Report and Financial Statements 2023
EMPOWERING
FINANCIAL
RESILIENCE
HARGREAVES
LANSDOWN
CONTENTS
PURPOSEFUL
PROGRESS
Governance
Chair’s Introduction
Board of Directors
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Nomination Committee Report
Risk Committee Report
Directors’ Report
Section 172 Statement
Statement of Directors’ Responsibilities
64
66
70
80
85
120
125
128
132
136
Strategic report
Hargreaves Lansdown At A Glance
Chair’s Introduction
CEO Review
Market Overview
Business Model
Stakeholder Engagement
CFO Introduction
Strategic Summary
Strategy and KPIs
Operating and financial review
Corporate Responsibility Introduction
Responsible Savings and
Investment Provider
Responsible Fund Manager
Responsible Business
Responsible Employer
TCFD
Non-Financial Information Statement
Risk Management
01
06
08
12
16
18
20
21
22
27
33
35
36
37
40
45
52
53
Financial statements
Independent Auditors’ Report
Section 1: Results for the Year
Section 2: Assets and Liabilities
Section 3: Equity
Section 4: Consolidated Statement
of Cash Flows
163
Section 5: Other Notes
165
Section 6: Company Financial Statements 174
138
145
153
161
Other information
Directors, company secretary, advisers
and shareholder information
Five-year summary
Glossary of alternative financial
performance measures
Glossary of terms
182
183
184
187
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
HARGREAVES LANSDOWN AT A GLANCE
A PURPOSE-LED
BUSINESS MODEL
We are the UK’s largest direct-to-consumer (D2C) digital wealth management
service. For over 40 years, we have helped clients to manage their finances
with our easy-to-use service and breadth of offering. Today we are trusted
with the savings and investments of more than 1.8 million clients. We are
a FTSE 100 company with over 2,000 colleagues, headquartered in Bristol.
Supporting clients
with their...
through channels
that work for them...
alongside high quality
products and services...
that enable the right
client outcomes.
HL funds
Feeling safe and supported
Savings
Self-serve (D2C)
Our purpose is to
empower people
to save and invest
with confidence.
Investment
Advice
Digital tools
Accumulation/
decumulation
Active Savings
Retirement
Workplace
Trading
Hargreaves Lansdown
Report and Financial Statements 2023
Managing finances with
confidence and convenience
Having access to expertise
Feeling in control of finances
Aligning with appetite for
risk and personal values
Achieving financial goals
FIND OUT MORE
Pg 16: Business Model
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
1
HARGREAVES LANSDOWN AT A GLANCE
CONTINUED
UNDERPINNED
BY OUR CLIENT-
FOCUSED CULTURE
Having over 40 years’ experience of helping people save and invest
means we understand the important role we have to play in building a
better financial future for both our clients and wider society. Our culture,
values and governance ensure our clients are at the heart of all we do,
and that we work in a sustainable and responsible way.
1 We put the
client first
From the day-to-day client
experience to the constant
improvement of our services,
we use client feedback to
shape future development.
2 We go the
extra mile
For our clients and for our
colleagues. We focus on
driving positive outcomes,
taking every opportunity to
delight, inspire and reassure.
3 We do the
right thing
We always aim to do the
best for our clients. We’re fair,
honest and focus on the
long term. It’s why our clients
trust us, and how we earn
their loyalty.
4 We make
it easy
Savings and investments
should be easy to access,
understand and execute.
We make things simple,
which gives our clients the
confidence to make important
decisions at the right time.
5
We do
it better
Since 1981, HL has
set the tone for the retail
investment market. We are
committed to energetically
innovating and improving.
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
2
HARGREAVES LANSDOWN AT A GLANCE
CONTINUED
ENABLING
US TO DELIVER
OUR STRATEGY
Transform
the savings and investment experience
Combine
the best of human expertise
with digital capability
Deliver
a uniquely personalised service
to simply manage your financial
health and wealth
FIND OUT MORE
Pg 22: Strategy & KPIs
ACHIEVING RESULTS
ACROSS OUR FIVE
STRATEGIC PILLARS
The delivery of our strategy has been mobilised
across five strategic pillars, with good progress
made in 2023 as we execute on enabling the
next stage of HL’s growth.
Accelerate Growth via
our Integrated Proposition
Key to our strategy is building out and
broadening our savings and investment
proposition. We delivered several Growth
initiatives in 2023: we accelerated our Active
Savings proposition, delivered six HL Funds
and piloted our new financial coaching offering.
This comes alongside evolving elements of
our pricing structure to support families in
managing their wealth.
Create a step change in
Client Service and Efficiency
Over the year, our focus has been on building
out our digital capability to enable an improved
client experience. This includes introducing new
technology on our Helpdesk to make it easier
for clients to get to the right expert colleagues.
We have also launched open banking payments
on Active Savings, offering clients a new way
to pay and reducing our cost to serve.
Hargreaves Lansdown
Report and Financial Statements 2023
3
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
HARGREAVES LANSDOWN AT A GLANCE
CONTINUED
Develop our
Digital Backbone
Our digital capability and technology is critical
to our future success and the delivery of our
strategy. This year, we have invested in building
key foundational capability, including data skills
and resilience enhancements.
Enable our People,
Strengthening our Culture
Developing our people and building an inclusive
and development-focused culture is key to
the success of the transformation and how
we deliver our strategy. In 2023, we have
built capability across the business, enhanced
our reward structure and offered increased
development opportunities. This year has also
seen us continue to enhance our position as
a responsible business, with our ESG priorities
aligned with our business-wide KPIs and a key
focus on supporting the community in building
financial resilience.
Hargreaves Lansdown
Report and Financial Statements 2023
Scale the
Foundations
Our strategy is focused on building our
long-term resilience and enabling sustainable
returns into the future. This year saw the
introduction of the Consumer Duty, and
we have been focused on embedding
this in line with our existing client-centric
approach. We have done this alongside
enhancing core systems to support our
scalability and resilience and developing
our risk maturity.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
4
HARGREAVES LANSDOWN AT A GLANCE
CONTINUED
WHY HL? – DELIVERING
SUSTAINABLE VALUE
A trusted and
experienced
business
Delivering an
increasingly
personalised
experience
Seizing a
broad market
opportunity
Creating long-term
and sustainable value
We are a FTSE 100 company
headquartered in Bristol who,
for more than 40 years, has been
empowering people to save and
invest with confidence. We offer
a full suite of tax wrappers and
over 14,000 investment options,
alongside access to market-
leading savings rates through our
Active Savings cash management
platform. We are now trusted
with £134.0 billion by over
1.8 million clients, making us
the UK’s largest savings and
investment platform.
We combine the data we get
from the millions of interactions
we have with our clients each
year with our expertise to deliver
relevant and timely content
to our clients, educating them
and helping them reach better
financial outcomes. Clients can
engage with us however suits
them, be it via our mobile app,
our website or our Helpdesk.
The addressable wealth
market is expected to grow from
£3.1 trillion to £3.7 trillion over the
next three years as savers and
investors navigate an increasingly
complex economic climate and
wealth management landscape.
Delivery of our strategy will
deepen existing relationships,
building client and asset
retention, and continue to
grow assets on our platform.
We are highly cash-generative,
have a strong balance sheet,
no debt and retain a surplus
of capital over and above
our regulatory requirement –
this has allowed us to pay an
increasing ordinary dividend
for the last eight years. Our
targeted strategic investment
of £175 million through to 2026
will enable our future growth
and continue our track record
of dividend growth.
1.8m
clients
92%
client retention rate
41.8%¹
D2C market share
4+ star
Trustpilot rating
£3.1tn²
addressable wealth
market 2023
£402.7m
profit before tax 2023
£3.7tn
estimated addressable wealth
market 2026
41.5p
dividend 2023
1 Platforum UK D2C Market update
2 Source: BCG Global Wealth Market Sizing
June 2023
2023
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
5
CHAIR’S INTRODUCTION
“
We continue to help
people build their
financial understanding.
Deanna Oppenheimer
Chair
Hargreaves Lansdown
Report and Financial Statements 2023
PURPOSEFUL PROGRESS
IN A GROWING MARKET
HL has been helping clients save and invest
with confidence for over 40 years and this
year has been no different. Given the
macroeconomic challenges we’re currently
faced with, our role at HL has become even
more important, and we continue to help
people build their financial understanding,
health and resilience by offering tangible
solutions such as our Financially Fearless
initiative and Better Investors programme,
our Active Savings cash management service
and the expansion of our HL fund range.
This year, we have set out our Corporate
Responsibility Approach, recognising the
responsibility we have to all our stakeholders
including clients, colleagues, community and
society, and to use our influence for good.
We have strengthened our ESG considerations
through our actions as a responsible business,
stewardship as a responsible fund manager,
our offering as a responsible savings and
investment provider, and our strategy as
a responsible employer. We have set out
what we have achieved, and our ambitions,
on pages 33 to 44. Some notable progress
in the year includes:
• Reporting our Scope 3 financed emissions
for our fund management business for the
first time
• Further narrowing our gender pay gap and
voluntarily publishing our ethnicity pay gap
• Establishing a dedicated ESG Analysis
team as part of our broader investment
research function
Board governance and changes
We have made substantial progress in our
evolution to a systemically resilient, financially
strong and independently governed FTSE
company. To achieve this, we are focused
on balancing the needs of all our stakeholders,
including our shareholders. And whilst those
goals are a journey and not a destination,
I am pleased that we have moved significantly
along the road.
During the past year, the Board has overseen
a smooth and seamless CEO transition from
Chris Hill to Dan Olley. This followed a thorough,
global review of candidates and Dan, joined us
as our new CEO on 7 August 2023. We thank
Chris for doubling the client base and near
doubling the assets on the platform during his
six-year tenure, and for guiding the business
through the challenges of a pandemic
and other significant events. Dan is off to
a great start, helped by his knowledge of
HL, its colleagues, culture and values gained
during his past four years on the Board as
a Non-Executive Director, and by his proven
track record of creating efficiently scalable,
agile and competitive platform businesses.
Dan’s leadership will look to build on and
accelerate the past year’s progress on our
strategic transformation. Of note was the
delivery of new funds, which attracted over
£200 million of flows in challenging market
conditions. The HL US Fund launch was one
of the most successful fund launches this year,
demonstrating the strength of HL’s brand.
6
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CHAIR’S INTRODUCTION
CONTINUED
In addition, Active Savings grew substantially,
with the addition of new partner banks,
60,000 additional client accounts and improved
margins. We also invested in our Helpdesk,
which is a core part of our service proposition,
providing our clients with expert support and
insight to help them navigate their savings
and investments. This year, we had a very
busy run in to tax year end, as clients looked
to take advantage of the tax and pension
changes announced as part of the Budget.
These changes led to longer and more complex
calls, and at times, meant clients were waiting
too long to speak to an agent. We therefore
invested in our capability to adjust, through
better allocation of resources and by
implementing new technology which
is improving service levels.
Returning service levels to the standards that
both we and our clients expect is a key focus
for Dan, as is continuing to improve the broader
client experience. In his CEO statement on
page 8, Dan shares his perspective on how our
investment into data and technology is driving
greater engagement with our mobile app and
helping us to increase the relevance of our
communications with clients, helping them
reach better outcomes while at the same
time driving value for the business.
To read more about progress
against our strategy, please see
pages 22 to 26
Amy Stirling is well into her second year as
our CFO, guiding our financial performance
that, this year, has exceeded expectations
despite the tough market backdrop.
You can read Amy’s review on the performance
of the business and our financial results on
page 27 to 32.
Hargreaves Lansdown
Report and Financial Statements 2023
Since 2018, we have been strengthening
the skills and capabilities of the Board in the
areas of audit, risk management, remuneration,
investment, wealth management, technology
transformation and growth through the
appointment of skilled and experienced
Independent Non-Executive Directors.
We were delighted that our newest board
member, Michael Morley, former CEO of
Coutts and a past CEO of UK Deutsche Bank
Wealth Management, joined us on 1 August
2023. You can read more about Michael’s
appointment on page 122.
Darren Pope has now been a Board member
for a year and has been a valuable addition.
Having joined the Board as Audit Chair
designate in September 2022 I am pleased
to confirm that Darren will be succeeding
Roger Perkin in that role from 1 October 2023
(subject to regulatory approval). I would like
to extend my thanks to Roger for his tenure
and you can read more about the Audit
Committee’s activity this in year on page 81.
As Chair of the Risk Committee, Andrea Blance
has strengthened the oversight of Risk and
Compliance. During the past three years, the
addition and development of an accomplished
risk management team has advanced the
proactive identification and mitigation
of risk and management of compliance.
You can read more about our focus on risk
and regulation on pages 53 to 62 and 125
to 127 and how the Board has ensured the
business was well prepared for the new
Consumer Duty regulation, when it came into
effect in July 2023, on pages 126 and 134.
This year, Moni Mannings, Chair of the
Remuneration Committee, has consulted
with our shareholders on the new remuneration
policy we are asking you to support at the
forthcoming AGM. The policy more closely
aligns our Executive Directors with investors
through the creation of a Long-Term Incentive
Plan that pays out when key drivers of business
success are achieved – this includes a Total
Shareholder Return and an ESG component
as well. We would appreciate your affirmative
vote on our new remuneration policy.
Detail of the Remuneration policy
can be found on pages 85 to 119
Dividend
The ordinary dividend policy outlined
at Capital Markets Day was to commit
to grow the ordinary dividend by 3% per
annum for FY22 and FY23. Given the positive
financial performance in the year, the Board
recommends payment of a final ordinary
dividend of 28.80p per share, subject to
shareholder approval at the AGM. If approved,
the dividend will be paid on 15 December 2023
to all shareholders on the register at the close
of business on 17 November 2023.
An interim dividend of 12.70p per share was
paid on 31 March 2023. Taking this into
account, the total ordinary dividend for the
year will be 41.50p per share (2022: 39.70p),
an increase of 4.5% on last year.
Since joining HL, I have enjoyed seeing the
recruitment of new colleagues, the different
skill sets they have brought to the business,
and how they work collaboratively with the
seasoned and experienced leaders we already
have in the team. Whilst change is disruptive,
the Board regularly challenges management
on colleague engagement and reviews
succession plans for all senior positions
and ensures these align with our commitments
on inclusion and diversity. It is the strength of
our emerging talent, integrated with a positive
and inclusive culture, as well as the new skills
and approaches we have introduced to the
business that will carry this company to its
full potential as the industry continues to
change and transform.
On behalf of the Board, I would like to thank
our 1.8 million clients – both those who have
joined us recently and those who have been
with us for some time – and our dedicated
colleagues for their relentless focus on
helping our clients. Finally, I would like
to thank you, our shareholders, for your
continued investment and support during
these challenging economic times.
As Peter Drucker, the famous management
consultant, pointed out, the best way
to predict the future is to create it. Under
the leadership of the Board and executive
management of HL today, this firm is well
positioned to play a vital part in creating
the next generation of wealth management,
savings and investment, that harnesses
world-class technologies and data application
to benefit our clients’ financial position.
Deanna Oppenheimer
Chair
18 September 2023
7
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CEO REVIEW
“
We have a unique opportunity
to benefit from structural
demographic and workplace
behaviour shifts and the UK
regulatory changes to encourage
greater saving and investment.
Dan Olley
Chief Executive Officer
Hargreaves Lansdown
Report and Financial Statements 2023
HELPING CLIENTS ACHIEVE
BETTER FINANCIAL
OUTCOMES
What was also clear from both my
conversations with clients and the regulatory
initiatives in our sector, is that investing
remains a daunting task for a large proportion
of the population. Many of the people I have
spoken to are confused by the array of jargon
and terminology, or put off by the wide range
of product options available to them. This often
results in inertia as investing is put off ‘until
tomorrow’. The current economic environment
is only exacerbating this issue, putting more
demands on people’s finances, and dropping
saving and investing down the list for many.
The size of our client base is a significant
differentiator in enabling us to have a strong
gauge on changing client needs and our ability
to therefore respond to help make investing
accessible and understandable to everyone,
with initiatives like Financially Fearless, which
aims to tackle money inequality and specifically
help women save and invest with confidence.
I was delighted to move from being a Non-
Executive Director to CEO of your Company
as of August this year. Our last financial year
has been a period of significant change and
I will spend some time outlining the financial
and operational execution that the team has
delivered. However, before I do so, I want to set
out some early reflections as CEO, a role which
gives me a very different lens on the Group.
HL is a great business built on a fantastic
heritage of delivering its clients the best, most
relevant information on an industry-leading
breadth of savings and investment solutions,
underpinned by a focus on providing client-led
service and support and making execution
seamless and easy. What is clear to me as I
reflect on the interactions I have had with both
HL clients and non-clients alike since starting
as CEO, is that getting these basics right – for
every client, every time – is still the core driver
of value. It is clear that our service and
execution must return to the high standards
we and our clients expect and deserve. This
is a core focus for me. However, I have been
very encouraged by all my conversations with
the Client and Service teams at HL. They know
that becoming the trusted financial partner for
clients is a right you must earn through every
interaction. Their passion for ensuring this
happens is equal to mine, which is why I know
we will deliver this non-negotiable objective
for HL and our clients.
8
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CEO REVIEW
CONTINUED
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Doing this for a small number of clients may
be relatively straight forward. However, to
offer this proactive and personalised service
in a scalable and cost-effective way to over
1.8 million clients, each with different needs,
knowledge and experience, is a completely
different challenge. It demands that we
combine the best of our curated knowledge
and market insights, with advances in
technology and our digital platform, to help our
clients identify the best savings and investment
options for them. For example, earlier this year
it became clear from our client interactions and
market trends that gilts could be an attractive
yielding investment option for higher rate
taxpayers and those that have used their
full ISA allowance. Through personalised and
targeted education-based content, we were
able to help clients take advantage of this
opportunity, investing over £430m in July.
As HL continues to help more clients reach
good financial outcomes, the opportunity
to grow, and as a result drive long-term,
sustainable attractive returns and growth
for all our stakeholders, is clear. The alignment
of the interests of the organisation, our clients,
our shareholders, and the regulator has never
been stronger.
This tells me that, at its core, our strategic
direction is the right one. We have a unique
opportunity to benefit from structural
demographic and workplace behaviour shifts
and the UK regulatory changes to encourage
greater saving and investment. However,
the world has changed since we set out
the strategy in February 2022, with a
fundamentally different macro-economic and
geopolitical environment. We have also learnt
lessons from the execution of the strategy
since then. Coming in as a new CEO with the
teams 18 months into delivery, now is a good
time to take stock, keep what works and learn
from areas where we can do even better. We
will refocus and refine our approach, where
needed, to ensure we still have our strategic
initiatives in the right order and our resources
focused on the right areas to maximise value
to clients, colleagues, and shareholders.
Work will also continue to develop and mature
our control environment to ensure we’re
managing all our processes and controls
efficiently and effectively as we scale further.
Initial priorities
Being only a few weeks in to my new role
I am very much in listening mode, speaking
with our clients, shareholders and colleagues
to understand their views and insights. Based
on what I’m hearing from initial discussions
and what I know from the time I’ve spent
on the Board, I am focused, in the near-term,
on four key areas.
1. Drive client and asset growth – Increase
focus on tailored client content and a seamless
experience, backed by great service and broad
product range.
2. Increase pace – Drive execution pace and
agility to continuously deliver additional client
value at speed.
3. Save to Grow – Continuously strive to be
fitter and leaner as a business, so we can save
to invest more for clients.
4. Focus on our people – Make HL great for
colleagues and clients – the right culture, with
the right people in the right roles, focused on
the right things.
I will be providing a more thorough update
at the half year results early in 2024. In the
meantime, it is important to reflect on the
achievements and challenges of the last
financial year.
Market backdrop
As the data from our Savings and Resilience
Barometer shows, the rising cost-of-living
is putting pressure on the UK’s financial
wellbeing. People have less disposable income,
investor confidence is low and the outlook
remains uncertain. Markets have been volatile
and with interest rates rising, savers have
looked to make their cash work harder for
them without always wanting to invest.
This has been evident in the strong
performance across our Active Savings
cash platform, which attracted record
new business of £3.2 billion in the year.
Conversely, the challenging external conditions
and low investor confidence impacted net
flows onto the platform and stockbroking
volumes, something that has been seen
across the sector.
Hargreaves Lansdown
Report and Financial Statements 2023
9
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CEO REVIEW
CONTINUED
Our focus has remained on supporting our
clients and helping them to achieve better
financial outcomes during these challenging
times including helping them to build their
financial awareness and confidence, whilst
at the same time continuing to deliver on
our strategy.
An example of this would be during the US
banking crisis in March this year, which
followed the collapse of Silicon Valley Bank.
This was a challenging time for many of our
clients – insight from our interactions with
them told us they had questions around their
own investments in the banking sector and
that they wanted reassurance of the security
of the cash they were holding with UK banks.
We acted quickly and wrote two specific
articles and sent targeted communications to
clients we knew engaged with macroeconomic
news. Our articles attracted over 18,000
readers, who spent almost a minute longer
on the page than the average of our other
news articles, showing how clients value the
relevance and timeliness of our research.
FY23 performance
In spite of the challenging backdrop, we
have delivered robust financial performance.
The value of our proposition attracted
£4.8 billion of net new business and a further
67,000 net new clients, taking our total assets
under administration and active client numbers
to £134.0 billion and 1.8 million respectively.
Our investment in data and technology has
helped us to support our clients in the ways
that suit them. In FY23, we had 249 million
digital visits and mobile engagement remained
high – it is clear that more and more of our
clients want to manage their accounts on-the-
go, and this is steering our “app first” approach
to developing our service going forward.
We also continued building out our Better
Investors programme in line with the FCA’s
Consumer Duty regulation. This programme
provides personalised content to clients with
the aim of helping them and their families
achieve good outcomes from their hard-earned
savings. Topics include holding an appropriate
level of cash, portfolio diversification, the
importance of regular investing and the power
of compounding. This educational-based
content is just one way in which HL fosters
long-term client relationships and stable client
retention rates, at 92.2% (2022: 92.1%).
The impact of economic and financial
challenges has seen the value of cash
withdrawals increase this year as families
deal with the cost-of-living issues, and this
has led to a reduction in our asset retention
rate, to 90.4% (2022: 91.8%).
We know our high level of service is a critical
part of what our clients value and our Client
Service Net Promoter Score fell to 45% (2022:
51%). Despite implementing technology
improvements and adding resource to our
Service teams, we had a very busy tax
year end which meant increased waiting times
for client queries and our service levels falling
below our expectations. This is an area where
we will improve further.
Revenue for the full year was £735.1 million, up
26% on the prior year (2022: £583.0m). We
have seen continued base rate increases
throughout the year and have passed over 85%
of the benefit through to our clients over the
last 12 months. Net interest margin has also
increased as a result and it is encouraging to
see growth across all our key revenue lines in
the second half of the year.
We have delivered spend in line with our
guidance with underlying costs of
£314.6 million (2022: £284.7m). In addition,
strategic spend in the year was £51.4 million
(2022: £32.9m) of which £36.1 million was
expensed and £15.3 million was capitalised.
Underlying Profit Before Tax increased 47% to
£438.8 million (2022: £297.5m) and Statutory
Profit Before Tax increased by 50% to
£402.7 million (2022: £269.2m).
The dividend for the financial year has
increased 4.5% to a total dividend of 41.50p
for the full year, reflecting this year’s positive
financial performance.
Strategic delivery
Our focus this year has been on building out
our client value proposition, while laying the
foundations that will allow us to accelerate our
growth and scale efficiency. Progress overall
has been slower than we originally anticipated,
but we have though made good progress on
several initiatives as set out below.
Active Savings – With interest rates continuing
to rise and clients looking for an easy way
to make their cash work harder, we have
expanded our partner banks and building
societies to a total of 17, launched a new
Cash ISA, and offered market-leading rates
for 59% of the year, leading to record net flows
of £3.2 billion and a closing AUA of £7.8 billion
across more than 175,000 client accounts.
Further improvement is needed to accelerate
onboarding of banks.
Funds – Our new US and UK Income funds
support clients looking to put together their
own diversified portfolio, and we launched four
managed Portfolio funds which offer greater
diversification in a single investment for those
who wish to take a more hands-off approach.
AUM in these funds now totals £2.2 billion.
We remain focused on continuing to improve
the performance of our funds and creating
more efficiency in the time-to-market of new
fund launches. We will launch a new tool that
helps less experienced clients and their families
choose the right HL account for their situation,
and the most suitable investment solutions to
meet their needs.
Hargreaves Lansdown
Report and Financial Statements 2023
10
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CEO REVIEW
CONTINUED
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Trading – This year, we relaunched our
enhanced online Share Exchange service
to help clients make the most of their tax
allowances, brought in a new online voting
solution, giving more power to retail investors,
and reduced the cost of share dealing for
almost 500,000 clients by removing the
dealing charge for regular investors and
those reinvesting dividends.
Investing – We reduced the management
charge for the Lifetime ISA and removed
charges completely for Junior ISAs, reducing
costs and supporting families in saving for
the future and creating lifelong, and beyond,
relationships by encouraging intergenerational
wealth transfer.
Service – As well as making tactical changes,
such as reallocating resource across the
business to better support clients over the
period, we have commenced the roll out a
Cloud-based telephony system. This has
started to improve the client experience, drive
colleague efficiency and improve the quality
of data captured to drive even better service
and provide client insights into our digital and
service roadmaps. As I said, this is a core
focus for me.
Cost Savings – We launched Pay by Bank for
our clients using Active Savings towards the
end of financial year. This not only makes it
easier for clients to top up their accounts, but
will also generate meaningful cost savings for
HL. By year end, the adoption rate was already
at 25% and we will be rolling it our across other
accounts through the course of this year.
As well as client proposition improvements,
we have made progress in building more
secure foundations to improve our operational
resilience and risk management, whilst
continuing to invest in our client facing
digital products.
In the year, we continued work and have made
progress towards the FCA’s 2025 Operational
Resilience deadline. The Board approved our
annual Operational Resilience Self-Assessment
for the year to 31 March 2023, which we
evolved from the 2022 assessment to add
greater rigour and structure to the process.
The Board also attested our compliance with
the FCA’s Consumer Duty by the end of July.
I am pleased to report that our Consumer
Duty programme confirmed that our existing
embedded focus on good client outcomes has
led to no major change requirements across all
the FCA prescribed dimensions, with only
minor enhancements identified to further
support our clients in reaching good outcomes.
I am pleased that our colleague engagement
surveys showed some improvement during the
year, reflecting both our focus on helping
colleagues build their financial resilience and
building an inclusive and client focused culture.
As ever there is more to do, which is why this is
one of my four initial focus areas. We have also
made good progress against our Inclusion and
Diversity priorities, increasing gender and
ethnicity representation across the business
through both our new early talent programmes
and improved recruitment processes, which
have increased senior representation across
the board.
On ESG, this year we have continued to
strengthen our requirements as part of
our Wealth Shortlist research, with all funds
included on the shortlist meeting our minimum
ESG requirements. We have also launched
our new ESG Investment Policy and our
Stewardship and Engagement Policy and
are reporting on Scope 3 Financed Emissions
across the portfolio of HL managed funds.
Finally, work continues to progress
development of our enhanced relevance and
personalisation engine within the HL digital
platform. Sitting under both our digital and
human interaction experiences, this engine
will ensure clients receive the most relevant
information, the best service and a seamless
and easy experience, however they chose to
engage with us.
Outlook and guidance
The current economic climate is likely to remain
much the same for the coming financial year,
and so will continue impacting investor
confidence. This will provide a continued
tailwind for flows into Active Savings but a
potential constraint on net new investment
flows and dealing volumes, although we will
proactively mitigate this by helping all HL
clients identify the opportunities that do exist
and could be right for them, as we did with
gilts. We will also provide tools to help clients
efficiently consolidate assets to save them time
and help us provide increasingly personalised
services, whether they want to interact digitally
or speak to an HL colleague directly.
Against this backdrop, we have already started
to take initial actions on cost and will continue
to carefully manage all operating costs and
efficiency improvements whilst balancing with
the importance of providing the high level of
service and support that our ever-growing
client base demands.
In terms of our financial outlook for FY24,
Amy Stirling has provided some detailed
guidance in her CFO’s report.
It has been a busy first few weeks in the new
role, and I have thoroughly enjoyed hearing
from many of our clients, colleagues and
shareholders. I’m looking forward to the coming
months as I focus on my initial priority areas
of driving growth, increasing pace, identifying
opportunities to save to grow and ensuring
we have the right people in the right roles
and focusing on the right things, so we are
truly future fit to deliver for our clients and,
in turn, for our shareholders.
Dan Olley
Chief Executive Officer
18 September 2023
Hargreaves Lansdown
Report and Financial Statements 2023
11
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
MARKET OVERVIEW
A GROWING
MARKET
OPPORTUNITY
AT AN
INFLECTION
POINT
The UK savings and investment
market has seen significant
growth over recent years
and our addressable market is
estimated at £3.1 trillion, which
is made up of £1.2 trillion of
private wealth plus £1.9 trillion
of cash savings.
HL is the UK’s largest direct-to-consumer (D2C)
savings and investment platform with £134.0 billion
AUA. The majority of the addressable private wealth
market is held through independent financial
advisers, wealth managers and vertically integrated
funds, with savings predominantly held by UK high
street banks. Despite the recent cost-of-living
challenges, the market is set to continue its growth
trajectory, underpinned by a range of secular and
industry specific trends. HL is well-placed to benefit
from these and capture the opportunity by delivering
our client and growth-focused strategy.
Hargreaves Lansdown
Report and Financial Statements 2023
Secular shifts
Across society there is an increased
demand for people to understand
and manage their finances and
therefore a growing need for simple,
trusted and easy-to-use services
to support this.
People living
longer
There is an estimated
£314 billion gap between
retirement expectations
and the cost of funding
such expectations –
“The Savings Gap”. The
level of funding necessary
to provide retirement
income is increasing, driven
by longer life expectancies,
less generous company
pensions and ambitious
retirement expectations.
Changing
interest rates
After many years of low
interest rates on cash-based
products, we have seen
significant increases over
the last year. Individuals need
help to understand how they
can best manage both their
savings and investments,
to ensure they remain on
track to meet their goals.
SECULAR SHIFTS
Political and
market uncertainty
Political and market
uncertainty reinforces the
importance of saving and
investing, and the need for
individuals and families to be
financially resilient. This drives
engagement as people realise
the importance of being
financially prepared for
the future.
Complex savings
environment
Successive UK governments
implementing further changes
to pension savings, introducing
new ISA products, the growing
awareness of responsible
investing, historically low
but rising interest rates and
significant cost inflation have
made finding the right solution
for individuals’ investment
needs ever more complex.
Individual
responsibility
The burden of responsibility
for retirement is shifting from
government and corporates
to the individual. This gap
cannot be closed without
individuals taking ownership
for self-provision or without
the use of long-term
investments, alongside cash
savings. HL and the rest of the
UK financial services industry
have an important role to play
in helping bridge this gap.
12
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
MARKET OVERVIEW
CONTINUED
£3.7tn
estimated addressable market in 2026
£3.1tn1
addressable market today
£134.0bn
market addressed
by HL today
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
1) Source: BCG Global Wealth Market Sizing 2023
Hargreaves Lansdown
Report and Financial Statements 2023
Clients
Clients’ expectations of their savings and investment
management providers have continued to rise, as people
become ever more confident in using personalised digital
services and look for the same ease-of-use as they get from
companies like Amazon and Netflix.
Regulation
The regulator has a clear focus on client outcomes and
the value of long-term investing, as illustrated by the
implementation of the Consumer Duty across the industry in
2023. There is an increasing recognition of the importance of
empowering more people to save and invest with confidence.
MARKET TRENDS
Incumbent players
The market has become increasingly complex, consumer
needs continue to evolve, and much of the industry is failing
to keep up. Expensive adviser fees, confusing and jargon-heavy
communications, and manual and time-consuming processes
mean that, despite an increasingly competitive landscape,
there is a gap for a simple, trusted and easy-to-use service
to support people in managing their finances.
Technology
Technological capability has moved even further forward –
from Cloud computing to the power of artificial intelligence
and digital tools. There is an opportunity to better harness
these advances and drive the next level of client experience.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
13
MARKET OVERVIEW
CONTINUED
CAPTURING
THE MARKET
OPPORTUNITY
Through our position as the UK’s
largest savings and investment
provider and our deep understanding
of clients and their needs, we are
confident in our ability to seize the
growing market opportunity.
By delivering on our strategic ambition, we will strengthen
our digital service, deepen existing relationships, build
retention, and grow assets over time.
Hargreaves Lansdown
Report and Financial Statements 2023
Broadening our proposition
to embrace evolving technology
and changing client needs
Over the last 40 years, we have developed the broadest
offering in the market, giving clients access to over
14,000 investment options. We offer a diversified
service where they can manage their investments
and savings in one place and can access the HL
platform via our Helpdesk, our website, or our mobile
app. The app is increasingly becoming the channel of
choice for clients, and in 2023, we saw 877,000 clients
access our service through our mobile offering, with
our app being rated 4.7 stars on the mobile app store.
BROADENING OUR PROPOSITION TO EMBRACE
EVOLVING TECHNOLOGY AND CHANGING CLIENT NEEDS
Broadening our proposition to support our clients reach
the right outcomes goes to the heart of our strategy.
In 2023, we have seen more clients utilising cash
savings in the rising interest rate environment and taking
advantage of our Active Savings service which provides
access to cash deposits with a range of third-party
banks and building societies offering different terms
with often market-leading rates. We have continued
to enhance the service this year, making payments
easier and raising awareness of the leading rates
available among clients. We have also built out our HL
Fund Management proposition this year, delivering six
new funds across sectors that our clients have shown
interest in, such as the US.
For more insight on developments in our proposition
to meet our clients’ changing needs, see Strategy
and KPIs on page 22.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
14
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
MARKET OVERVIEW
CONTINUED
Driving innovation into
how individuals manage
their finances
HL has a history of innovation, being the original
D2C platform and an early-mover on key products
and services such as the Lifetime ISA, Active Savings
cash savings platform, and mobile access. We operate
in an increasingly competitive landscape, and recognise
that, across the market, there is still more to be done to
better enable people to manage their finances. We are
focused on innovating to drive improvement.
Enhancing our service to
support clients as the market
environment changes
Delivering a quality service and putting the client
at the centre of what we do is core to HL. This has
become more important as people are having to
take increased responsibility for their own finances.
Our strategy is focused on enhancing our service
by enabling better personalisation, more efficient
processes and increased insight for our clients.
Continuing to
capture the market
opportunity
HL has a strong track record of growth and is a leader
in terms of market share and the scale of its operations.
The progress we have made over the past five years
is≈shown in the charts below. The investment we are
making will help unlock the wealth of client insight and
data we have and will drive our proposition and client
experience forward to ensure we continue to win in
this growing market.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
DRIVING INNOVATION TO HELP
INDIVIDUALS MANAGE THEIR FINANCES
ENHANCING OUR SERVICE TO SUPPORT CLIENTS
AS THE MARKET ENVIRONMENT CHANGES
CONTINUING TO CAPTURE
THE MARKET OPPORTUNITY
In 2023, we further developed our proposition and
service to support clients – we introduced a Cash ISA
through our Active Savings service, delivered six new
fund solutions, and improved the way in which equity
investors can engage with their shareholding with a
new online voting solution. Alongside this, we continued
to enhance how we support our clients, delivering
almost three million personalised nudges to help
people reach better financial outcomes and piloting
a new financial coaching service.
Our focus on support has been clear in 2023, enabling
us to further build our lifelong relationship with clients
and their families, meaning we are well placed to be
their trusted partner to support them through future
market changes. Our Savings and Resilience Barometer,
and the insight it provides, has enabled clients to better
understand their resilience versus their peers. Our
regular news updates and articles on key market
dynamics have provided insight on the external
challenging environment, whilst our evergreen
‘Learn’ content continues to evolve to help those
starting out with investing better understand the basics.
D2C market share1
2023
2019
Compeer trading market share2
2023
2019
AUA
2023
2019
1 Source: Platforum Market Update June 2023.
2 Compeer Limited XO Quarterly Benchmarking Report – Q2 2023.
Hargreaves Lansdown
Report and Financial Statements 2023
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
41.8%
40.5%
35.1%
34.5%
£134.0bn
£99.3bn
15
BUSINESS MODEL
OUR RESILIENT
GROWTH CYCLE
DRIVES VALUE
The breadth of our proposition and client
focus enables us to build long-term
relationships, driving growth and
sustainable returns for our stakeholders.
Our proposition
We provide an award-winning digital
platform, that enables clients to access
a broad range of savings and investment
products to manage their finances and
facilitate their investment goals.
Through the channel of their choice,
whether that be self-serve (direct-to-
consumer), advice or through their
workplace, clients can access a range
of products and services that match
their needs.
HL Funds
Through our HL Fund Management fund
range we manage over £8.7 billion of
assets, providing investment solutions for
clients across a broad range of sectors
and investment needs. This includes a
range of Portfolio Funds offering instant
diversification, Portfolio Building Blocks
which provide greater diversification
across different global sectors and our
range of Select Equity Funds, which are
concentrated portfolios with a high level
of transparency and insight.
Active Savings
Our Active Savings deposit service
provides a simple, digital solution for
managing cash savings across
multiple providers.
In the rising interest rate environment,
Active Savings has been an important
service for both new and existing clients,
now holding £7.8 billion of assets.
Investment and Retirement
We offer a range of tax-efficient
investment solutions across both ISAs
and pensions. Our suite of ISA products
includes the Lifetime ISA (LISA) and Junior
ISA (JISA) which support clients through
different life stages, and our varied
retirement proposition features Self
Invested Personal Pensions (SIPPs),
Income Drawdown and Annuities.
These are supported by a number
of retirement planning tools.
Trading
Last year clients conducted over 22 million
fund and share trades through HL’s
platform. Trading can be placed on the
app, via the website or by phone, and
we focus on achieving best execution on
prices across a wide range of investments
in the UK and abroad. Our clients have
access to live prices, a digital voting tool
and access to equity primary capital
raises. Retail investors play an increasingly
important role in capital markets and we
continue to build our trading proposition
to better enable this.
OUR RESILIENT GROWTH CYCLE DRIVES VALUE
OUR PROPOSITION
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
16
BUSINESS MODEL
CONTINUED
Powers our distribution engine
We attract clients with our high-quality
service and offering, we engage them with
our expert-led content and easy-to-use
functionality, and we retain them for the
long-term by supporting them in driving
towards their financial goals.
Attract
Our broad proposition and client-focused
service enables us to attract and build
lifelong relationships with clients.
We continuously evolve our approach
to client acquisition, investing in our
marketing, service and proposition to
ensure we maintain and improve our
offering and empower clients to save
and invest with confidence.
Engage
Through our high-quality client experience,
which is underpinned by our expertise and
technology, we engage with clients as
they build wealth, becoming their trusted
partner and reinforcing our relationship
with them.
The happier and more engaged clients
are, the greater is the flywheel effect for
increased new business flows through
transfers of investments held elsewhere
onto our platform, new lump sum
contributions and regular savings,
particularly with regards to the tax
allowances within a SIPP and an ISA.
Driving strong growth
By attracting, engaging and retaining
clients, we grow our AUA which helps drive
revenue growth. Our revenues fund the
administration of the platform, our client
proposition and the investment to build
a more operationally-efficient business
that can deliver sustainable growth.
Retain
Retention is key to our ongoing revenue
generation, as clients consolidate their
wealth with our service and build their
assets through time.
Our deep understanding of client needs,
combined with our expertise on the wealth
management market, enables us to focus
our reinvestment and the allocation of
resources to improve existing and develop
new services, which makes us an ever more
integral part of clients’ daily financial lives.
Total AUA
£134.0BN
(2022: £123.8BN)
Total active clients
1.8M
(2022: 1.7M)
Creating value
Sustainable returns
We generate revenues based on the value
of assets administered on our platform,
activity levels of our clients, net interest
margin on uninvested cash and advice
given to clients. Of these revenue streams,
83% are ongoing in nature, providing a
high degree of profit resilience.
Our diversified revenue streams, scalable
growth and effective cost management
enables sustainable profits which quickly
convert into cash. After ensuring we
maintain a surplus of capital over and above
our regulatory requirement, being sure we
remain able to meet our clients’ needs and
have invested to support the future growth
of the business, we can then pay dividends
to our shareholders.
Meeting stakeholder needs
Our investment in the business will
enhance our business model and ensure
we remain able to meet our clients’ needs,
further driving our powerful distribution
engine and enabling growth.
This will deliver long-term value creation
across our broad range of stakeholders,
including clients, colleagues, investors
and our community.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
ATTRACT
E
N
G
A
G
E
POWERS OUR
DISTRIBUTION ENGINE
RETAIN
Hargreaves Lansdown
Report and Financial Statements 2023
DRIVING STRONG GROWTH
CREATING VALUE
Detail on how we have
addressed these stakeholders
in our strategy is on page 18
17
STAKEHOLDER ENGAGEMENT
SHAPING
OUR STRATEGY
TO DELIVER FOR ALL
OUR STAKEHOLDERS
The evolution of our strategy has been
directly informed by our stakeholders.
Regular engagement supports us in
understanding their evolving needs,
which we then reflect in our decision-
making processes and the ongoing
delivery of our strategic goals.
Section 172 Statement
You can read about how the Board considers
the interests of our stakeholders when
complying with its obligations under Section
172 Companies Act 2006 on page 132.
Building a lifelong
relationship with our clients
We are a client-focused business, and our
strategy is built around empowering clients
to save and invest with confidence and
delivering the right outcomes as their
needs evolve.
In 2023, we continued to enhance and
deepen the ways we engage with clients.
We conducted extensive user research on
our new and existing propositions, undertook
surveys after clients used key journeys as
part of our service, built our understanding
of client needs by learning from their behaviour
on our website and app and we continued
our regular dialogue through 1.3 million client
interactions with our Helpdesk over the period.
The insight this engagement provides
shapes our strategic development, focusing
our investment on how we can best meet
clients’ needs. We continue to increase the
ease of use of our service, broaden our savings
and investment proposition to ensure we have
the right products to help clients meet their
goals and enhance our support and guidance
to build clients’ confidence as they manage
their finances.
Developing our people
HL benefits from dedicated and talented
colleagues, who deliver a high-quality
service in line with our values.
As we focus on delivering our strategic goals,
engaging with colleagues and making sure we
build an inclusive and development-focused
culture is more important than ever. Over the
year, we refreshed our Colleague Forum to
provide more direct feedback to our Leaders
on the business and key colleague issues.
We also ran multiple colleague surveys,
held transformation and leadership deep-dive
sessions and continued to enhance our online
colleague portal.
Building a better HL for colleagues is key to our
strategy and we are focused on how we make
HL the best place to work for people at all
stages of their careers.
For more insight on the developments
we have made for colleagues this year
please see the Responsible employer
section on page 40
Hargreaves Lansdown
Report and Financial Statements 2023
18
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Partnering with
our community
Responsible businesses that support their
local communities and wider society will
be those that thrive in the future.
As a large business in the Southwest,
we are committed to supporting our local
community, driving better outcomes for
the area, and utilising our expertise to
build financial resilience.
For more information on how we
have supported our community
this year please see the
Responsible Business section
on page 37
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
STAKEHOLDER ENGAGEMENT
CONTINUED
Enhancing our partnership
with our shareholders
As owners of our company and providers
of capital, supportive shareholders are
instrumental to our growth.
We value the relationships we have with
our shareholders, and engage regularly to
understand their thoughts and views on the
business and our strategy. We do this through
our investor relations programme, which
includes regular trading updates, results
presentations, management roadshows,
investor and analyst meetings and attendance
at investor conferences both in the UK and US.
The programme covers existing shareholders
and potential new investors, and regular
reports and feedback are shared with the
executive team and the Board on key market
issues and concerns.
Issues raised in the year included progress
on the strategy and impacts of the challenging
market backdrop on the business. These have
been addressed in results announcements and
presentations. The transition to a new CEO
has also been raised and was covered primarily
by the Chair on her Governance roadshow.
Our AGM, attended by all members of the
Board, also enables shareholders to ask
questions and vote on resolutions.
Our strategy was built to enable us to better
meet client needs, to ensure we are well
placed to continue to build our market share
across the wealth management sector, and
to reinforce our position as an innovative and
leading brand in the UK market. By delivering
this, we will enable future growth and ensure
sustainable returns in-line with our
shareholders’ goals.
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
19
CFO INTRODUCTION
DELIVERING OUR
STRATEGY TO DRIVE
SUSTAINABLE
PERFORMANCE
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
In 2022, we set out our strategy to transform
the savings and investment experience,
by delivering personalised services to help
clients simply manage their financial health
and wealth.
This is an evolution rather than a revolution
for HL, and will enable us to take advantage
of the structural market tailwinds by developing
compelling and easy-to-use services, delivered
in a way that is both client-friendly and
cost-effective.
Our strategy also enables improvement right
across the business, addressing current
manual processes and siloed client journeys
which currently require manual intervention
and multiple hand-offs to complete, along with
increased oversight requirements to ensure
operational resilience. This currently drives
additional cost and slows down our ability to
innovate our proposition, including the service
and experience we offer to our clients.
Now that we have built out the capabilities
necessary to deliver these changes, we now
need to focus on executing at pace which is
a key priority for us in the coming year.
During the year, we have delivered on our
commitment to build out our client proposition,
expanding Active Savings, delivering new
funds and improving the trading experience.
Client engagement through our app continues
to increase and we have begun work to
make the business “mobile first”, enabling
all functionality to be available on our app
as well as on our website.
Against this backdrop, we have made good
progress across our KPIs, delivering statutory
profit before tax of £402.7 million, increasing
our client base to over 1.8 million clients and
generating £4.8 billion of net new business.
We have improved our gender and ethnic
minority senior leadership by 4.7% and 3.0%
and have continued to mature our risk
management approach.
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
“
During the year, we have delivered
on our commitment to build out
our client proposition.
Amy Stirling
Chief Financial Officer
Hargreaves Lansdown
Hargreaves Lansdown
Report and Financial Statements 2023
Report and Financial Statements 2023
20
STRATEGIC SUMMARY
DELIVERING PROGRESS
AGAINST OUR STRATEGIC KPIS
a t u rit y
Ris k m
Scale the
Foundations
Strengthening operational
resilience and risk management
to ensure resilient client journeys
whilst further developing our
enabling functions to support
growth and new ways of working.
efore tax
fit b
o
r
p
y
r
o
t
u
t
a
t
S
Enable our People,
Strengthening
our Culture
• We are simplifying the organisation
to drive faster decision making
and clearer accountability. We are
also focused on enhancing our
colleague value proposition
and strengthening our ways
of working and culture.
C
o
l
l
e
a
g
u
e
e
n
g
a
g
e
m
e
n
t
a
n
d
d
i
v
e
r
sit
y
UNDERPINNED BY OUR
STRATEGIC PILLARS
OUR STRATEGY
Transform
the savings and
investment experience
Combine
the best of human expertise with
digital capability
Deliver
a uniquely personalised service
to simply manage your financial
health and wealth
Develop our
Digital Backbone
By investing in our digital capabilities –
from data analytics, to transferring data
to the Cloud, and better managing basic
end-to-end client journeys – we will be able
to continue to take advantage of growth
and scale our platform in a more cost-
efficient way, reducing our cost to serve
and creating operating leverage.
T
o
t
a
l
c
l
i
e
n
t
s
U
n
d
e
r
l
y
i
n
g
c
o
s
t
N
et n
e
w
b
u
s
i
n
e
s
s
Accelerate Growth
via our Integrated
Proposition
We are strengthening our core
proposition by investing in our
Investment Solutions, accelerating
our Active Savings service and
continuing to deliver a high quality
and increasingly personalised client
service. These will all help to drive
client acquisition, increase
ongoing engagement and
improve retention rates.
Create a step-change
in Client Service
and Efficiency
We are using digital technology
and data to deliver tailored,
seamless client journeys to
improve client experience and
enhance client outcomes,
whilst delivering scalability
and cost-efficiency.
S
P
Client service N
n
n ti o
Hargreaves Lansdown
Report and Financial Statements 2023
ES
G
Strategic delivery
e
t
e
i e n t r
C l
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
21
STRATEGY AND KPIS
DELIVERING OUR STRATEGIC PRIORITIES
1
Accelerate Growth
via our Integrated
Proposition
Focus for 2024
• Improve the end-to-end transfer journey
for clients moving and consolidating their
assets to HL with a particular focus on
pensions, by enhancing processes and
using automation to improve service levels
and the client experience
• Expand our roster of partner banks and
introduce a broader product set for Active
Savings, including a wider range of Easy
Access and Fixed Term products available
within the Cash ISA wrapper
• Launch a new tool that helps clients
choose the right HL account and
investment solutions to meet their needs
– investment solutions will feature our
growing range of ready-made Portfolio
Funds, our Portfolio Building Blocks, and
funds from the Wealth Shortlist
• Develop functionality of our mobile app,
including SIPP account transfers and
fund filter tools
We have a broad
savings and investment
proposition to support
our clients throughout
their financial lives.
Through our focused investment, we are
building out our client proposition, expanding
our core offering and building our capability
to better support clients across their
savings and investment journey, drive
client acquisition, increase engagement,
improve client retention and deliver
net new business.
Progress in 2023
• Launched Active Savings Cash ISA
and added new banking partners, now
taking the total number to 17 – Active
Savings now has £7.8 billion AUA on behalf
of 175,000 clients
• Removed the management fee and online
dealing charge on Junior ISA accounts,
reduced the management fee on the
Lifetime ISA, and removed regular savings
and income reinvestment charges – these
changes are aligned with our efforts to
better support families in managing their
financial health and wealth
• Delivered six new funds – the HL US Fund,
HL UK Income Fund, and four Managed
Portfolio Funds – which now have over
£2.2 billion in assets under management
KPI: Total Clients
The total number of active clients that are
using our service at the end of the year.
An active client is one who holds at least one
account with a value over £100 at year end.
Why
As we attract, engage and retain a higher
volume of clients, we build increased
potential for growing future AUA.
Progress for the year
• New client acquisition remained resilient
through the challenging external conditions,
as we attracted 67,000 net new clients
over the period
• We ran our fourth brand awareness
campaign and relaunched our Financially
Fearless initiative, which focuses on
female savers and investors, underpinned
by our position as the most recognised
direct-to-consumer (D2C) brand
• New clients added across our range
of accounts and across all demographic
segments
Result
1.80m (2022: 1.74m)
Principal Risks
Strategic and operational
KPI: Net New Business
Represents subscriptions, cash receipts,
and assets transferred in, less withdrawals
and assets transferred out.
Why
Net New Business is an indicator of the trust
and security clients place in HL along with
the perceived value of the client offering.
The greater the assets gathered, the
greater the revenue.
Progress for the year
• General market conditions have worsened,
impacting investor confidence and leading
to subdued platform net new business
of £1.6 billion (2022: £4.0bn)
• Weaker stock markets and the rising interest
rate environment contributed to a record
year for Active Savings, driving £3.2 billion
net new business (2022: £1.5bn)
• Our strong proposition continued to
be recognised, with HL winning Best Buy
ISA, Best Buy LISA and Best Buy Pension
at the 2023 Boring Money Awards, as
well as Hargreaves Lansdown Advisory
Services receiving chartered status from
the Chartered Insurance Institute
• Further built our brand awareness, being
named in 31st place on the list of the UK’s
most valuable 75 brands, according to
Kantar’s BrandZ ranking
Result
£4.8bn (2022: £5.5bn)
Principal Risks
Strategic and operational
Hargreaves Lansdown
Report and Financial Statements 2023
22
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
STRATEGY AND KPIS
DELIVERING OUR STRATEGIC PRIORITIES CONTINUED
2
Create a step-change
in Client Service
and Efficiency
KPI: Underlying Cost
Based on the underlying operating costs for
the year, which excludes strategic investment.
Why
Cost discipline supports the business in
effectively scaling as we gain more clients
and enables us to invest in future growth.
Progress for the year
• Delivered underlying cost below
our guidance of circa 11% cost growth
Result
£314.6m (2022: £284.7m)
Principal Risks
Strategic and Financial
We have always been
recognised for our high-
quality client service and
experience – helping and
supporting clients to save
and invest with confidence.
We have a clear strategy for how we will
evolve our service, using digital technology
and data to deliver seamless, personalised
journeys to improve the client experience
and enhance client outcomes whilst
delivering scalability and cost-efficiency.
We want to make it easy for clients to manage
their investments and to provide a service
that enables them to do it better and reach
their financial goals.
Progress in 2023
• Launched Pay by Bank, our first Open
Banking payment journey, on Active
Savings, enabling a direct way for clients
to pay via their banking app and removing
the need for inputting debit card details,
improving the client experience and
reducing our transactional costs
• Piloted a financial health check and a
financial coaching capability, with the
learnings from this being carried forward
into work to increase the relevance and
personalisation of our communications
with clients and improve client outcomes
in line with the FCA’s Consumer Duty
• Delivered proof-of-concept for using
Cloud technology to automate elements
of our operational processes, creating
efficiencies and improving the client
and colleague experience
• Improved our trading capability and
functionality, including the relaunch
of our updated and digitised Share
Exchange service (formerly Bed & ISA),
bringing in a new online voting functionality,
and partnering with RetailBook to enable
more clients to access book builds
• New Cloud-based telephony system steers
clients to the most suitable agent to reduce
internal transfers and offers call backs
during peak periods
• Cost savings of £6.6m in FY23, driven
through procurement and resource efficiency
Focus for 2024
• Re-establish best service in line with our
clients’ expectations, with new technology
and automation driving efficiencies,
improving accuracy, reducing risk and
making it easier for colleagues to support
our clients, reducing our cost to serve
• Continue roll out of Pay by Bank across
other client accounts
• Launch new Client Relationship
Management system, with initial focus
on Complaints, Estates and Workplace
Solutions in FY24
• Invest in technology to support our
advisers, aiming to automate parts of
processes that are currently manual and
allowing us to scale our service in future
• Continue with the next phase of the pilots
of a new financial coaching service, which
will aim to bridge the gap for clients not
wanting full advice but looking for more
support than our execution-only service
KPI: Client Service NPS
Our net promoter score (NPS) is based on
the average results of client feedback from
the monthly Helpdesk client satisfaction
surveys in 2023.
We have moved from using Client Satisfaction
to Client Service NPS as this metric gives a
truer indication of the level of service our
clients are receiving.
Why
This provides a measure of our clients’
likelihood to recommend our service. A high
score demonstrates the positive, long-term
relationships we build with our clients and
gives an indication of our ability to attract
new clients.
Progress for the year
• Our Helpdesk took 1.04 million client
calls (2022: 1.27 million) and responded to
300,000 emails (2022: 416,000) – service
performed well in the first half but was
below our high expectations of best service
for our clients in the second half of the year
• HL were one of only ten providers in the
ISA/GIA category and one of only three
in the SIPP and SSAS category to achieve
STAR Gold Accreditation – STAR is the
cross-industry initiative which promotes
good practice in transfers
Result
45% (2022: 51%)
Principal Risks
Strategic and operational
Hargreaves Lansdown
Report and Financial Statements 2023
23
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
STRATEGY AND KPIS
DELIVERING OUR STRATEGIC PRIORITIES CONTINUED
3
Develop
our Digital
Backbone
As a digital platform,
technology enhances
the client experience we
provide and enables us
to optimise our service,
enhance our proposition
and improve our efficiency.
By investing in our digital capabilities – from
improved data analytics to Cloud technology
– we will be able to provide an increasingly
differentiated client experience, reduce cost
to serve and create operating leverage.
Progress in 2023
• Further increased operational resilience
and security by strengthening our digital
foundations and delivering a new Cloud
platform
• Supported Service teams in driving
efficiencies by delivering Amazon Connect
telephony system, first Robotic Process
Automation (RPA) use case, transfers out
Cloud solution and Pay by Bank for Active
Savings clients
• Preparatory work done to map foundations
and build new API layer
• Launched ‘Contentful’, our new Content
Management System, and first version
of data platform
• Continued development of mobile app
driving engagement and improved client
experience – over 81% of digital sessions
are now on the app (2022: 79%)
Focus for 2024
• Strategic Cloud migration to AWS and
Azure Drive further colleague efficiencies
by scaling automation, expanding use
of Amazon Connect and moving critical
journeys to Salesforce, our new Cloud-
based customer relationship
management software
• Migrate on-premise products and existing
relevancy and personalisation engine to the
Cloud to enable real-time personalisation
• Continue to enhance the digital client
experience, focusing on end-to-end
transfer journeys, ready-made investments
and rolling out Pay by Bank across other
HL accounts
• Scale relevant and personalised content to
deliver greater value for both clients and HL
KPI: Strategic Delivery
Our Strategic Delivery KPI is a qualitative
assessment made by the Board on the
progress we have made against our
strategic priorities.
Why
Delivery of our strategy is critical to
ensure we generate sustainable growth
into the future.
Progress for the year
• Established new processes for
tracking and reporting, issue resolution,
communications and engagement regarding
the transformation programme
• Delivery against each strategic pillar is
set out in this Strategy and KPI section
• Whilst we have delivered on key initiatives
during the year, it has taken longer than
expected to establish the programme which
has led to slower progress than planned
Result
BELOW TARGET
(2022: Not assessed)
Principal Risks
Strategic and operational
KPI: Client Retention
Based on the monthly retained number
of clients as a percentage of the month’s
opening clients, and then averaging for the
year. Any client whose account value falls
below £100 is deemed to no longer be active
and therefore, has been lost.
Why
A high client retention rate demonstrates
that clients are happy with the service we
provide and that it fulfils their financial needs.
The longer a client is with HL, the more
assets they are likely to accumulate.
Progress for the year
• Retention rate remains steady as clients
continue to see HL as their lifelong partner
and consolidate their assets against
a challenging market backdrop
• Enhanced our support and guidance,
continuing our Better Investors programme
which uses data to identify clients who
require nudges to drive better behaviours
such as moving uninvested cash into
Active Savings, piloting new digital tools,
and introducing targeted educational
initiatives, like Financially Fearless
• 290 million digital client visits and
increased mobile engagement with 61.5%
of clients digitally active (2022: 58.3%)
Result
92.2% (2022: 92.1%)
Principal Risks
Operational and financial
Hargreaves Lansdown
Report and Financial Statements 2023
24
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
STRATEGY AND KPIS
DELIVERING OUR STRATEGIC PRIORITIES CONTINUED
4
Enable our People
Strengthening
our Culture
Our people are our biggest
asset and are fundamental
to delivering our strategy
and to the sustainable
growth of our business.
As part of our strategy, we have clearly
defined how we need to enable our people
and strengthen our culture. We need to
simplify the organisation to drive faster
decision-making and clearer accountability,
to enhance our colleague value proposition
and strengthen our ways-of-working
and culture. We will also build our position
as a responsible business, through our
Corporate Responsibility Approach as
set out on pages 33 to 44.
Progress in 2023
• Improvements made to colleague value
proposition, including to parental leave
and sick pay provision
• Over 700 of our more junior colleagues
received a 7% pay increase in exchange
for annual discretionary bonus providing
greater certainty over earnings
• Expanded our learning infrastructure with
a new partnership with LinkedIn Learning, a
new management development programme
and a relaunch of our mentoring scheme
• All funds on the Wealth Shortlist now meet
minimum ESG requirements
• Relaunched Financially Fearless initiative
Hargreaves Lansdown
Report and Financial Statements 2023
Focus for 2024
• Create and embed an improved operating
model, with more streamlined and effective
processes and decision-making
• Focus on growing talent, reducing the
reliance on external hires and tracking
progression at an enterprise level, to equip
our colleagues to deliver on our strategy
• Complete TCFD reporting for HLFM and
continue to evolve the Responsible
Investment Hub on our website, expanding
the content available which will include
educational videos, fund ideas and news
KPI: Colleague Engagement,
Inclusion and Diversity
Colleague engagement is a key score from
our annual colleague survey, which is based
on four core metrics assessing colleague
pride, advocacy, motivation to go the extra
mile and intent to remain at HL. Our Senior
Leadership Gender and Ethnic Minority
Diversity scores are based on demographics
of our leadership population.
Why
We believe it is important to listen to and
understand our colleagues’ views and
motivations. We also know that building
an inclusive culture and a diverse workforce
is critical for enabling HL’s future success.
Progress for the year
• Colleague survey saw a strong response
rate at 80% (2022: 73%)
• Colleague feedback and engagement
insight was used to inform decision making
around a number of projects, including
building out our colleague value proposition
and enhancing our reward structure
• Continued to execute our Inclusion and
Diversity strategy and reported our Ethnicity
Pay Gap and published Minority Ethnic
diversity targets for the first time
Result
Colleague Engagement
68% (2022: 64%)
Gender Diversity – Senior Leadership
35.4% (2022: 30.7%)
Ethnic Minority Diversity – Senior Leadership
KPI: Environmental Social
Governance (ESG)
For FY23, performance has been assessed
against our three TCFD targets which were
the primary focus of our ESG work this year.
More detail is available in the TCFD section
of the report on page 45.
Why
Being a responsible business is a critical
part of our underlying strategic focus and
an important deliverable as part of our
People and Culture Strategic Pillar.
Progress for the year
• Measured and reported Scope 3 Financed
Emissions for the first time, with reduction
planning now underway.
• Introduced new ESG Investment and
Stewardship and Engagement policies
• Launched the Bristol Financial Resilience
Action Group, helping employers in the
Southwest to better support their
employees in building their financial
resilience
• Introduced energy saving operational
changes, including LED lighting across
UK offices and electric vehicle charging
6.7% (2022: 3.7%)
Principal Risks
Strategic and operational
Result
ABOVE TARGET
(2022: Not assessed)
Principal Risks
Strategic, operational, investment
and financial
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
25
STRATEGY AND KPIS
DELIVERING OUR STRATEGIC PRIORITIES CONTINUED
5
Scale the
Foundations
A critical element of any
successful business is
the enabling functions
that support the core
operational processes
and day-to-day operations
of the business.
To drive sustainable returns over the long-
term, we must ensure we strengthen our
operational resilience and risk management,
whilst further developing our enabling
functions to support growth and new
ways of working.
Progress in 2023
• Comprehensive review of strategy, products
and services completed ahead of July 2023
Consumer Duty implementation date – this
confirmed our embedded focus on good
outcomes being delivered for clients,
with only minor opportunities for
enhancements identified to further support
our clients in reaching good outcomes
• Delivered Risk Transformation Programme,
including embedding of new risk
management tool, and began Discovery
phase of Operational Resilience work
to comply with FCA requirements
Focus for 2024
• Focus on key cross business initiatives
needed to address manual processes,
reduce operational risk and improve pace
of delivery
• Simplify governance model to embed
controls, increase efficiency and release
capacity in our enabling functions
• Establish and begin execution of an
updated property strategy, addressing our
future ways of working and ensuring we
continue to support both our colleague
value proposition and our ESG ambitions
KPI: Statutory Profit Before Tax
Profit generated by the business over
the period. In light of our strategic spend
announced in 2023, we are now reporting
Profit Before Tax (PBT) in two ways:
• Underlying – measuring the underlying
performance of the business excluding
strategic spend
• Statutory – measuring the overall business
performance, including strategic spending
Underlying PBT is defined in the Glossary of
Alternative Financial Performance Measures
on page 184.
Why
A scalable platform with strong operational
resilience, risk management and enabling
functions helps to gather and retain assets
and clients, which drives revenues and profits.
Progress for the year
• The diversified nature of our service
offering drove performance, with factors
including an uplift in net interest margin
and more modest share trading in line
with expectations.
• Cost discipline in Underlying Costs
• Finance Income generation as a result
of balance sheet management
Result
£402.7m (2022: £269.2m)
Principal Risks
Strategic, operational and financial
KPI: Risk Maturity
Our Risk Maturity KPI is a qualitative
assessment made by the Board Risk
Committee of the maturity of the
business approach to risk management.
Why
To ensure the business has a culture and
process to proactively manage risks in order
to safeguard the firm and client assets and
maintain high levels of regulatory compliance.
Progress for the year
• Created, assessed and reviewed a
quantitative risk maturity measurement
process to be introduced in 2024
• Continued to enhance our Risk and
Compliance capability to ensure we
have right structure and team to provide
comprehensive second line expertise,
insight and oversight during this period
of investment
• Implemented improved risk management
systems and enhanced the risk
management framework
Result
ON TARGET
(2022: Not assessed)
Principal Risks
Strategic, operational and financial
Hargreaves Lansdown
Report and Financial Statements 2023
26
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
OPERATING AND FINANCIAL REVIEW
INVESTING FOR
FUTURE GROWTH
Strategic investment programme underway to deliver
operational efficiency and growth potential
Assets Under Administration (AUA)
and Net New Business (NNB)
Opening AUA
Platform growth*
Net movement to Active
Savings*
Active Savings growth*
Total Net New Business
Market growth and other*
Closing AUA
Year ended
30 June 2023
£bn
Year ended
30 June 2022
£bn
123.8
2.3
(0.7)
3.2
4.8
5.4
134.0
135.5
4.3
(0.3)
1.5
5.5
(17.2)
123.8
* Platform growth, Movement to Active Savings and Active Savings Growth are
alternative performance measures. See the Glossary of Alternative Performance
Measures on page 184 for the full definition.
Hargreaves Lansdown provides the leading direct wealth
management service in the UK.
The continued strength of our brand and breadth of services
available to clients on our platform has seen us grow net
new business every quarter this year despite the continued
challenging macroeconomic backdrop for our clients.
Total net new business for the year was £4.8 billion
(2022: £5.5bn).
Of this figure, platform growth was £2.3 billion (2022: £4.3bn)
with £0.7 billion (2022: £0.3bn) of net movement into Active
Savings, where we saw a significant increase in flows,
contributing £3.2 billion (2022: £1.5bn) of new money
to the £4.8 billion total growth.
Total AUA increased by 8% to £134.0 billion at the year end
(2022 £123.8bn). This increase was supported by the net new
business uplift and £5.4 billion of positive market movement
across the year, after the negative market growth experienced
in the first half returned to positive in the second half.
AUA for the period of £134.0 billion was 8% above that for
the prior year. The increase has occurred across both halves
of the year, with the second half of the year providing two thirds
of the increase. Market growth and other represents the impact
of the underlying market and other retained investment income.
In the current period this movement is driven by the changes
in the market.
Throughout the year we have maintained our focus on engaging
with clients to help them improve their financial engagement
and resilience. During this period of low investor confidence,
we have supported them in navigating the challenging economic
backdrop. We were pleased to see that despite the financial
impacts of the cost-of-living challenges, our client retention
rate remained consistent at 92.2% (2022: 92.1%).
Asset retention reduced to 90.4% (2022: 91.8%) for the year,
as we saw a higher level of cash withdrawals from specific
cohorts of clients to help with cost-of-living increases
or to fund large expenses and major life events.
We introduced 67,000 net new clients in the year (2022: 92,000),
growing our active client base by 4% to 1,804,000.
Hargreaves Lansdown
Report and Financial Statements 2023
“
Throughout the year we
have maintained our focus
on engaging with clients
to help them improve
their financial engagement
and resilience.
Amy Stirling
Chief Financial Officer
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
27
OPERATING AND FINANCIAL REVIEW
CONTINUED
An active client is defined as one who holds an account
containing £100 or more with us. The average age of new clients
remains consistent with recent periods at 36 (2022: 36) and
we are encouraged by the quality of clients we are welcoming
who brought an average NNB of £19,809, up 27% on last year
(2022: £15,565). This was driven by greater numbers of new
clients opening Active Savings accounts, which attract a higher
opening balance – during the year there were 17,000 new Active
Savings accounts (2022: 7,000).
Income Statement
Revenue
Operating costs
Finance and other income
Finance costs
Profit before tax
Tax
Profit after tax
Profit before tax
Adjusted for:
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
735.1
(350.7)
19.0
(0.7)
402.7
(79.0)
323.7
583.0
(313.0)
–
(0.8)
269.2
(53.4)
215.8
Funds1
Shares2
Cash3
HL Funds4
Active Savings5
Other7
Double-count8
402.7
269.2
Total
Revenue
Total revenue for the period increased 26% to £735.1 million (2022: £583.0m), with all key revenue lines increasing in the second
half of the year driven by a return to growth in all asset classes excluding cash as asset levels benefitted from positive market
movements and net new business. Year-on-year revenue growth reflects an improvement to Net Interest Margin following a
period of historic low interest rates, and the level of cash held by clients in both their Investment and Savings accounts more than
offsetting the impact of lower average asset values and lower stockbroking volumes resulting from negative market movements
and low levels of investor confidence.
The table below breaks down revenue, average AUA and margins earned during the period:
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
Year ended
30 June 2023
Year ended
30 June 2022
Revenue
£m
Average
AUA
£bn
Revenue
margin*
bps
Revenue
£m
Average
AUA
£bn
Revenue
margin
bps
i
F
n
a
n
c
a
i
236.4
147.7
268.7
54.3
8.7
19.3
–
735.1
60.78
48.8
14.0
8.48
6.4⁶
–
(8.3)8
130.08
39
30
192
65
14
–
–
–
254.5
194.9
50.0
60.3
1.8
21.5
–
583.0
65.38
52.3
13.6
8.88
3.86
–
(8.7)8
135.18
– Strategic Investment Costs
(including dual running costs)
Underlying profit before tax*
Tax on underlying profit*
Underlying profit after tax*
36.1
438.8
(86.1)
352.7
28.3
297.5
(59.0)
238.5
* Underlying profit before tax, Tax on Underlying profit, and Underlying profit after tax
for the period exclude strategic investment costs (including dual running costs) of
£36.1 million (2022: £28.3m). See the Glossary of Alternative Performance Measures
on page 184 for the full definition.
* Revenue margin is an alternative performance measure, see the Alternative Performance Measures glossary on page 184 for the full definition.
1 Platform fees.
2 Stockbroking commission and equity holding charges.
3 Net interest earned on cash held in investment accounts.
4 Annual management charge on HL Funds, i.e. excluding the platform fee, which is included in revenue on Funds.
5 Revenue from Active Savings earned as fees from partner banks.
6 Average cash held via Active Savings.
7 Advisory fees and ancillary services (e.g. annuity broking, distribution of VCTs and HL Currency Services).
8 HL Funds AUM included in Funds AUA for platform fee and in HL Funds for annual management charge. Total average AUA excludes HL Fund AUM to avoid double-counting.
Hargreaves Lansdown
Report and Financial Statements 2023
39
37
37
69
5
–
–
–
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
28
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
OPERATING AND FINANCIAL REVIEW
CONTINUED
Funds
Funds continue to be the largest asset class on the platform
at 47% of average AUA for the year and 46% of closing AUA
(2022: 47%) reflecting the significant range of investment
solutions available to meet a broad range of client needs.
Revenue on Funds decreased by 7% to £236.4 million
(2022: £254.5m) reflecting the decrease in average AUA,
particularly in the first half, with this revenue line returning
to growth in the second half of the year. Revenue margin
on funds was flat at 39bps.
Funds remain one of our largest sources of revenue, with the
margin for this year having remained stable on the prior year.
During the year, decisions have been taken to reduce fees
on the Lifetime ISA (LISA), from 45bps at base to 25bps, and
remove all fees on Junior ISA accounts. As a result, we expect
the fund revenue margin to fall slightly in the next financial year
and be in the range of 36.5bps to 38.5bps, driven primarily by
the full year impact of the fee cuts made in the Junior ISA and
LISA accounts in FY23.
Shares
Revenue on Shares decreased by 24% to £147.7 million (2022:
£194.9m) and the revenue margin of 30bps (2022: 37bps) was
at the low end of our expected range. This was as a result of
a reduction in deal volumes, reflecting comparatively lower
investor confidence as clients deal with cost-of-living issues,
rising interest rates and market volatility and also the impact of
the decline in the value of equities under administration, given
the previously mentioned market volatility.
Average deals per trading day in the first half of the year were
31,000 and rose in the second half of the year to 35,000 per
day. However, total deal volumes, including automated deals
such as dividend reinvestment, decreased by 21% to 8.3 million
(2022: 10.5m) but were in line with the low end of our expectation
of deals per trading day. Dealing peaked in January 2023 at
39,000 deals per trading day, propelled by news of growth in
UK, US and European markets. This compared with a low in
December of 27,000, given the seasonally quieter Christmas
period. Overseas dealing volumes fell slightly and represented
21% of our total client driven deals (2022: 22%).
Client driven trading is higher than levels seen prior to the
pandemic and we continue to improve our client experience in
relation to share trading, with improvements to best execution
on trades and the removal of fees for income reinvestment
and regular share savings. As and when investor confidence
improves we believe we are well placed to see a return to higher
trading volumes. Shares AUA, at the end of the year, was
£50.8 billion (2022: £45.9bn).
Revenue guidance on shares for the next financial year is
28bps to 32bps. This incorporates the full year impact of
the price changes on the Junior ISA, income reinvestment
and regular savings.
Cash
Cash held in Investment accounts plays an important role in
clients’ portfolio management by providing access to the
broad range of products and services available on our platform.
We manage this cash according to clear principles which are set
out in our Platform Client Fairness Policy. In determining rates,
HL considers the client need, characteristics and behaviour
by account type and the flexibility or limitations of the account
when determining and reviewing the rates paid to clients.
For example, we pay higher rates of interest where the
accounts have more product restrictions (e.g. the SIPP over
an unwrapped account) and where clients will hold higher cash
balances (e.g. the Drawdown account). The step up in base rate
has increased interest earned on cash and, as a result, we have
increased both the amount and the proportion earned by clients
during the period. The level of cash held in Investment accounts
increased during the period with average cash AUA of
£14.0 billion (2022: £13.6bn) which also contributed to
the increase in revenue.
The average cash balance represented 10.8% of total average
AUA, an increase from 10% in the prior year. However, across
the year, cash held in investments accounts has been reducing
as clients use existing funds on the platform to invest, and for
certain clients we are seeing increased cash withdrawals to
fund planned and unplanned needs. Our closing cash AUA
at the end of 2023 was £13.1 billion (2022: £15.0bn).
Revenue on cash significantly increased in the year to
£268.7 million (2022: £50.0m) reflecting increases in the Bank
of England base rate during the period and the level of cash
held by clients in investment accounts, partially offset by the
pass through rate to clients. Seven rate increases were made
during the year, taking the base rate from 125bps in July 2022
to 500bps as at 30 June 2023, compared to the changes in
the previous year, which saw five increases taking the rate
from 10bps to 125bps as at 30 June 2022.
Over the last twelve months, we have passed over 85% of
the benefit of base rate increases to our clients and should
we see further increases from here, we would expect to do
broadly the same.
As a result, our guidance for net interest margin for the next
financial year is 180bps to 200bps.
HL Funds
During the year we have delivered two new Building Block funds
(US Fund and UK Income fund) and four new Portfolio funds
(Cautious, Balanced, Moderately Adventurous and Adventurous),
all of which come with a lower annual management charge than
our existing fund offerings. These funds give clients access to
key asset classes and are structured via segregated mandates
so they can be held directly and also invested into by our
flagship HL Managed funds. The sector-focused funds within
the existing HL Multi-Manager range will be converted over
time, resulting in further efficiencies and reductions in costs
for investors.
Hargreaves Lansdown
Report and Financial Statements 2023
29
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
OPERATING AND FINANCIAL REVIEW
CONTINUED
Despite a very challenging market context for fund flows, across
the year we saw net flows into the fund range of £0.3 billion,
driven largely by the fund launches. HL Funds’ AUM at the
end of 2023 was £8.7 billion.
Revenues on HL Funds were down 10.0% to £54.3m (2022:
£60.3m). The main driver of this was average funds under
management being down 5% versus last year and lower
margin, largely as a result of the launch of new, lower cost
funds delivered in the year. The margin on HL Funds has
reduced to 65bps (2022: 69bps) accordingly.
HL Funds are a key part of our strategy and we continue to
launch further funds across FY24, including a Global Corporate
Bond fund that launched in July 2023. This will continue to
improve the overall proposition and competitiveness of our
own investment funds and will continue to bring net inflows.
The margin for 2024 is therefore expected to reduce and be
in the range of 55bps to 60bps.
Active Savings
Revenue from Active Savings has grown significantly in the year
to £8.7 million (2022: £1.8m) driven by the changes in the base
rate and the increase in AUA. The average margin throughout
the year was 14bps (2022: 5bps).
We have continued with the increased marketing of Active
Savings from the end of the last financial year and we have
subsequently seen strong flows across the period totalling
£3.2 billion (2022: £1.5bn). As at 30 June 2023 the AUA was
£7.8 billion (2022: £4.6bn) and over 175,000 clients now have
an Active Savings account.
Looking forward, we will continue our focus on growing
the Active Savings service through adding additional partner
banks and improving functionality, particularly within our app.
Our revenue margin for the next financial year is expected
to be in the range of 15bps to 20bps.
Other
Other revenues comprise advisory fees and ancillary services,
such as annuity broking and distribution of VCTs. The amount
has declined year-on-year, with the largest movements seen
in distribution income in respect of third party services, where
lower investor confidence for trading services has been partially
offset by increased revenues from Annuity arrangement fees,
due to the increase in rates available for these products.
Ongoing revenue
Transactional revenue
Total revenue
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
612.6
122.5
735.1
414.1
168.9
583.0
The Group’s business model offers clients a broad range of
asset classes to suit their needs in differing market environments
and as such, benefits from a diversified revenue stream.
The Group’s revenues are largely ongoing in nature, as shown
in the table above. The proportion of ongoing revenues has
increased to 83% in the period (2022: 71%) as the transactional
stockbroking commission decreased versus last year and the
net interest income increased significantly as the base rate of
interest increased. Ongoing revenue is primarily comprised of
platform fees on funds and equities, fund management fees,
net interest income and ongoing advisory fees. This increased
by 48% to £612.6 million (2022: £414.1m) driven by improved
net interest margin from the higher interest rates earned,
which more than offset lower platform fees and management
fees from lower average AUA levels.
Transactional revenue primarily comprises stockbroking
commission and advisory event-driven fees. This decreased
by 27% to £122.5 million (2022: £168.9m) reflecting the 26%
decrease in client-driven equity dealing volumes.
Hargreaves Lansdown
Report and Financial Statements 2023
Underlying operating costs*
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
Underlying
cost
Underlying
cost
People costs*
Activity costs*
Technology costs*
Support costs*
Underlying costs (pre-FSCS)
Total FSCS levy
167.9
45.5
38.8
56.3
308.5
6.1
Underlying operating costs**
314.6
144.2
50.4
28.7
49.3
272.6
12.1
284.7
* Definitions have been amended and are shown in the Glossary of Alternative Financial
Performance Measures on page 184. The amendment has been made to align to the
way that the Board discusses matters internally.
** Underlying operating costs exclude strategic investment costs (including dual running
costs) of £36.1 million (FY22: £28.3m). See the Glossary of Alternative Performance
Measures on page 184 for the full definition.
Underlying operating costs
Underlying operating costs increased by 10.5% to £314.6 million
(2022: £284.7m) reflecting wage and cost inflation, annualisation
of headcount growth, increased technology spend, offset
by lower volume driven Activity costs and a reduction in
the FSCS levy.
People costs
People costs increased 16% to £167.9 million (2022: £144.2m)
as we invested to support our colleagues through the course
of the year. Our pay award for the year was an average of
5% and we have made further changes to colleague pay.
Given the economic backdrop, we have reset junior colleagues
compensation, providing a higher level of guaranteed earnings
throughout the year and we have seen additional wage inflation
in specific functions, addressing skill scarcity and retention.
In addition we made a £1.1m one-off support payment for
colleagues to help offset the impact of inflation.
Our headcount remained flat during the first half of the year,
with targeted additions made in the second half of the year
in our Service and Digital teams to support increased client
contact and improving our systems and security respectively.
30
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
OPERATING AND FINANCIAL REVIEW
CONTINUED
The impact of the annualisation of 2022 headcount increases
was also felt in the year and contributed 3% to the increase in
the current year.
Activity
Activity costs comprise marketing costs, dealing-related costs,
and payment costs for client cash transferred onto the platform.
Overall activity costs have reduced by £4.9 million during the
period reflecting the lower dealing volumes, higher payment
volumes driven by Active Savings and £5 million cost savings
achieved through renegotiation of third-party dealing contracts.
Payment costs have increased in line with the level of cash
added to the platform. In Q4, we introduced Pay by Bank
capabilities to those clients using Active Savings to make it
easier to transfer funds onto the platform whilst significantly
reducing the associated transaction cost. We have seen
encouraging take up so far and will be rolling out to all clients
during next year. Marketing costs, including client acquisition,
client engagement and brand awareness, have remained stable
year-on-year as we have continued to invest to drive awareness
of our breadth of savings and investment solutions, particularly
in the run up to tax year end this year.
Technology
Technology costs increased to £38.8 million (2022: £28.7m)
driven by software support fees and service subscriptions as
we build out our digital capability and transfer our systems to
the Cloud, and improving the security of our IT environment.
This requires the use of more third-party software, leading to an
increase in licence and subscription costs throughout the year.
Support
Support costs, which include legal and professional fees,
office running costs, depreciation and amortisation increased
to £56.3 million (2022: £49.3m). Including the impact of
higher energy costs and a £1.8 million one off increase in
the dilapidations provision, office running costs account
for £3.5 million of this increase. Insurance costs and professional
fees have increased as have travel expenses as staff returned to
more normalised working patterns.
The Financial Services Compensation Scheme (FSCS) levy run
by the FCA decreased to £6.1 million (2022: £12.1m), due to a
scheme surplus from the prior year, which reduced the amount
the FCA needed to raise for the current year. The FSCS is the
compensation scheme of last resort for customers of authorised
financial services firms. At present, we expect that the levy cost
next year will return to being in line with the prior year and as a
result, expect to see Underlying cost growth of 9% – 11% for the
next financial year.
Strategic Investment Costs
(including Dual Running Costs)
Total strategic spend in the year was £51.4 million, of which
£36.1 million has been expensed and £15.3 million has been
capitalised in line with our accounting policy. As the programme
scales up in both overall activity and individual project scale, we
expect our spend to increase further next year. Spend primarily
comprises staff (including contractor) costs and associated
professional fees, associated compliance, infrastructure and
support costs. With our strategic investment programme now
well underway, the strategic investment costs incurred in the
period are in addition to the business as usual, or underlying,
costs of the business.
We have previously presented strategic investment costs and
dual running costs as separate measures for the purpose of
reporting our underlying costs. Through review, we determined
that the use of a further Alternative Performance Measure
provides no additional clarity or insight to readers or users of
the financial statements regarding our approach to our Strategic
Investment Programme. As such, we have reverted to using
strategic investment cost as a single measure.
Profit before tax
During the year, £19.0 million of Finance Income resulted from
term deposits of corporate cash being placed at higher interest
rates. Finance costs comprise the undrawn cost of the Group’s
Revolving Credit Facility and the interest incurred on the
Group’s leases.
On an underlying basis, profit before tax increased by 47%
to £438.8 million (2022: £297.5m). On a statutory basis profit
before tax increased by 50% to £402.7 million (2022: £269.2m).
Tax
The effective tax rate for the period was 19.7% (2022: 19.9%).
This is despite the higher rate of tax in effect from April 2023
and its impact on the Group in the year. This was largely driven
by reclaims on our prior year submissions for R&D credits.
The Group’s tax strategy is published on our website at
http://www.hl.co.uk
Earnings per share
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
Operating profit
Finance and other income
Finance costs
Profit before tax
Tax
Profit after tax
Underlying profit before tax*
Tax on underlying profit*
Underlying profit after tax*
Weighted average number
of shares for the calculation
of diluted EPS
Diluted EPS (pence per share)
Underlying diluted EPS
(pence per share)*
384.4
19.0
(0.7)
402.7
(79.0)
323.7
438.8
(86.1)
352.7
474.6
68.2
74.3
270.0
–
(0.8)
269.2
(53.4)
215.8
297.5
(59.0)
238.5
474.5
45.6
50.4
* Underlying profit before tax, Tax on underlying profit before tax, Underlying profit
after tax and Underlying diluted EPS for the year exclude strategic investment costs
(including dual running costs) of £36.1 million (2022: £28.3m). See the Glossary
of Alternative Performance Measures on page 184 for the full definitions.
Hargreaves Lansdown
Report and Financial Statements 2023
31
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
OPERATING AND FINANCIAL REVIEW
CONTINUED
Diluted EPS increased by 50% from 45.6 pence to 68.2 pence,
in line with the Group’s increase in profits. The Group’s basic
EPS was 68.3 pence, compared with 45.6 pence in 2022.
Capital
Underlying diluted EPS increased by 48% from 50.4 pence to
74.3 pence. (See Glossary of Alternative Performance Measures
on page 184 for the full definition). The Group’s underlying basic
EPS was 74.4 pence, compared with 50.4 pence in 2022.
Capital and liquidity management
Hargreaves Lansdown looks to create long-term value for
shareholders by balancing delivery of profit growth, capital
appreciation and an attractive dividend stream to shareholders
with the need to invest in the business to maintain a broad
savings and investment offering and high service standards
for our clients.
The Group seeks to maintain a strong net cash position and
a robust balance sheet with sufficient capital and liquidity to
fund ongoing trading and future growth. The Group’s net cash
position at 30 June 2023 was £503.3 million (2022: £508.0m).
Cash generated from operations more than offset the payments
of the 2022, final ordinary dividend and the 2023 interim
dividend. This includes cash on longer-term deposit and
is before funding the 2023 final dividend of £136.6 million.
The Group has a Revolving Credit Facility agreement with
Barclays Bank to provide access to a further £75 million
of liquidity. This is undrawn and was put in place to further
strengthen the Group’s liquidity position and increase our
cash management flexibility. The Group also funds a share
purchase programme to manage the impact of dilution from
operating our share-based compensation schemes.
The healthy net cash position provides both a source of
competitive advantage and support to our client offering.
It provides security to our clients and allows us to provide
them with an excellent service, for example through using
surplus liquidity to allow same day switching between
products that have mismatched settlement dates.
Shareholder funds
Less: goodwill, intangibles
and other deductions
Tangible capital
Less: provision for dividend
Qualifying regulatory capital
Less: estimated capital
requirement
Estimated capital surplus
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
709.7
575.1
(54.7)
655.0
(136.6)
518.4
(248.3)
270.1
(41.0)
534.1
(130.2)
403.9
(219.1)
184.8
Total attributable shareholders’ equity, as at 30 June 2023,
made up of share capital, share premium, retained earnings
and other reserves increased to £709.7 million (2022: £575.1m)
due to the increased profit in the year. Having made appropriate
deductions as shown in the table above, estimated surplus
capital amounts to £270 million.
HL plc has four subsidiary companies authorised and regulated
by the FCA. The FCA’s Investment Firm Prudential Regime (IFPR)
applies to the Group and HL completes this assessment through
the Group Internal Capital Adequacy and Risk Assessment
(ICARA) processes. Our assessment of HL’s capital requirements
takes account of the regulatory requirements.
Consistent with the IFPR requirements, HLAM is specifically
required to disclose regulatory capital information; this is
available on the Group’s website at https://www.hl.co.uk/
investor-relations.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Dividend
Dividend (pence per share)
Interim dividend paid
Final dividend declared
Total dividend
2023
12.70p
28.80p
41.50p
2022
12.26p
27.44p
39.70p
The Board has declared an increase in the total ordinary
dividend of 4.5% taking the ordinary dividend per share to
41.5 pence (2022: 39.7 pence per share of ordinary dividend).
The ordinary dividend is made up of an interim dividend
of 12.70 pence per share that was paid on 31 March 2023
(2022: 12.26 pence per share) and a final ordinary dividend of
28.80 pence per share (2022: 27.44 pence per share). Subject
to shareholder approval of the final ordinary dividend at the
2023 AGM, the final dividend will be paid on 15 December 2023
to all shareholders on the register at the close of business
on 17 November 2023.
In terms of capital allocation, our priority continues to be to
ensure our robust financial health, maintaining a meaningful
capital surplus over the regulatory minimum. The Board has
begun discussion regarding the overall approach to capital
allocation acknowledging that we are currently in a period
of investment and the importance of shareholder return.
As a result and subject to market conditions and the Group’s
growth, investment and regulatory capital requirements,
we expect to continue to grow the ordinary dividend at least
4% in the next financial year.
Amy Stirling
Chief Financial Officer
18 September 2023
Hargreaves Lansdown
Report and Financial Statements 2023
32
CORPORATE RESPONSIBILITY
INTRODUCTION
CORPORATE
RESPONSIBILITY
Our Approach
As a FTSE 100 company
trusted with £134 billion
on behalf of over 1.8 million
clients, we recognise that
the way in which we do
business will have a
significant impact on our
clients, our colleagues,
the environment and
our community.
We strive to integrate social and environmental
considerations into our operations with
a strong corporate governance underpin,
to ensure more sustainable management
of our business model and development
with a long-term view. This is in addition
to the responsibility we have to manage
our wider environmental and social footprint.
We are committed to aligning to the global
goals of the Paris agreement and want
to make it easy for all our stakeholders to
understand the work we’re doing and how
we’re measuring our performance – this is
why we will be reporting in line with the
Task Force on Climate-related Financial
Disclosures (TCFD).
We are committed to achieving net zero
emissions no later than 2050, and in 2023
we continued to develop our approach to this.
We refined our commitments in line with our
transition pathway, providing more details on
Financed Emissions for our Fund Management
operations, and built explicit climate change-
focused objectives into our business-wide
strategic key performance indicators.
Our strategy has been informed by the UN
Sustainable Development Goals (UNSDGs),
as set out in the Responsible Business
section of the HL website.
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Aims of our
Corporate
Responsibility
Approach
1
2
3
Support our local
community and help
build financial resilience
across the UK.
Make HL a great
place to work, where
colleagues have equal
opportunities and can
be their true selves.
Embed ESG
considerations throughout
our engagement among
our colleagues, clients
and wider stakeholders.
4
Strive to align with
the goals of the Paris
Agreement to limit
global warming to 1.5ᵒC
and achieve net zero
emissions no later
than 2050.
5
Embed climate
considerations
into our investment
management and
stewardship activities.
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
33
CORPORATE RESPONSIBILITY
CORPORATE RESPONSIBILITY CONTINUED
We are proud of the progress we have made
but are very aware that there is more to do.
We have set out our Corporate Responsibility
Approach, which breaks down our areas of
influence into four categories.
We share certain responsibilities with our peers
and other companies of our size and influence
– all companies should positively contribute to
society as a Responsible Business and foster
an inclusive culture and support colleagues as
a Responsible Employer. Above and beyond
this, as the UK’s largest digital wealth
management service, we have a responsibility
to support our growing client base as a
Responsible Savings and Investment Provider
and to manage money on behalf of investors
as a Responsible Fund Manager.
Hargreaves Lansdown
Report and Financial Statements 2023
Our Corporate
Responsibility
Approach
Responsible savings
and investment provider
Our efforts to ensure that we
enable clients to get the right
outcomes, providing the insight
they need to save and invest in
line with their values
Page 35
Responsible
business
Our actions to support the
local community and build
financial resilience across our
stakeholders
Page 37
Responsible
fund manager
Our focus on ensuring that
we manage money in a
responsible way to ensure
sustainable long-term returns
for clients and society
Page 36
Responsible
employer
Our strategy to make HL
the best place to work for
our colleagues, ensuring
we build an inclusive and
diverse culture for all
Page 40
34
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
RESPONSIBLE SAVINGS AND INVESTMENT PROVIDER
RESPONSIBLE SAVINGS
AND INVESTMENT PROVIDER
Client Proposition
We have a broad proposition which supports
clients in better managing their financial health
and wealth across their lifetime and helps
people develop their understanding of savings
and investments through our expert content
and research.
Last year, we published over 1,000 pieces
of content, analysis and research online, and
our Better Investors programme, which uses
the data from our 1.8 million clients and the
experience we’ve gathered over more than
40 years, provided over 3 million tailored emails
to clients, educating them and driving positive
action on things like diversification and risk.
You can find out more about how we’ve
developed our proposition on pages 22 to 26.
Consumer Duty
At HL, we have always put client outcomes
at the heart of what we do, and this year,
we have extended this to prepare for the
implementation date of the FCA’s Consumer
Duty. We have undertaken a suitability review
of our products and rolled out our readiness
plan to ensure colleagues were aware of what
was required from them ahead of 31 July 2023.
ESG Analysis and Research
We now have a dedicated ESG Analysis
team, within our broader investment research
function, who share insight on responsible
investing with clients and work with the wider
investment team to integrate ESG processes
in their analysis.
All our fund and equity research notes
now have a dedicated ESG analysis section,
to ensure clients are aware of the ESG risks
and opportunities that come with their
investments. We also regularly include a
segment of ESG analysis in HL’s fortnightly
Switch Your Money On podcast.
We continue to strengthen our ESG
requirements as part of our Wealth Shortlist
research, for all funds included on the shortlist
meeting our minimum ESG requirements,
as outlined in our ESG Investment Policy.
The insight provided through our Responsible
Investment Hub on our website also continues
to evolve, including educational videos and
content, fund ideas and news and insight.
Financially Fearless
As we develop our content and insight to
support a broader audience and make investing
accessible to all, we relaunched Financially
Fearless, an initiative designed to empower
women at every stage of their financial journey,
build financial resilience and provide practical
paths to financial independence.
We have created a new web section, which
features weekly content from our ambassadors,
a powerful video and daily updates. We also
work alongside our HL Workplace team to
increase the reach of the campaign and have
run monthly online and in-person events with
hundreds of attendees.
Accessibility
HL’s goal is to help everyone save and invest
with confidence, regardless of their accessibility
needs. This year, we took major steps towards
making HL accessible for all, including
establishing a design system which houses
web components and brand guidelines with
accessibility built in, reviewed our colour
We enable clients to get the
right outcomes, providing
the insight they need to
save and invest in line with
their values.
Our ESG Investment Policy is
available on our Responsible
Investment Hub
www.hl.co.uk/funds/
responsible-investment
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
combinations, changed our font and formed
a strategic partnership with an expert third
party to help us scale accessibility across
the business.
Cyber Security
As an online platform, we hold significant
amounts of data relating to our clients,
products and services. We recognise that
protecting this information and safeguarding
our clients is critical and, therefore, have built
out significant cyber security capability,
processes and controls to ensure resilience
as we scale.
Our security processes are aligned with
industry best practice and with ISO 27001
and we conduct regular internal security audits,
vulnerability assessments and security testing.
We are continually evolving and enhancing our
approach to cyber security as the external
threat-landscape evolves and deliver regular
cyber security training and awareness-raising
initiatives to colleagues, who are a key line of
our defence.
35
CORPORATE RESPONSIBILITY
RESPONSIBLE FUND MANAGER
RESPONSIBLE FUND MANAGER
ESG Investment Policy and
Stewardship and Engagement Policy
In 2023, we launched our new ESG Investment
Policy and our Stewardship and Engagement
Policy. This is a meaningful step in enhancing
our responsible processes and controls in our
fund management approach.
Our ESG Investment Policy outlines the
ESG-integrated criteria within which our fund
managers invest. This includes, for the first
time, our exclusions screening across HL Select
Funds and the segregated mandates through
which we manage the HL Multi-Manager and HL
Building Block funds. We will not invest in firms
associated with controversial weapons, who are
a persistent violator of the UN Global Compact,
or make more than 20% of their revenue from
thermal coal or oil sands. We additionally
require groups to be a UNPRI signatory and
to have pledged net zero targets for their direct
emissions (Scope 1 and Scope 2) or be working
towards committing within a two-year period.
We are pleased that most groups we invest
with already meet these expectations.
Our Stewardship and Engagement Policy
strengthens our approach and practice around
engaging with the companies and fund groups
we invest with to influence their responsible
policies and behaviours to the benefit of
long-term investors. The introduction of our
dedicated ESG Analysis team this year has
enabled us to build out our engagement
approach, including joining Climate Action 100.
The outputs of our efforts can be found in our
Engagement Report published on our website.
Financed Emissions
Another area of focus has been on building
our understanding of the Scope 3 financed
emissions (category 15) associated with
our portfolio of HL funds.
We are reporting on this for the first time
this year and we will continue to improve
our reporting on this area.
We have begun work to establish our net
zero transition plan for our Scope 3 financed
emissions, including targets for both 2050
and 2030. The table below outlines two core
carbon metrics for our investment portfolio,
recommended by the Task Force on Climate
related Financial Disclosure (TCFD). While
standards are still emerging, we believe
investors should consider both metrics for
decision-making including the WACI 2023
93.88 (2022: 106.72).
HL Fund Managers TCFD
Next financial year, HL Fund Managers Limited
will complete entity level reporting under TCFD,
setting out how we take climate-related matters
into account in managing and administering
investments of behalf of our clients.
Core portfolio-level metrics
Total carbon emissions
Unit
tCO2e
Enterprise Value Calculation
Market Value Calculation
2023
2022
2023
2022
416,403.86
464,763.30
734,190.53
767,355.01
Carbon footprint
tCO2e/$m invested
37.77
49.66
66.59
81.99
Note:
When calculating our financed emissions, we use Emission Data (tCO2e) provided by a third party. These are based on information made available by third parties, subject to continuous change and therefore are
not warranted as to their merchantability, completeness, accuracy, up-to-datedness or fitness for a particular purpose. In cases where a company does not report their emissions, an estimation model is used.
The data will capture equity securities only, cash and bonds have been excluded for our calculations. We do not consider equities with a nil carbon intensity number for our Market and Enterprise values, we
reweight everything to 100% (which equates to a 1.25 gross up) to more accurately calculate the emissions of our managed products.
Definitions
Total carbon emissions are the absolute greenhouse gas (GHG) emissions associated with the portfolio. Scope 1 and Scope 2 GHG emissions are allocated to investors based on an equity ownership approach.
Carbon footprint is the total carbon emissions for the portfolio normalised by the market value of the portfolio.
Weighted average carbon intensity (WACI) is the portfolio’s exposure to carbon-intensive companies, relative to revenue. Scope 1 and Scope 2 GHG emissions are allocated based on portfolio weights (the current
value of the investment relative to the current portfolio value).
Market Value calculation values a company based on the value of outstanding shares in the stock market.
Enterprise Value calculation values a company based on both the equity and debt value of a company excluding any cash.
36
We manage money in a
responsible way to ensure
sustainable long-term
returns for clients and
society.
Please visit our website
www.hl.co.uk/funds/
responsible-investment
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
RESPONSIBLE BUSINESS
RESPONSIBLE BUSINESS
Financial Resilience and Education
HL’s Savings and Resilience Barometer, created
in collaboration with Oxford Economics, pools
data from several big official sets, including
from the ONS and the FCA, and analyses the
financial resilience of households across the
nation against our 5 To Thrive pillars.
These pillars are:
1. Control your debt
2. Protect you and your family
3. Save a penny for a rainy day
4. Plan for later life
5. Invest to make more of your money
In July, we published our latest half year
Barometer report – the outputs of this work
allow HL to shine a light on the need for
policymakers to think holistically about
financial resilience and helps us to better
design products for clients.
We also recognise the responsibility we have
to support our community, and as a company
founded and based in Bristol, we have focused
our financial resilience and education initiatives
on the City and the Southwest area.
We support the local
community and build
financial resilience across
our stakeholders.
More information can be found at www.hl.co.uk/features/5-to-thrive
and our Saving and Resilience Comparison Tool can be found here:
www.hl.co.uk/features/5-to-thrive/savings-and-resilience-comparison-tool
Hargreaves Lansdown
Report and Financial Statements 2023
For 2023, we realigned the
Foundation’s aims to match HL’s
wider focus on financial resilience
This resulted in two key focus areas
for donations in the year.
1. We have formed a three-year strategic
partnership with the Just Finance
Foundation (JFF), a national charity
working with schools, families and
changemakers to build financially
resilient communities where everyone
has an equal opportunity to thrive.
2. We have aligned our Charity of the Year
selection with our aim to build financial
resilience, and our colleagues chose
FearLess, a charity working to break
the cycle of domestic abuse across
the Southwest, as our charity to
support for 2023.
Community Impact, Volunteering
and Partnerships
The HL Volunteering Scheme gives colleagues
two paid working days per calendar year to
offer their time, skills and experience to good
causes – in 2023, colleagues volunteered
over 2,300 hours.
We run several volunteering schemes focused
on building social mobility and improving
resilience, support local organisations such
as Fareshare and the Bristol Sport Foundation,
and work with sustainability-focused
organisations, like Avon Needs Trees.
37
In May, HL launched the Bristol Financial
Resilience Action Group, a free initiative
bringing together 19 employers with over
25,000 employees from a variety of industries
across the city, to provide them with the tools
they need to support their employees and work
towards making Bristol the most financially
resilient city in the UK.
HL Foundation
The HL Foundation is HL’s charitable arm
which acts as a focal point for our colleagues’
charitable engagement.
The HL Foundation organises a series of
fundraising events to raise money for our
Charity of the Year, as voted for each year
by colleagues, and supports humanitarian
crises, such as the earthquake felt in Turkey
and Syria this year.
Alongside colleague fundraising, the HL
Foundation receives donations through both
HL plc and payroll giving. This resulted in our
two 2022 Charities of the Year, 1625
Independent People and Bristol Mind each
receiving £90,000.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
RESPONSIBLE BUSINESS CONTINUED
Measuring our emissions
Effectively measuring our annual emissions
profile and setting relevant targets is critical
to ensuring we are on track to deliver our ESG
strategy and that mitigations are effectively
in place to manage climate risks.
2023 Performance: We have continued to
expand our reporting of carbon emissions,
including outlining the Scope 3 financed
emissions associated with the investments
made by our investment business, HLFM,
for the first time.
The Group’s Scope 1, Scope 2 and our Scope 3
emissions (Business travel and Employee
commuting) for the year to 30 June 2023 are
set out in the table below. Scope 1 emissions
relate to direct greenhouse gas (GHG) emissions
from sources that are owned or controlled by
the Group. Scope 2 emissions are GHG
emissions associated with the generation of
purchased electricity consumed by the Group.
This year we are also reporting our Scope 2
emissions on a market basis, alongside the
location basis we have used in prior reporting,
to highlight the progress we have made
in renewably sourcing our electricity in
our core offices.
Our Scope 3 emissions include two key
operational emissions categories relating
to business travel and employee commuting,
alongside our financed emissions included
in our Responsible Fund Manager section.
We have seen an increase in all areas of
business travel and employee commuting
as business practise returns to normal after
COVID. Although we do not consider our
emissions high in this area, we will continue
to actively monitor and explore methods to
reduce them where possible.
Our employee commuting figure is calculated
using Travel West travel to work survey data
extrapolated to cover our average FTE. We
have restated FY22 using the same approach.
To provide an intensity ratio for our emissions
disclosure, we have calculated our greenhouse
emissions per employee. The Directors believe
that the number of employees is the best
indicator for a Group of this size and nature
for the purposes of this disclosure. The number
of employees used is the average number
of full-time equivalent employees over the
measurement period. For the year ending
30 June 2023, our emissions per average
employee was 0.49 tonnes, down 31% on the
prior year (2022: 0.71). The average number of
employees for the year was 1,857 (2022: 1,984).
Scope Description
1
2
Emissions from gas, refrigerants and owned vehicles
Location based
Electricity emissions using geographical locations
Market based
Electricity emissions using purchased electricity factor
Tonnes of CO2e per avg full time equivalent employee
Energy used KwH, (market based)
3
Business travel
Employee commuting
Tonnes of CO2e
Current reporting
year 2022-2023
Comparison year
2021-2022
% Change
876.8
490.4
24.9
0.49
942.1
476.1
476.1
0.71
1,640,741
3,851,381
148.9
512.8
29.9
439.3
-7%
3%
-95%
-31%
-57%
398%
17%
Note
In accordance with the GHG protocol guidelines, and in absence of appropriate renewable sourcing in 2021-22 our figures for Scope 2 market-based is equal to our location-based emissions.
Definitions
Under the Greenhouse Gas Protocol, emissions are categorised as:
Scope 1: Direct emissions associated with our offices. Calculated by taking the invoice consumption data (in KwH) from our Gas supplier and refrigerant gas data multiplied by the UK Government GHG
conversion factors.
Scope 2: Emissions produced via the electricity we purchase. On a location basis this is calculated by taking the invoice consumption data (in KwH) from our Electricity supplier multiplied by the UK
Government GHG conversion factors. On a market basis we discount electricity used that we have Renewable Energy Guarantees of Origin (REGO) certificates to confirm the supply is renewably sourced.
This is currently the case for our two main UK sites.
Scope 3: Emissions produced indirectly in our value chain. We currently report three categories of Scope 3 emissions: business travel (category 6), employee commuting (category 7) and financed emissions
(category 15). Business travel is calculated by taking colleague expense claim data multiplied by emission factor data. Employee commuting is calculated using Travel West ‘travel to work survey data’ and
average distances travelled, multiplied by emission factor data. The percentage of colleagues working from home is also factored in.
Market based emissions reflect the emissions from the electricity that companies have chosen to purchase, often through contracts or
instruments like Renewable Energy Certificates (RECs)12345.
Hargreaves Lansdown
Report and Financial Statements 2023
38
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
RESPONSIBLE BUSINESS CONTINUED
Tax Strategy
Integrity and good conduct are central to our
culture, and this means we aim to comply with
both the spirit and the letter of the law and are
committed to conducting our tax affairs in
a clear, fair and transparent way.
Taxes provide public revenues for government
to meet economic and social objectives. Paying
and collecting taxes is an important part of our
role as a business operating responsibly within,
and contributing to, society. We aim to comply
with all our tax filing, tax reporting and tax
payment obligations.
We seek to maintain an open, honest
and positive working relationship with
tax authorities, and we do not undertake
aggressive tax planning. Our corporation
tax and employer’s National Insurance paid
in respect of the year ended 30 June 2023
was £94.6 million (2022: £61.6m). In addition,
we pay other taxes such as VAT, stamp duty
and business rates.
Our full tax strategy is available at:
www.hl.co.uk/about-us/tax-strategy
Human Rights and Modern Slavery
We are committed to being a responsible
business and upholding Human Rights.
Our Human Rights Policy, which we updated
and published on our website in 2023,
supports the key principles established in
The Universal Declaration of Human Rights,
The International Covenant on Civil and
Political Rights, The International Covenant on
Economic, Social and Cultural Rights and The
International Labour Organization’s Declaration
on Fundamental Principles and Rights at Work.
Hargreaves Lansdown
Report and Financial Statements 2023
Anti-bribery and corruption
HL maintains a full suite of policies and
procedures to guard against bribery and
corruption. This includes an Anti-Bribery Policy,
outlining the offences, responsibilities of all
colleagues and clear reporting procedures; a
Whistleblowing policy and process; Anti-Money
Laundering and Market Abuse policies; and
procedures for dealing with, making and
accepting gifts and hospitality.
All colleagues undertake bespoke training
programmes, at least annually, for all these
areas, in addition to having access to online
guidance and procedures aiding awareness.
Colleagues can access policy and guidance
statements via the company intranet and
these procedures are reviewed and updated
on a periodic basis by the Senior Managers
responsible for them.
Please visit our website –
www.hl.co.uk/corporate-social-
responsibility/our-policies
39
We continue to embed respect for human
rights in all our operations and aim to ensure
our business operations are free from modern
slavery, exploitation and discrimination.
There have been no recorded incidences
of modern slavery in our supply chain, but
we are not complacent. We have created a
Supplier Code of Conduct that is shared with
all new suppliers when onboarding services to
Hargreaves Lansdown. The Code covers many
areas and includes a section on Human Rights
where we ask that the supplier should comply
with all internationally recognised human rights
understood, at a minimum, as those expressed
in the International Bill of Human Rights and the
principles concerning fundamental rights set
out in the International Labour Organization’s
Declaration on Fundamental Principles and
Rights at Work. Within our award-winning
platform, fund groups are subject to our
Platform Terms of Business which includes
a requirement to comply with the Modern
Slavery Act 2015. Furthermore, we are aware
of modern slavery considerations as part of
our anti-money laundering activities, as a
financial institution found to be holding the
proceeds of Modern Slavery and Human
Trafficking will be liable for money laundering
offences. We continue to be a signatory of
the United Nations Principles of Responsible
Investment and consider environmental, social
and governance factors, including slavery
and child labour, when making our investment
decisions. We have an Anti-Slavery and Human
Trafficking Policy which applies to everyone
working for us, or on our behalf in any capacity.
All colleagues are reminded of this policy
and its importance annually. It is available on
our internal intranet and referred to in posters
around the office. Whilst the Board of Directors
has overall responsibility for this policy,
it applies to every HL colleague.
Our Modern Slavery Act Statement
and Human Rights Policy are available
on our website
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
RESPONSIBLE EMPLOYER
RESPONSIBLE EMPLOYER
We make HL the best place
to work for our colleagues,
ensuring we build an
inclusive and diverse
culture for all.
We want our colleagues to have meaningful
and rewarding careers and make HL a
great place to work, develop and fulfil
career potential.
This starts with supporting our colleagues
with their financial resilience, as we do for
our clients and community – this is particularly
relevant given the current cost-of-living crisis.
In January this year, we made a standalone
support payment to over 1,600 colleagues most
impacted by the current external circumstances
and reviewed our pay balance resulting in over
700 colleagues receiving a 7% pay increase
in exchange for annual discretionary bonus,
increasing certainty over their earnings.
We made these changes to our pay balance
because of the feedback we received from
colleagues. Last year, we relaunched our
Colleague Forum to provide another way
to offer feedback and have discussions
on important topics. Other changes from
colleague feedback included updating our
family friendly policies and increasing our
company sick pay provision to help make sure
HL is an inclusive and supportive workplace
that can attract and retain the best talent.
Another focus for us was developing our
culture that has made us so successful this
far. Last year, we launched ‘The HL Way’ – HL’s
Code of Conduct – which is approved annually
by the Board. HL have always been about
driving good client outcomes and this Code
was developed with our clients front-and-
centre. We enhanced The HL Way further this
year to align it to the FCA’s Consumer Duty and
ensured all colleagues have committed to
upholding the standards and expectations
through an online learning module.
Our Commitment to Inclusion
and Diversity
Inclusion and Diversity is at the heart of
The HL Way – having an inclusive culture and
a diverse workforce leads to better outcomes
for clients, colleagues, our community and our
business. It ensures we can attract and harness
the talent we need to drive our transformation,
deliver for our clients and ensure we have
a positive societal impact.
In 2020, we set three Inclusion and
Diversity priorities:
1. Increase ethnic minority representation,
recognising the need to accelerate
progress in this area to better align
HL to the local demographic;
2. Maintain our commitment to increase
female representation and close the
gender pay gap; and
3. Increase the focus on building a culture
of inclusion.
This strategy marked a step-change in our
commitment to Inclusion and Diversity and
supported the delivery of a number of
initiatives to drive change.
Having reviewed the progress against our
action plan and the outcomes we have
delivered over the past three years, we have
now broadened our focus and ambitions to
agree three new strategic priorities:
1. Deliver on agreed representation targets
2. Broaden our diversity focus to include
plans to support:
• Colleagues with disabilities and chronic
conditions
• LGBTQ+ colleagues
• Social mobility
• Colleagues across all age groups
3. Intensify our focus on inclusion as
a core expectation of life at HL
We believe in managing our commitment
to Inclusion and Diversity in the same way
as we approach any other business objective,
by ensuring accountability for progress.
This is why we have a number of internal
and external commitments and targets that
are built into our strategic KPIs and Business
Performance Metrics.
In 2020, we agreed targets for senior and
mid-level female, ethnic minority groups
and Black representation to be achieved
by December 2025. Progress against these
targets is tracked via a quarterly dashboard
which is shared with the Executive Committee,
as we know that executive buy-in and
accountability is crucial to achieving
sustainable change.
More information about our
Inclusion and Diversity approach
and initiatives can be found at:
www.hl.co.uk/corporate-social-
responsibility/our-people
Hargreaves Lansdown
Report and Financial Statements 2023
40
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
RESPONSIBLE EMPLOYER CONTINUED
“Our Median Gender Pay
Gap has significantly
narrowed over time,
having moved from 20.4%
in 2018 to 13.6% in 2022.
Female representation
We continue to make progress with regard
to increasing the proportion of women at
HL and aspire to hire more, promote more
and lose fewer women. Our specific focus
is on increasing the representation of women
at mid-level and senior levels, building a
sustainable pipeline to create long-term
change. Whilst we are currently on track
to achieve our targets, there is more to
do to ensure continued progress.
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Hargreaves Lansdown
Report and Financial Statements 2023
Internal commitments
Our 2025 targets for senior and mid-level
female representation are 36-40% for both
groups. As at 30 June 2023, we are at 35.4%
for senior female representation and 35.8% for
mid-level female representation, both of which
are on track to meet our 2025 target range.
External commitments
We are proud signatories of the Women in
Finance Charter where we report annually on
progress against our target for senior female
representation of 36-40% by 2025. In the HM
Treasury Women in Finance Charter Annual
Review 2022, we reported 31.6% of senior
management roles were held by women.
Since reporting, this figure has risen to
35.4% as noted above.
We have exceeded the FTSE Women Leaders
target of 40% women on Boards and are proud
to have a female Chair, Chief Financial Officer,
Senior Independent Director and a majority of
female Board Committee Chairs. In our 2022
submission, reflecting data as at 31 October
2022, we reported that women made up
30.2% of the Executive Committee and its
direct reports. As at June 2023, that has
increased to 35.6%.
Our 2023 Gender Pay Gap (GPG) report, which
shares data from 5 April 2022, shows that we
have reduced our Median GPG, Mean Bonus
Gap and Median Bonus Gap since the last
submission. Our Mean GPG has increased.
Our Median GPG has significantly narrowed
over time, having moved from 20.4% in 2018
to 13.6% in 2022. The Mean Bonus Gap has
reduced by 26.8% since 2018.
These figures reflect the increases in
senior female representation, in particular
at Board and senior management level.
Our focus continues to be ensuring that
the gender balance reflected at these levels
is replicated deeper in the organisation
to drive long-term change.
Ethnic minority representation
Since the launch of our Inclusion and
Diversity strategy in 2020, we have focused
on increasing the ethnic diversity of our
workforce and supporting the progression
and development of ethnic minority groups
(colleagues from Black, Asian and minority
ethnicities).
Internal commitments
We have agreed 2025 targets for senior
and mid-level colleagues from ethnic
minority groups and also a specific target
for Black representation.
• Our target for senior ethnic minority
representation is 6-10%. As at 30 June
2023, we are on track at 6.7%.
• Our target for mid-level ethnic minority
representation is 8-12%. As at 30 June
2023 we are on track at 10.4%.
• Our target for Black representation is 2-4%
across both senior and mid-level colleagues.
As of 30 June we are on track for both, at
1.1% for senior Black representation and
1.6% for mid level Black representation.
Full details of our Gender Pay
Gap report can be found at
www.hl.co.uk/corporate-social-
responsibility/our-pay-gaps
41
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
RESPONSIBLE EMPLOYER CONTINUED
“
This year, we voluntarily
published our Ethnicity
Pay Gap for the first time –
we believe that pay gap
transparency helps drive
accountability and progress.
External commitments
The Board continues to meet the Parker review
recommendation to have at least one Director
from an ethnic minority background and we are
currently modelling targets to apply to the
Executive Committee and their direct reports,
as recommended by the review, alongside our
senior management ethnic minority target
which is already in place.
This year, we voluntarily published our Ethnicity
Pay Gap (EPG) for the first time, measuring the
difference between ethnic minority (Black, Asian
and minority ethnicities) and non-ethnic minority
(White) colleagues’ earnings. We believe that
pay gap transparency helps drive accountability
and progress and is aligned to our commitment
to the Race at Work Charter. Our initial baseline
report shows we have a Median EPG of 21.2%
and a Median Ethnicity Bonus Gap of 43.1%,
which reflects the higher proportion of
colleagues of non-ethnic minority in senior and
higher paying roles. In line with the government
EPG reporting guidance, published in April 2023,
we plan to further disaggregate our data
into ethnicity categories next year, adding as
much granularity as possible, whilst ensuring
colleague privacy. Continuing to deepen our
analysis and reporting will help us to identify
inequalities and support us to narrow these
gaps in the years ahead.
Hargreaves Lansdown
Report and Financial Statements 2023
Creating connection and community
One of our strategic priorities is to intensify
our focus on inclusion as a core expectation
of life at HL. This means scaling up our training
and engagement initiatives, so colleagues
know what is expected of them and why it is
important to HL, and ensuring we have ways
to identify any barriers to inclusion.
Our Colleague Networks play a critical role
in fostering inclusion and belonging – their
purpose is to encourage inclusivity, empower
colleagues to use their voice, support network
members with signposting and raising
awareness and consult with HL to effect
change in our policies and practices. Each
network is supported by an Executive sponsor,
to ensure their activities get the visibility and
support they need to have the greatest impact.
We currently have over 600 members across
our six Colleague Networks:
• Chronic Conditions and Disabilities
• Cultural Diversity Group
• Gender Diversity Group
• Kaleidoscope (LGBTQ+)
• Sustainability
• Wellbeing
We also have Mental Health First Aiders,
sports groups and community groups,
such as Women in Tech (WIT).
Manager training has also been a focus
for this year, recognising their importance
in making HL an inclusive place to work.
A programme of mandatory inclusion training
for managers has been launched and is
equipping managers with the awareness
and skills to build inclusive teams.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Our policies and processes continue to be
reviewed to ensure they support equity and
inclusion and help us attract the broadest
pool of talent.
This year we made significant changes to our
Family Friendly policies, including increasing
maternity and adoption leave to 26 weeks
full pay and paternity leave to 6 weeks, and
reviewed our Company Sick Pay provision,
increasing this to 26 weeks full pay and
putting HL in the upper quartile of the market.
This work is part of our continuous
improvement of the colleague experience at
HL, aimed at supporting colleagues with their
financial resilience and having a positive impact
on their wellbeing at work.
Getting insight directly from colleagues is
an important pillar of inclusion. We run
regular ‘Listening Sessions’, which facilitate
different colleague groups sharing their
experiences directly with Executive Committee
members. We have also relaunched our
Reverse Mentoring programme to help senior
leaders build their understanding of a diverse
range of more junior colleagues.
Our Colleague Survey gives a snapshot of
colleague sentiment around Inclusion and
Diversity, with results of the 2023 survey
showing that 85% of colleagues feel
positive that HL values and promotes
employee diversity.
42
CORPORATE RESPONSIBILITY
RESPONSIBLE EMPLOYER CONTINUED
Our workforce
Total workforce 2023: 2,277
Total workforce 2022: 2,042
41%
Female
41%
Female
59%
Male
59%
Male
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
As at 30 June 2023
As at 30 June 2022
Board of
Directors
Other senior
management1
Total
employees
(FTE)
Board of
Directors
Other senior
management1
Total
employees
(FTE)
Female
5 (45%) 16 (28%)
927 (41%)
5 (50%) 13 (28%)
839 (41%)
Male
6 (55%) 41 (72%)
1,350 (59%) 5 (50%) 34 (72%)
1,203 (59%)
1 Other senior management is defined as an employee who has responsibility for planning, direction or controlling the activities
of the Group, or a strategically significant part of the Group, other than the plc Board of Directors and any Non-Executive
Directors of the Group’s principal operating subsidiaries.
We have simplified our approach to
performance and have aligned the
performance framework for all colleagues
to our strategy. This approach ensures all
colleagues are measured against how they
have contributed and collaborated to support
our strategic common objectives.
We believe that our colleagues should be able
to share in the success of our business and all
colleagues are eligible to sign up to our Save as
You Earn (SAYE) scheme. As at 30 June 2023,
41.4% of eligible colleagues are currently
participating in one of our existing Share
Save Schemes.
To complement our direct financial rewards,
we provide company matched pension
contributions, which includes a double matching
scheme to further encourage our colleagues
to save for their retirement, and extended life
insurance protection. HL Rewards, our flexible
benefits scheme, offers a comprehensive range
of protection, health, financial and lifestyle
benefits to ensure we provide a benefits
package that our colleagues value. This also
includes double matching any payroll giving
made by our colleagues to the HL Foundation.
Reward
Key to attracting and retaining the best
people is our approach to reward. We use
independently benchmarked pay and benefits
data to ensure we pay our colleagues fairly
for the work they do.
We believe in clear, fair and transparent pay
and reward, and our salaries go beyond our
legal obligations.
We are proud to be accredited with the Living
Wage Foundation and we apply the Real Living
Wage to all colleagues, including those on
internships, placements or apprenticeships.
It has never been more important to help our
colleagues build their financial resilience. Given
the challenging external conditions faced in the
year from the increased cost of living, we paid
a further standalone support payment to over
1,600 colleagues – the second support
payment in a 12-month period.
Following significant feedback from colleagues
through our Colleague Forum and Listening
Sessions, we understand the importance for
colleagues, particularly those in more junior
roles, to have more certainty over their
earnings. As such this year, we increased
the salaries of over 700 colleagues by 7%
in exchange for annual discretionary bonus.
This gives these colleagues certainty of an
increased salary each month rather than
waiting until the end of the year to see
what their bonus might be.
Hargreaves Lansdown
Report and Financial Statements 2023
43
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
RESPONSIBLE EMPLOYER CONTINUED
Building capability
Fast-paced technology advances have led to
significant increases in the need for digital skill
sets, with one in eight job roles in financial
services now technology-centric.
We also recognise that behaviours remain
vitally important for HL to maximise the
potential of technology, to deliver sustainable
growth through both human and digital skills.
HL’s commitment to becoming a learning
organisation has led to significant growth
of our learning infrastructure this past year:
• Partnership with LinkedIn Learning, providing
colleagues with access to a wide range
of on-demand learning;
• Launch of HL’s new management
development programme, strengthening
essential skills in managing and leading
high-performing teams; and
• Relaunch of an enhanced Mentoring
Scheme, enabling sharing of experience
and knowledge through relational learning.
We are also strengthening how we track the
progression of HL’s capability at an enterprise
level, ensuring we are shifting the dial and
equipping our colleagues to deliver the
strategy.
We have also introduced new channels, such
as Transformation Showcase events, to keep
colleagues connected to the progress we are
making against our strategy. The latest event
in June 2023 was watched by over 1,000
colleagues and was rated good or very
good by 99% of attendees.
The HL Colleague Forum was relaunched
in October 2022 with a focus on being
business-led. Colleagues are elected to
represent their different business areas
and the Forum is chaired by Colleague
Representatives. In addition to providing
an opportunity to consult with colleagues on
executive and wider workforce pay approach,
it provides a two-way feedback channel on
our Transformation and strategic priorities
and a route for colleagues to raise hot topics
that are relevant across the Group.
Although the new Forum is in its infancy,
it has already made significant progress
and has helped drive meaningful change –
the Forum have discussed and provided
feedback on changes to our approach to
pay for colleagues at more junior role
levels, changes to our absence management
approach, our colleague survey results and
The HL Way.
The Forum allows us to co-create People
change, keeping colleagues and clients at
the heart of what we do.
Early careers and apprenticeships
We recognise the importance of building the
next generation of skilled and motivated talent
for future leadership and expert roles and have
grown our programmes to support our strategy.
Colleague engagement and listening
In our most recent colleague survey, 80% of
colleagues gave us their view – the highest
response rate we’ve achieved since the
pandemic (Nov 2022: 75%).
We continue to support the development of
diverse talent and create opportunities for
young people in Bristol and the surrounding
area through:
• Our Graduate Schemes, Apprenticeships,
industrial placements and work experience
weeks;
• Our Strive internship scheme and our
commitment to the nationwide 10,000
Black Interns programme; and
• Partnerships with Women’s Work Lab and
Makers, offering roles to ‘graduates’ from
their programmes.
Our engagement metric improved by four
points to 68% favourable (May 2022: 64%).
While there is still significant room to improve,
this shows real progress. We also continue
to have strong scores for the strength of
our manager relationships – 78% favourable
(May 2023: 77%).
Over the course of the year, we’ve updated our
approach to engaging and communicating with
colleagues, focusing on three main audiences
key to the success of our organisation –
leaders, people managers and colleagues.
We tailor our messages and approach for
each group.
Hargreaves Lansdown
Report and Financial Statements 2023
44
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
TCFD
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES
TCFD Compliance Statement
The Task Force on Climate-related Financial Disclosures (TCFD) seeks to improve and increase
the reporting of climate-related financial information. We are pleased to present our latest report,
covering HL Plc and its operations, and how consistent we are in aligning ourselves to the
recommendations set out in the TCFD framework.
We will continue to develop our reporting year-on-year and intend to enhance the insight
we provide across each of the four areas outlined including any recommended sector
specific guidance.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
Theme
Disclosures
Progress Status
Governance 1. Describe the Boards oversight of climate-related risks and opportunities
2. Describe management’s role in assessing and managing climate-related
risks and opportunities
We have outlined how the Board oversees our ESG strategy and
climate-related risks and opportunities alongside details of how this
oversight flows through the management level ESG Taskforce.
Strategy
3. Describe the climate-related risks and opportunities the organisation
has identified over the short, medium and long term
4. Describe the impact of climate-related risks and opportunities
on the organisation’s business, strategy and financial planning
5. Describe the resilience of the organisation’s strategy, taking into
consideration different climate scenarios, including +2ᵒC or lower
Risk
Management
6. Describe the organisation’s processes for identifying and addressing
climate-related risks
7. Describe the organisation’s process for managing climate-related risks
8. Describe how processes for identifying, assessing and managing climate-
related risks are integrated into the organisation’s overall risk management
We have started to consider scenario analysis across three different
scenarios (including +2ᵒC or lower) and the climate-related risks and
opportunities across different timeframes and impact levels based on
this analysis. We are clear on the strategic actions we are taking to
address these points but need to continue to evolve this work to
provide insight on the quantitative impact alongside the qualitative.
Our process for identifying and assessing climate-related risks is
integrated into our Group-wide risk management process outlined
in the Risk management section of this report. We continue to evolve
how we manage climate-related risks through business-wide
co-operation.
50
Metrics and
Targets
9. Disclose the metrics used by the organisation to assess climate-related
risks and opportunities in line with its strategy and risk management process
10. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions
and related risks
11. Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets
We have provided our Scope 1 and Scope 2 metrics alongside
Scope 3. We have also outlined our progress against targets and
updated targets in line with our 2050 net zero ambition. We have
more to do to report our entire Scope 3 emissions profile and to
set additional short and medium-term targets across our emissions
profile to signal our progress towards our 2050 goal.
36 Financed
emissions
38 Other
emissions
51 Targets
= Recommendations we have been able to fully disclose against.
= Recommendations we have made significant progress against, and plan to enhance our disclosure further.
Hargreaves Lansdown
Report and Financial Statements 2023
45
Pages
46
77
Governance
Framework
46-49
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
TCFD CONTINUED
Governance
Our Board of Directors oversee the long-term
strategy. This includes ESG, climate change
and sustainability.
They analyse progress through bi-annual board
papers, regular focused presentations and
deep-dive sessions. This covers topics such
as the overarching ESG strategy, our approach
to risks and opportunities and how these
approaches feed into objectives. The Board
agrees the corporate objectives and approves
initiatives, such as our emissions targets,
Director objectives and our supporting
Group policies.
The Board delegates some elements of
its responsibilities to other committees and
groups. The ESG taskforce reports into the
Executive Committee and fits into HL’s wider
governance structure as detailed on page 77
of the Corporate Governance Report.
The ESG Taskforce are responsible for the
day to day execution and monitoring of our
ESG strategy. This involves ensuring key
deliverables are on track, fostering business-
wide commitment to our climate goals, and
addressing key actions as the regulatory and
climate risk landscape evolves.
We continue to evolve and embed our ESG
and climate change governance and controls.
In 2023, we have further embedded our ESG
commitments with our wider business strategy
– introducing ESG KPIs to our business-wide
performance measures and strengthening
alignment with our executive remuneration.
For more details on this please see the
Directors’ Remuneration Report.
Hargreaves Lansdown
Report and Financial Statements 2023
Strategy
Delivering our ESG strategy and enhancing
our sustainability is a priority for HL, which is
embedded across our wider business strategy,
investments, and operations. The impact of
climate change will affect all of us and across
multiple sectors of society and business –
therefore addressing this threat is directly
aligned with our purpose and our efforts to
ensure that people improve their financial
health and wealth.
Whilst we are aware that changes required to
achieve a low-carbon economy may present
some risks, we also believe that there are
opportunities for us and our clients during this
transition. We are committed to ensuring our
business operations are structured to enable
us to contribute to a low-carbon economy,
as well as providing our clients with access to
the relevant tools, information, and research to
make informed decisions on where to invest,
available on our Responsible Investment Hub.
Scenario Analysis
To assess our exposure to climate risks and
opportunities across the five key risk areas
outlined in the TCFD recommendation, we have
started to consider scenario analysis. Scenario
analysis is a process for identifying and
assessing the potential implications of a range
of plausible future states under conditions of
uncertainty. We have selected three scenarios
based on the established, and broadly used,
framework of Network for Greening the
Financial System (NGFS). Many central banks,
including the Bank of England, carry out
assessments based on NGFS scenarios.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
46
CORPORATE RESPONSIBILITY
TCFD CONTINUED
We have chosen to model three contrasting
scenarios; the first representing a smooth
and orderly transition, the second involving
a disorderly transition, and a third which
incorporates more extreme physical risks
due to a lack of climate-related policy:
• 1.4°C: Net Zero 2050 (Orderly)
• 1.6°C: Delayed Transition (Disorderly)
• 3°C+: Current Policies (Hot house world)
We view scenario analysis as an iterative
process and will look to progress this
assessment in future years, including
enhancing our quantitative assessment
of the financial impact of scenarios so
that it can further inform our strategy
and risk assessment.
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Hargreaves Lansdown
Report and Financial Statements 2023
Modelled Scenarios
High
s
k
s
i
r
n
o
i
t
i
s
n
a
r
T
Low
Disorderly
Too little, too late
Orderly
Hot house world
1.4°C
Net Zero 2050
Limits global warming
to 1.5°C through
stringent climate
policies and
innovation, reaching
global net zero CO2
emissions around
2050.
Physical risks
1.6°C
Delayed Transition
Assumes annual
emissions do not
decrease until 2030.
Strong policies are
needed to limit
warming to below 2°C.
Negative emissions
are limited.
High
3°C+
Current Policies
Assumes that only
currently implemented
policies are preserved,
leading to high
physical risks.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
47
CORPORATE RESPONSIBILITY
TCFD CONTINUED
Risks and Opportunities
We have utilised our scenario analysis to
provide base states for an assessment of
risks and opportunities driven by the changing
climate and the associated impact that will
result across the world. The risks have been
assessed across both velocity timeframe
and impact level, and each identified risk is
summarised below, including the potential
impact of these risks and our strategic
mitigations.
Each scenario and our strategic responses to
address the risks outlined above also present
opportunities for the business. Key opportunities
for the business include the following:
• By offering responsible investment solutions
we can better meet client needs and drive
new business by fulfilling changing consumer
demand for these solutions
• We could utilise more resource-efficient
technology solutions and practices to
both improve our carbon footprint but also
reduce operational costs for the business
• As markets evolve to low-carbon focused
society and business, by ensuring our
investments are aligned with our broader
net zero strategy, we have an opportunity
for minimised risks and increased returns
• By investing in mitigating climate-based
risks which affect our operations, we will
improve our resilience which in turn may
have financial benefit
If HL successfully identifies and invests in
these opportunities, it may also have a positive
impact on brand reputation as a sustainable
and responsible company, attract new
investors and potentially increase market share.
Risk
Description
Reputation
The potential harm to HL’s reputation and brand value that
may arise from stakeholders perceiving the company as being
unresponsive or insensitive to climate-related risks, failing to
align its investments with the transition to a low-carbon economy,
lacking transparency about its climate-related risks, or facing legal
or regulatory action related to its exposure to climate risks.
Market
Potential financial losses that may arise from exposure to
climate-related risks, such as changes in financial markets,
market demand, pricing or regulation and the transition to
a low-carbon economy.
Policy
and Legal
The potential financial losses that may arise from changes in
climate-related policies or regulations, such as carbon pricing
or emissions targets, or legal actions related to climate risks.
Potential impact
• Damaged brand reputation
• Loss of client trust through perceived inaction from HL
to tackle climate change
• Perception HL is unable to cater to and fulfil a shift in client
preferences
• Reduced demand for products and services from existing
and prospective clients
• Potential fines, litigation, or financial penalties
• Assets with exposure to climate-related risks may be subject to
a decrease in value
• Reduced investment returns, increased costs and decreased market
share, which could negatively impact the platform’s financial
performance and competitiveness
• If HL is unable to effectively manage its exposure to market risks,
it may face reputational harm, legal and regulatory penalties and
decreased investor confidence
• Increased compliance costs, reduced investment returns, reputational
harm and potential legal liability
• Restrictions and/or amendments to product offerings
• If HL fails to properly manage policy and legal risks, it may face legal
and regulatory penalties, decreased investor confidence and potential
loss of market share
Technology
The potential financial losses that may arise from the failure to
adapt to technological changes related to the transition to a
low-carbon economy, such as renewable energy technologies
or carbon capture and storage.
• Increased operating costs
• Decreased revenues
• Decreased security valuations
n
o
i
t
i
s
n
a
r
T
Acute
Chronic
The potential financial losses that may arise from the direct
impacts of climate-related events, such as natural disasters
or extreme weather events, on HL’s investments and operations.
The potential financial losses that may arise from the gradual
and persistent impacts of climate change, such as sea level rise
or changes in temperature and precipitation patterns, on HL’s
investments and operations.
• Longer-term changes in climate patterns such as flooding, extreme
weather and higher temperatures impacting our operations
• Increased cost to the business due to risk of flooding at our offices
or reduced employee productivity
l
i
a
c
s
y
h
P
Hargreaves Lansdown
Report and Financial Statements 2023
48
Market
Disruptive policies and the subsequent shift away from fossil
We currently have nine funds in the Responsible Investment
risk across our portfolios. Our ESG Investment Policy outlines the
fuels poses a risk to client outcomes, for example to meet
sector on the Wealth Shortlist and we launched our Responsible
requirement for all fund managers we invest with in our solutions
the 1.5°c target, a phase-down of coal usage will be a key
requirement and this in turn could impact companies and
investments exposed to coal industries. We mitigate this risk
by creating content that educates our clients on the importance
of diversifying their investments. Diversification is a key part
of building resilience into a portfolio, and we offer clients the
opportunity to save and invest in a large selection of assets.
Investment Hub to provide clients with the tools and research
to have a net zero target, or to be working towards setting one
to invest in line with their preferences. We have also launched,
within a two-year period. Our Stewardship and Engagement
or will be launching, an additional 19 new funds that are ESG
Policy outlines our core engagement themes, which include
integrated. We are aware of the risk of portfolio exposure and
climate change. We are also working with the regulator through
risk management, and are exploring tools to help identify our
various working groups, such as the Investment Association, to
transition risks and to support client decision making. Within our
push for supportive policy that will enable an orderly transition
Fund Management business, we utilise our third-party data
across the market.
provider, Sustainalytics, to bolster our understanding of climate
Risk
Strategic response
Reputation A robust and transparent climate strategy will help mitigate
the reputational impact stemming from climate inaction.
This includes ensuring any promotion of funds is accurate and
does not lead to claims of greenwashing which would have a
negative impact on reputation.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Policy
and Legal
We horizon scan for policy and legal risks associated
with climate change. We screen regulatory press releases,
consultations, and publications to spot potential changes
that could impact our operations. Through this process,
risks are assessed in terms of impact.
Technology The risk of energy scarcity is being managed through the
transition to Cloud-hosted services, such as Amazon Web
Services (AWS). Using the Cloud means fewer servers are
footprint on average. As this transition has been confirmed,
HL could expect increased energy efficiency by 2030. Coupled
with our investment in Cloud-based services is our exploratory
needed and less energy used. HL is transitioning to using AWS
work into how we can deploy artificial intelligence to enhance
systems, for which Amazon claims the AWS infrastructure is
efficiencies. We’re also improving the energy efficiency of our
3.6 times more energy efficient than the median of the surveyed
operations through conscious switches, such as our 2022
US enterprise data centres, delivering a 72% reduction in carbon
installation of LED lighting across our offices.
Acute
Chronic
As part of our business continuity plans, we consider the effects
embraced following the pandemic have enabled us to further
of adverse weather. We have plans and playbooks for incidents
secure our business continuity with colleagues working in
such as flooding. These plans also include annual due diligence
different areas of the country and executing effectively through
of our suppliers, including climate-related risks. In terms of
remote working. Temperature rise is mitigated through the
flooding, Bristol City Council’s flood zone planning encompasses
installation of improved cooling systems that reduce the
our core Harbourside office, whilst insurance is also in place for
overheating of our core technology systems and server rooms.
further protection. The flexible working practices we have
n
o
i
t
i
s
n
a
r
T
l
a
c
i
s
y
h
P
Risk
Description
Potential impact
Risk
Strategic response
Reputation
The potential harm to HL’s reputation and brand value that
• Damaged brand reputation
may arise from stakeholders perceiving the company as being
unresponsive or insensitive to climate-related risks, failing to
align its investments with the transition to a low-carbon economy,
lacking transparency about its climate-related risks, or facing legal
or regulatory action related to its exposure to climate risks.
Reputation A robust and transparent climate strategy will help mitigate
the reputational impact stemming from climate inaction.
This includes ensuring any promotion of funds is accurate and
does not lead to claims of greenwashing which would have a
negative impact on reputation.
CORPORATE RESPONSIBILITY
TCFD CONTINUED
Market
Disruptive policies and the subsequent shift away from fossil
fuels poses a risk to client outcomes, for example to meet
the 1.5°c target, a phase-down of coal usage will be a key
requirement and this in turn could impact companies and
investments exposed to coal industries. We mitigate this risk
by creating content that educates our clients on the importance
of diversifying their investments. Diversification is a key part
of building resilience into a portfolio, and we offer clients the
opportunity to save and invest in a large selection of assets.
We currently have nine funds in the Responsible Investment
sector on the Wealth Shortlist and we launched our Responsible
Investment Hub to provide clients with the tools and research
to invest in line with their preferences. We have also launched,
or will be launching, an additional 19 new funds that are ESG
integrated. We are aware of the risk of portfolio exposure and
risk management, and are exploring tools to help identify our
transition risks and to support client decision making. Within our
Fund Management business, we utilise our third-party data
provider, Sustainalytics, to bolster our understanding of climate
risk across our portfolios. Our ESG Investment Policy outlines the
requirement for all fund managers we invest with in our solutions
to have a net zero target, or to be working towards setting one
within a two-year period. Our Stewardship and Engagement
Policy outlines our core engagement themes, which include
climate change. We are also working with the regulator through
various working groups, such as the Investment Association, to
push for supportive policy that will enable an orderly transition
across the market.
Policy
and Legal
We horizon scan for policy and legal risks associated
with climate change. We screen regulatory press releases,
consultations, and publications to spot potential changes
that could impact our operations. Through this process,
risks are assessed in terms of impact.
Technology
The potential financial losses that may arise from the failure to
• Increased operating costs
adapt to technological changes related to the transition to a
low-carbon economy, such as renewable energy technologies
or carbon capture and storage.
• Decreased revenues
• Decreased security valuations
Technology The risk of energy scarcity is being managed through the
transition to Cloud-hosted services, such as Amazon Web
Services (AWS). Using the Cloud means fewer servers are
needed and less energy used. HL is transitioning to using AWS
systems, for which Amazon claims the AWS infrastructure is
3.6 times more energy efficient than the median of the surveyed
US enterprise data centres, delivering a 72% reduction in carbon
footprint on average. As this transition has been confirmed,
HL could expect increased energy efficiency by 2030. Coupled
with our investment in Cloud-based services is our exploratory
work into how we can deploy artificial intelligence to enhance
efficiencies. We’re also improving the energy efficiency of our
operations through conscious switches, such as our 2022
installation of LED lighting across our offices.
n
o
i
t
i
s
n
a
r
T
• Loss of client trust through perceived inaction from HL
to tackle climate change
• Perception HL is unable to cater to and fulfil a shift in client
preferences
• Reduced demand for products and services from existing
and prospective clients
• Potential fines, litigation, or financial penalties
• Assets with exposure to climate-related risks may be subject to
a decrease in value
• Reduced investment returns, increased costs and decreased market
share, which could negatively impact the platform’s financial
performance and competitiveness
• If HL is unable to effectively manage its exposure to market risks,
it may face reputational harm, legal and regulatory penalties and
decreased investor confidence
• Increased compliance costs, reduced investment returns, reputational
harm and potential legal liability
• Restrictions and/or amendments to product offerings
• If HL fails to properly manage policy and legal risks, it may face legal
and regulatory penalties, decreased investor confidence and potential
loss of market share
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Market
Potential financial losses that may arise from exposure to
climate-related risks, such as changes in financial markets,
market demand, pricing or regulation and the transition to
a low-carbon economy.
Policy
and Legal
The potential financial losses that may arise from changes in
climate-related policies or regulations, such as carbon pricing
or emissions targets, or legal actions related to climate risks.
n
o
i
t
i
s
n
a
r
T
l
a
c
i
s
y
h
P
Acute
Chronic
The potential financial losses that may arise from the gradual
• Increased cost to the business due to risk of flooding at our offices
and persistent impacts of climate change, such as sea level rise
or reduced employee productivity
or changes in temperature and precipitation patterns, on HL’s
investments and operations.
As part of our business continuity plans, we consider the effects
of adverse weather. We have plans and playbooks for incidents
such as flooding. These plans also include annual due diligence
of our suppliers, including climate-related risks. In terms of
flooding, Bristol City Council’s flood zone planning encompasses
our core Harbourside office, whilst insurance is also in place for
further protection. The flexible working practices we have
embraced following the pandemic have enabled us to further
secure our business continuity with colleagues working in
different areas of the country and executing effectively through
remote working. Temperature rise is mitigated through the
installation of improved cooling systems that reduce the
overheating of our core technology systems and server rooms.
The potential financial losses that may arise from the direct
impacts of climate-related events, such as natural disasters
or extreme weather events, on HL’s investments and operations.
• Longer-term changes in climate patterns such as flooding, extreme
weather and higher temperatures impacting our operations
Acute
Chronic
a
c
s
y
h
P
i
l
Hargreaves Lansdown
Report and Financial Statements 2023
49
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Progress against targets
Target setting and tracking is a key part of our
climate reporting and ensures we are remaining
on track for our strategic goals. HL recognises
the significance of net zero, transparent
disclosures and authentic pledges to allow
for a sustainable economy. We are proud to
support the transition to carbon neutrality
by committing to net zero and publishing our
TCFD assessment of climate-related risks and
opportunities for our operations. We recognise
that the hard work starts here in evolving our
business to embed climate-related risk
management, and we will continue to refine
and expand our disclosures, while focusing on
reducing HL’s environmental footprint. We have
set our net zero target for 2050 and continue
to build our transition plan to meet this goal.
In order to highlight our progress towards this
we have had some historic short-term targets
to focus our emission reduction and are now
in the process of building out medium-term
targets in line with our transition path.
In 2022, we outlined a number of short-term
targets and over 2023 we have the following
progress against our key targets with outcomes
due this year:
CORPORATE RESPONSIBILITY
TCFD CONTINUED
Risk Management
Climate change risk forms part of HL’s
Risk Universe. Each department within the
business has responsibility to identify potential
climate-related risks and implement mitigating
controls. Strategic implementation of climate-
related objectives are overseen by the
Executive Committee.
Emerging developments of climate related risks
are monitored through the Group’s Emerging
Risk and Horizon Scanning process. The
Executive Risk Committee and Board Risk
Committee receive quarterly updates on
HL’s emerging risks and the actions being
taken by Accountable Executives.
We continue to focus on strengthening our
management of climate-related risks making
these considerations a component of our
strategic planning process and executed
through strategic implementation. HL has
assessed the financial impact of the risks
and the financial impact is not material.
Over future iterations we intend to develop
our quantification of these risks and add
further analysis to the financial impact.
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
50
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE RESPONSIBILITY
TCFD CONTINUED
Target
Achieved?
Detail
Reduce our Scope 1 and Scope 2
emissions by 15% (relative to
baseline year FY18) each year
Yes
20% reduction in tonnes of CO2e
for Scope 1 and Scope 2
emissions per average full-time
equivalent employee (relative to
baseline year FY16) each year
Yes
We have reduced our combined Scope 1 and Scope 2 (market basis) emissions by more than
15% against our baseline year of 2018.
We have reduced our Scope 1 and Scope 2 emissions and tonnes of CO2 per average FTE by
31% (market-based), we remain ahead of our target due to the strength of our 2016 baseline.
We continue to be committed to reducing our emissions intensity and will do so in line with our
updated targets below.
Measure and report Scope 3
financed emissions by 2023
Yes
As outlined, we are reporting our financed emission for the first time this year.
We will be reporting all other Scope 3 by 2025.
offices by 2030 – marking an important step
towards our overall net zero by 2050 goal.
• We continue to aim to be GHG net zero
by 2050 across all emissions.
By 2025 we aim to publish our net zero
2050 transition plan and we aim to report
our Scope 3 emissions across all relevant
categories. In line with this publication and
beyond we will outline our medium-term
targets towards the 2050 goal across our
full emissions profile, including Scope 3
financed emissions.
Looking ahead we are now focused on building
out significant medium-term milestones that
highlight our progress towards the 2050 net
zero target state. As we continue to build
our understanding of our Scope 3 emissions
profile, our intermediate targets for 2024 and
beyond are focused on Scope 1, Scope 2 and
Scope 3 business travel and employee
commuting reductions.
• We aim to be climate positive in Scope 1,
Scope 2 and Scope 3 business travel and
employee commuting by 2025. We will go
beyond carbon neutral and invest more in
carbon offset and reduction projects in line
with Our Corporate Responsibility Approach
than what is required to neutralise our
emissions from these source
• We aim to be net zero in Scope 1 and
Scope 2 GHG emissions in our core UK
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
51
CORPORATE RESPONSIBILITY
NON-FINANCIAL INFORMATION STATEMENT
CORPORATE RESPONSIBILITY
Reporting requirement Policies and standards which govern our approach
Environmental
matters
The Responsible Business section of the Corporate Responsibility part of the annual
report provides details of our energy consumption and greenhouse gas emissions.
Further detail can be found in the TCFD statement, which includes progress against
our targets for FY23 and areas of focus for FY24.
Where you can find out more
Responsible Business
section on page 37
TCFD statement on page 45
Employees
We want our colleagues to have meaningful and rewarding careers and make HL
a great place to work, develop and fulfil career potential.
Responsible Employer
section on page 40
The Responsible Employer section of the Corporate Responsibility part of the annual
report provides detail on how we reward our colleagues and support them with their
career development and wellbeing, how we ensure we have the right talent in the
business to deliver on our strategy, and our commitment to inclusion and diversity.
Further information on our policies to promote diversity and inclusion can be found
in the Nomination Committee Report.
Social
The Responsible Business section of the Corporate Responsibility part of the annual
report details how we support our community and our working on building the UK’s
financial resilience. You can also read more on how we conduct our tax affairs in a
clear, fair and transparent way.
Respect for
human rights
We are committed to supporting the rights of individuals and our People policies
promote and support the protection of the rights of our colleagues. We have a zero
tolerance approach to slavery and human trafficking of any kind within our business
operations and supply chain. You can read more on our approach and the policies in
place to support it in the Responsible Business section of Corporate Responsibility
part of this report.
Nomination Committee Report
page 120
Responsible Business
section on page 37
Responsible Business
section on page 39
Anti-corruption
and anti-bribery
We have a full suite of policies and procedures in place to guard against financial
crime, including bribery and corruption, money laundering and terrorist financing,
market abuse and fraud. You can read more about our approach and the policies in
place to support it in the Responsible Business section of the Corporate Responsibility
part of the annual report.
Responsible Business
section on page 39
As a FTSE 100 business, we recognise that
the way in which we do business will have a
significant impact on our clients, our colleagues,
the environment and our community.
We focus on driving high levels of corporate
responsibility, governance and sustainability
and look to engage with a wide range of
stakeholders in order to help create value
for all.
This section of the Strategic Report constitutes
the Group’s Non-Financial and Sustainability
Information Statement for the purposes of
sections 414CA and 414CB of the Companies
Act 2006. The information listed is incorporated
by reference.
The Strategic report was approved by the
Board of Directors and signed on its behalf by:
Dan Olley
Chief Executive Officer
Additional information
Description of principal risks and impact of business activity
Principal risks and uncertainties, conduct risk (client outcomes) and operational risk (financial crime)
Description of the business model
Business model
Non-financial key performance indicators
Strategy and KPIs
Hargreaves Lansdown
Report and Financial Statements 2023
Page
53
16
22
52
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND
MANAGING RISKS
1. Risk management
We aim for effective and proactive risk management
to be integrated into the culture of HL.
The Board has ultimate responsibility for ensuring HL deploys
effective risk management. The Board determines and oversees
risk appetite including setting and monitoring appropriate
tolerance levels within which the business must operate.
To assist the Board in discharging its responsibilities, we have
implemented a comprehensive risk management framework
to support identification, mitigation and management of risk
exposures which is further described below.
Our Enterprise Risk Management Framework (ERMF)
(see figure 1) applies at both Group and Legal entity levels
and has been in place throughout the period under review
and up to the date of approval of the Report and Financial
Statements and is line with the UK Corporate Governance Code.
We regularly review the risk framework, risk capabilities
and tools to ensure effective ongoing risk management.
Key enhancements made during the period include the roll-out
of a Governance, Risk & Compliance recording & reporting
system, establishing the Group’s Risk Maturity Model that
supports ongoing Risk Management enhancements and
continuing the build out of key risk specialisms including
Model Risk, ESG and Enterprise Risk team capabilities.
Figure 1: Enterprise Risk Management Model
Policies
Framework & Standards
Risk Cycle
Governance
Group Risk Management Policy
Risk Category Policies
Strategic
Financial
Operational
Investment
Enterprise Risk Management
Framework
Internal Control Standard
Risk Appetite Standard
Risk Controls Self-Assessment
Standard
Risk Event Standard
Risk Taxonomy Standard
Identify
Report
Assess
BRC*
Exco** ERC†
Model
Governance
Committee
(MGC)
Operational
Risk
(ORC)
Monitor
Mitigate
Manage
& Control
Legal Entity
Management
Structure#
Executive
Committees‡
* plc Board Risk Committee ** Executive Committee † Executive Risk Committee ‡ e.g. Treasury & Product Governance Committee
# e.g. Legal Entity Boards, Operating Committee, Commercial Committee and Business Investment committee
Hargreaves Lansdown
Report and Financial Statements 2023
53
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
Governance of the Enterprise
Risk Management Framework
The Group includes four principal operating legal entities,
each of which is supported by a Legal Entity Board. The Legal
Entities are supported by three core management committees;
Operations Committee, Business Investment Committee and
Commercial Committee. The Fund Management business
also has a Management Committee. This Legal Entity structure
manages risk using the ERMF within agreed risk appetite levels,
with escalation on an agreed materiality basis to the Group
Executive Committee.
Risk management is acknowledged to be a core responsibility
of all colleagues at HL supported by the three lines of defence
Risk Management model with ownership for management of
risk in the business lines.
Oversight of risk and controls management is provided by
Management and Board committees as well as the Group
Risk and Compliance functions. The Board is responsible
for overseeing the Audit, Risk, Remuneration and Nomination
Committees. Risk reporting from both 1st and 2nd lines of
defence support these committees in the oversight and
management of risk.
Figure 2: Risk Appetite
Risk Appetite
Statements
Principal Risks
Risk Appetite
Statement
Key Risk
Indicators
(KRIs)
Level 1 Risk
Taxonomy
Strategic
Operational
Financial
Investment
Level 2 Risk
Taxonomy
33 Risks covering
all activity at HL
Risk metrics
A risk policy suite is in place aligned to the Risk management
framework, with policies reviewed on an annual basis.
Key governance committees relating specifically to the
maintenance and oversight of the risk and control environment
include the Board, the Board Risk Committee, the Executive
Committee and the Executive Risk Committee. The activities
of the Board and Executive Committees are detailed in the
Corporate Governance report, pages 78 to 79.
Risk Management Framework Components
Risk Taxonomy
We have an agreed and documented risk taxonomy, which
sets out the risk categories to which the business is exposed.
The risk taxonomy ensures that there is completeness in
the capture and management of risks, facilitates effective
aggregation of risk across the Group as well as ensuring that
there is consistency of treatment across all risk categories.
The broader risk management framework is aligned to
this taxonomy which is reviewed regularly and forms a key
mechanism to support Management and the Board in the
oversight of risk exposures.
Risk appetite
Our risk appetite is an articulation of the nature and level of
risk the Group is willing to accept, or wants to avoid, in order
to achieve its business objectives and strategy.
The risk appetite statements combine qualitative statements
and quantitative measures, or thresholds expressed relative to
metrics such as operational performance, capital and liquidity.
Risk appetite and its components are reviewed on at least an
annual basis. A particular focus during the period has been
the review of associated KRIs linked to corporate strategy.
Risk reporting
The Second Line of Defence provides risk and control
reporting to plc committees, Legal Entity Boards and Executive
committees which covers trends, the Principal Risk profile, risk
appetite, material risk events and emerging risks.
Hargreaves Lansdown
Report and Financial Statements 2023
Three Lines of Defence Model
The first line of defence (1LoD) is accountable for understanding
all the relevant risks in their area of responsibility, assessing the
exposure to these risks and ensuring appropriate risk mitigation
strategies are in place. The first line recognises when something
has gone wrong, or is going wrong, and reports and manages this
through the Loss Event Process. The first line includes everyone
in the business, except for those in the second or third lines.
There are a number of specialist dedicated first line control
teams, including:
• CASS Oversight team – provides guidance to operational
teams on CASS and provides oversight of the CASS control
environment.
• Chief Digital & Information Officer and Chief Operating Officer
risk and control teams – provide support to 1LoD colleagues
• A dedicated IT Security team, which manages, tests and
controls the cyber control environment.
• A specialist data management team which manages, supports
and provides guidance on data requirements to colleagues
and management teams
• Client Outcome, Conduct Risk and Product Governance teams
– to oversee the delivery of positive client outcomes including
Consumer Duty, and robust product governance in line with
the regulatory rules
• A People, Ethics and Governance team which manages and
oversees and reports on the SMCR regime.
The second line of defence (2LoD) is the Risk and Compliance
teams. As well as setting company policy on compliance and
risk matters, the second line is there to offer advice, guidance,
and challenge to the first line, the Executive Committee, and the
Board. The third line of defence (3LoD) comprises our internal
auditors, who are employed by HL, but report directly to the
Board allowing them to be independent.
Internal Capital Adequacy & Risk Assessment (ICARA)
The primary purpose of the ICARA is to ensure that there is a
clear, accurate and transparent link between the risk profile of
the business and the capital and liquidity held by the firm to
support our Own Funds Threshold (OFR) requirement. The final
approval of the HL Annual ICARA was in November 2022.
The ICARA is overseen by the Board Risk Committee and
is approved by Plc Board.
54
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Viability statement
The Board has considered the principal risks, in arriving
at the viability statement below. The principal risks and
uncertainties faced by the Group are detailed below.
The principal risks are categorised into strategic, operational,
financial and investment in accordance with our risk
management framework.
Management and the Board regularly discuss emerging risks.
Topics discussed during the period included on-going open
communications with the regulator, third party services and
solutions, operational resiliency, cybercrime, and the Russian
Invasion of Ukraine.
Assessment process for the viability statement
In accordance with provision 31 of the UK Corporate
Governance Code, the Directors are required to assess the
viability of the Group and in doing so make a statement
confirming the results of the assessment.
The Directors’ assessment has been made with reference to
the Group’s current position and strategy, the Board’s risk
appetite, the Group’s financial forecasts and the Group’s
principal risks and uncertainties. In making their assessment
the Directors’ have considered the appropriate timeframe
over which the assessment should be made.
The Directors’ confirm that they have assessed the viability
of the Group over a three year time period to June 2026 and
have a reasonable expectation that the Group will continue
to operate and meet its liabilities over this time and up to
this date. Three years has been chosen as it is in line with the
medium term strategic planning of the Group and is the basis
for developing forecasts regarding profitability, cashflows,
dividend policy, regulatory capital requirements and the
relevant capital resources. The Board approves the strategic
forecast annually and it is reviewed and updated regularly
as appropriate. Three years is additionally considered an
adequate timeframe over which to consider the regulatory
Hargreaves Lansdown
Report and Financial Statements 2023
and market environment and is the same period over
which the Group’s ICARA assessment is completed.
maintain performance at significantly higher sustained
volumes than normal.
• Targeted Cyber Attacks: Modelled a successful targeted
UK based cyber-attack breaching the Group’s core IT
infrastructure resulting in the theft of confidential client
data Stress testing impacts included potential additional
costs of temporary staff and consultancy service to provide
recovery support, potential client detriment and enhanced
information security monitoring.
In all scenarios modelled the Group was considered to
maintain adequate capital and suitable levels of liquidity.
There would be expected impacts to the Group’s revenues
and cost base, therefore impacting profitability, but over the
same three year period no issues were noted for viability and
the Group’s risk appetite provides sufficient cover. The two
examples noted above include the most extreme stresses
and even under these conditions the Board has seen that
there is sufficient evidence to support ongoing viability.
These matters and the consideration that in the normal
course of business the Board also has the ability to react to
emerging and present risks by making adjustments to its plan
as needed support the assertion of continued viability. The
Board are confident that the Group remains viable.
In assessing viability the Directors’ have considered the
principal risks impacting the Group as outlined below as
well as many macroeconomic factors, including Government
policy change, that are considered relevant to the viability
of the Group. This assessment is made after consideration
of the ongoing impact of the Russian invasion of Ukraine,
economic uncertainty created by interest and inflationary
pressures and the impact of these factors on the UK and
global economy. Scenarios considered in our approach to
assessing the Group’s viability include the following factors:
• Client and asset growth and retention
• Impacts of interest rate changes
• Market impacts
• Prolonged business disruption
• Cost inflation
• Operational risk events; and
• Material litigation or regulatory review.
Stress testing and scenario modelling considers impact
of events that exhibit significant stresses to determine the
robustness of the Group and in all scenarios, including the
most extreme, the Directors confirm that the Group remains
viable for the next three years.
Examples of stress testing and scenario modelling assessed
in the most recent ICARA, approved by the board during
FY2023, include but are not limited to:
• Economic downturn and operational event: This particular
test assessed the potential impacts of a continued economic
downturn combined with a major event. Including an
understanding of the impact of increased trading volumes
and client attrition over short time frames. This stressed the
value of assets under administration, impacting revenue and
our required capital, as well as the ability of our systems to
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
55
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
2. Principal risks and uncertainties
The Board has carried out an assessment of the emerging risks
and principal risks facing the Group, including those that would
threaten its business model, future performance, solvency,
or liquidity.
In making its assessment, the Board considered the
likelihood of each risk materialising in the short and longer
term. The Board considered the principal risks in arriving at
its viability statement. The principal risks and uncertainties
faced by the Group are detailed below. The principal risks
are categorised in line with the risk management framework
and aligned to the core risk exposures of the Group; strategic,
operational, financial and investment risks.
Principal risks reported here are those attracting the greatest
focus, and to which the organisation has the largest exposure.
The principal risks are linked to risk appetite and KRI measures
for reporting
Management and the Board regularly discuss emerging risks.
Topics discussed during the period included third party services
and solutions, operational resiliency, cybercrime, continuing
market challenges and communications from the regulator.
In assessing the 2022-2023 changes, consideration was given
to the continuing conflict in Ukraine and the sustained impact
on global markets on the Group’s inherent risks after considering
mitigating actions and controls.
As a result of this, an increasing likelihood has been reported
against the performance of markets, people and financial crime
principal risks. Operational delivery was considered to be stable
after assessing the performance of existing, additional and
revised processes and controls.
In assessing all risks, we consider the potential reputational,
client, financial impacts of risks materialising as well as the
impact of HL achieving its business and strategic objectives.
To mitigate potential impacts we ensure risk exposures and
potential impacts are appropriately and proactively escalated
through key risk governance. Reputational risk management
is further supported by an internal PR function and Corporate
Affairs Group as well as the use of external advisers supporting
both the Board and the Executive Committee.
Taxonomy Level 1 Strategic
Taxonomy Level 2 Failure to execute strategic plans
Owner:
Chief Executive Officer
Link to strategy:
Link to HL values:
Put the client first, do the
right thing, make it easy, go
the extra mile
2022-2023 Change
INCREASED
Risk
The risk that HL does not deliver on the
strategy or in the forecasted timescales due
to incorrect information or assumptions based
on changing market dynamics, inability to
react to changes, or that the activities
supporting the delivery of the strategy are
inadequate or poorly designed.
Potential impact
• Erosion of shareholder value
• Negative impact on our brand and reputation
• Negative impact on client experience and
HL’s ability to maintain market share
Mitigation and controls
• The Executive Committee and Board review
strategy in the context of propositional
design and service enhancement on a
regular basis
• Oversight and tracking of strategic
deliverables at senior level governance
forums(i.e. Quarterly Business Review)
• Clear objectives aligned to Executive owners
and a supporting operating plan in place
Key risk indicators
• Technology and resiliency risk events
• NNB v forecast
• Client retention
• Service rating
2022/2023 activity
• Commenced execution against three year strategy
• Progressed proposition enhancements including fund develop,
active savings capacity and client communication and cash
ISA wrapper
• Developed a Digital roadmap, including Cloud deployment and
engagement of enhancement telephonic capability
Hargreaves Lansdown
Report and Financial Statements 2023
56
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
Taxonomy Level 1 Strategic
Taxonomy Level 2 Business Performance
Owner:
Chief Executive Officer
Link to strategy:
Link to HL values:
Put the client first, go the
extra mile
2022-2023 Change
STABLE
Risk
The risk that HL does not meet the agreed
business performance targets linked to
strategy, due to poor delivery, cost
management and/or decision making.
Potential impact
• Earning fluctuations
• Blocker to delivery of strategic objectives
• Erosion of shareholder value and/or
market share
Mitigation and controls
• Diversified revenue streams balanced
between recurring and transaction-based
Key risk indicators
• Profit Before Tax
• Underlying Costs
• Monitoring and maintenance of client service
• Client metrics (net, new and retention)
• Executive and Board Governance
• Robust cost control
2022/2023 activity
• Increased targeted marketing campaigns
• Targeted pricing adjustments
• Prioritisation of internal investment on service,
technology & risk
• Executive oversight and development of KPIs
Taxonomy Level 1 Operational
Taxonomy Level 2 Technology
Owner:
Chief Digital &
Information Officer
Link to strategy:
Link to HL values:
Do the right thing,
make it easy
2022-2023 Change
STABLE
Risk
As HL moves through its transformation,
the risk of technology failing to meet current
business and future operational requirements
or at the pace required to deliver the strategic
outcomes, or the risk of system/data being
unavailable resulting in disruption to business
operations and the potential for customer
detriment, financial loss, damage to reputation,
regulatory fines and/or censure.
Potential impact
• Inability to maintain operational efficiency
• Failure to deliver against strategy
• Poor client outcomes
• Reputational damage
• Regulatory intervention
Hargreaves Lansdown
Report and Financial Statements 2023
Mitigation and controls
• Scalable IT Architecture planning
• Rolling internal and external monitoring
of IT environment
• Identification of contingency providers
for technology
• IT recovery capability, planning and testing
Key risk indicators
• Unplanned downtime of client facing applications
• Status of critical projects
• Core system monitoring
• System patching status
• Technology risk events
2022/2023 activity
• Formation of new teams to support strategy in tooling and
technology enablement
• Leverage Cloud technology to improve transfer out processes
• Broadened our Learning tools and introduced new mentoring
and coaching programmes
• Migration of client telephony services to Amazon Connect
• Full End-to-End IT Testing platform
• Platform security improvements
• Launched first Cloud journey, improving our transfers process
• Operational Resilience programme
• Operational Plan, including prioritisation of IT development
57
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
Taxonomy Level 1 Operational
Taxonomy Level 2 Administration
Owner:
Chief Operating Officer
Link to strategy:
Risk
Risk of failure or delay of any of the activities
that are carried out in support of the actual
process of administration of investing.
Potential impact
• Poor client service & outcome(s)
• Loss of client assets or money
• Reputational damage
• Failure to comply with Consumer Duty
• Regulatory intervention
Link to HL values:
Put the client first, do the right
thing, make it easy, do it better
2022-2023 Change
STABLE
Mitigation and controls
• Ongoing First Line of Defence monitoring of
Key risk indicators
• NPS
controls, control management, self
assessment and quality assurance
• Process and procedural documents
• Training and development
• Operational MI
• Control focus at key governance forums,
including CASS Committee, Executive Risk
Committee and Operating Committee
oversight
• Risk events (including CASS breaches) and Compliance
breach monitoring
• Third party breaches
• Complaints
• Helpdesk call quality
• Operational processing and transactional error rates
2022/2023 activity
• Focused workforce planning and tool deployment to support
service improvements
• Roll out of Amazon Connect telephony capability
• Enhancements to our transfer processes
• Development of digital roadmap to drive further service
capability
Taxonomy Level 1 Operational
Taxonomy Level 2 Regulatory Compliance
Owner:
Executive Committee
Link to strategy:
Risk
Risk that required regulatory change is not
implemented to regulatory expectations or
requirement and/or existing regulatory
requirements are not met.
Link to HL values:
Put the client first, do the right
thing, make it easy, do it better
2022-2023 Change
STABLE
Potential impact
• Regulatory breaches
• Regulatory intervention
• Reputational damage
• Inability to deliver business strategy
or objectives
Mitigation and controls
• Regulatory horizon scanning and business
Key risk indicators
• Volume of new outputs from regulatory bodies
impact analysis
• Compliance monitoring
• Ongoing open dialogue with the FCA
• Executive Risk Committee oversight
• Number of regulatory change projects
• Risk Events and Compliance breaches
• Complaints
2022/2023 activity
• Investment into ‘Foundation’ strategic pillar
• Consumer Duty implementation
• CASS Improvement Plan
• First ICARA under new IFPR rules
• Increased and enhanced Compliance Monitoring capacity
Hargreaves Lansdown
Report and Financial Statements 2023
58
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
Taxonomy Level 1 Operational
Taxonomy Level 2 Financial Crime
Owner:
Group Chief Risk Officer
Link to strategy:
Link to HL values:
Put the client first, go the
extra mile, do the right thing,
make it easy, do it better
2022-2023 Change
DECREASED
Risk
Risk that HL fails to design or implement
appropriate frameworks, including policies,
processes, or technology, to counter HL being
used to further financial crime by either internal
or external parties
Potential impact
• Loss of sensitive data
• Poor client outcomes (including fraud)
• Negative impact on confidence in HL
• Diminish the integrity of the financial system
• Regulatory intervention
Mitigation and controls
• Dedicated Chief Information Security Officer
and team, and a Security Operations Centre
focused on the detection, containment and
remediation of information security threats
• Dedicated Information Security, Anti Money
laundering and Client Protection teams in
place
• Specialist AML screening team
• Formal policies and procedures and a robust,
rolling risk-based programme of penetration
and vulnerability testing in place
• Enhanced Sanction control environment
• Horizon scanning peer group to understand
industry trends
Key risk indicators
• Fraud monitoring
• Cyber threat assessment
• Time taken to address security vulnerabilities
• Number of Information Commissioner’s Office (ICO)
notifiable data protection breaches
2022/2023 activity
• Completion of Financial Crime transformation programme
(part 1)
• Increased capability and capacity of Financial Crime teams
• Operational delivery of Client Risk Assessment tool
• Delivery of enhanced client Sanction controls
Taxonomy Level 1 Operational
Taxonomy Level 2 Data Management
Owner:
Chief Digital and
Information Officer
Link to strategy:
Risk
Risk that HL fails to design or implement
appropriate frameworks, including policies,
processes, or technology, to manage data and
data storage.
Potential impact
• Loss of sensitive data
Link to HL values:
Put the client first, go the
extra mile, do the right thing,
make it easy, do it better
• Poor client outcomes (including fraud)
• Inefficient processing
• Regulatory intervention
2022-2023 Change
STABLE
Hargreaves Lansdown
Report and Financial Statements 2023
Mitigation and controls
• Dedicated Chief Information Security Officer,
Key risk indicators
• Data related Risk Events
Chief Data Officer and Data Protection
Officer in place
• Data Governance function
• Robust data access controls
• Data storage standards
• Monitoring of sensitive data usage
• Data Panel
• Data reporting issues
• Data Privacy Impact Assessment completions
• Cyber events
• Fraud events
2022/2023 activity
• New Data Risk Management Policy
• Refresh of the suite of data standards supporting the policy
• Established a cross organisational Data Panel to improve the
management and use of data
• Data Management and Information Security programmes
59
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
Taxonomy Level 1 Operational
Taxonomy Level 2 Product & Proposition
Owner:
Executive Committee
Link to strategy:
Risk
Risk of developing/selling/communicating new
products or maintaining existing products that
result in poor outcomes for clients.
Potential impact
• Poor client outcomes
• Negative reputational impact
• Regulatory censorship
Link to HL values:
Put the client first, go the
extra mile, do the right thing,
make it easy, do it better
2022-2023 Change
STABLE
Mitigation and controls
• Colleague communication and training
• Risk and incident monitoring and review
• Executive Risk Committee and Product
Governance Committee oversight
• Corporate and social responsibility
programme
• Whistleblowing process
• Fair value assessment
• Robust marketing and financial promotion
controls
• Model Risk Management
Key risk indicators
• Client survey results
• Complaints
• Clients cancelling a new product or service
2022/2023 activity
• Delivery against forthcoming Consumer Duty regulations
• Investment in Model Risk capabilities
Taxonomy Level 1 Operational
Taxonomy Level 2 Operational Resilience
Owner:
Chief Operating Officer
Link to strategy:
Risk
Risk that HL fails to establish robust operational
resilience solutions to support positive client
outcomes.
Potential impact
• Poor client outcomes
• Policy or regulatory breaches
• Operational inefficiencies or failures
• Reputational damage
Link to HL values:
Put the client first, do the right
thing, make it easy, do it better
2022-2023 Change
STABLE
Mitigation and controls
• Business Impact Analysis
• Business Continuity Plans
• Disaster Recovery Plans
• Strong Incident Management capability
• Regular incident scenario testing
• Scenario based playbooks
• Vulnerability remediation
• Operating Committee oversight
Key risk indicators
• System downtime
• Process failures
• Crisis management response
2022/2023 activity
• Enhancements to the End-to-End IT testing platform
• Investment in Operational Resiliency tools and processes
• Review and enhancements to crisis management and incident
management approaches
• Dedicated Operational Resiliency team and programme
Hargreaves Lansdown
Report and Financial Statements 2023
60
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
Taxonomy Level 1 Operational
Taxonomy Level 2 Employee Relations
Owner:
Chief People Officer
Link to strategy:
Link to HL values:
Put the client first, do the right
thing, make it easy, do it better
2022-2023 Change
STABLE
Risk
The risk that HL does not adapt its employee
relation components to meet the changing
market environment and the way that HL will
operate as it transforms, such as employee
attraction, recruitment, onboarding,
development, retention as well as employment
laws which leads to employee/customer/HL
detriment.
Mitigation and controls
• Effective performance and Talent
Management
• Regular review of employee reward offering
to ensure competitive reward offering
• Regular staff surveys and employee forums
to understand morale
• People agenda monitored at ExCo and Board
• Robust whistleblowing policy and supporting
Potential impact
• Operational inefficiency or poor conduct
processes
• Poor client outcomes
• Reputational damage
Key risk indicators
• Colleague retention rates
• Colleague absence monitoring
• Gender Pay Gap
• Diversity & Inclusion
2022/2023 activity
• Breathing Space payment for junior colleagues to help with
cost of living
• Improvements in ‘Health & Wellbeing’ support to all colleagues
• People communications through HL Way to support HL Values
• Broadened out our Learning tools
• New mentoring and coaching schemes
• Evolved our Responsible Business Strategy through our ESG
Taskforce
Taxonomy Level 1 Operational
Taxonomy Level 2 Change Management
Owner:
Chief Digital and
Information Officer
Link to strategy:
Risk
The risk that HL change initiatives are not
delivered in a timely manner or fail to deliver
the required business outcomes; resulting in
compromised delivery.
Mitigation and controls
• Delivery & Change Co-ordination Function
• Change Delivery Framework & controls
• Exco and Business Investment Committee
oversight
Potential impact
• Operational inefficiency
• Poor client outcomes
• Reputational damage
Link to HL values:
Put the client first, do the right
thing, make it easy, do it better
2022-2023 Change
INCREASED
Key risk indicators
• Change envelopes (financial budgets)
• Delivery plans (milestones)
2022/2023 activity
• Development of Operating plan embedding strategic priorities
• Embedding of Change Delivery Framework and delivery
controls and oversight processes
• Change delivery recruitment in 1LoD
• Ongoing Executive and management oversight mechanisms
(replacing ABR & QBR bullet)
Hargreaves Lansdown
Report and Financial Statements 2023
61
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
RISK MANAGEMENT AND PRINCIPAL RISKS AND UNCERTAINTIES
EVALUATING AND MANAGING RISKS CONTINUED
Taxonomy Level 1 Operational
Taxonomy Level 2 Information Security
Owner:
Chief Digital and
Information Officer
Link to strategy:
Risk
The risk that information security protocols
do not keep up with good practices and
developments resulting in unauthorised access,
security breaches modification or loss resulting
in the potential for customer detriment,
financial loss, damage to reputation or
regulatory fines/censure.
Link to HL values:
Put the client first, do the right
thing, make it easy, do it better
2022-2023 Change
STABLE
Potential impact
• Service disruption or failure
• Compromise of sensitive and or
corporate data
• Negative reputational damage
• Impacted client outcomes
• Regulatory censure / fines
Mitigation and controls
• Dedicated Chief information Security Officer
in place
Key risk indicators
• Vulnerability management effectiveness
• Cyber Events
• Organisational remit reporting through SMF24
• Cyber Threat assessment
• Cyber Security Strategy and Plan
• Cyber agenda monitored at Exco and Board
• Secure by Design regime for all change
activities
• Cyber Security controls aligned in industry
good practice
• Security Testing and assurance regime
• Supply chain security assurance regime
• Cyber vulnerability management, monitoring,
incident planning and response
• Scenario testing for Senior Leadership. Formal
scenario selection and assessment for ICARA
provision
• Third party governance KRIs
• Colleague security awareness and compliance
2022/2023 activity
• Access control developments including privileged access
management.
• Platform Security improvements.
• Cyber threat intelligence and Security monitoring
improvements
• Endpoint Security Improvements
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
62
GOVERNANCE
’
Chair’s introduction
Board of Directors
Corporate governance report
Audit Committee report
Directors’ Remuneration report
Nomination Committee report
Risk Committee report
Directors’ report
Section 172 statement
Statement of Directors’ responsibilities
64
66
70
80
85
120
125
128
132
136
Hargreaves Lansdown
Hargreaves Lansdown
Report and Financial Statements 2023
Report and Financial Statements 2023
S
S
t
t
r
r
a
a
t
t
e
e
g
g
c
c
i
i
r
r
e
e
p
p
o
o
r
r
t
t
G
G
o
o
v
v
e
e
r
r
n
n
a
a
n
n
c
c
e
e
i
i
F
F
n
n
a
a
n
n
c
c
a
a
i
i
l
l
s
s
t
t
a
a
t
t
e
e
m
m
e
e
n
n
t
t
s
s
O
O
t
t
h
h
e
e
r
r
i
i
n
n
f
f
o
o
r
r
m
m
a
a
t
t
i
i
o
o
n
n
6363
CHAIR’S INTRODUCTION TO CORPORATE GOVERNANCE
ROBUST GOVERNANCE
SUPPORTING SUCCESS
These appointments were made by the Board, supported by the
Nomination Committee – you can find more information about
their appointments, the associated process and the skills and
experience these individuals bring to HL in the Nomination
Committee Report on pages 120 to 124.
Diversity & Inclusion
We recognise that greater diversity within a business drives
better decision-making and we strongly believe that building a
diverse and inclusive workforce will lead to better outcomes for
clients, colleagues and our business. You can read more about
our approach to building diversity and inclusion across our
workforce and the initiatives that support it on pages 40 to 44
of the Strategic Report. Information about the Group’s diversity
policy for the Board can be found in the Nomination Committee
report at page 120 to 124.
As at 30 June 2023 (and at the date of this report), 45% of our
Board is made up of women; three of our four senior Board
positions are held by women and we have at least one Director
from an ethnic minority background. We know that
representation matters.
I am pleased to introduce our Corporate Governance Report,
which sets out how the Group’s governance framework supports
and promotes its long-term success, and provides an overview
of the activities of the Board and its Committees. We apply
and report under the 2018 UK Corporate Governance Code
(the Code). Our Compliance Statement confirms our compliance
with the Code during the period under review. You can read
more about how we have applied its principles throughout our
Corporate Governance Report. Key disclosures are signposted
on page 65.
Culture
Our culture underpins our approach to governance and risk
management. The Board promotes a culture that encourages
good governance, effective decision making and appropriate
risk management. A key tool for engaging colleagues in this
is the HL Way which promotes accountability and clarity on
responsibilities. You can find out more information on this on
page 40 of the Strategic Report.
Board Changes
Since the last Report, the Board welcomed two new Directors:
Darren Pope joined on 1 September 2022 as a new independent
Non-Executive Director. Since the year ended on 30 June 2023
the Company was pleased to announce the appointment of
Michael Morley as an independent Non-Executive Director
with effect from 1 August 2023. In addition, during the year
and following on from Chris Hill’s decision to retire which was
communicated in October 2022, the Company was pleased to
announce the appointment of existing Non-Executive Director
Dan Olley to the role of CEO following a comprehensive search
process. Chris stepped down as CEO on 7 August 2023 with
Dan transitioning to the role on the same day.
Our culture underpins our
approach to governance
and risk.
Deanna Oppenheimer
Chair
Hargreaves Lansdown
Report and Financial Statements 2023
64
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CHAIR’S INTRODUCTION TO CORPORATE GOVERNANCE
CONTINUED
Stakeholder engagement and Consumer Duty
We continue to recognise the importance of engaging with and
considering the interests of all of our stakeholders in promoting
the Group’s long-term success:
• Clients are at the heart of our business and HL has always been
about helping people achieve good outcomes. As such a key
focus of the year has been on preparing for the implementation
of the Consumer Duty and we believe our strategy is aligned to
the direction set by the FCA. We are fully supportive of the
regulator’s intentions to drive good outcomes and understand
the responsibility we have as the market-leader in our sector.
• We ensure that we regularly engage with and listen to our
colleagues through a series of initiatives including our
workforce advisory panel, the HL Colleague Forum, regular
colleague surveys and a coordinated internal communications
programme. Further information can be found on pages 40 to
44 of the Strategic Report.
• We are committed to maintaining strong relationships with our
shareholders. We regularly meet with shareholders. Operating
under agreed protocols, Adrian Collins was appointed to the
Board in November 2020 to act as the representative of one
of our founder shareholders.
• We are conscious of our impact on the wider community
and take time to ensure that we are considering the
environment and supporting to the community we work
in. Further information can be found on pages 33 to 51
of the Strategic Report.
• Our relationship with the FCA as our regulator is of
fundamental importance to us and we maintain an open,
constructive dialogue with them to ensure that we are
aware of and meet the standards that they expect.
• You can read more about how the Directors promote the
success of the Company in our Section 172 Statement on
pages 132 to 135.
Deanna Oppenheimer
Chair
18 September 2023
Hargreaves Lansdown
Report and Financial Statements 2023
Governance at HL – Compliance Statement
HL is committed to the highest standards of corporate governance as set out in the UK Corporate Governance Code (the Code).
The Code sets out the standards of good practice in relation to how the Company should be governed and can be found on the
FRC’s website at www.frc.org.uk. This has been applied by the Company during the period under review. The Board is satisfied that
the Company has complied in full with the provisions of the Code throughout the period under review. You can read more about
HL’s compliance with the Code as set out below:
Section
Code Principles
Where to read about how HL has complied
1. Board leadership and
company purpose
A. An effective board promoting long term success
for the company and contributing to society
more widely
Pages 03-62, 64 and 75
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
2. Division of
responsibilities
B. Purpose, values, strategy and culture
C. Performance measures, risk and controls
Pages 03-62, 64 and 75
Pages 22-26, 53-63 and 125-127
framework
D. Stakeholder engagement
Pages 18-19, 76 and 132-135
E. Wider workforce
F. Leadership of the board
Pages 40-44 and 76
Pages 64 and 75-78
G. Board composition, roles and effectiveness
Pages 70-75 and 120-124
H. Directors’ responsibilities and time commitment
Pages 71-74
I. Support information and advice available to
Pages 72 and 74-75
the Board
3. Composition,
J. Board appointments, succession planning and
Pages 73 and 120-124
succession and
evaluation
diversity consideration including senior
management
K. Board skills, knowledge and experience
Pages 66-69 and 120-124
4. Audit, risk and
internal control
L. Board effectiveness review (annual)
Page 122
M. Independence and effectiveness of Internal and
Pages 78-84
External Audit functions
N. Fair, balanced and understandable assessment
Pages 78, 82 and 136
of company’s position and prospects
O. Risk Management and Internal Control Framework Page 53-62, 80-84 and 125-127
5. Remuneration
P. Remuneration alignment to strategy, company
Pages 85-119
purpose and values
Q. Executive and senior management remuneration
Pages 85-119
R. Authorisation of remuneration outcomes
Pages 85-119
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
65
BOARD OF DIRECTORS
Chair
Deanna Oppenheimer
Chair and Non-Executive Director
Executive Directors
Dan Olley
Chief Executive Officer**
Amy Stirling
Chief Financial Officer
Chris Hill
Chief Executive Officer*
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
Appointed to the Board
February 2018
Appointed to the Board
June 2019 (Chief Executive Officer since
August 2023, Independent Non-Executive
Director June 2019 – August 2023)
Appointed to the Board
February 2022
Skills, competence and experience
Deanna has extensive board level governance and
leadership experience in both public and private
financial services businesses having worked in
the industry for over 35 years at executive and
non-executive level. Her rich executive experience
includes, amongst other things, the transformation
of the retail banking division at Barclays. As a
non-executive director, Deanna formerly served as
a director for Tesco plc, Worldpay plc, Whitbread
plc, AXA Group, Tesco Bank and NCR Corporation.
Deanna is a member of the 30% Club.
Skills, competence and experience
Prior to his appointment as Chief Executive
Officer, Dan was CEO of dunnhumby Ltd from
January 2022. Dan joined HL as a seasoned
and experienced senior technology leader and
has a track record of driving digital transformations
in established businesses, including financial
services, insurance, business information
solutions, research and healthcare. Dan brings
a problem solving and analytical skill set, along
with experience of successfully implementing
advanced technologies to drive both revenue
growth and operational process efficiency and
optimisation. During his tenure as an Independent
Non-Executive Director of HL, Dan was a Member
of the Risk and Remuneration Committees.
Skills, competence and experience
Amy has significant financial and strategic
leadership experience in client facing businesses
across the telecommunications and financial
services sectors. She has considerable
transformation and M&A experience at both
executive and non-executive level and is a
qualified chartered accountant. Amy was
previously Chief Financial Officer of the Virgin
Group and other previous appointments include
non-executive director and chair of the Audit
Committee at RIT Capital Partners plc, non-
executive director at Virgin Money UK plc, Chief
Financial Officer of The Princes Trust and Chief
Financial Officer at TalkTalk Telecom Group Plc.
Appointed to the Board
Chief Executive Officer since April 2017
(Chief Financial Officer from February 2016
to September 2016, Deputy Chief Executive
Officer from October 2016 to April 2017)
Skills, competence and experience
Chris led the Company since 2017, driving
the digital transformation of the Group’s business,
including the strategy to expand HL’s position
as the UK’s leading digital wealth management
platform and ensuring HL is at the heart of
creating greater engagement with saving and
investing in the UK. Chris came to HL with more
than two decades of experience, across a range
of business sectors. He was previously Chief
Financial Officer at IG Group Holdings plc and
Chief Financial Officer at Travelex following a
number of finance leadership roles at GE Capital.
Chris qualified as a chartered accountant at
Arthur Andersen and is an associate member
of the Association of Corporate Treasurers.
Committee membership
Nomination Committee (Chair)
Remuneration Committee
Other current appointments
Director of Thomson Reuters Corporation
Non-Executive Chair of IHG Plc
Hargreaves Lansdown
Report and Financial Statements 2023
Committee membership
None
Committee membership
None
Committee membership
None
Other current appointments
None
Other current appointments
Trustee of HL Foundation
** From 7 August 2023 – Dan took on the role after the end
of the reporting period. During the reporting year he was
an independent Non-Executive of the Company.
Other current appointments
Member of the FCA Practitioner Panel
Board member of the Investment Association
* Until 7 August 2023 – Chris stepped down after the end
of the reporting period.
66
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
BOARD OF DIRECTORS
CONTINUED
Non-Executive Directors
Roger Perkin
Independent Non-Executive Director
John Troiano
Independent Non-Executive Director
Andrea Blance
Independent Non-Executive Director
Appointed to the Board
September 2017
Appointed to the Board
January 2020
Appointed to the Board
September 2020
Skills, competence and experience
Roger is a qualified accountant with recent and
relevant financial experience and competence
in accounting and audit, as well as extensive
financial services experience. He is a former
partner of Ernst & Young and has previously been
a non-executive director at Evolution Group plc,
Friends Life Ltd, Nationwide Building Society,
Electra Private Equity plc, AIB Group (UK) plc
and TPICAP plc. Roger chaired or served on
the Audit and Risk Committees of each of these
and additionally was Senior Independent Director
of Nationwide Building Society.
Skills, competence and experience
John has significant investment and asset
management experience. John has spent
38 years at Schroders in a wide range of roles
including investment research and analysis,
fund management, and has worked across both
retail and institutional channels. Most recently,
as Head of Distribution, he was responsible
for the design and implementation of business
strategy globally and the oversight of sales
and client service activities.
Skills, competence and experience
Andrea is a qualified accountant and brings
extensive Board and financial services experience
having spent her executive career at Legal &
General Group plc where she was a member
of the Group Executive Committee and held a
diverse range of senior leadership roles including
finance, risk and regulation, marketing and
strategy. Andrea’s past non-executive roles
include Risk Committee Chair at Scottish Widows
plc and Lloyds Banking Group Insurance Division,
Senior Independent Director and Audit Committee
Chair at ReAssure Group plc and a member of
William & Glyn’s pre-IPO board.
Committee membership
Audit Committee (Chair); Nomination Committee;
Remuneration Committee; Risk Committee
Committee membership
Audit Committee; Remuneration Committee;
Risk Committee
Committee membership
Risk Committee (Chair); Audit Committee;
Nomination committee
Other current appointments
None
Other current appointments
Independent Non-Executive Director of
Hargreaves Lansdown Fund Managers Ltd
Other current appointments
Non-Executive Director and Chair of the
Board Risk Committee at Aviva plc; Senior
Independent Director of Vanquis Banking Group
plc (formerly Provident Financial Group plc)
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
67
BOARD OF DIRECTORS
CONTINUED
Non-Executive Directors
continued
Moni Mannings
Independent Non-Executive Director
Adrian Collins
Non-Independent Non-Executive Director
Penny James
Senior Independent Non-Executive Director
Appointed to the Board
September 2020
Appointed to the Board
November 2020
Appointed to the Board
September 2021
Skills, competence and experience
Adrian has worked in the fund management
business for over 50 years, most recently at
Liontrust Asset Management where he served
as Executive Chairman from 2009 to 2019.
During this period, Adrian oversaw a transformation
in the business, broadening its investment and
distribution capabilities and undertaking numerous
acquisitions. Adrian has extensive experience
across fund management and adjacent sectors
having held senior roles at Gartmore, where he
was Managing Director, Trustnet (which he
co-founded), Jupiter, Bestinvest and Lazard
Investors and as Chairman of CIP Merchant
Capital Ltd. He is an experienced non-executive
director. Adrian has been appointed to the Board
as a shareholder representative and as such is
not deemed to be independent.
Committee membership
None
Skills, competence and experience
Penny brings extensive financial services
experience with strong leadership skills, financial
and risk expertise, strategic thinking and cultural
alignment. Penny was previously Chief Financial
Officer then Chief Executive Officer of Direct Line
Insurance Group plc. Prior to this she has held a
number of roles including Group Chief Risk Officer
and Director of Group Finance at Prudential plc;
Group CFO at Omega Insurance Holdings Limited;
and CFO UK General Insurance, at Zurich Financial
Services. Penny was previously a non-executive
director of Admiral Group plc from 2015 to 2017.
Committee membership
Nomination Committee
Risk Committee
Other current appointments
Chairman of Logistics Development Group plc
(formerly Eddie Stobart Logistics plc)
Other current appointments
Co-Chair of the FTSE Women Leaders Review
Skills, competence and experience
Moni is a qualified solicitor with a strong
background in international banking and finance
and was a Senior Partner and Board member
of law firm Olswang LLP. She has held a number
of non-executive positions including as a Board
member of Dairy Crest Group plc, Polypipe Group
plc, the Solicitors Regulation Authority (chairing
its Equality, Diversity and Inclusion Committee),
Cranfield University, Deputy Chair of Barnardo’s
and Senior Independent Director of Investec
Bank plc.
Committee membership
Remuneration Committee (Chair);
Nomination Committee; Risk Committee
Other current appointments
Non-Executive Director of easyJet plc
Non-Executive Director and Remuneration
Committee Chair of Cazoo Group
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
68
BOARD OF DIRECTORS
CONTINUED
Non-Executive Directors
continued
General Counsel and
Group Company Secretary
Darren Pope
Independent Non-Executive Director
Michael Morley
Independent Non-Executive Director*
Claire Chapman
Appointed to the Board
September 2022
Appointed to the Board
August 2023
Appointed
October 2021
Skills, competence and experience
Darren has considerable and extensive experience
within the retail banking and financial services
sectors where he held senior and Board level
positions. At present, Darren is Chair of the
Remuneration Committee at Virgin Money plc,
SID and Chair of Audit Committee at Network
International Holdings plc and the Non-Executive
Chairman of Silicon Valley Bank UK Ltd. Until
December 2019 he served as SID and Chair of
Audit Committee with Equiniti plc. Throughout
his career, Darren held several executive banking
and finance roles at Lloyds Banking Group and
was the CFO of TSB Bank plc.
Skills, competence and experience
Michael has over 30 years of executive and board
experience in international financial services with
in-depth knowledge of private banking and wealth
management markets around the world. He was
previously CEO of Coutts and of Deutsche Bank’s
UK wealth management arm and Chair of
RBS International.
Committee membership
Audit Committee (Chair designate)
Risk Committee
Committee membership
Remuneration Committee
Risk Committee
Other current appointments
Non-Executive Director and Remuneration
Committee Chair of Virgin Money plc; Senior
Independent Director and Chair of Audit
Committee of Network International plc;
Non-Executive Chairman of HSBC Innovation Bank
Other current appointments
Non-Executive Director of Deutsche Bank SAEU
(Spain); Non-Executive Director of Deutsche Bank
SA (Switzerland); Senior Independent Director of
Personal Investment Management and Financial
Advice Association; Deputy Chair of Centre for
Mental Health
* Michael was appointed to the Board after the end of the
reporting period.
Hargreaves Lansdown
Report and Financial Statements 2023
Skills, competence and experience
Claire heads up the Legal, Company Secretariat
and Corporate Governance functions. She provides
expert and strategic legal advice across the range
of HL’s businesses and activities, with a focus on
legal and regulatory risk management, mergers
and acquisitions, technology, data and IP,
corporate projects, governance and contracts.
Claire has held General Counsel and also Company
Secretary roles at a range of companies including
most recently at Capita plc and prior to that at
Daily Mail & General Trust plc, Inchcape plc and
Thomson Reuters.
Claire qualified as a lawyer at Freshfields Bruckhaus
Deringer. She has a Masters in International Law
and is a qualified Solicitor, England and Wales and
additionally Attorney, New York.
Committee membership
None
Other current appointments
None
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
69
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING
GOVERNANCE FOR THE FUTURE
The Board is responsible for
promoting the sustainable success
of the Group, generating value for
the Company’s shareholders over
the long term, and contributing to
wider society by building strong
and lasting relationships with its
other stakeholders.
Corporate governance headlines at a glance
including Board composition data as at 30 June 2023
3 out of the 4
senior Board positions are held by women
1 director is from an ethnic minority background
Chair
Senior
Independent
Director
CEO
CFO
4
1
2
3
Board independence
1 Executive Director
2 Chair (independent
upon appointment)
2
1
3
Independent
Non-Executive Director 7
4 Non-Independent
Non-Executive Director 1
2
3
1
Tenure of Board members
1 0-3 years
2 4-6 years
3 6+years
7
3
1
Board gender balance
45% of Board members are women
Hargreaves Lansdown
Report and Financial Statements 2023
Male
Female
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
70
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
Division of responsibilities
The Board recognises the importance of a clear division of
responsibilities between Executive and Non-Executive roles,
and in particular a clear delineation of the Chair’s responsibility
to lead the Board and the Chief Executive Officer’s responsibility
for running the Group’s business. The roles of Chair, Chief
Executive Officer and Senior Independent Director are clearly
defined and have been approved by the Board.
Role of the Chair
The Chair, Deanna Oppenheimer, is responsible for leading the
Board and ensuring that it is effective in discharging its duties.
Her key responsibilities are to:
• Chair the Board, the Nomination Committee and general
meetings of the Company;
• Set the Board agenda and ensure the Board receives
accurate, timely and clear information, and that adequate
time is available for discussion of all agenda items,
in particular strategic issues;
• Set clear expectations concerning the Company’s culture,
values and behaviours and the style and tone of Board
discussions;
• Demonstrate ethical leadership and promote the highest
standards of integrity, probity and corporate governance
throughout the Company and particularly at Board level,
and generally ensure the effective governance of the Group;
• Promote a culture of mutual respect, openness and debate
by facilitating the effective contribution of Non-Executive
Directors, develop productive working relationships with
the Chief Executive Officer and Chief Financial Officer, and
ensure there are constructive relations between Executive
and Non-Executive Directors generally;
• Encourage all Board members to engage in Board and
Committee meetings by drawing on their skills, experience,
knowledge and, where appropriate, independence;
• Ensure effective communication with the Company’s
shareholders and other stakeholders, and that the Board
is made aware of their views; and
• Ensure that the performance of the Board, its Committees
and individual Directors is evaluated at least once a year
and that the results of the evaluation are acted upon.
Hargreaves Lansdown
Report and Financial Statements 2023
Role of the Chief Executive Officer
The Board delegates responsibility for the executive leadership
of the Group’s business to its Chief Executive Officer (CEO).
During the year ended 30 June 2023 this was Chris Hill with
Dan Olley taking on the role from 7 August 2023. The CEO’s
main responsibilities are to:
• Lead the senior management team in the day to day running
of the Group’s business in accordance with the Board
approved strategic objectives;
• Chair the Group Executive Committee in its oversight of
the performance of the Group against the Board approved
strategic objectives and communicate any decisions and
recommendations to the Board;
• Review the operational performance and strategic
direction of the Group’s business;
• Ensure that appropriate systems of internal control and
risk management are in place and operating in accordance
with the Group’s risk appetite approved by the Board; and
• Together with the Chair, provide a coherent leadership of
the Group and promote adherence to its culture and values.
Role of the Senior Independent Director
The Senior Independent Director plays an important role in
supporting the Chair on governance issues, contributing to
the culture of open and honest communication between the
Chair and the other members of the Board, and providing an
additional point of contact for the Company’s shareholders.
Penny James provides an overview of her role as Senior Independent Director (SID)
What does the role of the SID encompass?
A key, and consistent part of my role is to be available to
assist the Chair of HL. This can take a variety of forms but
mainly it's to discuss and provide insight and guidance on
issues relating to the Group’s governance, the performance
of the Board and individual Directors. But it can be broader
and cover any concerns raised by Directors, the Company’s
shareholders or the Group’s colleagues.
Each year I also lead the other Non-Executive Directors in
carrying out Deanna’s annual performance review. This
includes meeting with the Non-Executive Directors without
the Chair and Executive Directors present to collect feedback
whilst also monitoring Deanna’s performance during the year.
I also take note of her relationship with the CEO to ensure it
functions well.
As SID, a key responsibility is to lead the process for the
selection and appointment of a new Chair and Chair of the
Nomination Committee. As Deanna nears the end of her
tenure and the successful transition into role of our new CEO
I am focused on preparing for her succession at the relevant
time and facilitating the Board’s evaluation process including
taking into account stakeholder views.
Is it a wholly internal role?
The role of the SID is equally an outwards looking one as
I am available to shareholders – particularly in circumstances
where it would be inappropriate for them to meet with others
such as the Chair.
For example this year, I contacted HL’s main institutional
shareholders to follow up with them following the votes
against both the Chair and the Remuneration Committee
Chair that were recorded at last year’s AGM1.
Having considered the feedback from that process I, and the
whole Board, remain supportive of both the Chair and the
Remuneration Committee Chair and I would like to thank all
the shareholders that took the time to engage with me and
provide feedback.
1 Resolution six (re-election of Deanna Oppenheimer, Non-Executive Director and
Chair) and resolution thirteen (re-election of Moni Mannings, Non-Executive
Director and Remuneration Committee Chair) both received less than 80% of the
overall vote at the Company’s AGM held on 19 October 2022.
71
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
Non-Executive Directors
The role of the Non-Executive Directors is to constructively
challenge and help develop proposals on strategy and play a
leading role in monitoring and scrutinising the performance of
the Group’s Executive Committee in meeting agreed goals and
objectives. The Non-Executive Directors are also responsible for
determining appropriate levels of remuneration for the Executive
Directors, and play a prime role in appointing and, where
necessary, removing Executive management.
The Nominated Director (Adrian Collins) is an appointee of a
shareholder and is not independent under the Code. However,
all the Non-Executive Directors are independent of management
and bring valuable skills, experience and an external perspective
to the business conducted by the Board, as well as offering
specialist advice in their fields of expertise.
The independent Non-Executive Directors also play an
important role as members of the Board’s Committees.
Group Company Secretary
All the Directors have access to the advice and services of the
Group Company Secretary. The Group Company Secretary is
responsible for working with the Chair to develop and maintain
the policies and processes required to enable the Board to
function effectively and efficiently, and for ensuring the Board
has the information, time and resources it needs.
The Group Company Secretary is also responsible for advising
the Board on corporate governance matters and for ensuring
procedures are followed and applicable rules and regulations
complied with.
The appointment and removal of the Group Company
Secretary is a matter reserved for the Board. During the
period under review, Claire Chapman held the role of
Group Company Secretary.
Meeting attendance and information provided to the Board
HL plc Board
6 meetings
Audit Committee
7 meetings
Deanna Oppenheimer
plc Board Chair
6/6
CHAIR
Chris Hill
Chief Executive Officer
Amy Stirling
Chief Financial Officer
Penny James
Senior Independent Director
Andrea Blance
Independent NED &
Risk Committee Chair
Adrian Collins
Non Independent NED
Nominated Director
Moni Mannings
Independent NED &
Remuneration Committee Chair
Dan Olley*
Independent NED
(CEO from 7 August 2023)
Roger Perkin**
Independent NED &
Audit Committee Chair
Darren Pope†
Independent NED
John Troiano
Independent NED
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
5/5
6/6
n/a
n/a
n/a
n/a
7/7
n/a
n/a
n/a
7/7
CHAIR
6/6
7/7
Nomination
Committee
5 meetings
5/5
CHAIR
n/a
n/a
5/5
5/5
n/a
5/5
n/a
5/5
n/a
n/a
Remuneration
Committee
6 meetings
Risk Committee
6 meetings
6/6
n/a
n/a
6/6
n/a
n/a
6/6
CHAIR
4/5
1/1
n/a
6/6
n/a
n/a
n/a
5/6
6/6
CHAIR
n/a
6/6
6/6
6/6
5/5
6/6
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
72
Hargreaves Lansdown
Report and Financial Statements 2023
* Dan Olley stepped down from the Remuneration Committee on 28 April 2023. In addition he was recused from one meeting during his membership of the Committee.
** Roger Perkin was appointed to the Remuneration Committee on 28 April 2023.
† Darren Pope was appointed the plc Board, Audit Committee and Risk Committee on 1 September 2022.
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
Board meeting attendance is shown for all scheduled Board
meetings during the year including an in person Strategy Day
in December 2022 to assess progress against the execution of
the Group Strategy. Outside of the scheduled Board cycles, the
Board may meet to discuss or otherwise consider and approve
matters on an ad hoc basis, such as appointments to the Board
and other senior positions within the Group, or other material
and time critical matters. The Non-Executive Directors also
meet periodically without the Executive Directors present.
These sessions have been held via a mixture of remote,
hybrid and face to face meetings to make best use of
time and work efficiently.
The Board also met with members of the Executive Committee
and other senior management. There have also been a number
of ‘drop in’ and demonstration sessions during the year for the
Board covering items including: ICARA; FCA’s Consumer Duty;
and individual Strategic Pillars of HL’s Strategy.
Supported by the Group Company Secretary, the Board is
satisfied that it has the policies, processes, information, time
and resources required in order for it to function effectively
and efficiently. Comprehensive Board packs and agendas
are circulated prior to meetings to ensure Directors have the
opportunity to consider the issues to be discussed so that more
time at meetings can be dedicated to constructive challenge
and strategic discussion. Directors are expected to attend all
meetings. However, when a Director is unavoidably unable
to attend all or part of a meeting, they are able to provide
comments on the papers to the Chair before the meeting.
Board make up and supporting elements
Board composition, balance and diversity
The structure, size and composition of the Board is regularly
reviewed to ensure that the balance between Executive
and Non-Executive Directors allows it to exercise objectivity
and that no individual or small group of individuals dominates
decision making. In addition the Nomination Committee
regularly reviews the size, structure and composition of the
Board and its Committees to ensure an appropriate and diverse
mix of skills, experience, knowledge, backgrounds and personal
strengths. The Non-Executive Directors have strong and
relevant experience across all aspects of financial services
and the Board as a whole is considered to have an appropriate
balance of skills and experience for the requirements of the
Group’s business.
Consideration of the length of service of Directors is a key
element of the wider consideration of Board composition and
succession planning, and for Non-Executive Directors it is an
important aspect that is considered in determining continued
independence. The Group maintains clear records of the terms
of service of the Chair and Non-Executive Directors to ensure
continued compliance with the tenure requirements in the Code.
The Chair has held the position since her appointment to the
Board in February 2018 and, as at the date of this report, none
of the Non-Executive Directors has served on the Board for
more than nine years from the date of their first appointment.
Diverse pools of candidates are considered for vacancies and in
succession planning, and any appointments are based on merit
and objective criteria. Further details on the Group’s approach
to diversity and inclusion when considering Board appointments
and succession planning, and how the approach promotes
diversity of gender, social and ethnic backgrounds, cognitive
and personal strengths, can be found in the Nomination
Committee report on pages 120 to 124.
As at 30 June 2023 45% of Board members are female with
one Board member being from a minority ethnic background.
Women hold the following three of four senior roles: Chair,
Senior Independent Director and Chief Financial Officer.
The Board also recognises and embraces the clear benefits
of diversity at Board Committee level. As such consideration
is given to the wider Board diversity policy when looking at
the make up of Committees with the aim of driving diversity
of membership and thought. When making appointments to its
Committees (including the Audit, Nomination, Remuneration and
Risk Committees) the Board has regard to the skills, experience
and diversity of the Committees and their needs. As a result
as at 30 June 2023, Board Committee gender diversity
was as follows: Board Audit Committee – 25% female,
Board Remuneration Committee – 50% female, Board Risk
Committee – 50% female and Board Nominations Committee
– 80% female.
Board appointment process
The Nomination Committee leads the process for Board
appointments, details of which can be found in the Nomination
Committee report on pages 120 to 124. Non-Executive Directors
are appointed for fixed terms of three years, subject to election
or re-election by the Company’s shareholders at each AGM.
At the end of each term, Non-Executive Directors may be
appointed for further three-year terms provided the Board
is satisfied with the individual’s performance and that
he or she remains independent and able to devote
sufficient time to the role.
Hargreaves Lansdown
Report and Financial Statements 2023
73
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
Time Commitments
Board members are required to disclose significant time
commitments prior to their appointment, and candidates’
existing time commitments are taken into account by the
Board when considering new appointments. On joining the
Board, Non-Executive Directors receive a formal letter of
appointment setting out the time commitment expected
of them. Once they have met all approval and induction
requirements, Non-Executive Directors are currently expected
to commit a minimum of 30 days per annum to their roles.
This expectation is calculated based on attendance at and
preparing for Board meetings, meeting with senior management
and the Company’s shareholders, and attending strategy days,
Board dinners and training. Additional time commitments may
apply where a Non-Executive Director takes on an additional
role such as chairing a Committee.
The Board considers that each of the Non-Executive Directors
has sufficient time to meet their responsibilities both to the
Board and any Committees of which they are a member.
This is kept under review by the Nomination Committee and
more detail can be found in its report on pages 120 to 124.
Darren Pope joined the Board in September 2022 and shares his insights
Why did you want to join HL?
I think the history of HL is just tremendously inspiring and
given I lived in the West Country for 15 years it's a history
I am very familiar with. It really is "the" iconic west country
financial services business. But more than that, looking
forward, I was inspired by a business that already has scale
and tremendous insight into its customers but with an
ongoing purpose that will continue to meet critical and
growing customer needs and meets these needs with
a passion for customer service at its core.
What are your first impressions of HL?
So positive! Colleagues are full of enthusiasm and energy
– wanting to continually improve products and services for
clients. Everyone is very conscious of the trust placed in us
by our clients and as such very focused on doing the right
thing. Colleagues take a real pride in working for HL. There
is of course a tremendous amount to do to fully deliver on
our strategy and potential but I am completely reassured
that we have the right people, motivated to execute this
for all our stakeholders.
What do you bring to HL, its Board and its members?
I have extensive experience of financial services from a
number of different companies in a number of different roles.
As an ex-CFO of a listed bank I think I can bring real world
experience of value creation, public markets and regulatory
expectations. As a current non-executive of retail banks and a
payments company I think there is sufficient common ground
to allow me to bring the best of each of these companies to
help shape HL. Of course over a long career you will
inevitably have experienced things that have not gone so
well and I think it's equally important to bring those instincts
into the role to help spot potential challenges very early.
My preference has always been to work with genuinely
customer focused businesses with strong brands and HL
is no exception to this.
What is your current focus?
Along with the rest of the board we have a critical role in
supporting management in delivering a strategy that
accelerates growth and improves client service while further
developing our digital and operational capability. We need
to do this in challenging market conditions. I am absolutely
confident that we will deliver and I am very excited to
welcome Dan as our new CEO to continue this journey from
Chris. More specifically for me I am focused on getting fully
up to speed on succeeding Roger as chair of the Audit
Committee where he has done an extraordinary job.
Induction
The Chair is responsible, with the support of the Group
Company Secretary, for arranging a comprehensive induction
programme for all new Directors. Inductions are tailored to the
individual following a skills gap analysis, and have regard to
their background, knowledge and previous experience both
professionally and as a Director. Induction programmes include
meetings with a variety of key stakeholders to provide the
Director with a thorough overview of the Group’s business
and the environment within which it operates. This includes
meetings with the Chair, Chief Executive Officer, Chief Financial
Officer and other members of the Board, as well as meetings
with senior management, heads of business areas and technical
experts, to gain a detailed insight into the operation of the
business and its culture. The Group Company Secretary and
Group Chief Risk Officer will also meet with the Director to
provide an overview of the Group’s corporate governance
and risk management frameworks respectively.
Hargreaves Lansdown
Report and Financial Statements 2023
74
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
Ongoing Professional development
An ongoing programme of training is available to all members
of the Board. During the period under review, this has
included training sessions for the Board the following topics:
• Consumer Duty
• Directors’ Duties
• Legal landscape
• Proposed audit changes (BEIS)
• Annual Report and Accounts developing trends and best
practice
• Diversity & Inclusion
• Evolving political landscape and HL as a responsible business
The Board also had a number of demonstration sessions
aligned to the execution of the strategy which included:
an overview of new Helpdesk support technology; a deep
dive on guidance and advice; and Business Transformation.
Training is also arranged to align to any specific development
needs identified by the annual Board evaluations, and individual
Directors are encouraged to devote an element of their time
to self-development.
External appointments
Directors are required to consult the Board prior to undertaking
any additional external appointments. Neither of the Executive
Directors currently holds any significant external appointments.
Please see biographical information on Board members on
pages 66 to 69 for any further detail.
Independence
On her appointment as Chair, Deanna Oppenheimer
satisfied the independence criteria set out in the Code.
The Board considers that each of Andrea Blance, Moni
Mannings, Michael Morley, Penny James, Roger Perkin, Darren
Pope and John Troiano are independent. In each case when
assessed against the criteria set out in the Code. Adrian Collins
is not considered independent because he is appointed by
a major shareholder. Dan Olley was considered independent
during his time as a Non-Executive Director until his transition
to the CEO role on 7 August 2023. As such, throughout the
period under review, the Board has therefore satisfied the
Code requirement that at least half of the Board, excluding
the Chair, comprises Non-Executive Directors determined to
be independent. This is kept under review by the Nomination
Committee and more detail can be found in its report
on pages 120 to 124.
Director election and re-election
In accordance with the requirements of the Code and the
Company’s Articles of Association, all Directors will stand
for election or re-election, as relevant, at this year’s AGM.
Information on how the Board evaluates the effectiveness and
contribution of each Director can be found in the Nomination
Committee report on pages 120 to 124. The Notice of AGM
will include specific details of why the Board considers that
the contribution of the Directors seeking election or re-election
is, and continues to be, important to the Group’s long-term
sustainable success.
Board leadership and Company purpose
The Board sets the Group’s purpose, values and strategy, and
is responsible for developing and overseeing its framework of
governance, risk management and internal controls to ensure
that its business is managed effectively in an environment that
promotes and safeguards its future success.
You can read more about the Board’s role in setting and
monitoring the Group’s strategic priorities on pages 76 to 78
and in the Group’s Section 172 Statement on pages 132 to 135.
Through specific dashboards aligned to the key focus areas
of our strategy, the Board monitors and reviews progress
against targets. These dashboards are used throughout
the Group, ensuring alignment on execution and targets.
Additionally, how the Board has considered the Group’s
opportunities and risks, the sustainability of its business
model, and how governance around the Group’s risk
management framework contributes to the delivery
of its strategic objectives, is set out on pages 53 to 62.
The Board also plays a key role in setting the Group’s culture
and monitoring how it is being embedded to ensure alignment
with the Group’s business priorities. The Board has been
involved in a number of ongoing key initiatives including
the further development and evolution of the HL Way
(for information on the HL Way please see page 40), more
accessible and effective communication of the Group’s strategy
and vision to create a clearer sense of purpose and common
goals and improvements to the KPIs used to oversee culture.
You can read more about the Group’s values and how
the Group’s approach to investing in and rewarding its
workforce aligns to those values on pages 40 and 44
of the Strategic Report.
Hargreaves Lansdown
Report and Financial Statements 2023
75
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
Engagement with stakeholders
The Board recognises that active engagement with the
Company’s key stakeholders is fundamental to promoting the
Group’s long-term success. Details of how the Group engages
with its key stakeholders can be found on pages 18 to 19, and
information on how stakeholder interests have been considered
by the Board can be found in the Group’s Section 172 Statement
on pages 132 to 135.
Investor relations
The Board recognises the importance of maintaining good
communication with the Company’s shareholders and there is a
comprehensive investor relations programme in place to ensure
effective engagement.
The Chief Executive Officer, Chief Financial Officer and
Head of Investor Relations regularly meet with the Company’s
major shareholders to discuss performance and strategy.
This includes a series of investor roadshows following the
release of the Group’s interim and full year results, and other
meetings throughout the year, both one-on-one and in groups
at investor conferences. The Chair also meets or speaks with
the Company ’s shareholders throughout the year, including
attending a series of governance roadshows, and the Senior
Independent Director, Head of Investor Relations and Group
Company Secretary are available to major shareholders who
wish to raise questions. The Committee Chairs are available
to meet with shareholders to discuss matters relevant to
their roles. The outcome of interactions with the Company’s
shareholders are regularly fed back to the Board to ensure
that, as a whole, it has a clear understanding of shareholder
views. To provide further perspective, analyst and broker
briefings are regularly provided to the Board. The appointment
of Adrian Collins as the Nominated Director, provides the Board
with insights from a founder shareholder, Peter Hargreaves,
on issues considered by the Board, as appropriate.
The Board also considers the Report and Financial Statements
to be an important medium for communicating with the
Company’s shareholders. The Board aims to use the narrative
sections to provide detailed reviews of the Group’s business and
its future development in an engaging way that is accessible to
all. Similarly, the Company’s AGM is used as an opportunity to
engage directly with shareholders and share with them the
Board’s review of performance and its vision for the future.
Further details will be set out in the Notice of AGM that will
be circulated ahead of the meeting.
This year, following the 2022 AGM where votes of less than 80%
in favour were received for resolution six (re-election of Deanna
Oppenheimer, Non-Executive Director and Chair) and resolution
thirteen (re-election of Moni Mannings, Non-Executive Director
and Remuneration Committee Chair) the Senior Independent
Director sought further inputs on the voting from HL’s main
institutional shareholders. Having considered the feedback
from that process the Board remains supportive of both
individuals.
Colleagues
The Board believes that the Group’s people are key to its
long-term success. It ensures that the Group’s people policies
and practices promote its values to support that success.
Further information on the Group’s Responsible Employer
strategy and the policies and procedures in place to achieve its
aims, including the Group’s approach to engaging with, investing
in and rewarding its workforce, can be found on page 40.
The Board also recognises the importance of engaging
with the Group’s workforce for the long-term success of the
business. The HL Colleague Forum was set up in January 2019
as a formal workforce advisory panel to create a direct link
between colleagues and the Board on matters of strategic
importance. Further insight is obtained on colleague views
through the Group’s annual colleague survey, and half yearly
pulse surveys. The views of colleagues have been sought on
a more regular basis via additional pulse surveys and focus
groups so that we can quickly respond to colleague sentiment
and obtain colleague insights on particular topics.
The Board believes in creating a culture of openness and
colleagues are encouraged to share their views, ideas and work
experiences. Similarly, colleagues are encouraged to raise any
concerns in confidence, and the Group has a formal policy on
whistleblowing to ensure colleagues who do speak out are
protected. Further information can be found on page 84
of the Audit Committee Report.
Governance framework
The Board operates within a formal schedule of matters
reserved, with certain responsibilities being delegated to its
permanent Committees. Details of matters reserved for the
Board can be found on page 77. The detailed responsibilities
of the Board’s Nomination, Audit, Risk and Remuneration
Committees, along with an overview of how they have
discharged those responsibilities during the year, can be found
in the Committee reports on pages 80 to 127. The Chair of each
of the Committees reports to the Board at each meeting on its
activities since the previous meeting, and the Board keeps
under review the terms of reference of each to ensure it is
continuing to operate effectively
Responsibility for matters that are not specifically reserved
to the Board is delegated to the Chief Executive Officer.
This includes oversight of the Group’s performance, delivery
against the strategy approved by the Board, and the effective
management of day-to-day operations within the governance,
risk and internal control frameworks it has developed. The Chief
Executive Officer has an established Executive Committee to
assist him in discharging these responsibilities. The Chief
Executive Officer also receives reports from the Conflicts
Committee about improving the Group’s framework for
identifying, mitigating and protecting against conflicts of interest,
and to ensure appropriate measures are in place to mitigate
conflicts of interests between the Group’s principal operating
subsidiaries and between HL, its colleagues and clients.
Details of the roles and responsibilities of the participants in the
Company’s governance framework can be found on pages 71
and 72.
The Group’s principal operating subsidiaries carry out its business
of providing regulated financial products and services. The boards
of the principal operating subsidiaries include various members
of the Executive Committee, with independent Non-Executive
Directors also sitting on the Board of Hargreaves Lansdown
Fund Managers Ltd in line with regulatory requirements. Each
board is responsible for ensuring that its business is operated in
accordance with relevant legal and regulatory requirements, within
the framework of the strategy, culture and policies determined
by the Board. The subsidiary boards are assisted by Group level
Hargreaves Lansdown
Report and Financial Statements 2023
76
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
CORPORATE GOVERNANCE REPORT
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
Hargreaves Lansdown plc Board
Hargreaves Lansdown plc Board
Hargreaves Lansdown plc Board
Hargreaves Lansdown plc Board
Schedule of matters reserved:
Schedule of matters reserved:
Schedule of matters reserved:
Schedule of matters reserved:
• Approval of the Group’s strategic
• Approval of the Group’s strategic aims
• Approval of the Group’s strategic
• Approval of the Group’s strategic aims
aims and objectives
and objectives
aims and objectives
and objectives
• Approval of annual operating
• Approval of annual operating
• Approval of the annual operating and
• Approval of the annual operating and
and capital expenditure budgets
and capital expenditure budgets
capital expenditure budgets
capital expenditure budgets
• Reviewing performance in light
• Reviewing performance in light
• Reviewing performance in light of
• Reviewing performance in light of
of strategic aims and objectives
of strategic aims and objectives
strategic aims and objectives
strategic aims and objectives
• Setting the Group’s values
• Setting the Group’s values
• Setting the Group’s values and
• Setting the Group’s values and
• Overseeing the Group’s operations
• Overseeing the Group’s operations
• Overseeing the Group’s operations
• Overseeing the Group’s operations
and standards
and standards
standards
standards
and management
and management
and management
and management
• Approval of the Group’s purpose and
• Approval of the Group’s purpose and
• Approval of the Group’s purpose and
• Approval of the Group’s purpose and
ensuring that its purpose, values and
ensuring that its purpose, values and
ensuring that this, its values and
ensuring that this, its values and
strategy are aligned with its culture
strategy are aligned with its culture
strategy are aligned with its culture
strategy are aligned with its culture
• Ensuring the maintenance of a
• Ensuring the maintenance of a
• Ensuring the maintenance of a sound
• Ensuring the maintenance of a sound
sound system of internal controls
sound system of internal controls
system of internal controls and risk
system of internal controls and risk
and risk management
and risk management
management
management
• Approval of the Group’s annual
• Approval of the Group’s annual
• Approval of the Group’s annual report
• Approval of the Group’s annual report
report and accounts and interim
report and accounts and interim
and accounts and interim financial
and accounts and interim financial
financial statements
financial statements
statements
statements
• Approval of major capital projects
• Approval of major capital projects
• Approval of major capital projects
• Approval of major capital projects
• Approval of communications
• Approval of communications
• Approval of communications to the
• Approval of communications to the
to the Company s shareholders
’
to the Company’s shareholders
Company’s shareholders
Company’s shareholders
’
• Approval of the Company s dividend
• Approval of the Company’s dividend
• Approval of the Company’s dividend
• Approval of the Company’s dividend
’
’
• Ensuring adequate succession
• Ensuring adequate succession
• Ensuring adequate succession
• Ensuring adequate succession
policy and payments
policy and payments
policy and payments
policy and payments
planning, agreeing Board
planning, agreeing Board
planning, agreeing Board appointment
planning, agreeing Board appointment
appointments and the appointment or
appointments and the appointment or
and the appointment or removal of
and the appointment or removal of
removal of the Company Secretary
removal of the Company Secretary
the Company Secretary
the Company Secretary
• Determining remuneration
• Determining remuneration
• Determining the remuneration policy
• Determining the remuneration policy
policy for Executive Directors
policy for Executive Directors
for the Executive Directors
for the Executive Directors
Audit Committee
Audit Committee
Audit Committee
Audit Committee
• Monitors the integrity of the
• Monitors the integrity of the
• Monitors the integrity of the
• Monitors the integrity of the
Group’s financial reporting
Group’s financial reporting
Group’s financial reporting
Group’s financial reporting
• Monitors the adequacy and
• Monitors the adequacy and
• Monitors the adequacy and
• Monitors the adequacy and
effectiveness of the Group’s
effectiveness of the Group’s
effectiveness of the Group’s
effectiveness of the Group’s
internal controls
internal controls
internal controls
internal controls
• Oversees the Group’s relationship
• Oversees the Group’s relationship
• Oversees the Group’s relationship
• Oversees the Group’s relationship
with its external auditor and the
with its external auditor and the
with its external auditor and the
with its external auditor and the
effectiveness of the Internal
effectiveness of the Internal
effectiveness of the Internal
effectiveness of the Internal
Audit function
Audit function
Audit function
Audit function
Nomination Committee
Nomination Committee
Nomination Committee
Nomination Committee
• Monitors the composition of
• Monitors the composition of
• Monitors the composition of
• Monitors the composition of
the Board to ensure it remains
the Board to ensure it remains
the Board to ensure it remains
the Board to ensure it remains
appropriate
appropriate
appropriate
appropriate
• Recommends appointments to
• Recommends appointments to
• Recommends appointments to
• Recommends appointments to
the Board and its Committees
the Board and its Committees
the Board and its Committees
the Board and its Committees
• Conducts succession planning for
• Conducts succession planning for
• Conducts succession planning for
• Conducts succession planning for
the Board and senior management
the Board and senior management
the Board and senior management
the Board and senior management
• Oversees the annual evaluation
• Oversees the annual evaluation
• Oversees the annual evaluation
• Oversees the annual evaluation
of the Board’s effectiveness
of the Board’s effectiveness
of the Board’s effectiveness
of the Board’s effectiveness
Remuneration Committee
Remuneration Committee
Remuneration Committee
Remuneration Committee
• Oversees and keeps under review
• Oversees and keeps under review
• Oversees and keeps under review
• Oversees and keeps under review
the remuneration policies for
the remuneration policies for
the remuneration policies for
the remuneration policies for
Executive Directors, Material Risk
Executive Directors, Material Risk
Executive Directors, Material Risk
Executive Directors, Material Risk
Takers and colleagues generally
Takers and colleagues generally
Takers and colleagues generally
Takers and colleagues generally
• Determines total remuneration
• Determines total remuneration
• Determines total remuneration
• Determines total remuneration
for Executive Directors, senior
for Executive Directors, senior
for Executive Directors, senior
for Executive Directors, senior
management and Material Risk
management and Material Risk
management and Material Risk
management and Material Risk
Takers, and associated targets
Takers, and associated targets
Takers, and associated targets
Takers, and associated targets
for performance related pay
for performance related pay
for performance related pay
for performance related pay
Risk Committee
Risk Committee
Risk Committee
Risk Committee
• Reviews and advises the Board on
• Reviews and advises the Board
• Reviews and advises the Board
• Reviews and advises the Board on
changes to the Group’s risk
on changes to the Group’s risk
on changes to the Group’s risk
changes to the Group’s risk
appetite, risk profile and future risk
appetite, risk profile and future
appetite, risk profile and future
appetite, risk profile and future risk
strategy
risk strategy
risk strategy
strategy
• Monitors the effectiveness and
• Monitors the effectiveness and
• Monitors the effectiveness and
• Monitors the effectiveness and
improvements being made to the
improvements being made to
improvements being made to
improvements being made to the
Group’s risk management
the Group’s risk management
the Group’s risk management
Group’s risk management
framework
framework
framework
framework
• Oversees the delivery of the
• Oversees the delivery of the
• Oversees the delivery of the
• Oversees the delivery of the
Group’s ICAAP/ICARA
Group’s ICARA
Group’s ICARA
Group’s ICAAP/ICARA
Conflicts Committee
Conflicts Committee
Conflicts Committee
Conflicts Committee
• Oversees the Group’s conflicts of interest policy
• Oversees the Group’s conflicts of interest policy
• Oversees the Group’s conflicts of interest policy
• Oversees the Group’s conflicts of interest policy
and framework
and framework
and framework
and framework
• Reviews conflicts of interest within the Group, the
• Reviews conflicts of interest within the Group, the
• Reviews conflicts of interest within the Group, the
• Reviews conflicts of interest within the Group, the
sufficiency of mitigating measures and determines
sufficiency of mitigating measures and determines
sufficiency of mitigating measures and determines
sufficiency of mitigating measures and determines
appropriate action where material conflicts arise
appropriate action where material conflicts arise
appropriate action where material conflicts arise
appropriate action where material conflicts arise
Chief Executive
Chief Executive
Chief Executive
Chief Executive
Officer
Officer
Officer
Officer
Responsible for executive leadership
Responsible for executive leadership
Responsible for executive leadership
Responsible for executive leadership
of the Group in accordance with
of the Group in accordance with
of the Group in accordance with
of the Group in accordance with
Board-approved strategic objectives
Board-approved strategic objectives
Board-approved strategic objectives
Board-approved strategic objectives
Group Executive
Executive Committee
Group Executive
Executive Committee
Committee
Committee
Established by the Chief Executive
Established by the Chief Executive
Officer to help him discharge his
Officer to help him discharge his
Established by the Chief Executive
Established by the Chief Executive
duties
duties
Officer to help him discharge his
Officer to help him discharge his
duties
duties
Group Management Committees
Group Management Committees
Group Management Committees
Group Management Committees
• Support the Group Executive Committee in its oversight
• Support the Group Executive Committee in its oversight
• Support the Group Executive Committee in its oversight
• Support the Group Executive Committee in its oversight
of matters including: Risk, Conduct and Client Outcomes,
of matters including: Risk, Conduct and Client Outcomes,
of matters including: Risk, Conduct and Client Outcomes,
of matters including: Risk, Conduct and Client Outcomes,
Product Governance, Remuneration and Operational
ESG, Product Governance, Remuneration and Operational
Product Governance, Remuneration and Operational
ESG, Product Governance, Remuneration and Operational
Resilience
Resilience
Resilience
Resilience
Hargreaves Lansdown
Hargreaves Lansdown
Report and Financial Statements 2023
Report and Financial Statements 2023
S
S
t
t
r
r
a
a
t
t
e
e
g
g
c
c
i
i
r
r
e
e
p
p
o
o
r
r
t
t
G
G
o
o
v
v
e
e
r
r
n
n
a
a
n
n
c
c
e
e
i
i
F
F
n
n
a
a
n
n
c
c
a
a
i
i
l
l
s
s
t
t
a
a
t
t
e
e
m
m
e
e
n
n
t
t
s
s
O
O
t
t
h
h
e
e
r
r
i
i
n
n
f
f
o
o
r
r
m
m
a
a
t
t
i
i
o
o
n
n
77
77
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
and subsidiary level management committees constituted
to assist in the day-to-day management of the business.
Board activities and allocation of time
The Board devoted a significant amount of time during the
period under review to overseeing the implementation of the
revised Group Strategy which was launched at our Capital
Markets Day on 22 February 2022. The Board was fully engaged
in its development and continues to be so during its execution
with deep dives into each of the strategic pillars carried out
during the year. The Board also spent time overseeing the
Group’s ongoing business performance including regular
updates from the Chief Executive Officer and other members
of the Executive Committee and the review and approval of
the Group’s annual operating plan. The Board has continued
to receive periodic reports relating to events arising out of the
suspension of, and subsequent decision by Link Asset Services
to wind up, the LF Equity Income Fund (formerly Woodford
Equity Income Fund).
The following chart illustrates the time spent by the Board on
matters within the categories stated.
Overview of the Board’s activities in the year
to 30 June 2023
21%
Governance, risk
and regulatory
8%
Standard items
including updates
from Remuneration
and Nomination
Committees
27%
Finance, reporting
and audit
Other key matters considered by the Board during the
period under review include:
• Business performance, through regular updates from
the Chief Executive Officer;
• Progress against strategic initiatives, via the Chief Executive
Officer’s regular deep dives into strategic pillars including:
‒ Demonstration of new Helpdesk support technology,
(Client Service & Efficiency);
‒ Investment Solutions and Active Savings (Growth);
‒ Cyber security and the evolving threat landscape
(Digital Backbone);
‒ Developing the colleague value proposition
(People & Culture); and
‒ Transformation Office (Foundations).
• Deep dives into the change delivery framework, Helpdesk
performance and associated transformation and client needs;
• Financial performance and investor relations, via the Chief
Financial Officer’s regular updates;
• The Group’s liquidity and capital adequacy, and the approval
of its 2022 ICARA;
• Approval of the Group’s operating plan;
• Maintaining oversight of the Group’s risk management
framework, and approval of its operational resilience
self assessment;
• Maintaining oversight of potential or actual material
litigation and/or regulatory reviews;
• Monitoring the status of the Group’s reputation;
• Approval of updates to the Group’s key policies, including
conflicts of interest, whistleblowing, human rights, tax
strategy and Board diversity;
• Progress of recommended actions from the annual evaluations
44%
Business
performance
and strategy
of Board performance, including further embedding best
practice and developing the resilience and expertise of
the Board; and
• Receiving progress updates against readiness for the
Consumer Duty.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
ESG and sustainability
As part of its role in overseeing the Group’s long term strategy
the Board engages in topics relating to ESG, climate change
and sustainability. For more information on our ESG governance
please see the TCFD report on pages 45 to 51.
Audit, risk and internal control
Audit
The Board is responsible for establishing the policies and
procedures that ensure the independence and effectiveness
of the Group’s Internal Audit function and the external auditor,
and for satisfying itself as to the integrity of the financial and
narrative statements in the Report and Financial Statements.
The Board delegates responsibility to its Audit Committee to
oversee the Group’s Internal Audit function and the Group’s
relationship with its external auditor. The Audit Committee is
also responsible for monitoring the integrity of the Group’s
financial reporting and the processes and controls that
support it, and for advising the Board as to whether the
Report and Financial Statements provide a fair, balanced and
understandable assessment of the Company’s position and
prospects. The terms of reference for the Audit Committee
can be found here: www.hl.co.uk/about-us/board-of-directors
The main features of the Group’s internal control and risk
management systems that ensure the accuracy and integrity
of its financial reporting include:
• The utilisation of appropriately qualified and experienced
colleagues, and regular knowledge sharing within the team;
• The use of appropriate information security and access
controls around the key systems used in the Group’s financial
reporting processes;
• Appropriate segregation of duties to ensure that no individual
controls the end-to-end process;
• Continuing enhancements to the Group’s Risk Management
Framework including robust risk identification, assessment
and management;
Hargreaves Lansdown
Report and Financial Statements 2023
78
CORPORATE GOVERNANCE REPORT
FURTHER STRENGTHENING GOVERNANCE FOR THE FUTURE CONTINUED
• Detailed processes and controls around the reconciliation
of the Group’s office accounts, the recognition of revenue
and the Group’s tax balances, and payment processes; and
• A detailed process of reconciliation and review by
management of data extracted from the general ledger
system for the production of management accounts.
Further details can be found in the Audit Committee report
on pages 80 to 84. Statements from the Board as to the
adoption of the going concern basis for preparing the financial
statements and the Board’s responsibility for preparing the
Report and Financial Statements can be found on page 131
of the Directors’ Report and the Statement of Directors’
Responsibilities on page 136 respectively.
Risk management and internal controls
The Board is responsible for the systems of risk management
and internal control and for reviewing their effectiveness. It is
responsible for establishing procedures for risk management
and for monitoring the Group’s risk management framework
and system of internal controls. There is an ongoing process for
identifying, evaluating and managing the principal risks faced by
the company with systems having been in place for the period
under review and up to the date of this report. The Board
delegates responsibility for monitoring those systems to its
Audit and Risk Committees, and each carries out an annual
review of their effectiveness on the Board’s behalf. Together,
this review covers all material controls, including financial,
operational and compliance controls and risk management
systems. The crossover of membership between the Audit
Committee and Risk Committee assists in the exchange of
relevant issues and the facilitation of associated discussions.
Following review by its Committees, the Board is satisfied that
the Group’s risk management and internal control systems are
adequate and have continued to improve throughout the period
under review. The Board continues to encourage the continued
enhancements to risk management and maturity, aligned to
the Group’s scale and complexity as it continues to grow and
implement the strategy. Further information of the continued
enhancements planned can be found on page 126 of the Risk
Committee report.
The Board is also responsible for determining the nature and
extent of the principal risks the Group is willing to take in order
to achieve its long-term strategic objectives. Supported by the
Risk Committee, the Board carries out a robust assessment of
the Group’s emerging and principal risks when assessing the
prospects of the Company over the longer term. The outcome
of that assessment, along with a description of the Group’s
principal risks, the procedures in place to identify emerging
risks, and an explanation of how these risks are managed
or mitigated can be found on pages 53 to 62.
A description of the main features of the Group’s risk
management and internal control systems, including the
‘three lines of defence model’, can be found on pages 53 to 62.
The terms of reference for the Audit and Risk Committees
can be found here: www.hl.co.uk/about-us/board-of-directors
Remuneration
The Group’s remuneration policies and practices are designed
to support its strategic objectives and promote its long-term
sustainable success. A summary of how the Company has
complied with the remuneration requirements set out in the
Code, along with details of the Remuneration Committee’s
activities during the period under review, the levels of Directors’
remuneration and detail relating to the new Directors’
Remuneration Policy, can be found on pages 89 to 99.
The terms of reference for the Remuneration Committee can
be found here: www.hl.co.uk/about-us/board-of-directors
Conflicts of interest
The Board takes action to identify and manage any conflicts
of interest that arise to ensure that the interests of the
Company’s shareholders as a whole are protected.
All Directors have a duty to avoid situations that may give
rise to conflicts of interest. Directors are responsible for
notifying the Chair and the Group Company Secretary as
soon as they become aware of any actual or potential conflict.
The Company’s Articles of Association permit the Board to
consider and authorise any situations where a Director has an
actual or potential conflict, and a formal procedure is in place for
considering, recording and, if appropriate, authorising conflict
situations. Conflicts of interest are included as a standing
agenda item at each Board and Committee meeting and, in
determining whether to authorise an actual or potential conflict,
the Board will take into account the specific circumstances and
whether to impose conditions on the Director in the interests of
the Company.
The Conflicts Committee reports into the CEO which is
responsible for ensuring there is appropriate governance and
ownership around enhancements to the conflicts management
framework within the Group. In addition, conflict management
is enhanced through the separation of investment decisions and
broad membership of investment related oversight committees
including external members as appropriate. During the year,
we updated and relaunched our mandatory conflicts training
for all colleagues and updated our conflicts notification and
management processes, particularly driving efficiencies through
a common oversight process to both business and to personal
conflicts management.
Consumer Duty
The Board attests that Hargreaves Lansdown is substantively
compliant with its obligations under PRIN 12 and PRIN 2A,
that appropriate assessments and checks have taken place,
including that its future business strategy has been assessed to
ensure it is aligned with its obligations under the Consumer Duty
with minor areas of enhancement identified to further support
good client outcomes.
Hargreaves Lansdown
Report and Financial Statements 2023
79
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
AUDIT COMMITTEE REPORT
ENSURING THE CONTINUED FINANCIAL
RESILIENCE OF THE GROUP
Ensuring oversight of
financial reporting and
the control environment.
Roger Perkin
Chair of the Audit Committee
Dear Shareholder
As Chair of the Audit Committee, I am pleased to present this
report on the Committee’s activities in the year under review.
This will be my final report to you as Audit Committee Chair with
Darren Pope taking on the role from 1 October 2023 – having
joined the Board as Audit Chair designate in September 2022.
Role of the Audit Committee
The Board delegates responsibility to the Committee to
monitor the integrity of the Group’s financial reporting and the
processes and controls that support it. This includes reviewing
and challenging the appropriateness of accounting policies,
significant issues and judgements, and the assumptions in
support of the Company’s ability to continue as a going
concern and its longer-term viability.
A key aspect of the Committee’s role in ensuring the integrity
of the financial reporting is its oversight of the Group’s
relationship with the external auditor. This includes making
recommendations to the Board in relation to the appointment
of the external auditor, approving its scope of work, fees and
terms of engagement, as well as regularly reviewing its
independence, objectivity and effectiveness.
More broadly, the Group’s internal control framework is an
essential part of ensuring the integrity of its financial reporting
and other business operations. The Committee oversees the
effectiveness of, and ongoing improvements to, the Group’s
internal controls, as well as having responsibility for monitoring
and reviewing the effectiveness of the Group’s Internal Audit
function, which provides assurance on those controls.
The detailed responsibilities of the Committee are set out in its
terms of reference, which are available on the Group’s website.
This report provides an overview of how the Committee has
discharged its responsibilities during the period under review.
Composition and meeting attendance
Roger Perkin (as Chair), Andrea Blance, Darren Pope and
John Troiano, each of whom is an independent Non-Executive
Director, are the members of the Committee as at the date of
this report. Darren Pope joined the Committee in September
2022 and the three other members have been on the
Committee throughout the period under review.
The Committee met seven times in the period under review.
The attendance of members at meetings across the year
is set out in the table on page 72. Other individuals attend
Committee meetings at the request of the Committee Chair.
The Board has satisfied itself that the Committee as a whole
has an effective balance of skills and experience to perform
its responsibilities. Each of Roger Perkin, Andrea Blance, Darren
Pope and John Troiano have significant experience of the asset
management sector and the wider financial services industry.
Roger Perkin has recent and relevant financial experience and
competence in accounting and audit. Additionally both Darren
Pope and Andrea Blance are qualified accountants.
Ongoing training is provided to assist Committee members
in performing their duties. During the period, this included
two sessions with the external auditor. The first covered
developments in corporate reporting from the external auditor’s
corporate reporting specialists. The second discussed the
Department for Business, Energy and Industrial Strategy’s (BEIS)
proposals on the future of audit and corporate governance and
what this means from a corporate reporting and corporate
governance perspective.
Hargreaves Lansdown
Report and Financial Statements 2023
80
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
AUDIT COMMITTEE REPORT
ENSURING THE CONTINUED FINANCIAL RESILIENCE OF THE GROUP CONTINUED
Overview of the Committee’s activities
in the year to 30 June 2023
23%
Governance
and Other
20%
External Audit
16%
Internal Audit
23%
Financial
Reporting
13%
Internal Controls
5%
Whistleblowing
This will usually include the Chair of the Board, the Chief Financial
Officer, the Chief Internal Auditor, Chief Risk Officer and the
external auditor. The Committee has access to the Group
Company Secretary, whose nominee acts as secretary to the
Committee. The Committee is authorised to obtain independent
professional advice where it considers it necessary.
Financial statements
The Committee is responsible for monitoring the integrity of the
Group’s financial statements, including its interim and full year
results. Where practicable, and consistent with proposed audit
and corporate governance reform proposals, it also reviews
other external disclosures such as the Group’s Sustainability
Accounting Standards Board (SASB) disclosure prior to its
publication on the Company’s website.
In carrying out this role, the Committee reviews and challenges
the application of significant accounting policies across the
Group that feed into its financial statements, and the methods
used to account for significant or unusual transactions.
A significant example considered by the Committee during
the period includes:
• The application of IAS 38 (Intangible Assets) in relation to the
amounts held by the Group’s subsidiaries including internally
developed software and goodwill.
Hargreaves Lansdown
Report and Financial Statements 2023
In each case the Committee reviewed and challenged
management on the appropriateness of these accounting
policies and how they were applied to the Group’s financial
statements, and was satisfied.
The Committee also considers the accounting estimates
and judgements made, and any significant issues that have
arisen, in preparing the Group’s financial statements. It provides
challenge to management on considerations taken into account
and requests additional reports when it would like further detail
on specific aspects, scrutinising the clarity and completeness
of related disclosures to ensure they are set properly in context.
In doing so, it pays due regard to any related correspondence
with the external auditor and any material adjustments resulting
from the external audit. In the period under review, the
Committee has concluded that there were limited issues
requiring significant judgements to be made in relation to
the financial statements, but that estimation uncertainty
existed in relation to certain matters. In arriving at this
conclusion, the Committee considered the following:
• Revenue recognition. The Committee considered the veracity
of the Group’s revenue streams in the period, which continue
to be non-complex and primarily consist of high-volume, low
value transactions. The Committee receives assurance on
revenue calculations both internally through its oversight of
the Group’s internal controls and from the external auditor’s
approach to recalculating the Group’s significant revenue
streams and carrying out sample testing on the remainder.
In addition, the external auditors reviewed and sample
tested the operational transactions that drive the revenue
to ensure that these were being booked in a timely and
accurate fashion.
• Carrying value of investments in subsidiary. The valuation
models of HLSL and HLAS were reviewed in detail by the
Committee. The Committee concluded that a £21.1 million
reversal of the previous impairment of HL plc’s investment in
HLSL was required given the improvement in the company’s
performance and the environment in which it operates.
Conversely, it was concluded that the investment in HLAS
should be impaired by £10.8 million, due to the support
required in developing the Advice strategy had significantly
increased the investment valuation. However, the modelling
required under ISA 36 looks at shorter timelines for valuation
purposes. They also reviewed the capitalised development
cost in HLAS and HLSL in line with the requirements of IAS 36
and concluded that no impairment was required. Full details
of the value of intangible assets capitalised and the policies
applied can be found in note 2.2 to the consolidated financial
statements on page 154.
• Contingent liabilities. The Committee reviewed and carefully
considered the contingent liabilities for the Group. Full details
of the matters considered can be found in note 5.3 to the
consolidated financial statements on page 166.
• Remuneration. The Committee considered the accounting
impact of the proposed changes to a new Sustained
Performance Plan within the Remuneration Policy. Changes
relate to deferral rates and vesting periods and are driven
from the requirements of the Investment Firm Regulation and
Investment Firm Directive along with shareholder feedback.
The Committee also considered the following:
• Going concern. The Committee reviewed the going concern
position for each group entity.
• Tax. The Committee received reporting on and considered
tax matters impacting the Group, including tax in financial
reporting, Group and operational tax compliance. It also
reviewed and recommended to the Board the tax strategy
for FY23.
• TCFD. The Committee reviewed TCFD and the related
sustainability reporting together with the process and
controls that support it.
As Hargreaves Lansdown Asset Management Limited is
an enhanced firm under the Senior Managers & Certification
Regime but does not have a separate Audit Committee,
the Committee reviewed the Hargreaves Lansdown Asset
Management Limited accounts for recommendation to
the board of that company.
Alternative Performance Measures
The Committee reviewed and challenged the classification
and monitoring of costs related to our updated strategy.
81
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
AUDIT COMMITTEE REPORT
ENSURING THE CONTINUED FINANCIAL RESILIENCE OF THE GROUP CONTINUED
Report and Financial Statements and interim results
In addition to considering significant accounting issues, policies
and judgements throughout the year, the Committee plays an
important role in the production of the Report and Financial
Statements and interim results. This includes reviewing and
challenging the assumptions that support the use of the going
concern basis for the preparation of the financial statements
and the statement given by the Directors as to the Company’s
longer-term viability, which can be found on page 55.
The Committee also undertakes a wider review of the content
of the Report and Financial Statements to advise the Board
as to whether, taken as a whole, it is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s performance, business
model and strategy. This supports the Board in providing the
confirmations set out on page 136.
In considering the wider content of the Report and Financial
Statements, the Committee pays particular attention to ensuring
the narrative sections provide context for, and are consistent
with, the financial statements, and that an appropriate balance
is struck between the articulation of successful outcomes,
opportunities, challenges and risks. In addition to considering its
content, the Committee oversees the process for preparing the
Report and Financial Statements and received regular updates
throughout the period on planning for the year end reporting,
with overall responsibility for coordinating production assigned
to the Chief Financial Officer.
External Audit
The Committee is responsible for overseeing the Group’s
relationship with its external auditor, PwC, which has been
retained since 2014. In addition to oversight of the audit process
itself, the Committee is responsible for monitoring the Group’s
other interactions with the external auditor to ensure that its
independence and objectivity are maintained.
The Committee has considered and prepared for the adoption
of the Minimum Standard as issued by the FRC and in the
year-to-date has had no matters on which it is required to report
but has not.
External audit process
During the period, the Committee has overseen the end-to-end
audit process. The Committee reviewed and approved the
external auditor’s engagement letter and the detailed audit
plan to ensure appropriateness of scope. In approving the
proposed audit fees, the Committee paid particular attention
to ensuring they were appropriate to enable an effective and
high-quality audit.
The Committee reviewed the findings from the audit process
with the external auditor, which included a discussion of key
audit and accounting matters including significant judgements,
including the estimation uncertainty in relation to the valuation
of investments in subsidiaries, as disclosed in note 6.3 of the
financial statements of the Company on page 176 and the
external auditor’s views on its interactions with management.
The Committee reviewed and recommended to the Board that it
signs the representation letter requested by the external auditor
in respect of its audit of the financial statements. The views of
the external auditor were sought at the Committee’s meetings,
which included sessions without management present,
to discuss its remit and any issues arising from the audit.
External auditor effectiveness and independence
The Committee is responsible for assessing the qualifications,
expertise and resources of the external auditor, and for
reviewing the effectiveness of the audit process. In discharging
these responsibilities, the Committee has considered information
from a variety of sources. It received a report from the external
auditor on its own internal quality control procedures, which
included reference to the outcome of the FRC’s 2022/23
AQR inspection report.
The views of management and the Committee members
were sought on the efficiency of the year end process and
the performance of the external auditor was discussed by
members as part of the Committee’s effectiveness review. Audit
quality was assessed on a continuous basis through provision of
the reports from the external auditor which are reviewed and
challenged by members at each meeting. The Committee
noted that the external auditor has demonstrated challenge
and professional scepticism in performing its role through the
provision of regular reporting and drawing the Committee’s
attention to key matters during Committee meetings.
Challenge provided by the external auditor on IT controls
in particular has enabled the Committee to oversee the
implementation by management of a comprehensive
programme of improvements together with mitigating
controls whilst the programme of work is completed.
As part of its role to monitor and assess the independence
and objectivity of the external auditor, the Committee has
considered the FRC’s Revised Ethical Standard 2019 (the
Standard), and paid particular attention to the Group’s wider
relationship with the external auditor through its provision of
non-audit services to the Group, the rotation of the senior
audit partner, and the external auditor’s tenure with the Group,
as detailed below.
The Committee received a report from the external auditor
confirming that, in line with the FRC’s Standard and having
regard to the threats and safeguards to independence, it
had concluded that there were no matters that impaired or
restricted its objectivity as auditors to the Group.
Having considered the information and views presented to it,
the Committee has concluded that the external audit process
was effective, that it is satisfied with the performance of the
external auditor, and that there are policies and procedures in
place adequately to protect the independence and objectivity
of the external auditor. Accordingly, the Committee has
recommended to the Board that a resolution is put to
shareholders at the upcoming AGM for the reappointment
of the external auditor.
Non-audit fees
Oversight of the non-audit services provided to the
Group is a key component of the Committee discharging its
responsibility for monitoring the independence and objectivity
of the external auditor. In addition to the report the Committee
received concerning the safeguards to the external auditor’s
independence, the Committee reviewed reports from the
Group’s Finance function prior to the publication of the Group’s
interim and full year results on all non-audit services provided
to the Group by the external auditor during the period
under review.
Hargreaves Lansdown
Report and Financial Statements 2023
82
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
AUDIT COMMITTEE REPORT
ENSURING THE CONTINUED FINANCIAL RESILIENCE OF THE GROUP CONTINUED
The Committee has responsibility for recommending to the
Board the Group’s policy on non-audit services supplied by
the external auditor. The policy is specifically designed to
ensure that the external auditor’s independence and objectivity
is maintained. It sets out a number of permissible non-audit
services which the external auditor may carry out in line with
the FRC’s Standard. The Committee considers that it is desirable
that the external auditors also perform the assurance services
required by regulation in respect of CASS and Safeguarding
as this provides efficiencies in the audit process and, in its
judgement, the threats to the auditors’ independence are
insignificant. All non-audit services must be approved in
advance by the Committee.
The policy specifies, in line with the FRC’s Standard, that the
maximum non-audit fees that the external auditor can receive
from the Group is 70% of the average of the audit fees incurred
by the Group over the previous three years. Assurance services
in relation to CASS and Safeguarding are specifically excluded
from the fee cap. The full policy can be found on the Group’s
website.
During 2023 the Group paid PwC £1,191,000 (FY22: £1,036,000)
for audit and audit-related assurance services and £81,000
(FY22: £101,000) for other assurance services, giving a total fee
to PwC of £1,272,000 (FY22: £1,137,000), 94% was therefore for
audit and related services and 6% for other assurance services.
Further information on Auditors’ Remuneration is set out in
Note 1.4 to the financial statements.
Tenure of the external auditor
The Company has complied throughout the period under review
with the provisions of The Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee Responsibilities) Order
2014, as regards the tenure of the Group’s external auditor, the
tender process for auditor appointments and Audit Committee
responsibilities.
The lead audit partner for the period under review was Darren
Meek, in his third year of appointment. The Company considers
that, taking account of the controls in place to maintain the
external auditor’s independence and objectivity, the relationship
the Group has developed with PwC is conducive to an efficient
and effective audit and, taking into account the significant
transformation agenda, that it is therefore in the best interests
of the Company’s members as a whole to maintain that
relationship for the financial year ending 30 June 2024.
As reported last year, the Group undertook a formal, competitive
tender process in 2022 during which audit quality was of
paramount importance. Following completion of the tender
process, the Committee recommended to the Board that,
subject to continuing satisfactory performance, members will
be invited to vote, at the Company’s AGM, to reappoint PwC
in respect of the audit of the financial statements for the
year ending 30 June 2024. The next tender process will be
mandatory after no more than ten years.
Internal controls
In conjunction with the Risk Committee, the Committee
provides assurance to the Board on the Group’s system of
internal controls.
A key aspect of this is the review of the financial control
systems that identify, assess, manage and monitor financial
risks, which are an important aspect of ensuring the integrity
of the Group’s financial statements as a whole.
As part of its oversight of the Group’s wider system of internal
controls, the Committee receives reports from management
on the effectiveness of those controls, as well as independent
assurance on the effectiveness of controls by the Group’s
Internal Audit function and the external auditors. During the
period, the Committee has:
• Received regular reports from the Group’s Internal Audit
function on the sufficiency of the internal controls in those
areas of the business included in the Internal Audit Plan for
the period. A new approach to audit issue management and
reporting has been introduced during the period under review
which promotes sustainable risk mitigation. Specific areas
of focus in the period have included data governance,
mobilisation of the updated strategy, readiness for
implementation of the Consumer Duty, information security
and the systems and controls that support regulatory
changes. Reporting to the Committee has also included
updates on progress against management actions identified
with a new management attestation approach providing
higher quality closure evidence. Root cause analysis of internal
audit observations over the preceding 12-month period was
also reviewed by the Committee.
• The Committee has also received the Chief Internal Auditor’s
annual assessment of the Group’s internal control framework;
and monitored the status of the Group’s CASS control
environment and the improvements being made as part of the
CASS change programme. In doing so it has considered the
report from the external auditors on client assets held by the
Group’s regulated subsidiaries and received regular reports
from the Group’s CASS oversight function on the completion
of CASS assurance activity, updates on remediation activity
carried out as part of the CASS change programme, and
management information on any breaches of significance
and associated remediation.
Overall, the Committee is satisfied that the Group’s internal
control and risk management framework comprises adequate
arrangements, actions and mitigating controls. In order to
support the continuing growth and increasing complexity
of the Group, the Committee recognises that there is a need
to continue to invest in improving and strengthening the
Group’s risk culture and the risk management and internal
control systems. Further information on the enhancements
can be found on page 126 of the Risk Committee Report.
The Committee has reviewed and approved the statements
included in this Report and Financial Statements relating to
risk management and longer-term viability on page 55 of the
Strategic Report and on the adequacy of the Group’s internal
control and risk management arrangements on page 78 of the
Corporate Governance Report.
Hargreaves Lansdown
Report and Financial Statements 2023
83
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
AUDIT COMMITTEE REPORT
ENSURING THE CONTINUED FINANCIAL RESILIENCE OF THE GROUP CONTINUED
Whistleblowing and Fraud
The Committee Chair is the whistleblowers’ champion for the
Group and the Group is committed to creating a culture of
openness, integrity and accountability. A formal policy is in
place which encourages colleagues and contractors to raise
concerns, in confidence, about possible wrongdoing in relation
to financial reporting or other matters. Changes to the policy
require the approval of the Board, and the Committee has
responsibility for regularly reviewing the adequacy of
arrangements to ensure the proportionate and independent
investigation of matters raised and appropriate follow up action.
The function’s detailed work programme is set out in a rolling
12-month Internal Audit Plan, which is reviewed and approved
by the Committee every six months. A continuous risk
assessment informs the audit planning and priorities and a
separate session was held with the members in May 2023 to
review and challenge the Plan. In doing so, the Committee has
ensured that the Plan covers the Group’s key risks, regulatory
priorities and strategic ambitions and aligns with the assurance
activity being carried out by the Group’s second line function
and the external auditor. Any modifications to the Plan are
approved by the Committee.
During the period, the Committee received regular reporting
on the Group’s Speak Up arrangements, including management
information on concerns raised. The Speak Up arrangements
are an important internal control for the Group and the
Committee regularly updated the Board on their operation.
As part of the Group’s commitment to ensure reasonable
procedures are in place to prevent fraud, the Committee also
received two reports on fraud risk assessments which outlined
the controls and measures in place to detect fraud and
safeguard clients’ assets. No material issues were identified.
Internal Audit
The role of the Group’s Internal Audit function is to provide
objective assurance and advice to both the Board and
management on the Group’s internal control and risk
management framework. The Committee plays an important
role both in overseeing the programme of work carried out
by the function, and in monitoring and reviewing its role and
effectiveness, including its objectivity.
The role of the Group’s Internal Audit function is defined by
the Internal Audit Charter, which sets out its objectives,
responsibilities and scope of work. The Charter was subject
to review this year based on industry best practice and was
approved by the Committee in January 2023.
During the period, the Committee received regular reports on
progress against the Plan, the responsiveness of management
in addressing recommended actions, and the function’s
requirements for resource and access to management and
information. The Committee uses this information to assess
the function’s effectiveness and to ensure that it is adequately
resourced and fully equipped to fulfil its mandate and perform
in accordance with the Internal Audit Charter and relevant
professional standards. The Chief Internal Auditor is a
permanent invitee to the Committee’s meetings and meets
regularly with both the Committee Chair and its members
without management present.
Having considered the information provided to it throughout the
period under review, the Committee remains satisfied that the
quality, experience and expertise of the function is appropriate
and that it is operating effectively.
The Committee continues to support the maintenance of the
function’s objectivity. It ensures the Chief Internal Auditor has
direct access to both the Chair of the Board and the Committee
Chair, in each case without the involvement of management,
and they receive reporting directly from the function.
It is the responsibility of the Committee Chair to set objectives
for the Chief Internal Auditor, appraise his performance (with
support from the Chief Executive Officer) and recommend his
annual remuneration for approval by the Remuneration
Committee.
Audit Committee evaluation
The Committee is required to undertake a review of its
performance at least annually to ensure it is operating
effectively and in line with its terms of reference. This review
was undertaken in April 2023. A separate session was held with
the members which sought their views on areas such as the
division of responsibilities between the Committee and the Risk
Committee, the documentation provided by management and
whether Committee members were comfortable that they had
been provided with a complete and accurate picture of the
assurance landscape with a process in place to assess audit
quality on a continuous basis. The Secretary to the Committee
also undertook an exercise to ensure the Committee had
fulfilled its responsibilities as per its Terms of Reference.
Both of these activities confirmed that the Committee had
acted in line with its remit during the period under review.
Audit Committee priorities for 2023/24
Looking ahead to the next financial year, it is anticipated that
the Committee will focus in particular on:
• Assurance on the Group’s governance arrangements to ensure
effective oversight of the updated strategy and the delivery of
expected benefits;
• Continued oversight of the ongoing CASS change programme;
and
• Preparations for changes to processes and procedures arising
from the BEIS proposals on reporting and internal controls and
the FRC’s consultation on changes to the Corporate
Governance Code.
Roger Perkin
Chair of the Audit Committee
18 September 2023
Hargreaves Lansdown
Report and Financial Statements 2023
84
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
ANNUAL STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE
DIRECTORS’
REMUNERATION REPORT
Dear Shareholder
Firstly, I would like to thank our shareholders for their support of
last year’s remuneration report and I am pleased once again to
present our Directors’ Remuneration Report for the year ended
30 June 2023.
This year’s report sets out how the committee has addressed its
responsibilities during the year and explains the rationale for our
decision making. We have also set out proposals in relation to
our updated Directors’ Remuneration Policy (‘Policy’). The Policy
explains our approach to Directors’ pay and is reviewed and
submitted to shareholders for approval at least every three
years. The Policy will be subject to shareholder vote at this
year’s AGM meeting.
Principles of Policy review
As you will see in the updated Policy, set out in full on pages 89
to 99, whilst many elements remain the same, our review has
concluded that we want to evolve our Policy to better align
our approach with our strategy and the long-term sustainable
growth and returns this will deliver.
In developing our Policy, we engaged with several of our largest
shareholders during the year to hear their feedback on our
approach to executive remuneration. I would like to thank those
shareholders for giving us their time to discuss this topic and for
providing useful insights. The views of our shareholders are
valued by the Committee and changes have been made to our
proposals taking account of the feedback received during this
engagement process.
Summary of proposals
In determining its proposals, the Committee followed key
principles of performance over the longer term, alignment
with shareholder and wider stakeholder outcomes and delivery
of the strategy as demonstrated through the key proposed
changes summarised below:
• Increased proportion of variable pay measured over the
longer term through reducing the maximum annual bonus
opportunity and replacing it with a new Performance Share
Plan (PSP).
We are therefore proposing that the annual bonus
opportunities are reduced as follows:
– CEO from 400% to 250% of base salary
– CFO from 350% to 220% of base salary
The Committee is also proposing to allocate this opportunity
to awards under a new PSP scheme as follows:
– CEO 150% of base salary
– CFO 130% of base salary
• Aligning with shareholders by increasing the proportion
of pay delivered in shares over a five-year period through
introducing a Performance Share Plan (PSP) award over HL
shares. The PSP award will be assessed over a three-year
performance period with a two-year holding period.
Performance will be assessed against stretching targets
that are aligned to our long-term strategic ambitions and
creation of shareholder value.
• No change to overall maximum opportunity for Executive
Directors, therefore total variable remuneration opportunity
remains the same.
The Committee has also proposed minor amendments to
take account of regulatory requirements such as deferral and
retention periods as set out in more detail on page 92.
85
Aligning to our long-term
strategic ambitions and creation
of shareholder value.
Moni Mannings
Chair of Remuneration Committee
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
ANNUAL STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE
CONTINUED
Business context in 2023
This year has been another difficult year for so many and the
ongoing uncertain and challenging external environment has
continued to impact market and investor confidence. Whilst
we cannot control the external factors impacting our business
outcomes, management have acted on what they can control
and have delivered a robust statutory Profit Before Tax (PBT).
Despite reduced investor confidence, we have continued to
grow both in terms of net new business and client numbers,
whilst also ensuring strong client retention. In addition, the
executive team have delivered against the transformation plan,
the delivery of six new HL funds, implementation of Amazon
Connect, and Cloud development such as in transfers and
shareholder voting. I am also pleased to note the strong
progress against a stretching diversity and ESG agenda
in line with the values of our business.
Incentive award outcomes for 2023
In determining Executive Director bonuses, the Committee
reviewed out-turns based on financial and non-financial
performance in key areas of focus and noted this was the
first year of our new approach with targets aligned to our
five strategic pillars and phasing of strategic spend. The
Committee also considered carefully:
• Whether the overall outcomes aligned with the wider
stakeholder experience;
• The intention by the Board to pay a full year dividend;
• An assessment of risk events, risk maturity and control
effectiveness; and
• The progress this year against key strategic priorities crucial
to the long-term success for the Company.
Annual bonus outcomes are set out in summary on page 88 and
in detail on pages 105 to 107. In determining the outcomes, the
Committee were satisfied that there was no reason to apply
discretion and approved the outcomes as calculated.
Finally, the Committee noted wider workforce bonus outcomes
were in line with those determined for Executive Directors.
The 2018 SPP award was subject to underpinning
performance conditions across Group financial, risk and
personal performance over a five-year period. After careful
consideration the Remuneration Committee determined the
underpins for this award have been met.
Wider workforce
As living costs continue to rise, the Real Living Wage has never
been more important and I’m proud that HL, as part of its Living
Wage Accreditation, implemented the new rates of pay earlier
than required this year.
As part of the 2020 Remuneration Policy review, the
Remuneration Committee simplified the operation of the
SPP award by using a three-year performance period with a
two-year holding period. The 2020 SPP award has therefore
also completed its performance period in 2023 and the
Remuneration Committee has confirmed that the underpin
conditions have been met in full. Whilst the value of the 2020
SPP award is captured under the requirements for the single
figure disclosure, in practice awards will not vest and be
released until 2025.
Details on how variable pay awards have been determined for
the 2023 performance year as well as grants made during the
year are set out in the annual report on remuneration.
Executive Director changes
In 2022, the Board announced Chris Hill’s intention to retire after
six years in role. Chris will remain employed until the end of his
notice period, being 17 October 2023 and stepped down from
the board on 7 August 2023 when the new Chief Executive,
Dan Olley, joined. Chris’ pay on leaving has been determined in
accordance with his service contract and our Policy and further
details are included on page 111. The Committee agreed in line
with the policy and the plan rules that Chris is to be treated as
a good leaver in relation to his outstanding share awards.
Our new CEO, Dan Olley, is a globally renowned technology
leader, having delivered transformational change and growth,
including scaling platform businesses internationally and is
uniquely placed to lead the ongoing execution of HL’s strategy,
given his Non-Executive Director role on the Board since
June 2019.
In relation to remuneration arrangements for Dan Olley, all elements
of his ongoing package will be determined in line with our Policy,
pro-rated as applicable. His salary has been set at £730,000 and
will not be reviewed until 1 July 2024. Incentive arrangements
for 2023/24 will reflect the updated approach as set out in the
updated Policy, subject to shareholder approval. Further detail
on his remuneration package are set out on page 111.
Given the challenging external conditions faced in the year from
the increased cost of living, we have paid a further standalone
support payment to over 1,600 colleagues. This was the second
support payment in a 12-month period.
We also began a programme of work to improve our colleague
value proposition aimed at increasing the financial resilience
of colleagues, including increasing salaries by 7% for over
700 colleagues in exchange for discretionary bonus and
bringing forward the timing of our annual salary range
review for all colleagues.
Further details of the activities in FY23 can be found
on page 43.
Gender pay and diversity
We have made strong progress against our Inclusion & Diversity
action plan to date by providing dedicated resource to drive
actions forward as well as increasing communications on the
aims of this strategy and our progress against it. As such we have
made improvements to our policies to make them more inclusive
and attract and retain a broader pool of talent, more information
about which can be found on page 42.
We have improved the structure surrounding our colleague
networks to ensure Chairs and Committees have increased
visibility as well as the support they need to be effective.
New training and development for managers focusing on
inclusion and challenging bias has been launched. With this
we have built broader mechanisms to consider insight, data and
feedback around Inclusion & Diversity at HL, helping colleagues
and leaders to understand drivers of change.
Having previously set targets for female, ethnic minority and
black representation through to the end of 2025 within our
business performance measures, we have incorporated these
long-term targets within our Performance Share Plan. Progress
against FY23 annual targets can be found on page 41 and our
proposed targets through to FY26 can be found on page 118.
Hargreaves Lansdown
Report and Financial Statements 2023
86
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
ANNUAL STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE
CONTINUED
Our Median Gender Pay Gap has continued to reduce
year-on-year from 20.4% in 2018 to 13.6% in 2022. The Mean
and Median Bonus Gaps have reduced, showing the benefits
of continued focus on increasing female representation at
all levels, especially at Board and Director level. Our focus
continues to be ensuring that the gender balance reflected
at these levels is replicated deeper in the organisation to
drive long-term change.
We have put solid foundations in place and are already seeing
results from this. But we need to go further and our priorities
for 2023 – 2025 are:
1. Deliver on agreed representation targets
2. Broaden our diversity focus to support colleagues with
disabilities and chronic conditions, LGBTQ+ colleagues,
social mobility and colleagues across all age groups
3. Intensify our focus on inclusion as a core expectation
of life at HL.
To deliver on our priorities, we have outlined an action plan
across the four pillars of the Women in Finance Charter Blueprint
to help ensure that we are approaching our priorities in the
broadest way possible.
This year, we voluntarily published our Ethnicity Pay Gap (EPG)
for the first time, measuring the difference between ethnic
minority (Black, Asian and minority ethnicities) and non-ethnic
minority (White) colleagues’ earnings. We believe that pay gap
transparency helps drive accountability and progress and is
aligned to our commitment to the Race at Work Charter.
Our initial baseline report shows we have a Median ethnicity
pay gap of 21.2% and a Median bonus gap of 43.1%, which
reflects the higher proportion of colleagues of non-ethnic
minority in senior and higher paying roles.
In line with the government ethnicity pay gap reporting
guidance, published in April 2023, we plan to further
disaggregate our data into ethnicity categories next year,
adding as much granularity as possible, whilst ensuring
colleague privacy.
Implementation of our Policy for 2024
In considering implementation of the Policy, the Committee
focused on ensuring pay for performance over the longer
term, alignment to the shareholder and wider stakeholder
experience and delivery of our strategy and I would like to
highlight the following:
• We have reviewed our incentive metrics for all our variable
pay plans to align with our five strategic pillars: Service and
Efficiency, Growth, Digital Backbone, People and Culture
and Foundations.
• The annual bonus award will be assessed against the strategic
pillars with financial and growth measures making up 60% of
the overall assessment. Whilst the performance targets remain
commercially sensitive, further detail on the framework can
be found on page 117.
• For the PSP award, the Committee carefully considered
the most appropriate measures to assess the Group’s
performance over the long term. For FY24 awards we believe
focusing on the following metrics will provide the right balance
of measures to deliver sustainable performance aligned
to stakeholders’ experience:
– Cumulative Earnings Per Share
– Relative TSR; and
– Environmental and Social.
• The inclusion of relative TSR reflects feedback from our
shareholders on the importance of alignment between our
executives and shareholders. Further details on these metrics
and targets set can be found on page 118.
• The SPP award will continue to be assessed against robust
underpins that take into consideration our overall Group
performance and strategic priorities. There are no changes
to the underpins for this year. Further details on the underpin
criteria can be found on page 119.
• The Committee has accepted the CEO and CFO’s
requests that their salaries remain unchanged from those
in place last year. The Committee recognises their desire
to ensure any capacity for salary increases are focused
on the wider workforce.
Hargreaves Lansdown
Report and Financial Statements 2023
Areas of focus for the forthcoming year
Our purpose is to empower people to save and invest with
confidence. Our pay philosophy for all colleagues aligns to
this purpose and aims to:
• Reward client-centric sustainable performance aligned
to our purpose and values
• Share in the success of the Company and align colleagues’
interests with those of shareholders
• Recognise our colleagues who deliver exceptional client
service the HL Way
• Attract, retain and motivate a diverse range of talented
colleagues who live our culture and values
• Encourage colleagues to save over the long term, in line
with our Company purpose
• Offer flexibility to meet the needs of a diverse workforce.
The updated Policy has been designed to ensure it continues
to support our remuneration approach and align incentives
with HL’s purpose, values and strategy.
We will continue to review our remuneration approach
throughout the organisation to ensure we remain compliant
with our governance and evolving regulatory requirements.
Contents of this report
On the following pages we set out:
• A summary of Executive Directors’ Remuneration for the year.
• The Directors’ Remuneration Policy.
• The annual report on remuneration.
The Directors’ Remuneration Report and Directors’
Remuneration Policy will be submitted to shareholders
at the 2023 AGM.
Again, thank you for your time and support and I look forward to
our continued engagement in the run up to the upcoming AGM.
In the meantime, I would like to recommend this remuneration
report for approval at that meeting.
Moni Mannings
Chair of the Remuneration Committee
18 September 2023
87
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SUMMARY OF EXECUTIVE DIRECTORS’ REMUNERATION FOR THE YEAR
Remuneration outcomes for 2023 at a glance
CEO – Chris Hill
Total Remuneration Outcomes (£’000)
£811
£1,441 £272
Total
£2,524
£778
£963 £161
Total
£1,902
2023
2022
4,102
Policy
maximum
32%
Fixed
63%
% of
Maximum
68%
Variable
CFO – Amy Stirling
Total Remuneration Outcomes (£’000)
£594
£907
Total
2023
2022
£199
£238
£1,501
Total
£437
Fixed Pay
Annual Bonus
SPP
Fixed Pay
Annual Bonus
SPP
2,687
Policy
maximum
40%
Fixed
56%
% of
Maximum
60%
Variable
FY2023 Performance Assessment
Growth
Max
Achievement
20.0%
4.8%
49.4%
Bonus achieved
as % maximum
of opportunity
FY2023 Performance Assessment
Growth
Max
Achievement
20.0%
4.8%
49.4%
Bonus achieved
as % maximum
of opportunity
Digital Backbone
25.0%
10.9%
Digital Backbone
25.0%
10.9%
People & Culture
5.0%
4.5%
People & Culture
5.0%
4.5%
Service & Efficiency
27.5%
9.1%
Service & Efficiency
27.5%
9.1%
Foundations
22.5%
20.0%
Foundations
22.5%
20.0%
OVERALL OUTCOME
49.4%
OVERALL OUTCOME
49.4%
SPP
2018 Vested Awards
2020 Performance
Condition Outcome
Share Ownership
as a % of Salary
(as at 30.06.2023)
SPP
2018 Vested Awards
2020 Performance
Condition Outcome
Outcome
Number
of Shares
Outcome
100%
13,814
100%
Number
of Shares
20,050
Shareholding
Requirement
Current
Shareholding
300%
196%
The CFO joined HL in
February 2022 and
therefore does not have
reportable SPP awards.
The CFO joined HL in
February 2022 and
therefore does not have
reportable SPP awards.
Awards vested in full.
Details of the performance
conditions are set out on
page 108
Performance conditions
met in full. Details are set
out on page 109. Awards
subject to a 2-year holding
period.
Guideline of three times
salary. Current
shareholding details are set
out on page 110
Hargreaves Lansdown
Report and Financial Statements 2023
Share Ownership
as a % of Salary
(as at 30.06.2023)
Shareholding
Requirement
Current
Shareholding
300%
31%
Guideline of three times
salary. Current
shareholding details are set
out on page 110
88
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
DIRECTORS’ REMUNERATION POLICY
As outlined in the annual statement by the Chair of the Remuneration Committee, we have
been reviewing our approach to directors’ remuneration over the past year. The new Directors’
Remuneration Policy (‘Policy’) will be subject to a binding vote and approval by shareholders at
our 2023 AGM.
The Committee has determined to evolve our existing Policy to better align our approach with
our latest strategy as set out in February 2022. Specifically, the policy will enhance our focus on
delivering sustainable growth and returns through the introduction of a new Performance Share
Plan (‘PSP’) alongside an accompanying reduction in annual bonus opportunity with no change
in maximum variable pay opportunity.
The Committee followed a detailed decision-making process which included discussions
on the proposed policy changes at Committee meetings and with our largest shareholders.
The Committee considered input from the Chair and management, while taking steps to ensure
any conflicts of interest were appropriately managed. The Committee also considered carefully
corporate governance developments and input was provided by the Committee’s appointed
independent advisers throughout the process.
Details of the main proposed policy changes are highlighted in the following table.
Element
Current Policy
Proposed Policy
Annual
performance
bonus
Maximum bonus opportunity of 400% of base salary for the CEO and
350% for the CFO.
Reduction of the annual bonus maximum opportunity to 250% and 220% of salary for the
CEO and CFO respectively.
On-target bonus of 50% of maximum opportunity for all Executive
Directors.
A proportion of the bonus is deferred over three years, with a further
post-vesting holding period applicable as required under regulation.
On-target bonus will remain at 50% of maximum opportunity.
Awards will continue to be delivered in a combination of cash and shares, with a minimum
of 50% of total variable remuneration delivered over HL plc shares and subject to any further
post-vesting holding period applicable in line with regulatory requirements.
Deferral is higher of 40% of annual bonus awarded and 60% of total
variable pay in line with the Investment Firm Prudential Regime (IFPR)
regulatory requirements.
A proportion of total variable remuneration (normally 60%) will be subject to deferral to meet
regulatory requirements, taking into account all variable pay awarded for the year, including
any PSP and SPP awards.
Awards will be delivered in an appropriate combination of cash and
shares, in line with regulatory requirements, with a minimum of 50% of
total variable pay delivered over HL plc shares. The combination of cash
and shares will be determined each year by the Committee.
Performance
Share Plan
There is currently no Performance Share Plan (PSP) in place.
Proposal to introduce a PSP, with awards over HL plc shares subject to performance measured
over three years followed by a two-year holding period.
The maximum PSP opportunity under the policy will be 150% and 130% of salary for the CEO
and CFO respectively.
Vesting for threshold performance will be set at 25% of maximum and for stretch performance
at 100%, with straight line vesting in between.
The PSP performance metrics will reflect the key performance indicators of long term
performance under HL’s strategy.
Dividend alternatives will accrue up to vesting date.
Hargreaves Lansdown
Report and Financial Statements 2023
89
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Element
Current Policy
Proposed Policy
Sustained
Performance
Plan
Maximum award of 50% base salary.
No change to quantum of awards under the Sustained Performance Plan (SPP).
Awards vest over a five year period, subject to the achievement
of underpinning performance conditions over a three-year
performance period.
Awards are subject to any post-retention vesting holding
period required under regulations.
Awards will continue to vest subject to the achievement of underpinning performance
conditions measured over three years followed by a two year holding period.
Malus and
Clawback
Malus and clawback provisions are in place for variable pay awards.
For all variable pay awards, malus provisions will apply until vesting
occurs. Clawback will apply to all awards until the later of three years
following grant of an award and the end of any relevant vesting and
holding period.
No changes proposed to structure or time horizons of malus and clawback. PSP and SPP
awards will be subject to malus over the relevant vesting period and clawback over the
two-year post-vesting holding period.
Additional malus and clawback triggers going forward include evidence of misconduct,
material error, fraud, negligence, conduct resulting in significant losses, and failure to meet
standards of fitness and propriety.
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
90
DIRECTORS’ REMUNERATION POLICY
CONTINUED
The tables below summarise the elements of the remuneration package for Directors and will be
effective from the date approved by shareholders at the Company’s AGM in 2023 and will apply
until shareholders next consider and vote on a subsequent policy (intended to be three years from
the date of approval).
The Directors’ Remuneration Policy is designed to ensure that remuneration supports the Group’s
strategic objectives, is appropriately positioned against the external market, and provides fair
rewards that will attract, retain and motivate individuals of the calibre required to run a group
of the scale and complexity of Hargreaves Lansdown.
The policy is divided into separate sections for Executive and Non-Executive Directors.
Executive Directors
Element, purpose
and link to strategy
Base salary
Reflects the individual’s
responsibilities,
experience and
contribution.
Supports the recruitment
and retention of the
calibre of individuals
required to lead the
Company.
Benefits
An ‘across the board’
benefits package is
available both to
employees and Executive
Directors alike.
Supports the recruitment
and retention of the calibre
of individuals required to
lead the Company.
Operation and performance measures
Base salaries are normally reviewed annually, with any increase usually effective from 1 July.
Base salaries are set taking into account a range of factors including external remuneration levels and
remuneration levels within the Group, as well as an individual’s responsibilities, experience and contribution.
Base salary will ordinarily increase by no more than the average of relevant employee increases.
Any increase beyond this would only be made in exceptional circumstances, which would be explained
by the Remuneration Committee.
Circumstances in which the Committee may award increases outside this range may include:
• A change in the scope and/or size of Executive Director’s role and/or responsibilities;
• Performance and/or development in role of the Executive Director; and
• A material change in the Group’s size, composition and/or complexity.
The Committee’s policy is to provide Executive Directors with competitive levels of benefits, taking into
consideration the benefits provided to all eligible employees and the external market.
Where costs are necessarily incurred in the performance of duties on behalf of the Group, those costs will be
reimbursed in full, for example, travel, accommodation, subsistence, relocation, and any tax and social costs
arising thereon.
Benefits include (but are not limited to) life insurance, income protection, private medical cover, health
screening, discounted platform fees and participation in all employee share schemes such as Share Incentive
Plan and Save As You Earn scheme.
Maximum opportunity
No absolute maximum increase. However, the
Remuneration Committee will consider the
operational principles as set out in this table.
While no absolute maximum level of benefits
has been set, the level of benefits provided
is determined taking into account individual
circumstances, overall costs to the business
and market practice.
Hargreaves Lansdown
Report and Financial Statements 2023
91
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Element, purpose
and link to strategy
Pension
Provides adequate
pension saving
arrangements for
Directors and employees.
Supports the recruitment
and retention of the
calibre of individuals
required to lead the
Company.
Annual
performance
bonus
Rewards achievement
of the Group’s business
plan, key performance
indicators and the
personal contribution
of Directors.
Aligns the interests of
Directors with those
of shareholders.
Operation and performance measures
Pension provision is provided in line with the pension provision available for all employees.
Any changes made to the employee arrangements will normally be carried across to the Directors.
The Committee may amend the form of any Director’s pension arrangements in response to changing
pension legislation or similar developments, so long as any amendment does not increase the cost to the
Company of a Director’s pension provision by any greater percentage than the increase to the provision for
all other employees.
The Company will contribute, on the same basis as the pension provision available to all employees,
to a savings vehicle where a Director has reached the Lifetime Allowance, would exceed any pension
contribution limits in any year, or has elected to protect their Lifetime Allowance.
Alternatively, if the Director does not wish to contribute to a savings vehicle, a cash allowance will be paid.
All employees and Directors may waive an element of their annual performance bonus in return for a
corresponding employer’s contribution into their pension.
The level of annual performance bonus payable is linked to key financial and non-financial metrics as well
as corporate and individual performance against objectives.
The on-target award level for Directors is 50% of the maximum opportunity. For each performance element
of the bonus, 25% of the maximum opportunity will be paid for the attainment of threshold performance.
Performance will usually be assessed against a combination of financial/growth, non-financial and individual
performance measures with at least a 50% weighting allocated to financial/growth measures, and no more
than 20% allocated to individual performance. In assessing the overall performance outcome, the
Remuneration Committee may use its judgement and retains flexibility to apply discretion to the
formulaic outcome as set out in the below section titled Discretion.
Awards will be delivered in an appropriate combination of cash and shares in line with prevailing
regulatory requirements, with a minimum of 50% of total variable remuneration delivered over HL plc
shares. The combination of cash and shares will be determined each year by the Committee. Awards
may be subject to any further post-vesting/holding period applicable in line with regulatory requirements.
Deferral will be determined by reference to the proportion of overall variable pay required to be deferred under
regulatory requirements, currently the Investment Firm Prudential Regime (IFPR), typically 60%. In accordance
with regulation, deferral calculations will normally be based on grant values. The deferral period will usually
be three years followed by a post vesting holding period as required under regulation.
Subject to regulatory requirements, dividend alternatives will normally accrue on deferred awards up to
the vesting date.
Awards are subject to malus during the vesting period and clawback until the later of three years from the
date of award or the end of any post vesting holding period. Further details of malus and clawback provisions
are set out on page 95.
Maximum opportunity
The Group provides a matched employer
contribution of 5% of base salary.
Where employees make additional
contributions of over 5% of salary, these
will be double matched by the Company,
up to a maximum of 11% of salary.
The maximum contribution available to the
Directors is 11% of salary, in line with the
wider workforce rate. The maximum cash
alternative is 5%.
Any contribution paid as a result of waiver of
the cash element of an Annual Performance
Bonus will not be counted towards these
maxima and will not attract matched funding.
The maximum bonus opportunity for
Directors under the policy is as follows:
• CEO: 250% of base salary in respect
of the relevant financial year; and
• CFO: 220% of base salary in respect
of the relevant financial year.
Hargreaves Lansdown
Report and Financial Statements 2023
92
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Element, purpose
and link to strategy
Performance
Share Plan
Rewards achievement
of the Group’s business
plan and key performance
indicators over the long
term in line with
shareholder and wider
stakeholder experience.
Operation and performance measures
Awards over HL plc shares will vest subject to the achievement of performance measures over a performance
period, which is normally three years from the beginning of the financial year in which the award is granted.
Awards will normally be granted subject to satisfactory personal performance of each Director prior to grant.
Performance measures attached to PSP awards may be a mix of financial measures and other long-term
strategic measures. Financial measures will comprise at least 75% of the performance measures.
Weightings and targets will be set in advance of each grant by the Committee and disclosed prospectively,
and performance against the targets set will be disclosed retrospectively.
Vesting will be on a straight line basis between threshold and maximum performance levels, with no more
than 25% vesting at threshold performance. No award will vest for performance below threshold level.
The Committee may use its judgement and retains flexibility to apply discretion to the formulaic outcome
as set out in the below section titled Discretion.
Vested awards (net of applicable taxes and deductions) will normally be subject to a two-year holding period.
Subject to regulatory requirements, dividend alternatives will normally accrue on unvested awards up to the
vesting date.
Awards are subject to a formal malus mechanism until vesting. Awards are subject to clawback until the end
of any post vesting holding period. Further details of malus and clawback provisions are set out on page 95.
Awards may also be granted in conjunction with a tax-advantaged Company Share Ownership Plan (‘CSOP’)
up to the HMRC limits as an “Approved PSP Award” with the vesting of any Approved PSP Award scaled back
to take account of any gain made on exercise of the associated CSOP option. An Approved PSP Award may
enable the Director and the Company to benefit from tax advantaged treatment on part of their PSP award
without increasing the pre-tax value delivered to the Director or cost to the Company.
Hargreaves Lansdown
Report and Financial Statements 2023
Maximum opportunity
The maximum PSP award each year under
the Policy will be 150% for the CEO and
130% for the CFO.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
93
Maximum opportunity
The maximum award each year under
the Policy is 50% of base salary.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Element, purpose
and link to strategy
Sustained
Performance
Plan
Aligns the interests of
Directors with those of
shareholders and rewards
long-term stewardship
of the Company.
Shareholding guideline
Aligns the interests of
management and
shareholders to the
success of the Group
Operation and performance measures
Annual awards of over HL plc shares will vest subject to the achievement of underpinning performance
conditions over a performance period, which is normally three years from the beginning of the financial year
in which the award is granted.
Awards will normally be granted subject to satisfactory personal performance of each Director prior to grant.
The underpinning performance conditions applicable for each award will be set in advance of each
grant by the Committee and disclosed prospectively, and performance against the targets set will
be disclosed retrospectively.
Vesting will be determined by the Committee and, in doing so, the Committee retains flexibility
to apply discretion to the formulaic outcome as set out in the below section titled Discretion.
Vested shares (net of applicable taxes and deductions) will then normally be subject to a two-year
holding period.
Subject to regulatory requirements, dividend alternatives will normally accrue on unvested awards up to the
vesting date.
Awards are subject to a formal malus mechanism until vesting. Awards are subject to clawback until the end
of any post vesting holding period. Further details of malus and clawback provisions are set out on page 95.
All Executive Directors are expected to hold shares in the Company with a specific market value expressed
as a percentage of their salary, within a reasonable timeframe (typically within six performance years of
appointment).
Not applicable.
The current shareholding guideline for Directors is a minimum value of three times base salary.
Vested and unvested (net of tax) awards under the annual performance bonus are included in
the calculation of a Director’s shareholding for this purpose.
Awards no longer subject to performance conditions (net of tax) under the Performance Share Plan
and Sustained Performance Plan are also included.
Upon ceasing to be employed, Directors will be required to retain a shareholding equal to their shareholding
guideline, or the number of shares actually held on departure, whichever is the lower, for twenty four months.
This will not include shares purchased or awarded to Directors upon recruitment in respect of any buyout
award, nor will it include shares vested prior to the 2020 AGM.
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
94
Hargreaves Lansdown
Report and Financial Statements 2023
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Choice of performance measures and approach to target setting
Annual bonus
The Committee ensures that incentive targets are appropriately challenging and tied to
the achievement of financial and non-financial measures (including risk and other strategic
measures) in line with the strategy. The Committee reviews the measures each year and varies
them as appropriate to reflect the priorities for the business in the year ahead. A sliding scale of
targets is set for each measure to encourage continuous improvement and the delivery of above
target performance.
PSP
The introduction of the PSP reflects the Committee’s commitment to enhancing focus on delivery
of our long-term strategic goals. Vesting of awards will usually be tied to the achievement of
financial and non-financial measures aligned to our long-term strategy and the Committee will
review the measures each year and vary them as appropriate to reflect the priorities for the
business for the performance period ahead. A sliding scale of targets will be set for each
measure to encourage continuous improvement and the delivery of above target performance.
SPP
Vesting of awards will usually be tied to the achievement of financial and non-financial
performance underpins that reflect the Group’s strategic priorities and the Committee will review
the measures each year and vary them as appropriate to reflect the priorities for the business
for the performance period ahead.
Discretion
The Committee retains the flexibility to adjust the formulaic vesting outcomes of variable pay
and may consider:
• The extent to which market movements, investor sentiment, interest rates and regulation,
all of which are beyond the control of the Directors, have impacted performance
• The extent to which past and/or current management has operated within the agreed risk
parameters
• The extent to which the performance outcome reflects the overall performance of the business,
including in the context of the shareholder or wider stakeholder experience
• Where the outcome would otherwise not be appropriate in the context of unexpected
or unforeseen circumstances relating to the Group
Malus and clawback
Annual bonus, PSP and SPP awards are subject to malus and clawback provisions in exceptional
circumstances. In addition, the Committee can defer a decision to award incentives, or award and
suspend payment of bonuses, and/or vesting of deferred bonus, PSP and/or SPP awards for any
individual in scope of an investigation into their conduct or responsibility, accountability or
knowledge and/or influence over any material risk event identified during or after the
performance year.
The triggers that apply to malus and clawback under all incentive plans are as follows:
• There is reasonable evidence of employee misconduct or material error
• A material misstatement of the financial results of any Group Company or its funds;
• A material failure of risk management in any Group Company or a relevant business unit
• Serious reputational damage to any Group Company or a relevant business unit attributable
to the conduct of, or an act of omission by, the Participant or an Employee for which the
Participant is or was responsible
• A failure by the Participant to identify any serious risks relating to any relevant business unit
in which the Participant works or worked or for which the Participant is responsible
• A failure by the Participant to implement appropriate controls for any serious risk relating to
any relevant business unit in which the Participant works or worked or for which the Participant
is responsible
• A case of fraud or other conduct with intent or severe negligence which led to significant losses
• Corporate failure or significant downturn in financial performance suffered by any Group
Company or relevant business unit
• Participation or responsibility for conduct which resulted in significant losses in any Group
Member or relevant business unit
• A failure by the Participant to meet standards of fitness and propriety
• An error in calculating any Participant’s award
Hargreaves Lansdown
Report and Financial Statements 2023
95
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Legacy arrangements
The Committee retains discretion to make any remuneration payment or payment for loss of office
outside of this Directors’ Remuneration Policy (including the exercising of discretion available in
respect of any such payment) where:
• The terms of the payment were agreed before this Directors’ Remuneration Policy came into
effect, provided in the case of any payment whose terms were agreed before this Directors’
Remuneration Policy became effective, the remuneration payment or payment for loss of office
was permitted under the Company’s relevant former Directors’ Remuneration Policy at the time
of agreement; or
• The terms of the payment were agreed at a time when the relevant individual was not a Director
of the Company and, in the opinion of the Committee, the payment was not in consideration of
the individual becoming a Director of the Company.
For these purposes, ‘payment’ includes the satisfaction of awards of variable remuneration and,
in relation to an award over shares, the terms of the payment are agreed at the time the award
is granted.
Approach to recruitment remuneration
The Committee will set a remuneration package for new Executive Directors determining the
individual elements of the package and the total package taking account of the skills and
experience of the candidate, the market rate, and remuneration levels across the Group,
respecting maximum levels for variable pay referred to in the appropriate policy table.
Separately, additional cash and/or share based awards on a one-off basis may be made upon
recruitment as deemed appropriate by the Committee if the circumstances require, taking into
account pay or benefits forfeited by a Director on leaving a previous employer. The Committee
has the discretion to make such awards under its share plans and in excess of the salary limits
contained therein, or as permitted under Rule 9.4.2 of the Listing Rules (which allows companies
to make one-off share awards in exceptional circumstances, including recruitment). Such awards
will, as far as possible, maintain consistency with the awards forfeited in terms of type of reward
(shares or cash), expected value, time horizons and whether they were subject to performance
criteria. Other payments may be made for relocation expenses, recruitment from abroad, legal
costs, tax equalisation, other costs or benefits forfeited by an individual being recruited.
Service agreements and loss of office payments
All Executive Directors have a service contract which reflects the approved policy in force at the
time of appointment.
The service contracts for all Directors in post are available for viewing (on the giving of reasonable
notice) at our registered office during normal business hours and both prior to, and at, the Annual
General Meeting. Under the terms of our Articles of Association, all Directors are subject to annual
re-election by shareholders.
Service contracts do not have a specific duration but may be terminated with 12 months’ notice
from the Company or the Executive Director.
The service agreements contain provisions for payment in lieu of notice in respect of base salary
and pension contributions.
The Committee has a policy framework for payments for loss of office by an Executive Director,
both in relation to the service contract and incentive pay, which is summarised below. The approach
of the Company on any termination is to consider all relevant circumstances, including the recent
performance of the Executive Director, and to act in accordance with any relevant rules or
contractual provisions.
Hargreaves Lansdown
Report and Financial Statements 2023
96
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Element
Base salary,
pension and
benefits
Annual bonus
Deferred bonus
award
Performance
Share Plan
(PSP) awards
Nature of termination
By Executive Director or
Company giving notice
By Company
summarily
Good leaver – Leaving by reason of death, ill health, injury or disability, redundancy, retirement with the agreement of
the Committee, the sale of employing business or company, or other circumstances at the discretion of the Committee
Paid until
employment ceases.
Paid until
employment ceases.
Paid until employment ceases or in respect of notice period (subject to mitigation) depending on the
reason for cessation. Discretion for Company to pay salary, pension and benefits in a single payment
or in monthly instalments.
No entitlement to
annual bonus for that
financial year.
No entitlement to
annual bonus for that
financial year.
Cessation during the financial year or after the financial year end, but before payment date, may result in
bonus being payable subject to performance (pro-rated for the proportion of the financial year worked).
Unvested deferred bonus
awards lapse when
employment ceases.
Unvested deferred bonus
awards lapse when
employment ceases.
Vested awards will not lapse and unvested options and conditional shares awards (where shares have yet
to be delivered), may vest and be exercised in accordance with normal terms. Committee has discretion to
determine whether awards vest when employment ceases.
Unvested PSP
awards lapse when
employment ceases.
Vested PSP awards will
normally continue to be
released on the original
terms.
Unvested PSP
awards lapse when
employment ceases.
Vested PSP awards
subject to a holding
period will lapse upon
summary dismissal .
Unvested awards will normally vest in accordance with the original terms, on a pro rata basis for the
period of time served as a proportion of the initial performance period and subject to achievement of
the performance measures. The Remuneration Committee has discretion to waive the pro-ration of PSP
awards, should they deem this to be appropriate.
Vested awards that remain subject to a holding period will normally continue to be released on the
original terms.
The Remuneration Committee has discretion to accelerate the vesting and release of awards for good
leavers in exceptional circumstances (e.g. death).
Sustained
Performance Plan
(SPP) awards
Unvested SPP
awards lapse when
employment ceases.
Vested SPP awards will
normally continue to be
released on the original
terms.
Unvested SPP
awards lapse when
employment ceases.
Vested SPP awards
subject to a holding
period will lapse upon
summary dismissal.
Unvested awards will normally vest in accordance with the original terms, on a pro rata basis for the
period of time served as a proportion of the initial performance period, subject to achievement of the
performance underpins. The Remuneration Committee has discretion to waive the pro-ration of SPP
awards, should they deem this to be appropriate.
Vested awards that remain subject to a holding period will normally continue to be released on the
original terms.
The Remuneration Committee has discretion to accelerate the vesting and release of awards for good
leavers in exceptional circumstances (e.g. death).
Other payments
None.
None.
In appropriate circumstances, disbursements such as legal costs, outplacement services, relocation
expenses and the cost of a settlement agreement.
Hargreaves Lansdown
Report and Financial Statements 2023
97
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Provisions on a takeover or other corporate events
In the event of a takeover or other corporate event, the Committee shall determine the amount
(if any) of any bonus payable taking into account any applicable performance targets that
have been achieved and any such factors as it considers appropriate given the curtailed
performance period.
Unvested awards will normally vest at that time. PSP and SPP awards will normally be subject
to the satisfaction of any applicable performance conditions and pro-rated to reflect the length
of the Performance Period which has been worked (with the Committee having discretion not
to pro-rate or to reduce the pro-ration if it considers it appropriate to do so). Alternatively, the
Committee may determine with the agreement of the acquiring company that awards may be
exchanged for equivalent awards in another company.
Illustration of application of Remuneration Policy
The Committee discloses each year in the Group’s Report and Financial Statements a bar chart
that models the potential remuneration for each of the Executive Directors for the forthcoming
year using a range of assumptions. The chart shows the potential value of the current Executive
Directors’ remuneration for the forthcoming year for three scenarios; minimum, maximum and
mid-point scenario as follows:
• The minimum amount represents the unconditional component of the remuneration package:
salary, pension and employee benefits;
• The mid-point amount is the amount the Executive Director will receive if they achieve an
on-target bonus level )50% of maximum) and on-target Performance Share Plan vesting
(62.5% of maximum), and awards under the Sustained Performance Plan vest in full. It will
include both fixed and variable components of remuneration; and
• The maximum level is the maximum amount of remuneration each Executive Director can
be awarded in the year. The maximum is subject to remuneration caps that have been
established for each component.
Within the scenario charts, the final scenario on the right-hand side sets out the impact on
the PSP and SPP awards of a 50% appreciation in the Company’s share price during the
relevant period.
Dan Olley – Remuneration opportunity for FY24
(£’000s)
Minimum
100% £811k
On-target
29%
33%
25%
13% £2,773k
Maximum
Maximum
+share price
appreciation
20%
17%
45%
38%
27%
9%
£4,096k
23%
8%
15%
£4,826k
0
1,000
2,000
3,000
4,000
5,000
Fixed pay
Annual Bonus
PSP
SPP
Share price appreciation
Amy Stirling – Remuneration opportunity for FY24
(£’000s)
Minimum
100% £584k
On-target
32%
31%
23% 14% £1,850k
Maximum
22%
43%
25% 10%
£2,684k
Maximum
+share price
appreciation
18%
37%
22% 8%
15%
£3,156k
0
1,000
2,000
3,000
4,000
5,000
Fixed pay
Annual Bonus
PSP
SPP
Share price appreciation
Hargreaves Lansdown
Report and Financial Statements 2023
98
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Non-Executive Directors
Element, purpose and link to strategy
Operation and performance measures
Base fee
Supports the attraction and retention of high performing
individuals, considering both the market value of the
position and the individual’s skills, experience and
performance.
Committee Chair fees
Recognises the additional time commitment and
responsibility involved in chairing a Committee of
the Board.
Senior Independent Director (SID) fee
Recognises the additional time commitment and
responsibility involved in holding the SID role.
Non-Executive Directors are paid an annual base fee with fees for additional roles (for example, Senior Independent Director
or Chair of a Board Committee and/or Chair or member of a subsidiary Board).
The Chair’s and Non-Executive Directors’ base fees are reviewed annually and any increases, if applicable, are normally
effective from 1 July.
The fee levels are set considering relevant factors, such as time commitment and market data for comparable positions
and taking account of the time commitment required for the role.
All Non-Executive Directors’ fees including those below are paid in cash monthly or such other frequency as determined
by the Board.
The Non-Executive Directors are not eligible for bonuses, pension or to participate in any Group employee share plan.
Each Non-Executive Director receives an additional fee for each Committee for which they are Chair.
The Committee Chair fees reflect the additional time and responsibility in chairing a committee of the Board, including
time spent liaising with management and preparing for a committee of the Board.
The SID receives an additional fee for their role.
The fee reflects the additional time and responsibility in fulfilling the role of Senior Independent Director.
Benefits and expenses
To appropriately reimburse the Chair and Non-Executive
Directors for out-of-pocket expenses incurred in the
fulfilment of their responsibilities and any tax and social
costs arising.
Non-Executive Directors may be eligible to receive benefits such as travel and other reasonable expenses.
Where costs are necessarily incurred in the performance of duties on behalf of the Company, those costs will be
reimbursed in full, for example, travel, accommodation, subsistence, relocation and any tax and social costs arising.
Expenses may be claimed by the Chair and Non-Executive Directors in line with the Company’s expenses policy.
Appropriate Director insurance and indemnity cover is provided by the Company.
Some Group services are provided at a reduced cost, on the same basis as for all other employees.
Where benefits are provided to Non-Executive Directors, they will be provided at a level considered to be appropriate,
taking into account individual circumstances.
In accordance with the Company’s Articles of Association, the maximum aggregate remuneration
for the Non-Executive Directors is currently £1,500,000 per annum. This limit will be reviewed by
the Board from time to time to ensure that it remains appropriate. Non-Executive Directors are
appointed for an initial term of three years, if the contract ceases earlier, three months prior
written notice is required.
External Board appointments
The Company recognises that external Non-Executive Directorships are beneficial to both
the Director and the Company and that its Executive Directors may be invited to become Non-
Executive Directors of other companies. Such non-executive duties can broaden experience and
knowledge which can benefit the Company. Subject to approval by the Board, Executive Directors
are allowed to accept two non-executive appointments (limited to one in the FTSE 100) and retain
the fees received, provided that the appointment is not likely to lead to conflicts of interest.
Hargreaves Lansdown
Report and Financial Statements 2023
99
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
ANNUAL REPORT ON REMUNERATION
This report has been prepared in accordance with the
provisions of the UK Corporate Governance Code. It also
meets the requirements of the UK Listing Authority’s Listing
Rules. The Remuneration Committee confirms throughout the
financial year that the Company has complied with these
governance rules and best practice provisions.
The Committee also ensures that the remuneration relationship
between the Executive Directors and senior employees of the
Group is appropriate and that the Remuneration Policy complies
with the relevant FCA Remuneration Codes. Any exceptional
remuneration arrangements for senior employees are approved
by or advised to the Committee.
UK Corporate Governance Code
When considering the policy, the Committee was mindful of the
UK Corporate Governance Code and believes that the executive
remuneration framework addresses the following principles:
Role of the Remuneration Committee
The Board remains ultimately accountable for executive
remuneration but has delegated this responsibility to the
Remuneration Committee.
The Remuneration Committee is therefore responsible for
determining the Remuneration Policy for the remuneration of
the Executive Directors of the Company and of the subsidiary
companies, the Chair, other members of executive management
and all other employees who are deemed to be Material Risk
Takers. The Committee shall also review workforce remuneration
and related policies, and the alignment of incentives and rewards
with the Group’s culture and defined behaviours, taking these
into account when setting the policy for plc Executive Director
remuneration. The policy is determined with due regard to the
interests of the Company, the shareholders and the Group,
with the objective of being able to attract, retain and motivate
executive management of the quality required to run the Group
successfully without paying more than is necessary.
The performance measurement of the Executive Directors
and key members of senior management and the determination
of their annual remuneration packages is also undertaken by
the Committee. For individuals below the Executive Committee,
there is a sub-committee (the Reward Governance Committee)
for the review of remuneration structures and outcomes
consisting of the Chief Executive Officer, Chief Financial
Officer, Chief People Officer, Group Chief Risk Officer and
Group Head of Colleague Proposition and Capability, which
reports and refers decisions to the Committee for final approval
where relevant.
Clarity
Simplicity
The Committee remains committed to a clear and transparent remuneration framework that promotes
effective engagement with our shareholders and the wider workforce. Further alignment with our
shareholder interests is driven by the increased focus on long-term time horizons and Executive
Director shareholding requirements.
The remuneration arrangements for Executive Directors are well understood by both participants
and shareholders. The structure consists of fixed pay, annual bonus (including deferral), SPP and the
introduction of the PSP. Approach to annual bonus deferral has been simplified to fully align with the
regulatory requirement, with a portion being deferred where the requirement is not satisfied through
our long-term incentive awards.
Risk
The remuneration framework has been designed to mitigate risk where appropriate. The Committee
review adherence to the Group’s risk parameter as part of its determination of variable pay outcomes
and malus and clawback provisions apply to the annual bonus, SPP and PSP award.
Under the proposed policy, the PSP and SPP awards will be subject to a two-year post-vesting holding
period to ensure that a time horizon of five years is maintained. Where a portion of the annual bonus is
to be deferred, an additional post-vesting holding period will apply as required under the regulations.
Predictability
The potential value of the Executive Directors’ remuneration packages at threshold, target and
maximum scenarios (including with 50% share price appreciation) have been provided on page 98.
In addition, the policy states the maximum annual bonus, PSP and SPP opportunity as a percentage
of salary. In line with best practice, the specific targets are also communicated to participants and
disclosed to shareholders.
Proportionality
The Committee strongly believe that poor performance should not be rewarded. The annual bonus and
PSP award require performance against stretching targets to ensure that there is a clear link between
the performance of the Group and awards made to Executive Directors.
The SPP award is subject to robust underpin measures. These underpins reflect on both financial
and non-financial performance and are aligned to the Group’s strategic priorities.
Alignment
to culture
The remuneration framework has been designed to support both the Group’s culture, purpose and
values. The performance measures and underpins of the variable pay awards have been chosen to
drive desired behaviours and are aligned to the strategy of the business.
Hargreaves Lansdown
Report and Financial Statements 2023
100
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
ANNUAL REPORT ON REMUNERATION
CONTINUED
Meetings during the year
There were six scheduled meetings during the year as set out
on page 72 and occasional ad hoc meetings where required.
Meetings were chaired by Moni Mannings; other members
were Deanna Oppenheimer, Dan Olley, John Troiano and
Roger Perkin.
None of the Committee has any personal financial interest
(other than as shareholders), conflicts of interests arising from
cross-directorships or day-to-day involvement in running the
business. Dan Olley was not present or involved in decisions
regarding the determination of his own remuneration on
appointment to the role of CEO, or involved in decisions
regarding the new Directors’ Remuneration Policy.
Executive Remuneration & Policy
Reviewing and implementing the Directors’ Remuneration Policy
and considering our remuneration approach to apply to FY24
and beyond.
Consulting with shareholders on the proposed remuneration
policy and considering their feedback in determining proposed
policy changes.
Regulatory & Governance
Receiving and noting regulatory and governance updates.
Reviewing the approach to the new Investment Firm Prudential
Regime (IFPR) and the approach for the identification of, and
pay out process for MRTs under IFPR, Alternative Investment
Fund Managers (AIFMD) and Undertakings for the Collective
Investment in Transferable Securities V (UCITS V).
Consideration of the Directors’ Remuneration Report in the
2022 Report and Financial Statements, and stakeholder
feedback received.
Assessing progress towards achieving Director shareholding
requirements
During the year the Committee has undertaken activities as set
out below and, in doing so, confirm that there have been no
deviations from the procedure for implementation of the policy
in this financial year:
Wider Workforce Policy
Reviewing the remuneration policy for the wider workforce
and approving new policies in accordance with regulatory and
governance requirements.
46%
Executive
Remuneration
& Policy
13%
Regulatory
& Governance
18%
Wider
Workforce
Policy
7%
Other incl
Meeting
Admin
16%
Business
Performance
& Risk
Assessment
Review
Receiving reports and overseeing decisions and
recommendations made by the Reward Governance Committee.
Reviewing colleague feedback via the Colleague Forum.
Reviewing the gender and the ethnicity pay gap reporting
covering the snapshot date of 5 April 2022 and noting
management’s action plan to address the gender pay gap.
Business Performance & Risk Assessment
Reviewing our approach to business and individual performance
measures, targets and weightings, with a particular focus on
ensuring they evidence delivery against our strategic priorities.
Considering a formal assessment of risk performance in relation
to remuneration.
Reviewing and agreeing performance bonuses for the
Executive Directors and other Material Risk Takers (MRTs).
Reviewing and approving Executive Directors’ objectives
and performance measures.
Reviewing and approving the required Remuneration
Code disclosures.
In addition, the Committee dealt with administrative matters as
required, including approving minutes, reviewing matters arising,
considering forward agenda items and determining matters for
escalation to the Board or other legal entities as appropriate.
The detailed responsibilities of the Committee are set out in its
terms of reference, which are available on the Group’s website
at www.hl.co.uk/about-us/board-of-directors.
Advice to the Committee
During the year, the Committee has been supported by the
Company Secretary, Chief People Officer, Group Head of
Colleague Proposition & Capability, Head of Performance and
Reward, and Chief Executive Officer who are invited to attend
Committee meetings to provide further background information
and context to assist the Committee in its duties. The Group
Chief Risk Officer also provides a formal risk assessment to the
Committee at mid-year and at the end of the financial year
which assesses performance of the business against risk
appetite, key risk indicators, and includes an assessment of risk
events and conduct breaches to ensure second line input into
proposed remuneration outcomes. The Chief Financial Officer
provides insight and updates regarding business performance
and business performance metrics. No Director was involved in
decisions regarding the determination of their own remuneration.
101
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION
CONTINUED
Deloitte LLP, a signatory to the Remuneration Consultants
Group’s Code of Conduct were reappointed by the Committee
during 2021 following a review. They remain engaged for the
provision of independent remuneration advice, and throughout
the year the Committee has been advised by them. The advisers
review all committee papers and provide input on matters
directly to the Committee as well as attend committee
meetings. As such, the Remuneration Committee is satisfied
that the advice it has received was objective and independent.
The fees payable to Deloitte for this advice were based on
services provided against a scope of services approved by the
Committee and amounted to £85,319 plus VAT on a time and
material basis. Other services provided to Hargreaves Lansdown
by Deloitte LLP during the year consisted of risk advisory, tax,
financial advisory, consulting and internal audit services on
a co-sourced basis.
Consideration of employment conditions
elsewhere in the Company
The Committee considered the Company’s remuneration
principles which apply across the Group when determining
the Executive Director Policy outlined above. In particular, the
approach taken to salary increases and the structure of the
annual bonus aligns closely to the approach generally taken
across the wider workforce, and the same PSP and SPP
structure is used for all participants within the plan.
Earlier in the year we reviewed our pay balance, resulting in over
700 colleagues receiving a 7% pay increase aimed at providing
greater certainty over earnings and improving the financial
resilience of these colleagues.
This year our annual pay review has focused on awarding
salary increases across the wider workforce, including a
further increase for colleagues in scope of the above change.
The average annual salary increase for the wider workforce
was 4.8%
We also made a support payment to over 1,600 colleagues in
recognition of the challenges posed by the increase in the cost
of living. More information on these initiatives, and the other
ways we’ve improved our colleague value proposition, can be
found on page 43.
Over the year we have continued to practice our ‘Always
Listening’ approach to enable us to better consider the voice
of our colleagues when making decisions.
We will be engaging again with our major shareholders during
the forthcoming financial year to hear reflections on our
approach to executive remuneration.
The Committee is regularly updated on the pay and employment
conditions for the wider workforce through reports from the
Reward Governance Committee and Colleague Forum and
this provided context for its decisions regarding the Directors’
Remuneration Policy.
The Committee also considers salary increases,
remuneration arrangements and employment conditions
across the wider employee population when considering
Directors’ pay and awards.
Consideration of shareholder views
The Committee recognises that Director remuneration is an
area of particular interest to our shareholders and in setting and
considering changes to remuneration, it is critical that we listen
to, and take account of, their views.
The Committee considers shareholder feedback received in
relation to the AGM each year at its first meeting following
the AGM. This feedback, as well as any additional feedback
received during any other meetings with shareholders, is
then considered as part of the Group’s annual review of the
implementation of the Remuneration Policy. We also regularly
engage with our largest shareholders to ensure we understand
the range of views which exist on remuneration issues.
When any material changes are made to the Policy, the
Committee will discuss these in advance with our major
shareholders wherever practical. The Committee will also
consult with professional advisers to ensure we consider
regulatory requirements and current market and industry
practices, where appropriate.
The Committee undertook a specific shareholder consultation
exercise in relation to the development of this Policy in spring/
summer 2023, liaising with major shareholders and seeking
engagement with the main share advisory bodies. Their
feedback was taken into account in the finalisation of the Policy.
Consultation with employees
Over the course of the year, we’ve updated our approach to
engaging with and listening to colleagues, focusing on three
main audiences key to the success of our organisation – leaders,
people managers, and colleagues – and have tailored our
messages and approach for each. Further details on our
approach to colleague engagement and listening are set
out on page 44.
The HL Colleague Forum was first set up in January 2019 and
we relaunched the Forum in October 2022 with a focus on being
business led. In addition to providing an opportunity to consult
with colleagues on executive and wider workforce pay
approach, it provides a two-way feedback channel on
our Transformation and strategic priorities and a route for
colleagues to raise hot topics that are relevant across the
Group. Any topics not on the Forum agenda are raised through
other channels so nothing is missed making sure all colleague’s
voices are heard.
The Forum has already helped to drive meaningful change by
discussing and providing feedback on changes to our approach
to pay for colleagues at more junior role levels, changes to our
attendance management approach, our colleague survey
results, the HL Way and how tax year end was delivered.
Colleague feedback is incredibly important to us and helps us
to do the right thing by making more informed decisions and
improving the colleague experience at HL. The Forum allows us
to co-create people change, with colleagues and clients at the
heart of what we do.
In addition to the Forum, we have introduced new channels,
such as Transformation Showcase events, to keep colleagues
connected to the progress we’re making against our strategy.
102
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Executive Director Remuneration for 2023
Remuneration payable for the 2023 financial year (1 July 2022 to 30 June 2023) (audited)
The remuneration policy operated as intended in the financial year with remuneration received by Executive Directors in relation to performance in 2023, set out below:
Single Total Figure Table
Name of Director
Chris Hill
Amy Stirling
Year
Gross Basic
Salary £’000
Other
taxable
benefits1
£’000
Annual bonus
Upfront cash
£’000
Deferred
shares £’000
SPP2
£’000
Pension
contribution
£’000
Total
£’000
Total Fixed
Remuneration
£’000
Total Variable
Remuneration
£’000
2023
2022
2023
2022
730
700
525
1874
1
1
1
5
576
578
468
143
865
385
439
95
324
203
0
–
80
77
68³
7
2,577
1,944
1,501
437
812
778
594
199
1,765
1,166
907
238
Notes
1. This includes Medical, and for 2022 the SAYE discount value over the term of the savings contract in respect of Amy Stirling was included.
2. The outcomes of the 2018 (5-year performance period) and 2020 (3-year performance period) SPP awards, whereby the performance period ends 30 June 2023, have been assessed by the Committee. The Committee confirmed the 2018 awards will vest in full (being
13,814 for Chris Hill) with no discretion applied. The committee also confirmed the 2020 SPP performance conditions had been met in full (being 20,050 for Chris Hill) and the awards would vest at the end of the two-year holding period in 2025. The value of both the vested
2018 SPP and 2020 SPP awards has been calculated using the three-month average share price up to 30 June 2023 of £8.02, together with the value of the dividends that would have been received during the 5-year performance period for the 2018 awards and the 3-year
performance period for the 2020 awards. The gross value of these dividends is £52,362 (split £31,731 for the 2018 awards and £20,631 for the 2020 awards for Chris Hill. The SPP figures for 2022 have been updated to include the gross value of the dividend for the 5-year
performance period for the 2017 SPP awards being £41,717. The SPP previously disclosed in the 2022 report was £161,000. As the 2018 SPP award was granted using a share price of £22.15 and the 2020 SPP awards granted using a share price of £20.21, none of the SPP
value is attributable to share price appreciation. See page 108 for further details of the assessment of the underpin conditions.
3. Includes contribution for FY21/22 that was applied in FY22/23. Contributions for FY22/23 do not exceed 11% inline with policy.
4. The salary awarded to Amy Stirling relates to a part year period from appointment in February 2022 to the end of the financial year.
Other than SAYE options (which are available to Executive Directors on the same basis as all
employees and included in other cash benefits), and the awards made to Chris Hill on joining,
no share options without performance criteria have been granted to Executive Directors since
7 March 2012.
Where eligible, benefits in kind are available to Executive Directors on the same basis as other
employees. For 2023, benefits include Life Insurance, Income Protection, Private Medical
Insurance, Save As You Earn (SAYE) scheme, reduced platform fees for holding assets on the
Group’s investment platform, reduced dealing charges for self and connected persons and access
to a range of voluntary benefits such as Critical Illness cover.
No Executive Director has a prospective entitlement to a defined benefit pension by reference
to their length of qualifying service.
103
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Assessment of annual performance for the 2023 financial year
(1 July 2022 to 30 June 2023) (audited)
The value of any bonuses payable to Executive Directors was determined by the Committee
based on:
• An assessment of the performance of the Group against financial/growth and non financial
measures, including an assessment of risk performance and risk events;
• Delivery of the strategic priorities aligned to the five strategic pillars; and
• An overlay that takes account of the conduct, behaviours and culture evidenced by each
Executive Director in line with the Hargreaves Lansdown values and the extent to which they
have operated within the agreed risk parameters.
Group performance has been considered in relation to the following measures, with 60%
assessment based on financial/ growth metrics, as set out below:
Strategic Pillar
Weighting
Shared Objective
Measure
Growth
20%
Develop our client proposition to retain and attract new clients and accelerate our growth.
Net New Business (NNB)* (10%)
Service and efficiency
27.5%
Improve our client experience efficiently enabling us all to add more value and reduce
our costs.
Digital backbone
25%
Use new tech and data to improve our client and colleague proposition, becoming product
led to empower us all to innovate.
People and culture
5%
Make HL a great place to work for everyone with clear ways of working, joined up thinking
and a focus on our own development.
Foundations
22.5%
Work together to improve our resilience as a business, support our growth, drive efficiency
and embrace lessons learned.
Total Clients* (10%)
Client Service NPS (10%)
Underlying Cost* (17.5%)
Strategic Delivery (20%)
Client Retention* (5%)
Colleague engagement and Diversity (2.5%)
ESG (2.5%)
Profit Before Tax (Statutory)* (17.5%)
Risk and Controls (5%)
Note
* indicates financial/growth measures which together make up 60% of the overall performance assessment
For each Executive Director, the Committee determined their overall bonus, taking all factors into
account and using all relevant information, by reference to the following target and maximum
levels, as disclosed in the 2022 Report and Financial Statements:
Chris Hill
Amy Stirling
Threshold
bonus
opportunity
(% of base
salary)
On-target
bonus
opportunity
(% of base
salary)
Maximum
bonus
opportunity
(% of base
salary)
100%
87.5%
200%
175%
400%
350%
104
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Growth
Threshold Target
Stretch
Actual
Achievement Commentary
Net New Business (10%)
£5.0bn
£5.5bn
£6.5bn
£4.8bn
0%
Client numbers (10%)
1,742,000
1,809,000
1,829,000
1,804,000
48.1%
Net new business performance has been challenging due to external conditions and,
despite the outcome being just short of threshold, the Committee noted the importance
of HL’s diversified model with Active Savings delivering a record performance in net new
business.
Similar to net new business, client numbers have been challenging due to external
conditions. Despite this, the Committee noted the positive performance this year,
resulting in a further 67,000 net new clients, representing 3.6% growth in client numbers
and delivering just below target outcome.
Overall achievement 4.8% of 20% weighting
Service
& Efficiency
Threshold Target
Stretch
Actual
Achievement Commentary
Client Service NPS (10%) 48%
51%
53%
45%
0%
Underlying Cost (17.5%)
£317.4m
£315.0m
£305.0m
£314.6m
52%
Client Service NPS, although performed well in the first half of the year, was impacted by
longer call and call queue times. Despite rolling out technology improvements and
applying more resources to our service centre, the Committee noted that performance
was below standard and below threshold performance.
The Committee noted the continued focus by management on cost discipline whilst
acknowledging the inflationary environment and the need to build internal capabilities.
Overall achievement 9.1% of 27.5% weighting
105
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION
CONTINUED
Digital Backbone Threshold Target
Stretch
Actual
Achievement Commentary
Client Retention (5%)
92.1%
92.5%
92.8%
92.2%
31.3%
The Committee noted the significance of maintaining strong client retention reflecting
our high quality client service and recognised the maintenance of what is already a high
retention rate against a challenging economic background for clients.
Strategic Delivery (20%)
Based on delivery of strategic initiatives
outlined in our FY23 plan and at FY22
results
Below
target
46.9%
Recognising the ambition of our strategy, the Committee noted delivery in specific areas
as set out in the KPI section on pages 22 to 26, but also noted that the programme had
taken longer than expected to establish and led to slower progress than planned.
Overall achievement 10.9% of 25% weighting
People & Culture
Threshold Target
Stretch
Actual
Achievement Commentary
Colleague Engagement
Score (0.83%)
62.0%
64.0%
66.0%
68%
100%
% Senior Female (0.83%)
32.2%
32.8%
33.4%
35.4%
100%
% Senior Ethnic Minority
(0.83%)
ESG (2.5%)
4.4%
5.0%
5.5%
6.7%
100%
Progress towards Scope 3 financed
emissions reporting, total Scope 1 & 2
emissions and SDR Article 8 alignment.
Above
target
80%
FY23 has been a year of significant engagement activity to ensure all our colleagues
understand and can support our strategy. At the same time, colleague financial resilience
and wellbeing has been the focus of improvements to our colleague value proposition.
The Committee noted the excellent progress made and resulting outcome.
Building on the material progress made last year, the Committee noted the excellent
progress in accelerating representation of women at senior management level and also
noted this progress has also been replicated at all levels in the business.
The Committee noted the excellent progress made across a number of initiatives to
improve inclusion and diversity across the business with the focus on attracting a
broader pool of talent showing incremental progress.
The Committee recognised the progress made across all three priorities, including
reporting of Scope 3 financed emissions in HL funds, a reduction of 15% in total Scope 1
and 2 emissions against a baseline of 2018 emissions, and the launch of an ESG
Investment Policy and Stewardship and Engagement Policy for HL managed funds.
Overall achievement 4.5% of 5% weighting
106
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Foundations
Threshold Target
Stretch
Actual
Achievement Commentary
Statutory Profit Before
Tax (17.5%)
£230.0m
£248.3m
£269.2m
£402.7m
100%
Risks & Controls (5%)
Achievement as assessed via
Board Risk Committee
On target
50%
A very strong performance as a result of the diversified nature of our service offering
driven by an uplift in net interest margin and share trading in line with expectations. The
Committee recognised the excellent combination of strong revenue performance,
coupled with management’s continued close management of costs and phasing of
strategic spend in its assessment of performance.
Continued development of risk management effectiveness has been evidenced through
addressing legacy technology issues, improvement across key risk and compliance
activity, proactive identification of core infrastructure and control improvements to
support future growth, and strong progress on operational resilience. In addition, the
Committee noted the progress made regarding Consumer Duty implementation which
confirmed our embedded focus on good outcomes being delivered for clients.
Overall achievement 20.0% of 22.5% weighting
Overall achievement 49.4% of 100% weighting
107
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Overall assessment and bonuses awarded for the financial year
(1 July 2022 to 30 June 2023)
The Committee considered all of the above in making their bonus determination for Chris Hill
and Amy Stirling for the 2023 financial year.
Assessment of 2018 Sustained Performance Plan (SPP) Awards
(1 July 2018 to 30 June 2023) (audited)
The Committee assessed the achievement of the following underpinning performance conditions
over a period of five financial years as follows:
Condition
The average assets under administration (as determined by the
Board) for the complete Financial Year prior to Vesting exceeds the
average assets under administration (as determined by the Board)
for the Financial Year immediately before the beginning of the
Performance Period.
The Board determines that a satisfactory risk, compliance and
internal control environment has been maintained during the
Performance Period.
Achievement
Fully met
(FY18 average AUA:
£85.5m, FY23 average
AUA: £130.0m)
Fully met
Management has
driven significant and
continued improvement
The Board determines that the Participant’s personal performance
has been satisfactory during the Performance Period.
Fully met for
all participants
The Committee concluded that all underpinning performance conditions were fully met
and therefore they were satisfied that the awards should vest in full.
In addition, it also considered the extent to which performance (both Group and individual)
has been achieved within the agreed risk parameters, based on an assessment from the Group
Chief Risk Officer, and the extent to which the bonus outcome reflects the overall performance
of the business in the context of the client and shareholder experience (as discussed in the
Remuneration Committee Chair’s letter).
The Committee concluded that the bonus outcomes for Chris Hill and Amy Stirling reflect
Company performance, effective management of costs, risks and governance, together with
a strong focus on the strategic transformation plans. The Committee has also considered
the individual performance, contribution and behaviours in line with Company values in
determining bonuses.
The resulting bonuses determined by the Committee for the year ending 30 June 2023 are set
out below (Audited):
Chris Hill 2022
Chris Hill 2023
Amy Stirling 2022
Amy Stirling 2023
Cash
£’000
Deferred
£’000
578
576
143
468
385
865
95
439
Total
£’000
963
1,441
238
907
% of
maximum
37%
49.4%
36%
49.4%
Notes
For FY23, the portion of the annual bonus deferred was determined in accordance with the new IFPR regulations whereby at least
60% of all variable pay (bonus and SPP) must be deferred. The HL SPP is included in the total variable pay for the calculation of the
deferral for regulatory purposes. As Chris Hill will not receive a SPP award for the FY23 performance year, 60% of bonus is to be
deferred. For Amy Stirling the aggregate of the bonus and FY23 SPP means that 48.4% of bonus is to be deferred to meet the overall
required deferral of 60% of total variable pay.
Deferral of annual performance bonuses
The annual performance bonus is subject to compulsory deferral in line with regulatory
requirements into nil-cost options over shares which vest in equal tranches over a period of three
years. Dividend alternatives will accrue on the deferred share element of bonuses up to the time
of vesting and will be paid at exercise. Individuals have a right to exercise deferred awards after
their respective vesting date for a period of one year.
108
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Assessment of 2020 Sustained Performance Plan (SPP) Awards
(1 July 2020 to 30 June 2023) (audited)
The Committee assessed the achievement of the following underpinning performance conditions
over a period of three financial years as follows:
Condition
The average assets under administration (as determined by the
Board) for the complete Financial Year prior to the end of the
Performance Period exceeds the average assets under
administration (as determined by the Board) for the Financial Year
immediately before the beginning of the Performance Period.
The Board determines that a satisfactory risk, compliance and
internal control environment has been maintained during the
Performance Period.
Achievement
Fully met
(FY20 average AUA:
£100.6m, FY23 average
AUA: £130.0m)
Fully met
Management has
driven significant and
continued improvement
The Board determines that the Participant’s personal performance
has been satisfactory during the Performance Period.
Fully met for all
participants
The Committee concluded that all underpinning performance conditions were fully met and
therefore they were satisfied that the awards should vest in full at the end of the 2-year holding
period in September 2025.
Malus and clawback
Variable awards are subject to malus and clawback provisions in exceptional circumstances. In
addition, the Committee can defer a decision to grant variable awards, or award and suspend
payment of bonuses, and/or vesting of deferred or long term awards for any individual in scope of
an investigation into their conduct or responsibility, accountability or knowledge and/or influence
over any material risk event identified during or after the performance year. The triggers that apply
to malus and clawback under all incentive plans are set out on page 95 of this Report and
Financial Statements.
Departing Chief Executive Officer (audited)
As outlined in our RNS announcement, Chris Hill announced his intention to retire as Chief Executive
Officer at HL on 17 October 2022 and he stepped down from the Board on 7 August 2023.
Chris will receive his salary and contractual benefits until the end of his notice period being
17 October 2023, with payments paid in accordance with the terms of his service agreement
and the Policy. He will continue to be eligible for an annual bonus award for the 2024 financial
year, pro-rated for the period worked during his notice period and subject to the achievement of
performance conditions. He will not be entitled to receive any long-term incentive awards for the
2024 financial year.
All outstanding deferred bonus awards will vest in full in accordance with their original timeframes.
Chris will be treated as a good leaver in respect of his outstanding awards under Hargreaves
Lansdown’s Sustained Performance Plan. Accordingly, his unvested awards under this plan will
vest on their original vesting date, subject to the extent that the performance conditions are met,
and time pro-rated to reflect period in employment. All awards will remain subject to malus and
clawback provisions.
He will maintain a post-employment shareholding in accordance with the Policy for a period
of two years following cessation of employment.
He will receive no additional compensation or payment for the termination of his service contract
or his ceasing to be a Director of the Company or any other group company, although Hargreaves
Lansdown will pay legal fees of up to £20,000.
Incoming Chief Executive Officer
Dan Olley has been appointed on a salary of £730,000 and his ongoing pension, benefits and
variable remuneration arrangements will be in line with our new Remuneration Policy
Dan Olley will receive a buy-out in lieu of forfeited annual bonus and long-term incentive plan
awards with his previous employers as part of his service agreement and in line with the Directors’
Remuneration Policy. The buy-out award will maintain consistency with the awards forfeited in
terms of expected value, vesting terms and original time horizons. Details of the buy-out
arrangement will be provided in full in the 2024 Directors’ Remuneration Report.
109
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Share awards made during the year ending 30 June 2023 (audited)
Type of
award
nil cost
options
under:
SPP2
Name of
Director
Chris
Hill
Deferred
bonus3
Market
value of
maximum
award at
date of
grant
£
Share
price
on day
of grant
£
Number of
shares over
which the
award was
granted4
Exercise
price
£
Face value1
of award
£
% of face
value that
would
vest at
threshold
350,000 0.00
8.48
41,273
£349,995 n/a
Performance
period
1 July 2022
to 30 June
2025
385,350 0.00
8.48
45,442
£385,348 n/a
n/a
Amy
Stirling
SPP3
262,500 0.00
8.48
30,955
£262,498 n/a
1 July 2022
to 30 June
2025
Deferred
bonus3
95,330
0.00
8.48
11,241
£95,324
n/a
n/a
Notes
1 Face value is calculated by reference to the average of the mid-market value of HL shares on 14, 15 and 16 September 2022
multiplied by the number of options granted.
2 Awards under the SPP were granted on 21 September 2022 as nil cost options at 50% of base salary subject to the achievement of
underpinning performance conditions assessed over a three-year performance period. The awards, once vested, will be subject to a
two-year retention period. The underpinning performance conditions are:
• A requirement for average AUA for the last complete financial year prior to the third anniversary of grant to be above the average
AUA for the last complete financial year prior to award;
• Maintenance of and continued management focus to improve risk, compliance and internal control environment across the
performance period; and
• Satisfactory personal performance throughout the performance period.
3 Awards under the deferred bonus were granted as nil cost options on 21 September 2022.
4 The number of shares awarded was calculated by reference to the average of the mid-market value of HL shares on 14,15 and
16 September.
All-employee share plans
The Company operates a SAYE share option scheme on the same terms for all employees,
including a 20% discount on the exercise price of options under the scheme. All employees are
encouraged to become shareholders, through direct ownership and/or through participation in the
share scheme. At the end of the latest financial year, 41.4% of the Group’s employees participated
in the SAYE. The CEO opted to participate in the 2020 cycle of the SAYE scheme and the CFO
opted to join the 2022 cycle.
Sourcing shares
The Investment Association guidelines on sourcing shares have been followed and, in line
with the scheme rules, the Company has not issued shares under all employee schemes which,
when aggregated with awards under all of the Company’s other schemes, exceed 10% of the
issued ordinary share capital in any rolling 10-year period. The Company has also not issued new
shares under executive (discretionary) schemes which exceed 5% of the issued ordinary share
capital of the Company in any rolling 10-year period.
110
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Executive Directors’ shareholding and share interests (audited)
The current guideline for Executive Directors to accumulate minimum personal holdings in Hargreaves Lansdown plc shares amounts to a value of three times base salary within six years
of appointment to the Board. Current shareholdings are summarised in the following table:
Beneficially
owned at
30 June 2022
Beneficially
owned at
30 June 20231
Outstanding share
options subject
to continued
employment arising
from SAYE scheme
Outstanding share
options subject
to continued
employment arising
from other plans2
Outstanding share
options subject to
performance
conditions and
continued
employment arising
from sustained
performance plan
67,908
9,126
87,321
13,881
1,547
2,227
152,384
11,241
79,087
30,955
Name of Director
Chris Hill
Amy Stirling
No. of share
options
exercised
in year
No. of share
options vested
but unexercised
at 30 June 2023
Shareholding
guideline
(multiple of
base salary)
Shareholding
as a multiple
of base salary
achieved at
30 June 2023
37,2274
13,8145
Three times
196%
0
0
Three times
31%
Shareholding
guideline met3
No
No
Notes
1 Includes shares held by the Executive Directors and their connected persons.
2 The number stated is the gross number of share options and is subject to income tax and NIC on exercise.
3 Unaudited – at present the Executive Directors have not currently met their shareholding guideline. As the CFO only joined in February 2022, she will continue to build her shareholdings during the relevant time period. It is noted that the CEO has not yet achieved the
guideline level due to movement in HL’s share price. The Committee has reflected upon this accordingly and noted the post-cessation shareholding requirement combined with his unvested awards provide an appropriate shareholding level. The new remuneration policy
supports achievement of the shareholding guideline for the new CEO and CFO going forward.
4 Options exercised granted under 2021 Deferred Bonus Plan (DPBP) and 2017 Sustained Performance Plan (SPP). For the DPBP the market value at the date of exercise was £8.60 per share and the option exercise price in aggregate for 18,270 options was £1.00. For the SPP
the market value at the date of exercise for 18,957 options was £8.80 per share.
5 This relates to options awarded under the Sustained Performance Plan (SPP) granted in September 2018 and which have been assessed by the Committee to vest in full and are included since, as at 30 June 2023, they are no longer subject to performance conditions or
continued employment. The number stated is the gross number of share options and is subject to income tax and NIC on exercise.
There has been no subsequent change in Executive Directors’ shareholding and share interests as of 6 September 2023.
Pension (audited)
No Directors or employees participate in a defined benefit pension scheme nor have any future
entitlement benefits under such an arrangement.
The Group operates its own Group Self Invested Personal Pension (the GSIPP) which applies
to Executive Directors and employees. The Company requires a minimum employee contribution
of 5% of reference salary and in exchange the Company will contribute 5%. Employees who
contribute up to 3% more than the 5% receive double matching. This means that for an 8%
employee contribution the Company contribution is 11%.
Colleagues wishing to make additional contributions to the GSIPP can do so via salary exchange
or bonus waiver ensuring that they benefit from the maximum, immediate relief from income tax
and National Insurance.
Additionally, the Group has a pension redirection mechanism where colleagues who have
maximised their pension tax relief can contribute, on a post-tax basis, to a Fund & Share Account
and continue to receive matching in the same way as the current pension matching, up to a
maximum 11% employer contribution, net of appropriate taxes. Where a colleague, who has
maximised their pension tax relief does not wish to contribute to a savings vehicle, the Group
will make an additional monthly payment equivalent to the employer’s pension contribution
amount forsaken up to a maximum of 5% of reference salary. The Committee confirms that
no excess retirement benefits have been paid to current or past Executive Directors.
Payments to third parties (audited)
The Committee confirms that no amounts have been paid to third parties in respect
of Directors’ services.
111
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION
CONTINUED
Remuneration in context
Total shareholder return
The following graph shows the Company’s performance measured by total shareholder return
(TSR), which is the capital growth and dividends paid. This is compared with the performance
of the FTSE 350 Financial Services Index and FTSE 51-150 companies (excluding investment
trusts) for the last 10 years.
This chart shows the value of £100 invested in the Company on 1 July 2013 compared with
the value of £100 invested in each of the above two comparator groups for each of our financial
year ends to 30 June 2023. We have chosen the FTSE 350 Financial Services Index as we believe
this is the most appropriate broad comparator for benchmarking our corporate performance over
the 10-year period. We have also included the FTSE 51-150 (excluding investment trusts) to align
to the proposed Performance Share Plan TSR peer group.
300
200
100
0
2013
Hargreaves Lansdown
FTSE 350 Financial Services index
FTSE 51–150 companies
Annual bonus as a percentage
of maximum
Shares vesting as a percentage
of maximum3
Chief Executive Officer remuneration for the past ten years
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
CEO
Ian Gorham
Ian Gorham
Ian Gorham
Total remuneration
£10,608,359
£2,058,642
£2,070,861
60% (£1,350,000)
52% (£1,170,000)
78% (£1,550,000)
Ian Gorham1/Chris Hill2
£1,167,549/£1,035,211
43%/81% (£600,000/£790,625)
Chris Hill
Chris Hill
Chris Hill
Chris Hill
Chris Hill
Chris Hill
£2,454,048
£648,278
£2,739,520
£2,678,581
£1,944,122
£2,576,544
81% (£1,700,000)
0% nil
94% (£2,072,000)
86% (£1,958,092)
37% (£963,375)
49.4%
100%
nil
nil
66%
39%
nil
nil
nil
100%
100%
Notes
1 Emoluments for Ian Gorham for 2017 are shown for the period to 9 February 2017 when he stepped down as Chief Executive Officer.
2 Emoluments for Chris Hill for 2017 reflect his emoluments for the period from 9 February 2017, and exclude his earnings as Chief Financial Officer and Deputy Chief Executive Officer prior to that date.
3 Options vesting in 2014 pre-date the SPP and therefore had no performance criteria. The 2018 SPP award was assessed to vest at 100% based on assessment of performance conditions over the performance period 1 July 2018 to 30 June 2023.
In addition, the 2020 SPP award performance conditions for the period 01 July 2020 to 30 June 2023 was assessed at 100%. The awards are to vest in full at the end of the two-year holding period in 2025.
2023
112
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Percentage change of all Directors and all employees
The table below shows the average percentage change in remuneration of each Executive and Non-Executive Director against all employees of the Company for the last four years,
between years ended 30 June 2020 and the year ended 30 June 2023 inclusive.
Average
employee
(% change)1
Executive Directors
(% change)
Non-Executive Directors
(% change)
C Hill
A Stirling
D Oppenheimer J Troiano
M Mannings A Blance
A Collins
R Perkin2
D Olley
P James
D Pope3
0%
0%
0%
0%
0%
0%
-2.70%
0%
20%
1.92%
27.01%
31.99%
55.15%
-2.30%
2.99%
–
2.92%
103.64%
0%
–
–
–
–
–
–
–
11.33%
2.86%
4.3%
0%
-75%4
-24.33%
-35.01%
-3.75%
-48.53%
37.32%
265.68%
0.96%
-60.06%
Element of pay
Base Salary
Benefits
2023
2022
2021
2020
2023
2022
2021
2020
9.97%
4.29%
0%
6.59%
8.02%
6.85%
2.86%
6.41%
0.12%
2.9%
-2.06
-11.13%
0%
-7.15%
-78.72%4
2.82%
0%
–
–
–
–
–
–
Annual Bonus
2023
12.2%
49.58%
281%5
2022
2021
2020
-6.7%
-50.82%
0.8%
11.8%
-5.50%
–
–
–
–
-100%6
-100%6
–
n/a
n/a
n/a
n/a
–
n/a
n/a
n/a
n/a
–
–
n/a
n/a
–
–
–
–
n/a
n/a
–
–
–
–
n/a
n/a
–
–
-100%6
-100%6
–
n/a
n/a
n/a
n/a
–
n/a
n/a
n/a
n/a
–
–
n/a
n/a
–
–
Notes
1 This table shows the average percentage change in salary, benefits and bonus (on a full-time equivalent basis) delivered to eligible colleagues in the last four years.
2 As Roger Perkin stepped down as interim SID on 31 August 2021, total base salary has decreased.
3 The table includes Darren Pope who was appointed as a Non-Executive Director on 1 September 2022. It is therefore not possible to reflect a percentage change figure.
4 The decrease in benefits for C Hill and A Stirling is due to the exclusion of the SAYE discount value over the full three-year contract term which was reported last year (in accordance with the single figure methodology).
5 The increase in annual bonus for A Stirling is largely attributable to receipt of a pro rata bonus in the 2022 performance year having joined HL on 21 February 2022.
6 As there were no taxable expenses reimbursed for the Non-Executive Directors for the 2020/21 performance year, it is not possible to show the percentage change to the 2021/22 performance year.
–
–
–
–
–
n/a
–
–
–
113
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
CEO pay ratio
The table below sets out the ratio at median, 25th and 75th percentile of the total remuneration
received by the CEO for the last four years compared to the total remuneration received by our
UK colleagues. For the past four years, we have published our CEO pay ratio using the same
methodology as set out below.
Year
2023
Pay element
Basic salary
Total
remuneration
UK employee
lower quartile
UK employee
Median
UK employee
upper quartile
24,610
29,270
32,959
43,000
55,000
72,040
Year
2020
2021
2022
2023
Method
Lower Quartile Median
Upper quartile
Option A
Option A
Option A
Option A
103:1
101:1
73:1
88:1
73:1
73:1
52:1
60:1
47:1
47:1
32:1
36:1
Change
in median
n/a
0%
-29%
15.4%
Notes to the calculations:
1 The median, 25th and 75th percentile colleagues were determined based on calculating total annual remuneration up to and including
30 June 2023 for colleagues employed at 30 June 2023.
2 Basic salary for part-time colleagues and new joiners within the calculation year have been converted into full-time annualised
equivalent values for the purposes of the calculations.
3 ‘Option A’ was chosen from the options available in the reporting regulations since it is the most robust and statistically accurate
method.
4 Benefits are provided on the same terms to Executive Directors and all employees alike and as such are not included within the table
above. The methodology used in these calculations is consistent with those in the single figure table, with the same approach being
taken each year since 2020.
The pay ratio has increased following business performance and therefore the outturn of the
CEO’s bonus award. Wider workforce outcomes reflect changes in pay approach for over 700
employees via a 7% salary increase in exchange for discretionary bonus, together with the
average annual salary increase of 4.8%. There have been no material changes in benefits of UK
employees nor changes in the proportion of employees working outside the UK or employed
under contracts for service.
The remuneration policies and practices at HL are consistent across both our Executive Directors
and the wider workforce and are designed to promote the long-term success of the Company,
promoting both high individual and team performance. The same considerations and criteria apply
across a consistent framework during the assessment of performance and pay outcomes, noting
that the quantum of (risk-based) variable pay is higher for the CEO than across the wider workforce.
Having overseen the application of performance and pay policies, and reviewed reports from the
Reward Governance Committee and Colleague Forum throughout the period, the Committee is
satisfied that our 2023 median pay ratio is consistent with the Company’s wider pay, reward and
progression policies for our UK employees.
114
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION
CONTINUED
Relative importance of the spend on remuneration
The table below shows the actual expenditure of the Group in terms of total employee
remuneration, profit before tax, and total dividends for this and the previous year together with
the percentage change between the years. Profit before tax has been chosen as a metric in this
instance to demonstrate the profits generated for shareholders and the relationship between this
and the overall cost of employee remuneration.
Chair and Non-Executive Director remuneration
Fees for Non-Executive Directors are structured with a base fee payable to all Non-Executive
Directors, with additional fees paid for the role of Senior Independent Director and for the Chairs
of Board sub-committees.
Fees for Non-Executive Directors for the 2023 financial year are as follows:
Total dividend paid
£m
Profit before tax 1
£m
Employee costs
£m
Total dividend
declared (pence
per share)
Fee Policy
2023
2022
% change
190.4
241.1
-21.1%
257.6
269.2
-4.3%
179.3
155.5
15.3%
41.5p
39.7p
-21.4%
Note
1. Further details are set out on p145.
All employees across the Group are subject to the same process in respect of annual salary
reviews. Consideration is given to the scope of each role, the level of experience, responsibility,
progress in role, and pay levels for similar roles in comparable companies. The performance and
potential of the individual is also considered.
All eligible1 employees employed on or before 1 April of the performance year are considered
for an annual performance bonus, or equivalent, with individual performance metrics used to
determine awards and similar metrics to those used for the Executive Directors guiding the overall
bonus pool. All eligible employees (under the rules of the scheme) may also participate in the
Group’s Save As You Earn.
Note
1 As part of changes to our colleague value proposition, colleagues at role levels 6 and 5 employed on or before 1 March 2023 were
eligible for a pro-rated bonus for the period 1 July 2022 to 28 February 2023. From 1 March, these colleagues ceased to be part of
our bonus scheme and, instead, have received a 7% salary increase.
Chair
Base fee for Non-Executives
Senior Independent Director
Chair of Audit Committee
Chair of Remuneration Committee
Chair of Risk Committee
Chair of Nomination Committee1
Fees from 1 July 2023
(£ p.a.)
Fees from 1 July 2022
(£ p.a.)
£334,500
£74,150
£15,850
£21,100
£21,100
£21,100
£10,000
£334,500
£74,150
£15,850
£21,100
£21,100
£21,100
£10,000
Note
1 Under current arrangements the Chair fulfils this role for no additional fee.
In recognition of the ongoing cost of living crisis and in line with the Executive Directors, the
Non-Executive Directors have chosen not to recommend a fee increase for a second year in a
row. The Directors wish to ensure that any capacity for salary increases were focused on the
wider workforce.
115
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Remuneration payable for the 2023 financial year (1 July 2022 to 30 June 2023)
(audited)
The remuneration received by Non-Executive Directors in 2023 is set out below.
The table below shows, as at 30 June 2023; the Company shares held by the Non-Executive
Directors and connected persons:
2022 fees
(£)
2022
Taxable
Benefits i.e.
expenses (£)
2022 Total
(£)
2023 fees
(£)
2023
Taxable
Benefits i.e.
expenses (£)
2023 Total
(£)
D Oppenheimer 334,500
M Mannings
A Blance
A Collins
R Perkin
D Olley
J Troiano
P James
D Pope1
95,250
95,250
74,150
97,892
74,150
114,150
75,000
–
28,100
2,109
3,986
1,012
1,008
905
1,242
1,102
–
362,600
97,359
99,236
75,162
98,900
75,055
115,392
76,102
–
334,500
95,250
95,250
74,150
95,250
74,150
114,150
90,000
61,792
21,263
2,030
2,052
1,389
3,687
914
807
440
342
355,763
97,280
97,302
75,539
98,937
75,064
114,957
90,440
62,134
Notes
1. Joined 1 September 2022.
Non-Executive Directors received no other benefits or other remuneration other than
reimbursement of all reasonable and properly documented travel, subsistence and other
incidental expenses incurred in the performance of their duties and any tax and social costs
arising thereon, the benefit of officers’ liability insurance and reduced fees for the use of
Hargreaves Lansdown services for themselves and connected persons, on the same basis
as all other Hargreaves Lansdown employees.
D Oppenheimer
M Mannings
A Blance
A Collins
R Perkin
D Olley
J Troiano
P James
D Pope
Shares
30,572
Nil
Nil
Nil
Nil
Nil
14,400
Nil
Nil
Note
1. There has been no subsequent change in current Non-Executive Directors’ shareholdings as of 6 September 2023.
Non-Executive Directors’ Service Contracts
Details of the Non-Executive Directors’ terms of appointment are set out below
D Oppenheimer
M Mannings
A Blance
A Collins
R Perkin
D Olley
J Troiano
P James
D Pope
Commencement
of appointment
2 February 2018
1 September 2020
1 September 2020
2 November 2020
1 September 2017
1 June 2019
1 January 2020
1 September 2021
1 September 2022
Date of contract
2 February 2021
1 September 2023
1 September 2023
2 November 2020
1 September 2023
1 June 2022
1 January 2023
1 September 2021
1 September 2022
Expiry/review date
of current contract
1 February 2024
31 August 2026
31 August 2026
1 November 2023
31 August 2026
6 August 2023
31 December 2025
31 August 2024
31 August 2025
Non-Executive Directors are appointed for a three-year term, subject to confirmation by
shareholders at the following annual general meeting (AGM) and annual re-election at each
subsequent AGM.
116
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION
CONTINUED
Implementation of the Remuneration Policy in FY24 – Executive Directors
Salary
The Executive Directors’ base salaries were reviewed in June 2023. In reviewing base salaries,
the Committee takes into account salaries paid elsewhere across the Group, relevant market data
and information on remuneration practices in the financial services sector.
Having been appointed in February 2022, the CFO’s salary of £525,000 was determined by the
Committee to remain unchanged for FY23 given the timing of her appointment. For FY24, despite
the excellent performance and contribution of the CFO, the Committee has accepted her request
not to be awarded a salary increase notwithstanding the salary increase range used for our lower
paid colleagues of 4%-6% and the average salary increase received by the wider workforce
(below Executive Director level) which was 4.8%.
For the incoming CEO, Dan Olley, the Committee has accepted his request to align to the CEO
salary set at 1 July 2022 of £730,000 and this will not be reviewed until 1 July 2024. Dan Olley is
a globally renowned technology leader and has proven track record of delivering transformational
change and growth in organisations, including scaling platform businesses internationally.
The Committee strongly believes that he has the capabilities to drive forward our strategic
ambitions and will be critical to our success in coming years.
When setting the base salary of the incoming CEO, the Committee reflected on the calibre of
the individual, market positioning and the salary of the current incumbent taking account of likely
salary positioning for FY24.
Annual bonus
At the Capital Markets Day in February 2022, we set out our strategic plan to transform the
savings and investment experience, combine the best of human expertise with digital capability,
and deliver a uniquely personalised service to management of our clients’ health and wealth.
As in FY23 delivery of the strategy in FY24 will be focused around five strategic pillars with the
management team setting out their priorities against these pillars each year. The committee has
determined that it appropriate to continue to align the assessment of annual bonus awards
against the strategic pillars whilst maintaining a strong focus on financial performance
(60% across profit before tax, underlying costs, net new business and client retention).
The performance assessment will include the following measures:
Strategic Pillar Weighting Shared Objective
Measure
Growth
25%
Accelerate growth via our integrated
position.
Net New Business
(NNB)* (15%)
Client Retention*
(10%)
Service and
efficiency
27.5%
Create a step change in Client Service and
Efficiency.
Client Service NPS
(10%)
The Committee determined that the salary level set at appointment is at an appropriate level,
particularly when taking into consideration companies of a similar size and complexity and the
strategic ambitions of the Group over the coming years. Further detail on the incoming CEO’s pay
package can be found on page 111.
Digital
backbone
20%
Develop our digital backbone.
Underlying Cost*
(17.5%)
Strategic Delivery
(20%)
Name of Director
Chris Hill
Dan Olley1
Amy Stirling
Salary as at 1 July 2022
(£)
Salary as at 1 July 2023
(£)
% increase
People and
culture
5%
Enable our people, strengthening our
culture.
ESG – Colleague
engagement (5%)
730,000
–
525,000
730,000
730,000
525,000
0%
0%
0%
Foundations 22.5%
Scale the foundations.
Profit Before Tax
(Statutory)* (17.5%)
ESG – Risk and
Controls (5%)
Note
1. Dan Olley’s salary is payable from his date of joining, 7 August 2023.
Note
* Indicates financial/growth measures which together make up 60% of the overall performance assessment.
117
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information ANNUAL REPORT ON REMUNERATION
CONTINUED
Targets have been set at the start of the financial year based (where applicable) on the agreed
operating plan and taking account of consensus. The targets set in relation to these measures
are considered to be commercially sensitive but will be disclosed in next year’s Annual
Remuneration Report.
The assessment of any award will take account of each Executive Directors personal contribution
to strategic delivery (being 20% of the overall maximum outcome), and will include an overlay that
takes account of the conduct, behaviours and culture evidenced by each Executive Director in
line with the Hargreaves Lansdown values.
Performance Share Plan (PSP)
As part of the Policy review, it is proposed that a PSP award is introduced to reflect the
importance of driving long-term performance. For FY24, the Executive Directors will receive PSP
awards with maximum opportunities of 150% of salary and 130% of salary for the CEO and CFO
respectively, subject to satisfactory personal performance in the period prior to grant. This is
the equivalent value to the reduction of the annual bonus maximum as stated on page 89.
These awards will be assessed against achievement of the below performance measures over
a period of three financial years:
Risk and compliance considerations will also be taken into account at both Company and
individual levels.
In making an assessment of performance, the Committee retains flexibility to apply discretion
to the formulaic outcome as set out on page 95 and details of the Committee’s assessment will
be given in the Annual Remuneration Report next year.
As referred to on page 89, the annual bonus opportunity will be rebalanced for FY24, subject to
the approval of this Remuneration Policy. The incoming CEO’s bonus opportunity will be 250%
of salary, which is a reduction of 150% of salary from previous incumbent. The CFO’s bonus
opportunity will be 220% of salary, which is a reduction of 130% of salary. For both Executive
Directors, the on-target opportunity will be 50% of maximum.
On-target bonus opportunity
(% of base salary)
Maximum bonus opportunity
(% of base salary)
Dan Olley1
Amy Stirling
125%
110%
250%
220%
Note
1. Any bonus award determined for Dan Olley will be pro-rated based on the period worked during the performance year.
As part of this policy review, the approach to deferral has been simplified whilst remaining fully
aligned with the regulatory requirements. Where required, a portion of the annual bonus will be
deferred to ensure that the deferral requirement (usually 60%) of total variable remuneration
(including the SPP and PSP awards) to be delivered in shares or instruments is satisfied.
Dividend alternatives will accrue on deferred share awards as set out in the policy. Bonus awards
are subject to a formal malus and clawback mechanism as set out in the policy. For further details
of the relevant malus/clawback triggers, please see page 95.
Measure
Relative TSR1
Cumulative statutory EPS2
Environmental & Social:
Responsible employer (senior women
representation)
Responsible employer (ethnic minority
representation)
Responsible business (scope 1, scope 2 and
scope 3 business travel and employee
commuting)
Responsible Fund Manager (scope 3 financed
emissions targets agreed and TCFD reporting
across HLFM funds)
Weighting
Threshold
(25% of award)
Maximum
(100% of award)
30%
50%
Median
145.0p
36%
20%
6%
Upper Quartile
225.0p
40%
10%
Climate neutral
by FY26
Climate +ve
by FY25
Qualitative assessment of
progress made to target setting
Note
1. Relative TSR is assessed against the FTSE 51-150 companies (excluding investment trusts) comparator group.
2. Assessment is against cumulative statutory EPS on a diluted basis and the target has been set at a stretching level in the current
economic environment, based on internal plan and consensus forecast for the relevant period.
In making an assessment of performance, the Committee will retain flexibility to apply discretion
as set out on page 95. The Committee also retains discretion to make adjustments to the vesting
outcome if it is not considered to be appropriate taking into account share price performance
including consideration of any windfall gains arising and any other significant events which may
have impacted the Company’s share price or the market as a whole.
At the end of the performance period, the vested awards will be subject to a further two-year
holding period such the performance and holding periods together span a minimum of five years.
Dividend alternatives will accrue as set out in the policy.
118
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
ANNUAL REPORT ON REMUNERATION
CONTINUED
Awards are subject to a formal malus and clawback mechanism as set out in the policy.
For further details of the relevant triggers, please see page 95.
Sustained Performance Plan (SPP)
For FY24, each Executive Director is to receive an award over HL plc shares with a face value
of 50% of base salary, subject to satisfactory personal performance in the period prior to grant.
Awards will be assessed against achievement of the below underpinning performance conditions
over a period of three financial years:
• A requirement for average AUA for the last complete financial year prior to the third anniversary
of grant to be above the average AUA for the last complete financial year prior to award;
• Maintenance of and continued management focus to improve risk, compliance and internal
control environment across the performance period; and
• Satisfactory personal performance throughout the performance period.
The Committee will review performance against these underpinning conditions in the round
and will retain flexibility to apply discretion as set out on page 95. The Committee also retains
discretion to make adjustments to the vesting outcome if it is not considered to be appropriate
taking into account share price performance including consideration of any windfall gains arising
and any other significant events which may have impacted the Company’s share price or the
market as a whole.
At the end of the performance period, the vested awards will be subject to a further two-year
holding period such the performance and holding periods together span a minimum of five years.
Dividend alternatives will accrue as set out in the policy. Awards are subject to a formal malus
and clawback mechanism as set out in the policy. For further details of the relevant triggers,
please see page 95.
Statement of voting at the AGM
At the AGM held in 2022, votes cast by proxy and at the meeting in respect of the Directors’
remuneration report were as follows:
Votes for
(including
discretionary
Resolution
votes) % for
Votes
against
%
against
Total
votes cast
excluding
votes
withheld
Votes
withheld
Total
votes cast
including
votes
withheld
Approve
Directors’
Remuneration
Report
(excluding the
Policy)
384,584,392 93.07 28,638,812 6.93
413,223,204 18,101
413,241,305
Approve
Directors’
Remuneration
Policy in 2020 386,802,133 96.30 14,850,824 3.70
401,652,957 1,516,450 403,169,407
Moni Mannings
Chair of the Remuneration Committee
18 September 2023
119
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information NOMINATION COMMITTEE REPORT
CONTINUED DEVELOPMENT
OF GOVERNANCE RESILIENCY
Another year of significant
and positive change.
Deanna Oppenheimer
Chair of the Nomination Committee
Dear Shareholder,
As Chair of the Nomination Committee, I am pleased to
present this report on the Committee’s activities in the year
under review.
The Committee has overseen another year of significant and
positive change both at Board level and within the Group’s
senior management. The Committee continues to ensure that
there is alignment with the Group’s overall Strategy resulting
in oversight of a number of high calibre appointments including
that of the Chief Executive Officer Dan Olley.
Role of the Nomination Committee
The detailed responsibilities of the Committee are set out in its
terms of reference, which are available on the Group’s website
at www.hl.co.uk/about-us/board-of-directors
At a summary level the Committee plays a key role in:
• Reviewing and monitoring the composition of the Board and
its Committees to ensure the right balance of skills, knowledge
and experience;
• Conducting ongoing succession planning to ensure there
is a diverse pipeline of talent for appointments to the Board
and senior management;
• Leading the process for appointments to the Board and
re-election of Directors;
• Providing oversight of the Group’s approach to Inclusion
and Diversity; and
• Ensuring the Board and its Committees are functioning
effectively through the oversight of the annual evaluation
of the Board’s performance. The Committee also monitors
the Group’s progress in implementing recommendations.
As noted in the prior year’s report, whilst the focus of the
Committee has been ensuring that the right skills and
experience continue to be reflected in the Company’s
leadership now and in the future, the Committee has
additionally reviewed consolidating and expanding
the Committee’s remit to include defined governance
responsibilities. Updated terms of reference were approved
by the Board in August 2023, after the reporting period.
Composition and meeting attendance
At the date of this report (18 September 2023), Committee
members are Deanna Oppenheimer (Chair), Andrea Blance,
Penny James, Moni Mannings and Roger Perkin, each of whom
are independent Non-Executive Directors. All have been
members throughout the period under review. This satisfies the
Code requirement that a majority of members are independent
Non-Executive Directors.
Committee appointments are made for three-year terms and
can be extended for no more than two additional three-year
terms, provided that the member still meets the criteria for
membership and annual re-election at the AGM by shareholders.
The Board regularly reviews the composition of the Committee
and makes appointments accordingly.
The Committee met five times in the period under review.
The attendance of members is set out in the table on page 72.
Other individuals attend Committee meetings at the request
of the Committee Chair and usually include the Chief Executive
Officer and Chief People Officer and, where relevant, the
Group’s external advisers. The Committee has access to the
Group Company Secretary, who also acts as secretary to the
Committee. The Committee is authorised to obtain independent
professional advice where it considers it necessary.
120
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information NOMINATION COMMITTEE REPORT
CONTINUED DEVELOPMENT OF GOVERNANCE RESILIENCY CONTINUED
Committee activities during the period under review
Board size, structure and composition
(including Skills Matrix)
During the year the Committee regularly reviewed the size,
structure and composition of the Board, as well as conducting
annual reviews of the composition of its Committees. A review
of the Board skills matrix was undertaken against the needs of
the Group both now, and in the future, to deliver the Strategy
and aligned with governance requirements. Search processes
have been undertaken for two independent Non-Executive
Directors. One to address the skills gap created by the move by
Dan Olley to the role of CEO and one to further strengthen the
Board’s wealth management experience (as discussed below).
Succession planning
In tandem with considering composition during the year the
Committee also ensured appropriate succession planning for
both the Board and the Group’s senior management was in
place. This involved:
• Reviewing the succession planning and talent pipeline
for members of the Executive Committee who hold Senior
Manager Functions (SMFs) to ensure there is resilience
in these key areas is maintained;
• Taking account of key drivers such as recommendations
from Board evaluations, feedback from meetings with key
stakeholders including the FCA, investors, the Committee’s
own reviews of Board size, structure and composition, and
developments in corporate governance good practice;
• Actively considering mechanisms for staggering Board tenure
to manage evenly the distribution of change amongst the
Board; and
• Reviewing arrangements for short-term contingency planning
to prepare for unexpected periods using existing talent – for
Non-Executive Directors, Executive Committee members and
individuals holding Senior Manager Functions (SMFs). This
process helped identify any areas of over-reliance on key
individuals which further supported the decision to increase
the number of Non-Executive Directors sitting on the Board.
The tenure of the Non-Executive Directors was also
considered as part of this process.
All of these assessments (relating to composition and
succession) were undertaken in line with the Group’s Board
diversity policy – the Committee reviews broader aspects of
diversity as part of its reviews of Board composition and
succession planning, and when searching for candidates.
Work previously undertaken by the Committee in assessing the
Board Skills Matrix and succession planning was used to feed
into the searches conducted by the Committee this year. In
addition, and in line with good practice, thought has been given
to the role of the Chair and how this will evolve as HL moves
deeper into its execution of the Strategy.
Approach to recruitment
The Committee leads the process for appointments to the
Board other than for the Nominated Director (Adrian Collins).
For both Executive and Non-Executive searches during the
year the Committee has used the output of its:
• Detailed succession planning;
• Contingency planning; and
• Regular assessment of Board and Committee composition to
identify the skills, knowledge and experience required in
candidates to meet the Group’s current and future
requirements.
The Committee engages external search firms for all Board
appointments (other than for the Nominated Director), using
their networks and expertise to identify a list of candidates that
meet the capability requirements developed by the Committee.
Shortlisted candidates are invited to interview with various
members of the Board and senior management. Summaries of
the outcome of interviews, along with candidate CVs, are then
provided to the Committee for detailed consideration. When
searching for a new CEO preferred candidates were also invited
to present to the Board as a whole. Once the process is
completed the Committee recommends its preferred candidate
to the Board for approval.
For both Executive and Non-Executive searches the Committee
takes into account a number of factors, including the benefits of
diversity and balance of composition of the Board, including in
terms of ethnicity and gender. The Group’s policy is to work with
search firms who have signed up to the Standard Voluntary
Code of Conduct for Executive Search Firms on diversity and
best practice, and reject candidate lists that are not suitably
diverse without sufficient reason. The overriding requirement
is that recommendations for appointments are based on merit
against objective criteria, and that the best candidates are put
forward for consideration.
Search for a new Executive Director
Following a rigorous process as outlined above Dan Olley was
identified as the preferred candidate for the CEO role with him
being appointed as Executive Director with effect from 7 August
2023. Dan stepped down as a Non-Executive Director on the
same date. Dan stood down as a member of the Remuneration
Committee in April to mitigate any potential conflict of interest.
The Committee engaged The Lygon Group, an independent
external search agency, to assist with the search. The key
criteria considered the needs of HL, particularly its strategy
and its digital transformation, as well as being a listed
company within the financial services sector.
The Committee determined that Dan’s experience in client
focused, data driven and technology enabled organisations
positioned him to further advance the Group’s Strategy.
In addition, he has a strong track record of delivery at both
RELX where he was the CTO, at Elsevier and at dunnhumby
where he was the CEO.
Dan also has strong leadership credentials with an existing
deep collaborative relationship with the Executive Committee.
121
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information NOMINATION COMMITTEE REPORT
CONTINUED DEVELOPMENT OF GOVERNANCE RESILIENCY CONTINUED
Search for a new independent Non-Executive Director
During the period under review, the Committee carried out a
detailed search for a new Non-Executive Director. The focus of
this search was primarily around increasing resilience within the
Board and deepening its experience in relation to commercial
and investment management. For this search the Committee
engaged Spencer Stuart which is independent of the Group
although it should be noted that Moni Mannings, Non-Executive
Director sits on the Spencer Stuart Advisory Board. This potential
conflict was declared and noted by the board ahead of any
search process commencing.
On 11 July 2023, following a rigorous process involving initial
interviews with a range of potential candidates, the Company
was pleased to announce the appointment of Michael Morley
with effect from 1 August 2023. Michael has extensive financial
services and risk expertise, strategic thinking, governance and
regulatory experience combined with strong leadership skills.
Michael joined the Board Remuneration and Risk Committees
from the same date.
Taking into consideration the current skills and experience of
the Board, and noting the transition of Dan Olley to the CEO
role, the Committee is currently engaged in a search for a
Non-Executive Director with a global technology background.
Board induction and training
Once a new Board member has been appointed the Committee
oversees the induction programme that will support them in
understanding the Group and contributing to debate from an
early point. Each new Board member receives an induction pack
containing key material and is allocated a bespoke induction
plan. The latter is tailored depending on existing skills and
knowledge to ensure the new Board member understands the
Group’s purpose and Strategy, the operational environment and
regulatory requirements including Directors’ duties.
During the year the Committee received a summary of training
provided to Board members during the year. Further detail can
be found on page 75.
Director independence, time commitment
and re-election
The Committee conducted its annual review of the
independence of the Non-Executive Directors, and time
commitments of the Directors generally, at its June meeting.
In reviewing the independence of the Non-Executive Directors,
the Committee considered in detail whether any circumstances
had arisen, including those set out in Provision 10 of the Code,
which are likely to impair, or could appear to impair the
independence of each Non-Executive Director.
The Committee concluded that it considered each of the
Non-Executive Directors (other than the Nominated Director)
to be independent under the provisions of the Code. As an
appointee of a shareholder, the Nominated Director is not
considered to be independent, but contributes through
providing a link to Peter Hargreaves’ experience as well as
his own wealth of experience in the fund management industry.
The Nominated Director does not sit on any of the Committees
and given that the majority of the Non-Executive Directors
are independent, the Committee considers this adequately
compensates for any potential imbalance that may arise from
the presence of the Nominated Director.
In concluding that each of the Non-Executive Directors
has sufficient time available to allocate to the Company
as set out in their letters of appointment, the Committee
considered the detailed requirements of the Code and the
Senior Management Arrangements, Systems and Controls
(SYSC), attendance records for each Director and
responsiveness to Company business, as well as the
confirmations given to the Chair by each of the Non-Executive
Directors that they continue to have sufficient time to discharge
their responsibilities effectively.
Based on its assessment of each Director’s performance and
ability to continue to contribute to the Board in light of the
knowledge, skill and experience they possess, the Committee
has recommended to the Board that each of the Directors
is put forward for election or re-election at the 2023 AGM
as appropriate.
Board effectiveness
The Committee oversaw progress against the externally led
2021 Board Effectiveness Review (BER) with all actions being
closed during the year. In August 2022 the Board received the
report from the internally led 2022 BER. A deliberate decision
was made to develop questions that could be used across
both the 2022 and 2023 BERs to track progress year on year.
In June 2023 the Board received the report from the internally
led 2023 BER.
In both instances Board members were invited to complete
a survey, following which, one to one discussions were held
with the Chair (in 2022) and the Senior Independent Director
(in 2023).
Key points from the 2022 BER were:
• That a positive start had been made on the Board being
provided with requisite information relating to execution
of the Strategy and additional focus would be brought to
provide increased assurance and clarity of progress;
• That there had been increased clarity of executive ownership
of strategic elements; and
• The Board culture encourages challenge but within
a psychologically safe space.
All actions associated with the 2022 BER were closed
in the reporting year.
The key points from the 2023 BER were:
• Good progress had been made in the provision of information
with continued focus on drawing elements together
cohesively and effectively to track the impact of actions
and prioritisation decisions;
• That the composition of the Board should be reconsidered
to take account of the transition of Dan Olley to the CEO role;
and
• The Board was felt to be collegiate, collaborative and
supportive.
The Committee will track progress against the associated action
plan during the reporting year.
122
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information NOMINATION COMMITTEE REPORT
CONTINUED DEVELOPMENT OF GOVERNANCE RESILIENCY CONTINUED
Diversity
The Board believes that building a diverse and inclusive
workforce is important not just because it is the right thing to
do, but because it is good for the Group’s shareholders, clients,
its business and its people. The Group’s objective is to build a
diverse workforce at all levels and create an inclusive culture for
all. The Board is committed to creating a culture where people
treat each other with dignity and are encouraged to realise
their full potential.
The Group’s Inclusion & Diversity Policy supports this by making
clear the Group’s aspirations and commitment to inclusion and
diversity, and by defining the roles and responsibilities that will
support it in attaining its objectives. Further information can be
found on page 40. The Board Diversity Policy dovetails with the
wider Group Policy focusing on ensuring the Board is diverse
and provides role models for the organisation.
During the period, the Committee reviewed progress against
the Group’s Inclusion and Diversity Strategy and action plan.
In addition, the Committee requested that all Board members
be included in Group-wide training relating to diversity covering
topics including implicit bias; micro aggressions; power and
privilege; and how to be an ally.
Further information on the Group’s progress in achieving
its objectives can be found on pages 22 to 26 of the
Strategic Report.
Reporting on gender, identity or sex
Men
Women
Not specified/prefer not to say
Reporting on ethnic background
Number of
board
members
Percentage of
the board
6
5
0
54.5%
45.5%
0.0%
Number of
senior
positions on
the board
(CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
1
3
0
5
4
0
55.6%
44.4%
0.0%
Number of
board
members
Percentage of
the board
Number of
senior
positions on
the board
(CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White (including minority-white
groups)
10
90.9%
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
0
1
0
0
0
0.0%
9.1%
0.0%
0.0%
0.0%
4
0
0
0
0
0
8
0
1
0
0
0
88.9%
0.0%
11.1%
0.0%
0.0%
0.0%
123
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information NOMINATION COMMITTEE REPORT
CONTINUED DEVELOPMENT OF GOVERNANCE RESILIENCY CONTINUED
Gender balance
The Board continues to focus on gender diversity both at Board
level and in the Group’s senior management. The Committee has
overseen the development of specific strategic initiatives in this
respect, including to hire more, promote more and retain more
women in senior positions.
As of 30 June 2023, the Board numbered eleven in total,
five of whom are women with three of the four senior Board
positions (defined as Chair, Senior Independent Director Chief,
Chief Executive Officer and Chief Financial Officer) being held
by women. The Board recognises that there is always more to
do with regards to diversity in all its elements and continues
to focus on promoting diversity as part of its recruitment
processes.
The Group continues to promote diversity across the organisation
and is proud to be a signatory to the Women in Finance Charter,
a government initiative to promote inclusion and diversity. As of
30 June 2023, female representation across the Group’s senior
management (as per the Code definition) was 39.7%. For these
purposes ‘senior management’ comprises members of the Group
Executive Committee (including the Group Company Secretary),
and each of their direct reports including administrative staff.
If administrative staff are removed then female representation
across the Group’s senior management as per the Companies
Act 2006 definition (which only includes those responsible for
planning, directing or controlling the activities of the Group or a
strategically significant part) was 35.6%. Further information on
how the Group is seeking to promote diversity can be found on
page 40 of the Strategic Report.
Ethnic diversity
The Committee is pleased to report that the Company continues
to meet the recommendation from the Parker Review that there
should be at least one Director of colour on the Board by 2021.
During the period the Committee oversaw the implementation
of a new methodology for the internal governance appointments.
The aim is for a more structured and evidence based approach
to drive greater diversity within the Group’s internal Committees
and subsidiary Boards. For more information about the Group’s
approach to ethnic diversity please see the Responsible
employer section on page 40.
Overview of the Committee’s activities
in the year to 30 June 2023
13%
Board composition
and effectiveness
25%
Recruitment
34%
Governance and
other (including
NED only sessions)
28%
Talent, leadership,
succession, diversity & inclusion
Nomination Committee priorities for 2023/24
Looking ahead to the next financial year, it is anticipated that
the Committee will focus in particular on:
• Chair succession plans recognising that as of February 2024
Deanna Oppenheimer will have been on the Board for six
years. This was confirmed by the Company on 17 July 2023
when it announced that an exercise to determine the
attributes of any successor Chair candidates in line with good
governance and succession planning practices was underway.
Discussions relating to this will be chaired by the Senior
Independent Director with the Chair recusing herself.
• Recognising the amount of change there has been within
the Executive Committee working with members to further
develop succession planning and talent management with
a focus on diversity.
• Finalising Non-Executive Director onboarding and ensuring
that the expanded Board membership has increased coverage
across identified areas and reduced any over reliance on
key individuals.
• Overseeing the implementation of recommendations from
the internally led 2023 Board Effectiveness Review and
preparations for the externally led 2024 review.
• Following the approval of revised terms of reference by the
Board in August 2023 the Committee will focus on completing
its transition to a Nomination & Governance Committee and
embedding its associated operating cadence.
Deanna Oppenheimer
Chair of the Nomination Committee
18 September 2023
124
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
RISK COMMITTEE REPORT
DRIVE FOR CONTINUOUS
IMPROVEMENT
Strong risk management
is essential in the current
challenging macroeconomic
environment.
Andrea Blance
Chair of the Risk Committee
Dear Shareholder,
As Chair of the Risk Committee, I am pleased to present the
Committee’s report on the activities undertaken in the year
under review.
The Group’s approach to risk management and how it evaluates
and manages the principal risks and uncertainties the Group
faces are set out on pages 53 to 62.
Continued evidence of enhancements to risk management and
maturity have been reviewed by the Committee. This year the
Committee has approved the first full Internal Capital Adequacy
and Risk Assessment (ICARA) report under the Investment
Firm Prudential Regime (IFPR). It also reviewed the Operational
Resilience Self-Assessment and the Group’s response to the
implementation of the FCA’s Consumer Duty prior to approval
by the Board.
Role of the Risk Committee
The Board is responsible for the Group’s risk management
and strategy, and for determining an appropriate risk appetite.
The Committee ensures that risk management is properly
considered in Board decisions and provides oversight of risk
within the Group. The Committee advises the Board on changes
to the Group’s risk profile and risk appetite and monitors the
effectiveness of, and improvements being made to, the Group’s
risk management framework.
The Committee plays a key role in overseeing the management
of capital adequacy and liquidity through the ICARA which
includes ensuring HL has sufficient capital for its future
growth strategy.
The Committee has continued to keep under review the Group’s
updated strategy. Regular updates on mobilisation priorities
have been received to ensure that the activities supporting the
delivery of the strategy are adequately managed and prioritised
in order to support good client outcomes.
The detailed responsibilities of the Committee are available
on the Group’s website.
Composition and meeting attendance
As at the date of this report (18 September 2023), the members
of the Committee are Andrea Blance (Chair), Penny James, Moni
Mannings, Michael Morley, Roger Perkin, Darren Pope and John
Troiano, each of whom are independent Non-Executive
Directors. Michael Morley was appointed after the reporting
period in August 2023. Of the remaining members, with the
exception of Darren Pope, who has been a member since his
appointment in September 2022, all those listed have been
members throughout the period under review. Dan Olley was
also a member during the period under review but stepped
down as a member of the Committee on 7 August 2023 to
take on the role of Chief Executive Officer.
Ongoing training is provided to assist Committee members in
performing their duties. This year this included briefing sessions
on the implementation of the FCA’s Consumer Duty and
Operational Resilience.
125
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information RISK COMMITTEE REPORT
DRIVE FOR CONTINUOUS IMPROVEMENT CONTINUED
The Committee met six times in the period under review.
The attendance of members is set out in the table on page 72.
Other individuals attend Committee meetings at the request
of the Committee Chair.
• Encouraged the strengthening of risk management capabilities
in the first line operational teams, to enable the Group’s Risk
function to further focus on oversight.
Information security and fraud risk
• Reviewed updates on cyber security and the cyber risk control
environment, including a view on the cyber threat landscape.
• Reviewed the annual planning process which delivers the
• Received regular updates on enhancements made within the
Overview of the Committee’s activities
in the year to 30 June 2023
16%
Consumer duty
11%
Governance
and other
9%
ICARA
35%
Risk exposures
and reporting
29%
Risk maturity, management
and framework
Committee activities during the period under review
Risk management framework and risk appetite
• Oversaw the final phase of the Risk Transformation Plan which
included the introduction of a Group Risk and Compliance tool
and enhancements made to the Risk Management Framework.
• Reviewed the Group’s strategic risk appetite, which brings
together the core risk profile, including strategic, financial,
operational and investment risk and the proposed approach
to further define ‘acceptable’ levels of risk taking to inform
management decisions.
• Received regular updates on the status of the Group’s risk
profile supported by reference to the approved risk appetite,
reviews undertaken of risk and compliance events and the
status of control effectiveness.
• Reviewed and challenged reporting for evidence of continued
evolution of risk management in the first line and monitored
the response of management to issues identified, including
root cause analysis.
detailed plan to FY24 as well as the Operating Plan which is
the plan to FY26. This included consideration of execution risk
and the need to balance financial and non financial objectives.
ICARA
• Reviewed and challenged the ICARA results in October 2022
to ensure they were proportionate to the nature, scale and
complexity of HL, prior to recommending the ICARA results to
the Board for approval. The review covered the assumptions
and scenarios used to assess the material risks of harm and
the Group’s exposure to business risks such as regulatory
compliance, technology and severe market movements.
It also included review of the new framework for annual
regulatory disclosures. During the reporting year the ICARA
has been kept under periodic review with quarterly updates
provided to the Committee.
Consumer Duty
• During the period under review, the Committee has reviewed
and challenged preparations for the implementation of the
Consumer Duty within the Group.
• The Committee has monitored progress of the implementation
plan and assurance of the deliverables to ensure all aspects
of the regulations have been considered and delivery was on
track prior to completion of the annual assessment by 31 July
2023.
• The Committee has scrutinised the outcomes of product
reviews against requirements and overseen the ongoing
development of data to ensure monitoring and assurance
is in place to embed the Consumer Duty within HL.
• As a result of this work, the Committee was able to
recommend to the Board that the appropriate assessments
and checks had taken place, including that its future business
strategy has been assessed to ensure it is aligned with its
obligations under the Consumer Duty including price and
value, with only minor enhancements to client communications
identified to further support good client outcomes.
• This will remain an area of focus as both our processes
embed and FCA guidance develops.
Group’s financial crime framework and controls to ensure
continued compliance with legislative requirements and the
efficient management of increasing client volumes. Reviewed
the annual report from the Money Laundering Reporting
Officer (MLRO) which addressed the effectiveness of the
Group’s anti-money laundering and financial crime controls
prior to recommending this to the Board for approval.
Operational risk and resilience
• Scrutinised the Group’s preparedness for planned
or unplanned power outages which enabled the
Committee to monitor and oversee the Group’s approach
to operational resilience and crisis management planning.
• Reviewed and challenged the completeness of the
Operational Resilience Self-Assessment prior to
recommending this for approval by the Board.
• Scrutinised the output and associated action plan
following a review of Model Risk assurance.
Internal Risk and Compliance functions
• Received reports from the Compliance Monitoring function on
the effectiveness of measures designed to ensure compliance
with the Group’s regulatory risk control environment.
• Oversaw an improvement in the capacity and capability of
the Compliance function during the year to ensure adequate
oversight of the regulatory obligations and compliance with
them for a firm the size and scale of HL. The adequacy and
effectiveness of the function was confirmed as part of the
annual review.
• Received regular updates from the GCRO on the resource
capacity and capability in the Risk function and an annual
review of the effectiveness of risk management, the internal
control environment, and risk embedding across the Group.
Remuneration and risk
• Reviewed a summary of the GCRO’s paper to the
Remuneration Committee relating to risk events or issues
including compliance and audit findings that impacted, or
could have impacted, the Group or Clients and which were
taken into account by the Remuneration Committee when
determining Executive remuneration.
126
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
RISK COMMITTEE REPORT
DRIVE FOR CONTINUOUS IMPROVEMENT CONTINUED
Disclosures and attestations
The Committee reviewed the director attestation process
which serves the Corporate Governance Code requirement.
It also reviewed and approved the disclosures and statements
in the Annual Report relating to risk management.
Risk assessment of updated strategy
The Committee continued to oversee any risks associated
with the updated strategy through second line assessments
of mobilisation and prioritisation activities, progress against
initial planning and the risk profile associated with achieving
the target state within the stated timescales.
The Committee is particularly focused on overseeing the
management of any heightened change execution risks. Given
the increase in reliance on outsourcing arrangements that will
be driven by strategic change, the Committee also discussed
the findings from a review of Supplier Management.
Risk maturity
The Committee oversaw the introduction of a Group Risk
Maturity Framework and assessment as part of the continued
enhancement of the Group’s risk maturity, aligned to the scale
and complexity of a financial services organisation the size
of HL.
The Group Risk and Compliance tool now in place will support
the creation of a central system of record for risk data, risk
events and issues, risk appetite monitoring and reporting which
will provide greater insights on risk management.
Environmental, Social and Governance (ESG)
A deep dive was carried out by the Committee on the dedicated
ESG dashboard which provided a thorough assessment of HL’s
position against stated targets (for further details see page 46).
Committee performance
In line with its terms of reference, the Committee is required to
undertake a review of its performance on an annual basis to
ensure it is operating effectively. This review was undertaken in
April and confirmed that activities during the period have been
in line with its remit. Minor updates to the Terms of Reference,
including reference to the Consumer Duty and Operational
Resilience Self-Assessment were approved by the Committee
and the Board.
Risk Committee priorities for 2023/24
Looking ahead to the next financial year, it is anticipated that
the Committee will focus in particular on:
• Overseeing phase two of the Consumer Duty programme
to ensure the regulatory expectations are embedded within
HL and continued assurance is in place;
• Ensuring the Group Risk Maturity Framework is embedded to
support the business in further defining risk tolerance levels
and further building first line risk and compliance capability;
• Ensuring the new central system of record unlocks the value
of the risk data and risk reporting to further enhance risk
management; and
• Overseeing change delivery management to ensure the
strategic objectives and transformation of legacy systems
are able to go hand in hand.
Andrea Blance
Chair of the Risk Committee
18 September 2023
127
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
DIRECTORS’ REPORT
The Directors present their report on the affairs of the Group,
together with the audited consolidated financial statements
for the year ended 30 June 2023.
The Company is the holding company for the Group. The
Group’s regulated operating subsidiaries carry out its business
of providing financial products and services, principally to
retail clients. The Group operates predominantly in the United
Kingdom, with one operating subsidiary (HL Tech) located in
Poland that provides IT development services to the rest of
the Group.
The Directors’ Report for the period under review comprises
pages 128 to 131 of the Report and Financial Statements,
as well as other sections incorporated by reference.
As permitted by legislation, certain information required to
be included in the Directors’ Report has instead been included
in the Strategic Report, on the basis that the Board consider
those matters to be of strategic importance. Commentary
on the development and performance of the Group’s business,
including an indication of likely future developments can be
found on pages 1 to 52 of the Strategic Report. Disclosures
relating to the Group’s greenhouse gas emissions, energy
consumption and the measures being taken to increase
energy efficiency can be found on pages 38 to 51 of
the Strategic Report.
Details of how the Group engages with its key stakeholders,
including its shareholders, can be found on pages 18 to 19
of the Strategic Report and on page 76 of the Corporate
Governance Report. Details of how the interests of stakeholders
are considered in the Board’s decision making can be found
in the Section 172 Statement on pages 132 to 135.
The Strategic Report and the Directors’ Report together
form the Management Report for the purposes of DTR 4.1.8R.
For the purposes of DTR 7.2.1R:
• A statement as to the Company’s compliance with the Code
and details of where the Code is publicly available can be
found in the Chair’s Introduction to Corporate Governance
on page 65;
• A description of the main features of the Group’s internal
control and risk management systems in relation to the
financial reporting process can be found on page 78;
regarding control of the Company, restrictions on voting
rights, the appointment and replacement of Directors and
changes to the Company’s articles of association, and the
powers of the Directors can be found on pages 128 to 131;
• A description of the composition and operation of the
Group’s corporate governance framework can be found
on pages 76 to 77; and
• A description of the Group’s diversity and inclusion policy,
its objectives, how it has been implemented and the results
in the period under review can be found on pages 40 to 44
and 123 to 124.
• Information regarding significant shareholders, special rights
LR 9.8.4R (13)
Information to be disclosed under LR 9.8.4R
Listing Rule 9.8.4R requires listed companies to include in their
annual financial report all information required under Listing
Rule 9.8.4R in a single identifiable section, or otherwise in a
cross reference table indicating where that information is set
out. The following cross reference table sets out where the
relevant disclosures can be found in the Report and Financial
Statements.
Listing rule
Disclosure
Page reference
LR 9.8.4R (1)
to (11)
LR 9.8.4R (12)
Not applicable Not applicable
Current year
dividend waiver
agreements
Note 3.2 to consolidated
financial statements on
page 162
Future dividend
waiver
agreements
Note 3.2 to consolidated
financial statements on
page 162
LR 9.8.4R (14)
Information
regarding
controlling
shareholder
The Company does not
have a Controlling
Shareholder. Details of
the ongoing relationship
with the Company’s
former Controlling
Shareholder can be
found under the heading
Shareholder Agreement
on page 130
128
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information DIRECTORS’ REPORT
CONTINUED
Share capital structure
The Company’s share capital consists of a single class of
ordinary shares of 0.4p each. As at 30 June 2023 and the date
of this report, there were 474,318,625 ordinary shares in issue,
each of which is fully paid up, amounting to an aggregate
nominal share capital of £1,897,274.50. Each ordinary share is
listed on the Official List maintained by the FCA and admitted
to trading on the Main Market of the London Stock Exchange.
Further details of the Company’s share capital can be found in
note 3.1 to the consolidated financial statements on page 162.
There were no changes to the Company’s share capital during
the period under review.
Rights attaching to shares and restrictions on transfer
The ordinary shares have attached to them full voting,
dividend and capital distribution rights, and rank pari passu
in all respects.
Save for deadlines for voting by proxy, there are no
restrictions on voting rights attaching to, or on the transfer
of, the Company’s ordinary shares. Full details regarding the
exercise of voting rights at the 2023 AGM, whether in person
or by proxy, will be set out in the Notice of AGM. To be valid, the
appointment of a proxy to vote at a general meeting must be
received not less than 48 hours before the time of the meeting.
The Company is not aware of any agreements between the
holders of ordinary shares that may restrict their transfer or
the voting rights attaching to them.
None of the Company’s ordinary shares carry any special
rights regarding control of the Company.
Authority to allot or buy back shares
The Company was granted authority at the 2022 AGM to
purchase in the market its own shares up to an aggregate
nominal value of 10% of its issued ordinary share capital.
No shares were purchased under this authority in the
year to 30 June 2023 and up to the date of this report.
This authority expires at the end of the 2023 AGM,
at which a special resolution will be proposed for its renewal.
This is a standard authority that the Directors have no present
intention of exercising.
The Directors were granted authority at the 2022 AGM to
allot relevant securities up to an aggregate nominal amount
of £632,424.83, representing approximately one third of the
Company’s issued ordinary share capital. No shares were
allotted under this authority in the year to 30 June 2023 and
up to the date of this report. This authority expires at the end of
the 2023 AGM, at which an ordinary resolution will be proposed
for its renewal. This is a standard authority that the Directors
have no present intention of exercising.
Shares held in trust for employee share schemes
Hargreaves Lansdown EBT Trustees Limited (the EBT Trustee)
holds ordinary shares in the Company in trust under the terms
of the Hargreaves Lansdown Employee Benefit Trust (the EBT)
to satisfy the exercise of options granted to the Group’s
employees under its approved and unapproved share option
schemes. Under the rules of the EBT, the EBT Trustee has
discretion as to the exercise of voting rights attaching to
ordinary shares held within the EBT. As at 30 June 2023,
the EBT Trustee held 779,080 ordinary shares, equating
to approximately 0.16% of the Company’s issued ordinary
share capital.
Hargreaves Lansdown Trustee Company Limited (the SIP
Trustee) holds ordinary shares in the Company in trust under
the terms of the Hargreaves Lansdown plc Share Incentive
Plan (the SIP) to satisfy the exercise of options granted to the
Group’s employees under the SIP. Save where the Company
notifies it that such waiver does not apply, the SIP Trustee must
refrain from exercising the voting rights attaching to ordinary
shares held in the SIP trust that have been allocated to
employees. The SIP Trustee has no express power under the
terms of the SIP to exercise voting rights attaching to ordinary
shares held in the SIP trust that have not been allocated to
employees. As at 30 June 2023, the SIP Trustee held 20,725
ordinary shares, equating to approximately 0.004% of the
Company’s issued ordinary share capital.
Substantial shareholdings
Notifications received by the Company in accordance with DTR
5 are published on a Regulatory Information Service and on the
Company’s website. As at 30 June 2023, the Company had
been advised of the following voting interests in the Company’s
ordinary shares amounting to more than 3% of the Company’s
issued share capital.
Name
Ordinary shares
% holding
Peter Hargreaves
Lindsell Train Limited
Stephen Lansdown
Blackrock, Inc
Baillie Gifford
93,838,474
56,874,459
27,087,419
27,082,571
23,517,973
19.78%
11.99%
5.71%
5.71%
4.96%
In the period between 30 June 2023 and the date of this report,
the Company received no further notifications.
129
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information DIRECTORS’ REPORT
CONTINUED
Shareholder Agreement
The Company announced on 7 February 2020 that Peter
Hargreaves had reduced his shareholding to 24.35% and
therefore ceased to be a controlling shareholder of the
Company. Peter Hargreaves has since reduced his
shareholding further and now holds 19.78%.
In October 2020, the Board announced that in order to reflect
Peter Hargreaves’ continuing interest in the Company whilst
respecting the strong independent governance principles of
the Board, the Company had agreed with Peter Hargreaves to
enter into a new shareholder agreement (the Agreement) to
govern their ongoing relationship. Pursuant to the Agreement,
Peter Hargreaves is entitled to nominate one non-independent,
Non-Executive Director for appointment to the Board, subject
to the applicable regulatory and governance framework that
is observed by the Company. Peter Hargreaves exercised
this right and Adrian Collins was appointed to the Board
on 2 November 2020. This Agreement and nomination right
shall remain in place for so long as Peter Hargreaves and his
Associates’ (as such term is defined in the Listing Rules) control
or are entitled to control the exercise of at least 10 per cent of
the Company’s voting rights.
The Agreement intends to ensure that any transactions or
arrangements with him are conducted at arm’s length and on
commercial terms, and that neither he nor his associates would
prevent the Company complying with its obligations under the
Listing Rules or propose or procure a shareholder resolution
intended to circumvent the proper application of the Listing
Rules. In February 2023, the Company shared protocols for
interactions with Peter Hargreaves and also with his
shareholder representative to codify relevant obligations
of each party under the shareholder agreement, relevant
legislation and the Code to ensure a common understanding
of how interactions will take place.
Dividends
The Board recommends a final ordinary dividend of 28.8 pence
per ordinary share to be paid in respect of the period ending
30 June 2023. Subject to shareholder approval at the 2023
AGM, it is proposed that this ordinary dividend is paid on
15 December 2023 to all shareholders on the register at
close of business on 17 November 2023.
For further information on the dividend, including the suspension
of the special dividend see page 32 of the Strategic Report.
Name
Role
Date of appointment/
departure
Board of Directors
Powers of the Directors
The Company’s articles of association (the Articles) set out the
powers of the Directors. Subject to company law, the Articles
and any directions given by special resolution of the Company,
the Directors have been granted authority to exercise all the
powers of the Company.
The Articles may only be amended by special resolution
at a general meeting of the Company’s shareholders.
Appointment and replacement of Directors
The appointment and replacement of Directors is governed
by the Articles, the Code and the Companies Act 2006 and
related legislation.
Under the Articles, Directors may be appointed, either to fill
a vacancy or as an addition to the existing Board, by ordinary
resolution of the Company or by resolution of the Board.
If appointed by the Board, a Director must retire and, if willing
to act, seek election at the next AGM following appointment.
In addition, the Articles require all Directors to retire at each
AGM and, if willing to do so, offer themselves for re-election.
This aligns to the requirements of provision 18 of the Code.
Further details can be found on page 75 of the Corporate
Governance Report.
In addition to the powers set out in the Companies Act 2006,
the Articles provide for the removal of a Director before the
expiration of their period of office by ordinary resolution of
the Company.
The Board
The names of the Directors of the Company as at the date
of this report, along with their biographies, are set out on
pages 66 to 69.
Darren Pope
Independent
Non-Executive Director
Appointed
1 September 2022
Since the year ended on 30 June 2023 the Company was
pleased to announce the appointment of Michael Morley as an
independent Non-Executive Director with effect from 1 August
2023. Michael’s experience and suitability as a Director of HL
can be found in his biography set out on page 69. In addition
during the year and following on from Chris Hill’s decision to
retire which was communicated in October 2022 the Company
was pleased to announce the appointment of existing Non-
Executive Director Dan Olley to the role. Chris stepped down
as CEO on 7 August 2023 with Dan transitioning to the CEO
role on the same day.
Directors’ interests
Details of the Directors’ interests in the Company’s ordinary
shares can be found on pages 111 and 116 of the Annual Report
on Remuneration.
During the period under review, no Director had any material
interest in a contract to which the Company or any of its
subsidiary undertakings was a party (other than their own
service contract) that required disclosure pursuant to the
Companies Act 2006.
Directors’ indemnities
As permitted by the Articles, the Directors have the benefit
of an indemnity which is a qualifying third-party indemnity
provision as defined by Section 234 of the Companies Act
2006. The indemnity was in place throughout the period
under review and remains in place as at the date of this report.
The Company also maintains Directors’ and Officers’ liability
insurance cover to protect the Directors from loss resulting from
claims against them in relation to the discharge of their duties.
Appointments to and departures from the Board during
the period under review are set out in the table below.
This cover was in place throughout the period under review
and remains in place as at the date of this report.
130
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information DIRECTORS’ REPORT
CONTINUED
Compensation for loss of office
There are no agreements in place between the Company and
its Directors or employees for compensation for loss of office
or employment as a result of a takeover bid.
Further details of how we encourage colleague involvement
in the Group’s performance, including by way of participation
in share schemes, can be found on page 43 of the
Strategic Report.
Stakeholders
The Board recognises that active engagement with the
Company’s key stakeholders is fundamental to promoting the
Group’s long-term success. Details of how the Group engages
with its key stakeholders can be found on pages 18 to 19, and
information on how stakeholder interests have been considered
by the Board can be found in the Group’s Section 172 Statement
on pages 132 to 135.
Details of the Group’s policies for the recruitment, continuing
employment and career development of disabled persons
can be found on pages 42 of the Strategic Report.
Post-balance sheet events
Details of important events affecting the Group that have
occurred since the end of the period under review can be
found in note 5.5 to the consolidated financial statements
on page 166.
Financial instruments and financial risk management
Details of the Group’s financial risk management policies and
objectives in relation to the use of financial instruments, and
its exposure to market, liquidity and credit risk, can be found
in note 5.7 to the consolidated financial statements on
pages 168 to 172.
Change of control
There are no significant agreements to which any member
of the Group is a party that take effect, alter or terminate upon
a change of control of the Company following a takeover bid.
Employee engagement and involvement
The Group is committed to engaging and communicating with
colleagues to ensure they understand the Group’s purpose,
vision and priorities and how they each play their part in the
development of its business. Information on action taken to
ensure colleagues are provided with information on matters
that concern them and to promote awareness of the factors
affecting the Group’s performance can be found on page 44
of the Strategic Report. Details of how the Group engages
with colleagues and how their interests are considered in
decision making can be found on pages 19 and 44 of the
Strategic Report and in the Group’s Section 172 Statement
on pages 132 to 135.
Political donations
The Group did not make any political donations or contributions
or incur any political expenditure during the period under review.
Annual General Meeting
The Board looks forward to welcoming shareholders to the
Company’s AGM in December 2023. Further information, along
with details of all resolutions to be proposed to the Company’s
shareholders and how to vote, will be set out in the Notice of
AGM that will be circulated ahead of the meeting.
Electronic communications and dividend payments
Shareholder communications are only sent in paper format to
shareholders who have elected to receive documents in this
way. This approach enables the Company to reduce printing
and distribution costs and the impact of the documents on
the environment. Shareholders who wish to receive email
notification instead of paper copies can register online at
www.shareview.co.uk
Shareholders can also request that dividends are paid directly
into their bank or building society account via Shareview.
This saves time and is more secure than receiving dividends
by cheque, which could arrive late or be lost in the post.
Going concern
In adopting the going concern basis for preparing the financial
statements, the Directors have considered the Group’s business
activities, together with the factors likely to affect its future
development, performance and position, including current
market conditions, the increase in inflation and the associated
cost-of-living crisis. This includes the Group’s principal risks
and uncertainties, details of which can be found in the Strategic
Report. The Operating and Financial Review on pages 27 to 32
of the Strategic Report describes the Group’s robust balance
sheet, managed to internal risk appetite and regulatory capital
limits, and a business with a high conversion of operating profit
to cash and a strong net cash position.
Having regard to the Company and Group’s financial, liquidity
and capital position, the Board has concluded that it remains
appropriate to adopt the going concern basis of accounting
in preparing the Company and Group’s financial statements.
Long-term viability
In accordance with Provision 31 of the Code, the Directors
have assessed the prospects of the Group over a longer period
than the 12 months required by the going concern provision.
Details of this assessment can be found on page 55 of the
Strategic Report.
Disclosure of information to external auditor
Each of the persons who are Directors at the time when this
report is approved confirms that:
• So far as they are aware, there is no relevant audit information
of which the Company’s external auditor is unaware; and
• They have taken all the steps that they ought to have taken
as a Director to make themselves aware of any relevant audit
information and to establish that the Company’s external
auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with Section 418 of the Companies Act 2006.
Approved by and signed by order of the Board.
Claire Chapman
Group Company Secretary
18 September 2023
131
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
SECTION 172 STATEMENT
Understanding the views and interests of our stakeholders helps
the Group to make better decisions with the aim of generating
long-term value for the Company’s shareholders whilst
contributing to wider society by building strong and lasting
relationships with our other key stakeholders.
The Board recognises that the impact of each decision made by
it, and elsewhere in the Group’s governance framework, will be
different for each of its key stakeholders and understands the
importance of considering the impact on each of those
stakeholders when making decisions.
Our employees
The Board recognises that understanding the needs of the
Group’s people is essential in developing a workplace and
culture in which they can reach their full potential and, in turn,
ensure the long-term success of the Group.
Section 172 of the Companies Act 2006 requires the Directors
to act in a way they consider will promote the success of the
Company for the benefit of its members as a whole. In doing
so, the Directors must have regard (amongst other matters) to:
• The likely consequences of any decision in the long term;
• The interests of the Group’s employees;
• The need to foster business relationships with the Group’s
suppliers, clients and others;
• The impact of the Group’s operations on the community
and the environment;
• The desirability of the Group maintaining a reputation
for high standards of business conduct; and
• The need to act fairly as between the Company’s
shareholders.
You can read more about how we engage with and respond to
the interests and needs of our key stakeholders on pages 18 to
19 of the Strategic Report.
How the Board has discharged its Section 172 duties
The Directors are briefed on their duties as directors as part of
the Group’s induction programme and the Board, as a whole,
periodically receives refresher training. Each Director also has
access to the Group Company Secretary for advice on the
application of those duties.
The Directors’ awareness of their duties to the Company,
combined with the knowledge and insights they obtain on the
views and interests of the Group’s key stakeholders and the
impact of the Group on wider society, enables them to make
decisions that promote long-term sustainable value for the
Company’s stakeholders. In practice, the Group operates within
a corporate governance framework whereby responsibility for
day-to-day decision making is appropriately delegated. In
considering their duties under Section 172 when setting the
Group’s strategy, values and framework of policies, the Board
aims to ensure that the consideration of stakeholder interests and
the Group’s long-term success is embedded across its business.
The Group’s Board and Committee paper templates encourage
paper authors to consider and highlight the impact on the
Group’s stakeholders of the matters covered. In addition to
acting as an aid to the Board in discharging its duties and
facilitating focused debate, this is intended to provide an
additional layer of comfort that paper authors have properly
considered and taken into account the interests of stakeholders.
Further details of how the Board considers each of the specific
matters set out in Section 172 is set out below, along with some
examples of how those considerations have influenced
decisions taken by the Board and Group more widely.
Considering the long term
The Board sets the strategy, values and culture, and develops
and oversees the Group’s framework of governance, risk
management and internal controls to promote and safeguard
the Group’s long-term success. The strategic goals and
objectives it sets are focused around developing the Group’s
proposition and service to fulfil the long-term needs of its
clients. You can read more about the Group’s strategy on
pages 20 to 26 of the Strategic Report.
The Group provides an essential service to its clients in a highly
regulated environment. The identification, management and
mitigation of risks to the Group’s business is key to ensuring the
delivery of its strategy over the longer term, and the
consideration of risk plays an important part in decision making.
You can read more about how the Group evaluates and
manages risk along with a description of the principal and
non-financial risks relating to the Company’s operations on
pages 53 to 62 of the Strategic Report. Details of how clients’
considerations influenced the Board’s implementation of the
FCA’s Consumer Duty can be found in the case studies on
pages 134 to 135.
The Group’s workplace advisory panel, the HL Colleague Forum,
provides a feedback channel directly between colleagues and
the Board on matters of strategic importance. It is chaired by
the Chief People Officer and each meeting is attended by a
broad range of colleagues from across the Group’s business.
In addition to the direct Board and Group Executive Committee
representation on the Forum, details of the issues raised and
outcomes are reported to the Remuneration Committee, with
onward escalation to the Board where appropriate. You can read
more about the Forum on page 40 of the Strategic Report.
The views of colleagues are also obtained via regular colleague
surveys. Detailed results are shared with the Group Executive
Committee, with key themes and issues escalated to the Board
for consideration.
You can read more about how we engage with colleagues and
the actions we have taken as a result of that engagement on
page 44 of the Strategic Report. Details of how engagement
with colleagues has influenced the Board’s decision making can
be found in the case studies on pages 134 to 135.
Our clients
The Group’s clients are at the heart of its strategy and their
interests are a key consideration in everything that the
Group does.
Both the Group Executive Committee and the Board regularly
receive updates on client proposition and service metrics.
The consideration and determination of current and future needs
of clients drives the Group’s innovation and the prioritisation of
activities within the Group’s annual operating plan and long-term
strategy. During the year under review specific consideration was
given to our Active Savings offering by the Board this resulted in
the consideration and strengthening of the governance around
partner banks. The Board also reviewed HL’s Client Fairness
Policy to ensure that given the rising interest rate environment HL
was appropriately – and fairly – ensuring good client outcomes.
132
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information SECTION 172 STATEMENT
CONTINUED
You can read more about how consideration of our clients’
interests have shaped some of the Board’s decisions this
year in the case studies on pages 134 to 135.
You can read more about how we engage with our clients
and the actions we have taken as a result on page 23
of the Strategic Report.
Our regulator
The FCA regulates the financial products and services provided
by the Group. The Group’s continued compliance with its
regulatory obligations and the interests and views of the FCA
are primary considerations in decision making across the Group.
The Board is regularly briefed on regulatory developments and
expectations, and the Board’s Risk, Audit and Remuneration
Committees receive detailed insights into specific areas such
as the ICARA, Operational Resilience, CASS and Consumer Duty.
The Board also receives updates in relation to specific matters,
such as areas of interest to the FCA including operational
resilience.
The Group maintains regular contact with the FCA to ensure
awareness of its concerns, expectations and agenda, and this
informs the prioritisation of activities within the Group’s annual
operating plan. The Group also engages with the FCA to help
ensure that the position of retail investors in the UK is
understood. Further details can be found on page 37.
Our suppliers
Fostering good relationships with the Group’s suppliers is an
important factor in ensuring it is able to continue to service
its clients effectively and efficiently over the long term. The
Group continues to develop, enhance and embed a vendor
management framework across the business, in line with
business, market and regulatory expectations. We aim to pay
our suppliers promptly and within 30 days of payment being
requested and have maintained the increased frequency of
our payment runs introduced to support suppliers during the
COVID-19 pandemic. Our average payment days during the
period under review was approximately 25 days.
Acting fairly between shareholders
Information on how we engage with our shareholders and how
the Board is made aware of shareholder sentiment and interests
can be found on pages 18 to 19 of the Strategic Report and
page 76 of the Corporate Governance Report. The views and
interests of the Company’s shareholders are key considerations
when the Board determines the level of dividend payments
(further details of which can be found on page 130 of the
Strategic Report), and when setting the Group’s strategy and
business priorities.
A shareholder agreement is in place with Peter Hargreaves (who
has a shareholding of 19.78%). The Agreement intends to ensure
that any transactions or arrangements with him are conducted at
arm’s length and on commercial terms – details of this agreement
can be found on page 32 of the Directors Report. In February
2023, the Company shared protocols for interactions with
Peter Hargreaves and also with his shareholder representative to
codify relevant obligations of each party under the shareholder
agreement, relevant legislation and the Code to ensure a
common understanding of how interactions will take place.
Impact on the community and the environment
The Board is conscious of the impact of the Group’s operations
on the community and environment, and understands the
importance of being a good corporate citizen.
The Board recognises ESG as an increasingly important
consideration to many of its key stakeholders and ESG
matters have been the subject Board discussions again this
year, alongside the Chief Executive Officer’s regular updates to
the Board on the Group’s approach. You can read more about
our ESG practices on pages 35 to 38 of the Strategic Report
and the key considerations of the Board when reviewing our
ESG strategy on page 46.
Maintaining a reputation for high standards
of business conduct
The Board supports the Chief Executive Officer in embedding
a culture that encourages the Group’s colleagues to live our
values and help the Group deliver on its strategic objectives.
The Group encourages colleagues to ‘do the right thing’ to
ensure that, as a business, we act with integrity in all our
dealings and decisions with the aim of being clear, fair and
transparent. The HL Way supports colleagues in understanding
how best to fulfil their personal responsibilities, making clear
what we stand for, the principles to follow, why it’s important
and what’s expected of us. You can find more information
about the HL Way on page 40 of the Strategic Report.
The Board approves and oversees the Group’s adherence
to policies that promote high standards of conduct and
receives regular updates on the Group’s culture through
KPIs that form part of the Chief Executive Officer’s business
performance update.
Key decisions and consideration
of stakeholder interests
The following table summarises how the Board and the wider
Group have had regard to the duties under Section 172 when
considering specific matters.
133
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information SECTION 172 STATEMENT
CONTINUED
Implementing Consumer
Duty – focus on clients
UK regulation continues to evolve, seeking to provide higher levels of protection for the consumer. In July 2022, the FCA confirmed the final details
of its new Consumer Duty aimed at setting higher and clearer standards of consumer protection across financial services and requiring firms to
deliver good outcomes for clients. This came into force in July 2023 and was a key focus for the Board during the period under review. It is
focused on ensuring that firms deliver good customer and client outcomes through: ensuring those products and services provide fair value,
enabling informed decision-making and providing support that meets the needs of customers and clients. This naturally aligns with HL’s culture
and values alongside our focus on our clients and how we can deliver the best experience alongside the best outcomes.
To support the implementation of Consumer Duty the Board has carried out a review of HL’s strategy and business model which concluded that
both are clearly aligned with obligations under Consumer Duty and to the ongoing delivery of good client outcomes. HL’s interests align well
with client outcomes and where interest could diverge steps have been taken to manage conflicts and avoid delivering harm to clients.
Reviews of HL’s products and services have been undertaken with a focus on client outcomes and also the outcomes for vulnerable clients,
recognising their differing situation. Our long-standing focus on clients leads to good outcomes being delivered across all dimensions, with only
minor enhancements identified to further support our clients in reaching good outcomes. These will be owned in the business and delivered in due
course.
The four ‘Outcomes’ named in the Consumer Duty outcomes have been considered throughout this process by the Board and aligned to
strategic pillars:
• Product & service – the Growth pillar focuses on developing HL’s proposition, including products and services, with a focus on addressing
client needs, and in delivering good client outcomes. The Digital Backbone pillar also focuses on using technology to improve the client
proposition and experience.
• Consumer support – the Service and Efficiency pillar focuses on improving client experience, including support, which in turn is expected
to meet client needs and expectation, particularly for clients with vulnerabilities and those who need additional support.
• Consumer understanding – the Growth and Service and Efficiency pillars will lead to enhancements. These evolve into ‘delivering a uniquely
personalised service’ which is aligned with the consumer understanding outcome.
• Price & value – as per the Consumer Duty, value is the relationship between the price paid for a product or service and the overall benefit
a client receives from it. HL’s strategy focuses on improving the proposition and service a client receives, enhancing the value delivered.
The Board’s Consumer Duty attestation can be found on page 79.
134
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information SECTION 172 STATEMENT
CONTINUED
Supporting our
colleagues
Engagement with
shareholders
The Board is acutely aware of how current inflationary pressures are impacting not only our clients’ financial wellbeing but also our colleagues.
Over the course of the last twelve months, we have increased the forums and mechanisms for listening to our colleagues and implemented cross
business working groups to shape our Colleague Value Proposition (CVP). Feedback gathered through the Colleague Forum led to improvements
to our overall CVP this year, supporting the financial resilience of our colleagues, particularly those who are lower paid. In addition to the breathing
space payments for circa 1,200 colleagues which were delivered in May 2022, a further standalone payment was awarded in January 2023 to over
1,600 colleagues, to reflect the continued impact of cost of living pressures.
Following significant feedback from colleagues through our Colleague Forum and listening sessions, we understand the importance for colleagues
to have more certainty over their earnings. As such this year, we increased the salaries of over 700 colleagues by 7% in exchange for annual
discretionary bonus. This gives these colleagues certainty of an increased salary each month rather than waiting until the end of the year to see
what their bonus might be. This certainty is even more important now due to the unprecedented pressures we’re seeing on the cost of living. We
also made the decision to bring forward our annual salary range review for all colleagues to provide managers with more visibility of the process
ahead of year end pay review activity and ensure that all our colleagues are on the minimum of their salary range before going into their annual
pay review. The outcome is a fairer process for all.
The Board have been kept fully up to date and engaged with these proposals through the wider CVP work and in particular through the Remuneration
Committee which receives regular reports from the Colleague Forum and also in relation to reward issues impacting the wider workforce.
Each year Deanna Oppenheimer undertakes a series of governance roadshows with HL’s key shareholders. This year the governance roadshows
focused on:
• The upcoming CEO transition;
• The ongoing execution of the strategy; and
• HL’s delivery of improved financial and operational results.
Feedback received through these meetings have informed communications to shareholders and the Board’s discussions of investor presentations.
Alongside this, during 2023, the Remuneration Committee Chair has been engaging with shareholders regarding the Remuneration Policy.
Feedback has been considered by the Board (via the Remuneration Committee) with amendments to the proposed Policy made as a direct result.
For example, the introduction of a Total Shareholder Return component to the proposed Long Term Incentive Plan for the Executive Directors.
More details on how we have addressed feedback as part of the Remuneration Policy consultation can be found on page 87 of the Directors
Remuneration Report.
In addition the discussions with shareholders were helpful in continuing HL’s dialogue regarding ESG which is split into three strands covering
HL as a responsible:
• Business;
• Investment and savings provider; and
• Fund manager.
This distinction flows through into Board debates has enabled the Board to effectively focus on clear areas in what is otherwise a broad topic.
HL’s approach to ESG across each of these elements can be found on pages 35 to 39.
135
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
In the case of each director in office at the date the directors’
report is approved:
• so far as the director is aware, there is no relevant audit
information of which the Group’s and Company’s auditors are
unaware; and
• they have taken all the steps that they ought to have taken as
a director in order to make themselves aware of any relevant
audit information and to establish that the Group’s and
Company’s auditors are aware of that information.
Amy Stirling
Chief Financial Officer
18 September 2023
The Directors are responsible for the maintenance and integrity
of the Company’s financial statements published on the ultimate
parent Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ confirmations
The directors consider that the Report and Financial Statements
2023 and accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s and Company’s position
and performance, business model and strategy.
Each of the directors, whose names and functions are listed
in Board of Directors profiles on pages 66 to 69 confirm that,
to the best of their knowledge:
• the Group and Company financial statements, which have
been prepared in accordance with UK-adopted international
accounting standards, give a true and fair view of the assets,
liabilities and financial position of the Group and Company,
and of the profit of the Group; and
• the Strategic Report includes a fair review of the development
and performance of the business and the position of the
Group and Company, together with a description of the
principal risks and uncertainties that it faces.
The Directors are responsible for preparing the Report and
Financial Statements 2023 and the financial statements in
accordance with applicable law and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group and the Company financial statements
in accordance with UK-adopted international accounting
standards.
Under company law, directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Company and
of the profit or loss of the Group for that period. In preparing
the financial statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable UK-adopted international
accounting standards have been followed, subject to
any material departures disclosed and explained in the
financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and
company will continue in business.
The directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the
financial statements and the Directors’ Remuneration Report
comply with the Companies Act 2006.
136
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information FINANCIAL
STATEMENTS
Independent auditors’ report
Section 1: Results for the year
Section 2: Assets and liabilities
Section 3: Equity
Section 4: Consolidated statement
of cash flows
Section 5: Other notes
Section 6: Company financial statements
138
145
153
161
163
165
174
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
137
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HARGREAVES LANSDOWN PLC
Report on the audit of the financial statements
Opinion
In our opinion, Hargreaves Lansdown Plc’s group financial statements and parent company
financial statements (the “financial statements”):
• give a true and fair view of the state of the group’s and of the parent company’s affairs as
at 30 June 2023 and of the group’s profit and the group’s and parent company’s cash flows
for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting
standards as applied in accordance with the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Report and Financial Statements
2023 (the “Annual Report”), which comprise: the consolidated statement of financial position and
the parent company statement of financial position as at 30 June 2023; the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated statement of
changes in equity, the consolidated statement of cash flows, the parent company statement of
changes in equity and the parent company statement of cash flows for the year then ended; and
the notes to the financial statements, which include a description of the significant accounting
policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’
responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical
Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the
FRC’s Ethical Standard were not provided.
Other than those disclosed in the Audit Committee report, we have provided no non-audit
services to the parent company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
• The group financial statements comprise the consolidation of 18 individual components,
each of which represents a legal entity within the group, as well as group level consolidation
adjustments.
• We assessed each component and considered the contribution it made to the group’s
performance in the year, whether it displayed any significant risk characteristics and/or
whether it contributed a significant amount to any individual financial statement line item.
• The above assessment resulted in us identifying two financially significant components that
required audit procedures for the purpose of the audit of the consolidated financial statements.
• The two financially significant entities are based in the UK and were audited by the PwC UK
audit team.
• By performing audit procedures on these two components, the consolidation adjustments and
by audit of specific balances in the components with large individual balances, we achieved
coverage greater than 75% of each material financial statement line item within the group’s
financial statements.
• We performed a full scope audit of all material line items in the parent company financial
statements.
Key audit matters
• Revenue recognition (group)
• Carrying value of investments in subsidiaries (parent company)
Materiality
• Overall group materiality: £20,139,000 (2022: £13,400,000) based on 5% of consolidated profit
before tax.
• Overall parent company materiality: £3,375,000 (2022: £12,200,000) based on 1% of total assets.
• Performance materiality: £15,100,000 (2022: £10,050,000) (group) and £2,500,000 (2022:
9,150,000) (parent company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most
significance in the audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
138
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
This is not a complete list of all risks identified by our audit.
The carrying value of investments in subsidiaries is a new key audit matter this year. Otherwise,
the key audit matters below are consistent with last year.
Key audit matter
Revenue recognition (group)
Revenue is material to the group and is an important determinant of the group’s results.
Revenue may be misstated due to errors in system datasets, calculations and/or manual
processes, for example, arising from incorrect securities’ prices or levels of assets held used
in such calculations and/or processes. Further, there are incentive schemes in place for
Directors and staff which are in part based on the group’s results, and therefore largely
impacted by the reported revenue amount. Where there are incentives based on financial
performance, there is an inherent risk of fraud in revenue recognition in order to overstate
revenue. This may arise through unauthorised changes to key data inputs or system
calculations used in the revenue recording processes and/or posting journal entries to
manipulate revenue.
Our assessment in this regard in respect of each of the group’s revenue streams concluded
that relevant areas of risk related to the three areas described below.
• The potential manipulation of key data inputs used in the automated calculation of platform fees
(e.g. number of units held) or fees on stockbroking transactions (e.g. fee rates) in the
administration system.
How our audit addressed the key audit matter
In order to address these areas, including the risk of fraud in revenue recognition, we evaluated
the design and implementation of key controls as well as performing the following procedures:
We tested relevant IT controls over the administration system, as well as the front end systems
which capture and transmit customer transactions to the administration system. We identified
and tested relevant IT dependencies (for example the interface between the front end systems
and the administration system) in the revenue reporting process. We identified a number of
exceptions from our testing of the IT controls and therefore performed additional work to
address these including consideration of mitigating controls, with no further issues arising.
We tested relevant controls over the accuracy of relevant data in the administration system
(for example over the recording of customer holdings, and matching of transactions to third
party records), with no exceptions being noted from this testing.
We tested samples of key data inputs held and used in the administration system for revenue
calculation purposes to supporting documentation, with no exceptions being noted from this
testing.
We performed sample-based testing to trace the revenue transactions recorded in the
year end dataset to the origination systems, validating the transactions and ensuring they
are correctly classified in the system. We noted some classification issues in the samples and
quantified the potential misstatement by obtaining the detailed transaction breakdowns which
confirmed there were no errors.
139
INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF HARGREAVES LANSDOWN PLC CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information Key audit matter
How our audit addressed the key audit matter
• The potential manipulation of the calculation logic within the administration system to increase
reported revenue from platform fees and stockbroking commission.
We used our data analytics software to reperform the platform fees and stockbroking
commission calculations, using source data extracted from the administration system.
We then compared our independent recalculations to the amounts reported.
• Posting journals to manipulate reported revenue amounts.
Carrying value of investments in subsidiaries (parent company)
The carrying value of investments in subsidiaries is £90.8m as at 30 June 2023
(2022: £68.9m). The investments in subsidiaries are recorded at cost less any provision
for impairment.
Management is required by IAS 36 ‘Impairment of assets’ to perform an annual review
and consider if there are any impairment indicators following which impairment reviews
were performed for two subsidiaries (Hargreaves Lansdown Savings Limited (“HLS”) and
Hargreaves Lansdown Advisory Services Limited (“HLAS”) whereby the recoverable amount
of both subsidiaries using a value-in-use approach was determined.
For HLAS, the recoverable amount determined by management was less than the current
carrying value and an impairment of £10.2m was recognised. For HLS, the recoverable
amount determined by management was in excess of the current carrying value, and in
excess of the historical cost of the investment (which had been previously impaired).
As such management recognised an impairment reversal of £21m to increase the carrying
value to the recoverable amount.
The determination of recoverable amounts for both subsidiaries requires assumptions to
be made regarding future cash flows, long term growth rates and the discount rate applied.
These are subjective areas and recognising the changes in circumstances identified, the
carrying value of investments in subsidiaries was classified as a significant risk for the audit.
We tested a risk-based sample of revenue related journals as part of our overall response
to the risk of management override of controls.
With respect to the revenue recalculations, we noted differences which required further
investigation and testing. We obtained further evidence to address those, and we evaluated
the residual differences. Based on the evidence obtained we did not consider the differences
to require adjustment.
There were no issues noted in our testing of key data inputs and journals.
We evaluated the design and implementation of key controls as well as performing the
following test procedures:
We challenged management on key elements of the assessments, for example the approach
taken to the forecast period used in both the HLAS and HLS value-in-use calculations. Initial
versions of the models both used an 8-10 year forecast period whereas IAS 36 suggests that
a maximum 5 year period should be used unless certain conditions are met. As a result,
management updated both to use a 5 year forecast period, which resulted in material changes
in the value-in-use calculated for both HLS and HLAS.
We agreed the cash flow forecasts used by management in the value-in-use calculations
for the first three years of the forecast period to approved business plans for HLS and HLAS.
We also assessed the key revenue and cost assumptions within the business plans and
subsequent period and corroborated those to external data where available.
We evaluated the historical accuracy of cash flow forecasts, including a comparison
of the current year actual results with those forecast.
We obtained and understood management’s sensitivity calculations over the carrying
value assessments, as well as performing further sensitivity scenarios ourselves.
We engaged our internal valuation experts to independently determine a reasonable range
for both the discount rate and long term growth rate assumptions used within the value-in-use
calculations. We found that the discount rates and long term growth rates used by
management were within the ranges determined by our experts, or where they were
not, the impact of this was not material.
Overall we are satisfied that there is sufficient evidence to support the key assumptions made
by management within the updated assessments and value-in-use calculations and that these
are compliant with IAS36. We therefore concur with the level of impairment that has been
recognised for HLAS and the impairment reversal recognised for HLS.
140
INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF HARGREAVES LANSDOWN PLC CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial statements as a whole, taking into account the structure of the group and
the parent company, the accounting processes and controls, and the industry in which they
operate.
The group operates primarily in the UK, and has one Polish based subsidiary. There were 5 key
operating subsidiaries during the year. We considered two legal entities to be financially
significant reporting units, Hargreaves Lansdown Asset Management Limited and Hargreaves
Lansdown plc, for which we performed an audit of their complete financial information. Together
these two financially significant reporting units represent 157% of the group’s consolidated profit
before tax (before considering the impact of intercompany eliminations) and 90% of the group’s
consolidated revenue. A reporting unit was considered to be financially significant if it contributed
more than 15% of consolidated profit before tax or otherwise met relevant risk or other criteria.
Revenue recorded by Hargreaves Lansdown Fund Management ltd was classified as a ‘large
balance’, contributing over 15% of consolidated revenue and subject to substantive testing.
Specific audit procedures were also performed over consolidation adjustments, balances that
could be tested centrally which included share-based payment expenses, intercompany
transactions and balances, and material movements through the consolidated statement
of changes in equity. All of the audit work was performed by the group engagement team
in the UK.
The impact of climate risk on our audit
In planning our audit, we considered the extent to which climate change is impacting the
group and how it impacted our risk assessment for the audit of the group’s financial statements.
In making these considerations we:
a) Enquired of management in respect of their own climate change risk assessment and obtained
their completed Climate-related risk questionnaire, including associated governance processes
and understood how these have been implemented.
b) Obtained the latest Task Force for Climate Related Financial Disclosures (“TCFD”) report for the
group and checked it for consistency with our knowledge of the group based on our audit work.
c) Considered management’s risk assessment and the TCFD report in light of our knowledge
of the wider asset management and wealth management industries.
Our conclusion was that the impact of climate change does not give rise to a key audit matter for
the group and it did not impact our risk assessment for any material financial statement line item
or disclosure.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Financial statements – group
Financial statements – parent company
£20,139,000 (2022: £13,400,000).
£3,375,000 (2022: £12,200,000).
Overall
materiality
How we
determined it
5% of consolidated profit
before tax
1% of Total assets (change from
prior year)
Rationale for
benchmark
applied
Based on the benchmarks used in
the Annual Report, profit before
tax is the primary measure used
by the shareholders in assessing
the financial performance of the
group, and is a generally
accepted auditing benchmark.
Our approach is consistent with
that used in the prior year.
The parent company operates
primarily as a holding company for
investments in the group’s
subsidiaries, with limited other
operating activities. Accordingly, we
have revisited our assessment of
materiality and consider that Total
assets is a more appropriate
benchmark than 5% of parent entity
profit before tax. This is a change in
approach from the prior year.
For each component in the scope of our group audit, we allocated a materiality that is less than
our overall group materiality. The range of materiality allocated across components was between
£3,375,000 and £19,132,000. Certain components were audited to a local statutory audit
materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our audit and the nature and extent
of our testing of account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality,
amounting to £15,100,000 (2022: £10,050,000) for the group financial statements and £2,500,000
(2022: £9,150,000) for the parent company financial statements.
In determining the performance materiality, we considered a number of factors – the history of
misstatements, risk assessment and aggregation risk and the effectiveness of controls – and
concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified
during our audit above £1,000,000 (group audit) (2022: £670,000) and £168,000 (parent company
audit) (2022: £610,000) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
141
INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF HARGREAVES LANSDOWN PLC CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability
to continue to adopt the going concern basis of accounting included:
• Obtaining, evaluating and challenging management’s going concern assessment (specifically
covering operational resilience, current and projected capital and liquidity positions, and the
appropriateness of downside scenarios) using our knowledge of the group’s business
performance and its regulatory capital and liquidity requirements;
• Agreeing cash flow forecasts to the Board approved operating plan (which is used in
management’s assessment) and performing lookback testing over budgeted versus actual
results for the previous year to assess the historical accuracy of management’s forecasting;
• Considering information obtained through review of regulatory correspondence, minutes of
meetings of the Board, Group Audit and Group Risk Committees, as well as publicly available
market information to identify any evidence that would contradict management’s assessment;
and
• Substantiating the group and parent company liquid resources, and borrowing facilities.
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the group’s
and the parent company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not
a guarantee as to the group’s and the parent company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance
Code, we have nothing material to add or draw attention to in relation to the directors’ statement
in the financial statements about whether the directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern
are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial
statements and our auditors’ report thereon. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement, we
are required to perform procedures to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ report, we also considered whether the
disclosures required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires
us also to report certain opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit, the information given in
the Strategic report and Directors’ report for the year ended 30 June 2023 is consistent with the
financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and parent company and their
environment obtained in the course of the audit, we did not identify any material misstatements in
the Strategic report and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern,
longer-term viability and that part of the corporate governance statement relating to the parent
company’s compliance with the provisions of the UK Corporate Governance Code specified for
our review. Our additional responsibilities with respect to the corporate governance statement
as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement, included within the Strategic Report and
Directors’ Report is materially consistent with the financial statements and our knowledge
obtained during the audit, and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and
principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures
are in place to identify emerging risks and an explanation of how these are being managed
or mitigated;
142
INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF HARGREAVES LANSDOWN PLC CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information • The directors’ statement in the financial statements about whether they considered it
appropriate to adopt the going concern basis of accounting in preparing them, and their
identification of any material uncertainties to the group’s and parent company’s ability to
continue to do so over a period of at least twelve months from the date of approval of the
financial statements;
In preparing the financial statements, the directors are responsible for assessing the group’s and
the parent company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
• The directors’ explanation as to their assessment of the group’s and parent company’s
prospects, the period this assessment covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the parent
company will be able to continue in operation and meet its liabilities as they fall due over the
period of its assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and parent
company was substantially less in scope than an audit and only consisted of making inquiries and
considering the directors’ process supporting their statement; checking that the statement is in
alignment with the relevant provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements and our knowledge and
understanding of the group and parent company and their environment obtained in the course
of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of
the following elements of the corporate governance statement is materially consistent with the
financial statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair,
balanced and understandable, and provides the information necessary for the members to
assess the group’s and parent company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management
and internal control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement
relating to the parent company’s compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities, the directors are responsible
for the preparation of the financial statements in accordance with the applicable framework and
for being satisfied that they give a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of
non-compliance with laws and regulations related to non-compliance with laws and regulations
related to breaches of UK regulatory principles, such as those governed by the Financial Conduct
Authority, and we considered the extent to which non-compliance might have a material effect on
the financial statements. We also considered those laws and regulations that have a direct impact
on the financial statements such as Companies Act 2006. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were related to posting inappropriate
journal entries and the potential manipulation of key data or calculation logic within the
administration system to increase reported revenue for the group. Audit procedures performed
by the engagement team included:
• Discussions with the Risk and Compliance functions, Internal Audit and the parent company’s
legal counsel, including consideration of known or suspected instances of non-compliance
with laws and regulation and fraud;
• Performing an assessment of the susceptibility of the financial statements to be materially
misstated from fraud and how fraud might occur;
• Understanding and assessing management’s controls designed to prevent and detect
irregularities and the policies and procedures on fraud risks;
• Reading the Audit Committee papers in which whistle blowing matters are reported and
considered the impact of these matters on the group’s compliance with laws and regulations;
• Reading key correspondence with and making enquiries of the Financial Conduct Authority
(“FCA”) in relation to compliance with laws and regulations;
143
INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF HARGREAVES LANSDOWN PLC CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information • Reviewing relevant meeting minutes including those of the Board, Risk and Audit Committees;
• Reviewing data regarding customer complaints and the company’s register of litigation
and claims, in so far as they related to potential non-compliance with laws and regulations
and fraud;
• Testing key data within the administration system to a high degree of assurance, and testing
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
administration system logic through independent recalculation;
• adequate accounting records have not been kept by the parent company, or returns adequate
• Identifying and testing journal entries, in particular any journal entries posted with unusual
for our audit have not been received from branches not visited by us; or
account combinations increasing reported revenues or reducing the expenses of the group;
• certain disclosures of directors’ remuneration specified by law are not made; or
• Designing audit procedures to incorporate unpredictability around nature, timing or extent
• the parent company financial statements and the part of the Directors’ Remuneration report
of our testing; and
• Reviewing the Report and Financial Statements 2023 disclosures and testing to supporting
documentation to assess compliance with applicable laws and regulations.
There are inherent limitations in the audit procedures described above. We are less likely to
become aware of instances of non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances,
possibly using data auditing techniques. However, it typically involves selecting a limited number
of items for testing, rather than testing complete populations. We will often seek to target
particular items for testing based on their size or risk characteristics. In other cases, we will use
audit sampling to enable us to draw a conclusion about the population from which the sample is
selected.
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent company’s
members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for
no other purpose. We do not, in giving these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
to be audited are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members
on 25 October 2013 to audit the financial statements for the year ended 30 June 2014 and
subsequent financial periods. The period of total uninterrupted engagement is 10 years, covering
the years ended 30 June 2014 to 30 June 2023.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and
Transparency Rule 4.1.14R, these financial statements will form part of the ESEF-prepared
annual financial report filed on the National Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’
report provides no assurance over whether the annual financial report will be prepared using the
single electronic format specified in the ESEF RTS.
Darren Meek (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
18 September 2023
144
INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF HARGREAVES LANSDOWN PLC CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
SECTION 1: RESULTS FOR THE YEAR
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2023
Revenue
Operating costs
Operating profit
Finance and other income
Finance costs
Profit before tax
Tax
Profit for the financial year
Attributable to:
Owners of the parent
Non-controlling interest
Earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
The results relate entirely to continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2023
Profit for the financial year
Total comprehensive income for the financial year
Attributable to:
Owners of the parent
Non-controlling interest
The results relate entirely to continuing operations.
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
735.1
(350.7)
384.4
19.0
(0.7)
402.7
(79.0)
323.7
323.8
(0.1)
323.7
68.3
68.2
583.0
(313.0)
270.0
–
(0.8)
269.2
(53.4)
215.8
216.3
(0.5)
215.8
45.6
45.6
Note
1.1
1.3
1.6
1.7
1.8
1.9
1.9
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
323.7
323.7
323.8
(0.1)
323.7
215.8
215.8
216.3
(0.5)
215.8
145
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information SECTION 1: RESULTS FOR THE YEAR
NOTES TO THE GROUP FINANCIAL STATEMENTS
INCOME STATEMENT
1.1 Revenue
Revenue represents fees receivable from financial services provided to clients, net interest
income on client money and management fees charged to clients. It relates to services provided
in the UK and is stated net of value added tax.
Revenue is measured at the fair value of the consideration received or receivable and
represents amounts receivable for services provided in the normal course of business,
net of commission payable, discounts, VAT and other sales related taxes.
Ongoing Revenue
The largest source of revenue for the Group encompasses ongoing revenue, which includes
platform fees, fund management fees, net interest income on client money and ongoing
advice charges and renewal commission. This is revenue predominantly earned over time.
Platform fees are received for the provision of custody and administration of products on
the HL platform and are charged monthly in arrears for the service provided in the period,
recognised on an accruals basis as they fall due. The consideration due is based on the
value of clients’ underlying assets under administration.
Fund management fees are calculated as a proportion of the net asset value of the funds
under management in each of the HL Multi-Manager, Select funds, building block funds
and portfolio funds for the management services provided by the Group’s fund management
subsidiary. They are charged monthly in arrears and are recognised on an accruals basis in
the period during which the service is provided.
Active Savings revenue is earned on fees from partner banks.
Net interest income on client money is the revenue earned on money held within Group
products by clients. It represents amounts retained and received from clients for the
administration of cash on the platform, after interest is received by clients. It is linked to
the underlying interest rates and is recognised over time, based on the balances held in
investment accounts under administration.
Renewal commission is earned on third-party agreements entered into by clients, as a result
of advice provided to them and is recognised on an accruals basis as it becomes due and
payable to the Group.
Ongoing advice charges are levied monthly in arrears for the period during which the service
is provided and are calculated as a percentage of the assets under management within the
Group’s Portfolio Management Service.
The Portfolio Management Service is provided to clients who prefer a managed service.
This service encompasses the HL platform custody and administration, fund management
and ongoing advice services. All revenue streams are as described above. Additionally, initial
advice charges are levied on taking the product up or on any advised deposit into the product,
as described in transactional revenue below. Each stream is separately charged in relation to
the product. Each stream can also be taken by HL clients who do not use the Portfolio
Management Service, either as separate services or in any combination as required.
Although most ongoing revenue is based on the value of underlying benefits, these are not
considered to constitute variable income in which significant judgement or estimation is
involved. The calculations are based on short timelines or point in time calculations that
represent the end of a quantifiable period, in accordance with the contract. These are charged
to and paid by the client on the same value, constituting the transaction price for the specified
period. At any time during the period a client may choose to remove their assets from a service
and no further revenue is received.
All obligations to the customer are satisfied at the end of the period in which the service
is provided for ongoing revenue, with payment being due immediately.
Transactional
The other source is revenue earned on individual transactions and is primarily made up of
fees on stockbroking transactions and advisory event driven fees, referred to as initial advice
charges in the table on the next page. The price is determined in relation to the specific
transaction type and are frequently flat fees. There is no variable consideration in relation
to transactional revenue.
The Group earns fees on stockbroking transactions entered into on behalf of clients. The fee
earned is recorded in the accounts on the date of the transaction, being the date on which
services are provided to clients and the Group becomes entitled to the income.
Initial advice charges are made to clients for providing advice to clients on specific financial
matters or in relation to amounts deposited into the Portfolio Management Service. This
can take the form of ad hoc advice on a specific pool of assets or initial advice about taking
managed services. The transaction price is determined at the point advice is accepted based
on the final value of assets that are being advised upon. Revenue is recognised at the point
at which acceptance of the advice is made by the client and payment is taken on the
implementation of advice. The average time between acceptance and implementation
is 30 days, if advice is not accepted then no charge will be taken. If the client is advised
to take a managed service, ongoing advice charges are levied separately.
146
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 1.1 Revenue continued
Timing and judgements made in relation to revenue
As at year end, the Group has discharged all of its obligations in relation to contracts
with customers, other than in relation to those services that are billed in advance or arrears.
These amounts are not material and where an obligation still exists at year end and the
payment exceeds the services rendered a contract liability is recognised as deferred income
in trade payables and spread across the period of the transaction evenly. At the year end the
longest period of liability in relation to deferred income is three months.
None of the revenue streams contain financing components.
1.2 Segmental reporting
Under IFRS 8, operating segments are required to be determined based upon the way
the Group generates revenue and incurs expenses and the primary way in which the Chief
Operating Decision Maker (CODM) is provided with financial information. In the case of the
Group, the CODM is considered to be the Executive Committee.
It is the view of the Board and of the Executive Committee that there is only one segment, being
the direct wealth management service administering investments in ISA, SIPP and Fund & Share
accounts, and providing cash management services for individuals and corporates in the United
Kingdom. Given that only one segment exists, no additional information is presented in relation
to it, as it is disclosed throughout these financial statements.
There are no judgements made in relation to the timing or determination of transaction
price of any revenue streams.
The Group does not rely on any individual customer and so no additional customer information
is reported.
Ongoing revenue
Platform fees
Fund management fees
Ongoing advice charges
Active Savings revenue1
Net interest income
Renewal commission
Transactional revenue
Fees on stockbroking transactions
Initial advice charges
Other transactional income
Total Revenue
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
270.5
54.3
7.4
8.7
268.7
3.0
116.9
4.7
0.9
735.1
289.1
60.3
8.3
1.8
50.0
4.6
164.6
4.0
0.3
583.0
1 Active Savings revenue was previously disclosed within net interest income and is now disclosed separately.
1.3 Operating costs
Operating costs
Operating costs represent those arising as a result of our operations and include depreciation
and amortisation. All amounts are recognised on an accruals basis.
Leasing
Leases that are considered short-term or low value under IFRS 16 are charged to the Income
Statement on a straight-line basis over the term of the relevant lease. Benefits received and
receivable as an incentive to enter into a lease are also spread on a straight-line basis over
the lease term.
Activity costs
Activity costs comprise marketing costs, dealing related costs, and payment costs
for client cash transferred onto the platform.
Support costs
Support costs comprise costs other than labour, activity and technology costs that are part
of the underlying business of the Group. Calculated as the total cost, less labour activity and
technology costs.
Technology costs
Technology costs include software support fees and service subscriptions. As we build
our digital capacity we utilise more third-party services that are Cloud based.
147
SECTION 1: RESULTS FOR THE YEARNOTES TO THE GROUP FINANCIAL STATEMENTS INCOME STATEMENT CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 1.3 Operating costs continued
Operating profit has been arrived at after charging:
Depreciation of owned plant and equipment and
right-of-use assets (note 2.3)
Amortisation of other intangible assets (note 2.2)
Impairment of intangible assets (note 2.2)
FSCS costs
Activity costs2
– Marketing Costs
– Dealing and financial services costs
Technology costs*
Support costs1
– Legal and professional costs
– Office running costs
– Other operating costs
Staff (including contractors) costs (note 1.5)
Operating costs
1.4 Auditors’ remuneration
The analysis of auditors’ remuneration is as follows:
Audit fees
Fees payable to the company’s auditors and its associates
for the audit of parent Company, Company’s subsidiaries
and consolidated financial statements
Audit related assurance services
Other assurance services
1.5 Staff costs
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
Staff costs represent amounts payable to employees, contractors and NEDs in respect of
services provided in the year including wages and salaries, share-based payment expenses,
bonuses, payments to a defined contribution retirement benefit scheme and related social
security costs. Amounts are recognised as the services are provided.
8.5
6.8
–
6.1
20.7
23.4
40.4
40.9
8.4
16.2
179.3
350.7
8.9
6.2
1.0
12.1
25.8
24.6
29.7
33.1
4.9
11.2
155.5
313.0
The average monthly number of employees of the Group
(including Executive Directors and contractors) was:
Operating and support functions
Administrative functions
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Share-based payment expenses
Other pension costs
Total costs paid for staffing
Capitalised in the year
Staff (including contractors) costs
Year ended
30 June 2023
No.
Year ended
30 June 2022
No.
1,558
661
2,219
£m
149.9
14.4
8.2
16.0
188.5
(9.2)
179.3
1,533
576
2,109
£m
122.2
14.2
8.4
13.2
158
(2.5)
155.5
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
The staff (including contractors) costs of £179.3 million (2022: £155.5m) are net of costs capitalised
under intangible assets as disclosed in note 2.2. In total, £8.9 million of wages and salaries
(2022: £2.0m), social security costs of £0.1 million (2022: £0.2m) and pension costs of £0.2 million;
(2022: £0.3m) were capitalised. See note 2.2 for further detail of the amounts capitalised.
There were 143 (2022: 80) contractors with a total cost of £17.7 million (2022: £9.4m).
1.6 Finance and other income
0.7
0.5
0.1
1.3
0.6
0.4
0.1
1.1
Interest on bank deposits
Other income
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
15.8
3.2
19.0
–
–
–
148
*The line item description of these categories has changed from the prior year.
1 Support costs includes costs previously known as legal and professional fees and office running costs. Also included in support costs
are compensation and compliance costs, other finance costs, insurance costs and fair value movements on investments (note 2.4).
2 Activity costs now includes costs previously known as marketing costs and dealing and financial services costs.
Audit and related services provided by the auditors are discussed further in the Audit Committee
report on page 82.
SECTION 1: RESULTS FOR THE YEARNOTES TO THE GROUP FINANCIAL STATEMENTS INCOME STATEMENT CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 1.7 Finance costs
Commitment fees
Interest incurred on lease payables
Finance costs
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
0.3
0.4
0.7
0.3
0.5
0.8
The finance costs relate to the commitment fees paid in respect of a revolving credit facility
available to the Group. The facility allows the Group to draw up to £75 million (2022: £75m) and is
undrawn as at 30 June 2023. The facility incurs interest charges, consisting of a margin of 0.85%
plus SONIA per annum when drawn.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot
be readily determined, which is generally the case for leases in the Group, the lessee’s incremental
borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions. The rates range between 2.5% and 4.4%,
with a weighted average incremental borrowing rate of 2.8%. Lease payments are allocated between
principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period.
1.8 Tax
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax
currently payable is based on taxable profit for the year. Taxable profit differs from net profit
as reported in the Income Statement because it excludes items of income or expense that
are taxable or deductible in other years and it further excludes items that are never taxable
or deductible. The Group’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases
used in the computation of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments
in subsidiaries and associates, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the year when the
liability is settled or the asset is realised. Deferred tax is charged or credited in the Income
Statement, except when it relates to items charged or credited directly to equity, in which case
the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set off current tax assets against current tax liabilities and
when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Current tax: on profits for the year
Current tax: adjustments in respect of prior years
Deferred tax (note 2.7)
Deferred tax: adjustments in respect of prior years (note 2.7)
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
80.0
(0.2)
(0.8)
–
79.0
52.3
(0.4)
1.0
0.5
53.4
Corporation tax is calculated at 20.5% of the estimated assessable profit for the year to 30 June
2023 (2022: 19%).
In addition to the amount charged to the Consolidated Income Statement, certain tax amounts
have been credited directly to equity as follows:
Deferred tax relating to share-based payments
Current tax relating to share-based payments
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
(0.2)
(0.1)
(0.3)
(0.6)
0.1
(0.5)
149
SECTION 1: RESULTS FOR THE YEARNOTES TO THE GROUP FINANCIAL STATEMENTS INCOME STATEMENT CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 1.9 Earnings per share (EPS)
Basic earnings per share is calculated by dividing the profit attributable to equity holders of
the Company by the weighted average number of ordinary shares in free issue during the year,
including ordinary shares held in the Hargreaves Lansdown Employee Benefit Trust (HL EBT) and
Hargreaves Lansdown SIP Trust (SIP) reserve which have vested unconditionally with employees.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all potentially dilutive ordinary shares.
The weighted average number of anti-dilutive share options and awards excluded from the
calculation of diluted earnings per share was 1,285,599 at 30 June 2023 (2022: 429,519).
1.8 Tax continued
Factors affecting tax charge for the year
It is expected that the ongoing effective tax rate will remain at a rate approximating to the standard
UK corporation tax rate in the medium term, except for the impact of deferred tax arising from the
timing of exercising of share options which is not under our control. Following the enactment of the
Finance Act 2021 the standard UK corporation tax rate was 19% before increasing to 25% from
1 April 2023. The Group’s taxable profits for this accounting year are taxed at 20.5% as the Group’s
financial year straddled a rate change so a blended corporation tax rate has been applied for the
period. Deferred tax has been recognised at either 20.5% or 25% depending on the rate expected
to be in force at the time of the reversal of the temporary difference.
The charge for the year can be reconciled to the profit per the Income Statement as follows:
Profit before tax
Tax at the standard UK corporation tax rate of 20.5%
(2022: 19.0%)
Non-taxable income
Items not allowable for tax
Additional deduction for tax purposes
Adjustments in respect of prior years
Foreign tax suffered
Impact of the change in tax rate
Tax expense for the year
Effective tax rate
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
402.7
269.2
82.6
(5.7)
2.3
(0.2)
0.1
0.1
(0.2)
79.0
51.1
0.1
2.3
(0.2)
0.1
0.1
(0.1)
53.4
19.7%
19.9%
The additional deduction for tax purposes only arises from enhanced capital allowances available
from the super deduction on qualifying plant and machinery purchased within the financial
year ended 30 June 2023.
Factors affecting future tax charge
Any increase or decrease to the share price of Hargreaves Lansdown plc will impact the amount
of tax deduction available in future years on the value of shares acquired by staff under share
incentive schemes.
Earnings per share
Basic EPS
Diluted EPS
Earnings
Earnings for the purposes of basic and diluted EPS – net
profit attributable to equity holders of parent company
Number of shares
Weighted average number of ordinary shares
Weighted average number of shares held by HL EBT
and SIP
Weighted average number of shares held by HL EBT and
SIP that have vested unconditionally with employees
Weighted average number of ordinary shares for the
purposes of basic EPS
Weighted average number of dilutive share options held
by HL EBT and SIP that have not vested unconditionally
with employees
Weighted average number of ordinary shares for the
purposes of diluted EPS
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
323.8
216.3
474,318,625
474,318,625
(242,404)
(444,685)
89,116
74,702
474,165,337
473,948,642
686,256
579,869
474,851,593
474,528,511
Pence
68.3
68.2
Pence
45.6
45.6
150
SECTION 1: RESULTS FOR THE YEARNOTES TO THE GROUP FINANCIAL STATEMENTS INCOME STATEMENT CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information SECTION 1: RESULTS FOR THE YEAR
NOTES TO THE GROUP FINANCIAL STATEMENTS
INCOME STATEMENT CONTINUED
1.10 Share-based payments
Details of the share options outstanding during the year are as follows:
The Group issues equity settled share-based payments to certain employees. Equity settled
share-based payments are measured at fair value (excluding the effect of non-market based
vesting conditions) at the date of grant. The awards are expensed on a straight-line basis over
the vesting period, based on management’s best estimate of awards vesting and adjusted for
the impact of non-market-based vesting conditions. Annual revisions are made to the estimate
of awards vesting, based on non-market-based vesting conditions. The impact of the revision
is recognised in the Income Statement such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to reserves.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model
has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Any gains or losses on the sale of the Company’s own shares held by the EBT are credited
or debited directly to the EBT reserve.
Equity settled share option schemes
The Group seeks to facilitate equity ownership by employees, principally through schemes
that encourage and assist the purchase of the Company’s shares.
The Group operates five share option and share award plans: the Employee Savings Related
Share Option Scheme (SAYE), the Hargreaves Lansdown plc Share Incentive Plan (SIP) and the
Executive Option Scheme which includes the Hargreaves Lansdown Company Share Option
Scheme, Sustained Performance Plan (SPP) and the Deferred Performance Bonus Plan (DPBP).
Options granted under the SAYE scheme vest over three years.
Options granted under the Employee Share Incentive Plan vest over a three-year period.
Options granted under the Executive Option Scheme range between vesting at grant date and
a maximum of 10 years. Options under Hargreaves Lansdown Company Share Option Scheme
are exercisable at a price equal to the market value of the Company’s shares on the date of grant.
Options granted under the SPP and the DPBP are granted at nil cost.
There are currently no performance conditions attached to any options granted under any of the
schemes, with the exception of the Sustained Performance Plan (SPP) – a part of the Executive
Option Scheme, although options are forfeited (in most circumstances) if the employee leaves
the Group before the options vest.
Year ended 30 June 2023
Year ended 30 June 2022
Share options
No.
Weighted
average
exercise price
Pence
Share options
No.
Weighted
average
exercise price
Pence
SAYE
Outstanding at beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
Forfeited during the year
Outstanding at the end of the year
978,323
993,039
–
(7,123)
(679,258)
919.5
626.0
–
1,245.1
914.4
792,726
716,660
(18,034)
(9,453)
(503,576)
1,284,981
693.6
978,323
Exercisable at the end of the year
–
–
–
Executive Option Scheme
Outstanding at beginning of the year 1,484,090
662,847
Granted during the year
(257,447)
Exercised during the year
Lapsed during the year
–
(75,859)
Forfeited during the year
Outstanding at the end of the year
1,813,631
Exercisable at the end of the year
576,152
SIP
Outstanding at beginning of the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
33,475
(12,750)
20,725
20,725
358.5
–
24.53
–
–
278.0
875.0
23.5
23.5
23.5
23.5
1,340,013
517,721
(359,939)
–
(13,705)
1,484,090
563,287
34,885
(1,410)
33,475
33,475
1,223.9
808.0
1,340.5
1,262.7
1,218.5
919.5
–
572.6
–
653.7
–
–
358.5
944.6
23.5
23.5
23.5
23.5
The weighted average market share price at the date of exercise for options exercised during the
year was 861.3 pence (2022: 1,373.5 pence).
Hargreaves Lansdown
Report and Financial Statements 2023
151
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 1: RESULTS FOR THE YEAR
NOTES TO THE GROUP FINANCIAL STATEMENTS
INCOME STATEMENT CONTINUED
1.10 Share-based payments continued
The share options outstanding at the end of each year have exercise prices and expected
remaining lives as follows:
The fair value at the date of grant of options awarded during the year ended 30 June 2023 and
the year ended 30 June 2022 has been estimated by the Black-Scholes methodology and the
principal assumptions required by the methodology were as follows:
Weighted average expected
remaining life
0-1 years
1-2 years
2-3 years
3-4 years
4-5 years
Year ended 30 June 2023
Year ended 30 June 2022
Weighted
average
options
exercise price
Pence
Share options
No.
Weighted
average
options
exercise price
Pence
Share options
No.
1,085,774
516,695
1,215,280
74,193
227,394
3,119,336
517.1
423.4
506.5
0.0
0.0
447.5
1,050,667
413,388
857,299
86,784
87,749
2,495,887
719.7
240.9
671.7
0.0
0.0
573.6
Weighted average share price
Expected dividend yields
SAYE
Weighted average exercise price
Expected volatility
Risk free rate
Expected life
Fair value
Executive scheme
Weighted average exercise price
Expected volatility
Risk free rate
Expected life
Fair value
At 30 June
2023
839.21
3.05%
At 30 June
2022
1,260.37
2.41%
6.26p
38%
3.68%
3 years
223.0p
0.00p
38%
3.23%
3.8 years
891.1p
8.08p
41%
1.58%
3 years
253.0p
0.00p
34%
0.37%
2.6 years
1,473.1p
The expected volatility
The expected Hargreaves Lansdown plc share price volatility was determined by calculating the
historical volatility of the Group’s share price since flotation in May 2007. Prior to 15 May 2007, the
Company’s shares were not listed on a stock exchange and therefore no readily available market
price existed for the shares. Since 15 May 2007, a quoted market price has been available for the
Company’s shares.
The Group recognised total expenses related to equity settled share-based payment transactions
as shown in note 1.5.
Hargreaves Lansdown
Report and Financial Statements 2023
152
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 2: ASSETS AND LIABILITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
ASSETS
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax
Current assets
Investments
Trade and other receivables
Cash and cash equivalents
Current tax assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Net current assets
Non-current liabilities
Provisions
Non-current lease liabilities
Total liabilities
Net assets
EQUITY
Share capital
Shares held by EBT
EBT reserve
Retained earnings
Total equity, attributable to the owners of the parent
Non-controlling interest
Total equity
The consolidated financial statements on pages 145 to 173 were approved by the Board and authorised for issue on 18 September 2023 and signed on its behalf by:
Amy Stirling
Chief Financial Officer
Hargreaves Lansdown
Report and Financial Statements 2023
Note
At 30 June 2023
£m
At 30 June 2022
£m
2.1
2.2
2.3
2.7
2.4
2.5
2.6
2.8
2.9
2.10
3.1
3.1
1.3
50.4
17.4
2.6
71.7
0.5
836.9
373.3
3.4
1214.1
1,285.8
565.5
565.5
648.6
3.0
7.6
576.1
709.7
1.9
(6.4)
(1.0)
715.2
709.7
–
709.7
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
1.3
37.3
22.5
1.9
63.0
0.8
523.5
488.3
0.6
1,013.2
1,076.2
488.3
488.3
524.9
2.6
11.8
502.7
573.5
1.9
(3.6)
(2.4)
579.2
575.1
(1.6)
573.5
153
SECTION 2: ASSETS AND LIABILITIES
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
2.1 Goodwill
2.2 Other intangible assets
Goodwill arising on consolidation represents the excess of the cost of acquisition over the
Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary at the
date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently
measured at cost less any accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is allocated to the cash generating unit
expected to benefit from the synergies of the combination.
The cash generating unit to which goodwill has been allocated is reviewed for impairment
at least annually as a matter of course, and whenever an event or change in circumstances
occurs which indicates potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the fair value less costs of
disposal. Any impairment is recognised immediately in profit or loss and is not subsequently
reversed.
On disposal of a subsidiary, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
Cost – at beginning and end of year
Accumulated impairment losses
At beginning and end of year
Carrying amount – at end of year
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
1.5
0.2
1.3
1.5
0.2
1.3
The net carrying value of goodwill relates entirely to the acquisition of Hargreaves Lansdown
Pensions Direct Limited (HLPD) now named Hargreaves Lansdown Advisory Services Limited
(HLAS).
The Group has prepared financial forecasts for the cash generating unit to which the purchase
and goodwill relates for the period to June 2026 that show the Group as a whole is expected
to remain profitable and cash generative. Impairment has been assessed with respect to
the underlying cash generating unit to which the goodwill relates and no issues are noted.
Other intangible assets comprise customer lists, computer software and the Group’s significant
propositional systems, which are stated at cost less amortisation and any recognised impairment
loss. Amortisation is provided, where material, on all intangible assets excluding goodwill at rates
calculated to write off the cost or valuation, less estimated residual value, of each asset evenly
using a straight-line method over its estimated useful life as follows:
Customer list – eight years
The customer list relates to acquired books of business and does not include internally
generated client lists. The carrying value of the assets is reviewed for impairment at least every
12 months, or when events or changes in circumstances indicate that the carrying value may not
be recoverable.
Computer software – over three to eight years
Computer software relates to purchases of licences and software, in line with the requirements
of IAS 38. The carrying values of computer software are reviewed for impairment when events
or changes in circumstances indicate that the carrying value may not be recoverable. The gain
or loss arising on the disposal or retirement of an asset is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognised in the Consolidated
Income Statement.
Internally developed software – eight years
IT development costs are capitalised only to the extent that they have led to the creation
of enduring assets, which deliver benefits at least as great as the amount capitalised and
in accordance with the recognition criteria of IAS 38 intangible assets.
When assessing projects for capitalisation we apply IAS 38’s recognition and measurement
criteria for internally generated intangible assets to development expenditure that is both
propositional in nature (as opposed to regulatory or administrative), and which is, or is
expected to be, material over the life of the project.
Development work has been undertaken in house by IT staff, management and contractors to
develop new strategic solutions focused on improving our ability to serve clients, including
improving our transfers, payment solutions, client experience and Advice and Guidance
propositions as well as continued improvements to our key operating systems.
Hargreaves Lansdown
Report and Financial Statements 2023
154
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 2: ASSETS AND LIABILITIES
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
2.2 Other intangible assets continued
In-house development work has also been undertaken in Hargreaves Lansdown Savings
Limited to further develop digital cash savings products. Development commenced in the
year to 30 June 2016 and continues to the current year.
Costs relating to an asset that is not yet fully available for use by the business, are classified
as internally developed software and are reviewed for impairment at least annually. No issues
have been noted in the current year with assets in development other than those referred to
within this note. In accordance with the provisions of IAS 38 the costs are capitalised as an
intangible asset and subsequently amortised over the estimated useful life of the systems
of eight years, starting from the date at which the assets are put into use.
Impairment of intangible assets excluding goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the loss. Where the asset does not generate
cash flows, independent from other assets, the Group estimates the recoverable amount
of the cash generating unit to which the asset belongs. Recoverable amount is the higher
of fair value, less costs to sell, and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable amount and an impairment loss
is recognised as an expense immediately.
Cost
At 1 July 2021
Asset reclassification
Additions
Impairment
At 30 June 2022
Additions
Disposal
At 30 June 2023
Accumulated amortisation
At 1 July 2021
Asset reclassification
Charge
At 30 June 2022
Disposal
Charge
At 30 June 2023
Carrying amount
At 30 June 2023
At 30 June 2022
At 30 June 2021
Customer
list
£m
Computer
software
£m
Internally
developed
software
£m
4.6
–
–
–
4.6
–
–
4.6
1.2
–
0.6
1.8
–
0.6
2.4
2.2
2.8
3.4
15.8
1.5
1.5
–
18.8
–
(0.7)
18.1
14.8
1.4
1.1
17.3
(0.7)
–
16.6
1.5
1.5
1.0
39.1
(1.5)
9.4
(1.0)
46.0
19.9
–
65.9
9.9
(1.4)
4.5
13.0
–
6.2
19.2
46.7
33.0
29.2
Total
£m
59.5
–
10.9
(1.0)
69.4
19.9
(0.7)
88.6
25.9
–
6.2
32.1
(0.7)
6.8
38.2
50.4
37.3
33.6
The amortisation charge above is included in operating costs in the Income Statement.
The customer lists are a separately acquired intangible asset and do not include any
internally generated element. The remaining amortisation period for these assets is five years.
Computer software includes externally acquired licences and internally developed software
relates entirely to in house developed systems. Commitments in respect of intangible assets
are shown in note 5.3.
Internally developed software includes capitalised staff costs, as disclosed in note 1.5.
Hargreaves Lansdown
Report and Financial Statements 2023
155
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 2: ASSETS AND LIABILITIES
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
2.3 Property, plant and equipment
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss. Cost includes the original purchase price of the asset and the
costs attributable to bringing the asset to working condition for its intended use.
Property, plant and equipment now includes both owned and leased assets. Owned assets
are measured initially at cost and subsequently at cost less accumulated depreciation. Leased,
or right-of-use assets are measured initially at the present value of all future lease payments,
less any prepaid or accrued rent or incentives and any expected dilapidation cost being the
initial value.
Subsequently, leased assets are measured at initial value less accumulated depreciation.
Depreciation is charged based on the estimates of useful economic lives and expected
residual values, which are reviewed annually, for all plant and equipment, except for leased
assets which are depreciated on a straight-line basis over their economic lives. Management
determines the useful lives and residual values for assets when they are acquired, based on
experience with similar assets and taking into account other relevant factors, such as any
expected changes in technology. The charge is calculated to write off the cost or valuation,
less estimated residual value, of each asset evenly using a straight-line method over its
estimated useful life as follows:
Computer hardware – over three to ten years.
Office equipment (includes fixtures and leasehold improvements) –
over three to ten years.
Right-of-use assets – over the term of the associated lease.
The carrying values of plant and equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable. The
gain or loss arising on the disposal or retirement of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised
in the Income Statement.
Hargreaves Lansdown
Report and Financial Statements 2023
Cost
At 1 July 2021
Additions
Disposals
At 30 June 2022
Additions
Disposals
At 30 June 2023
Accumulated depreciation
At 1 July 2021
Charge
Disposal
At 30 June 2022
Charge
Disposal
At 30 June 2023
Carrying amount
At 30 June 2023
At 30 June 2022
At 30 June 2021
Right-of-use
assets
£m
Computer
hardware
£m
Office
equipment
£m
20.4
–
–
20.4
–
–
20.4
5.8
3.1
–
8.9
3.1
–
12.0
8.4
11.5
14.6
42.6
1.9
(0.6)
43.9
2.1
(2.1)
43.9
31.8
4.8
(0.6)
36.0
3.9
(2.0)
37.9
6.0
7.9
10.8
12.1
0.9
–
13.0
1.4
(1.4)
13.0
8.9
1.0
–
9.9
1.5
(1.4)
10.0
3.0
3.1
3.2
Total
£m
75.1
2.8
(0.6)
77.3
3.5
(3.5)
77.3
46.5
8.9
(0.6)
54.8
8.5
(3.4)
59.9
17.4
22.5
28.6
Leases recognised in property, plant and equipment
Right-of-use assets
Buildings
Amounts recognised in the Consolidated Income Statement
At 30 June
2023
£m
At 30 June
2022
£m
8.4
11.5
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
Note
Right-of-use assets – depreciation
Buildings
Lease expense recognised in finance costs
1.7
3.1
0.4
3.1
0.5
156
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
0.6
(2.1)
(1.5)
0.4
(1.3)
(0.9)
SECTION 2: ASSETS AND LIABILITIES
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
2.4 Investments
Fair value movements on investments
Investments are recognised in the Group’s Statement of Financial Position, on trade date,
when the Group becomes party to the contractual provisions of an instrument and are initially
measured at fair value.
Investments by default are designated as being held at fair value through profit or loss and
are subsequently measured at fair value. Fair value being the quoted market price of the listed
investment, with any gain or loss reported within the Income Statement. An investment is
classified in this category if it is held principally for the purpose of selling in the short-term
mandatorily, in accordance with IFRS 9.
The Group derecognises financial assets only when the contractual rights to the cash flows, or
substantially all of the risks and rewards of ownership from the asset are transferred or expire.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable is recognised in profit or loss.
At beginning of year
Purchases
Disposals
At end of year
Comprising:
Current asset investment – UK-listed securities valued at quoted
market price
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
0.8
2.0
(2.3)
0.5
0.9
0.7
(0.8)
0.8
0.5
0.8
£0.5 million (2022: £0.8m) of investments are classified as held at fair value through profit and
loss, being deal related short-term investments. Fair value movements on investments are
included in support costs, as disclosed in note 1.3.
Investment balances are short-term positions the Group takes as a result of deals placed either
in error or due to having to take positions where clients are no longer able to hold an investment.
The gross gains and losses in relation to fair value include movements where no investment
position is taken and are as shown below:
Gross gains
Gross losses
2.5 Trade and other receivables
Financial assets are recognised in the Group’s Statement of Financial Position when the Group
becomes a party to the contractual provisions of the instrument and are initially measured
at fair value.
Trade and other receivables
Trade and other receivables comprise fees due from clients and counterparty positions.
They are subsequently measured at amortised cost using the effective interest method less
any expected credit losses. The financial assets are held in order to collect the contractual
cash flows and those cash flows are payments of interest and principal only.
Term deposits
Term deposits comprise cash deposits held by UK licensed banks for a period of greater
than three months, over which there is no recall during the term of the deposit. The amounts
are measured at amortised cost using the effective interest method in line with IFRS 9.
Accrued income
Accrued income relates to amounts earned by the Group, for which the Group has provided
services, but balances are not invoiced and collected in arrears. The amount relates to fund
management fees, interest on deposits and services direct to clients.
Expected Credit Losses
The Group recognises Expected Credit Losses (ECLs) relating to trade and other receivables,
term deposits and accrued income in line with the simplified approach per IFRS 9 and are
calculated based on the historic information available from the preceding years alongside
factors impacting the individual debtors, economic conditions and forecast expectations.
Impairment losses are recognised immediately in the Income Statement.
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Hargreaves Lansdown
Report and Financial Statements 2023
157
SECTION 2: ASSETS AND LIABILITIES
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
2.5 Trade and other receivables continued
2.6 Cash and cash equivalents
Financial assets:
Trade receivables
Term deposits
Accrued income
Other receivables
Non-financial assets:
Prepayments
At 30 June
2023
£m
At 30 June
2022
£m
The composition of cash and cash equivalents is explained in note 4.2
Term deposits held by the Group on unbreakable terms greater than three months are
classified as financial assets and are shown in note 2.5.
510.3
130.0
169.0
7.6
816.9
20.0
836.9
432.6
20.0
49.0
3.7
505.3
18.2
523.5
Cash and cash equivalents:
Group cash and cash equivalent balances
Restricted cash – balances held by HL EBT
At 30 June
2023
£m
At 30 June
2022
£m
368.0
5.3
373.3
488.0
0.3
488.3
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
In accordance with market practice and accounting standards on trade date accounting,
certain balances with clients, Stock Exchange member firms and other counterparties totalling
£486.0 million (2022: £409.5m) are included in trade receivables. These balances are presented
net where there is a legal right of offset and the ability and intention to settle net. The gross
amount of trade receivables is £659.7 million (2022: £532.6m) and the gross amount offset in the
Statement of Financial Position with trade payables is £186.6 million (2022: £130.1m). Other than
counterparty balances, trade receivables primarily consist of fees and amounts owed by clients
and renewal commission owed by fund management groups. There are no balances where there
is a legal right of offset but not a right of offset in accordance with accounting standards, and
no collateral has been posted for the balances that have been offset.
At 30 June 2023, segregated deposit amounts held by the Group on behalf of clients in accordance
with the client money rules of the Financial Conduct Authority amounted to £7,214 million
(2022: £8,665m). In addition, there were pension trust and Active Savings cash accounts held
on behalf of clients not governed by the client money rules of £6,224 million (2022: £6,533m).
The client retains the ownership in both these deposits and cash accounts, and accordingly,
they are not included in the Statement of Financial Position of the Group.
Restricted cash balances relate to the balances held within the HL Employee Benefit Trust.
These are strictly held for the purpose of purchasing shares to satisfy options under the Group’s
share option schemes.
Given the short-term nature of the Group’s receivables and the expectation of the Group
in relation to its counterparties, there has been no material expected credit loss recognised
in the year – see note 5.7 for further details.
The Group does not have any contract assets in respect of its revenue contracts with customers
(2022: £nil).
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Hargreaves Lansdown
Report and Financial Statements 2023
158
SECTION 2: ASSETS AND LIABILITIES
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
2.7 Deferred tax
Deferred tax assets/(liabilities) arise because of temporary differences only. The following are the
major deferred tax assets/(liabilities) recognised and movements thereon during the current and
prior reporting years. Deferred tax has been recognised at either 20.5% or 25% depending upon
the rate expected to be in force at the time of the reversal of the temporary difference. A deferred
tax asset in respect of future share option deductions has been recognised based on the
Company’s share price as at 30 June 2023.
At 1 July 2021
Charge to income
Charge to equity
At 30 June 2022
(Charge)/credit to income
Charge to equity
At 30 June 2023
Deferred tax expected to be
recovered or settled:
Within 1 year after reporting date
>1 year after reporting date
Fixed asset
tax relief
£m
Share-based
payments
£m
Other
deductible
temporary
differences
£m
0.3
(0.8)
–
(0.5)
(0.2)
–
(0.7)
(0.5)
(0.2)
(0.7)
2.5
(0.7)
(0.3)
1.5
1.0
–
2.5
0.1
2.4
2.5
0.9
–
–
0.9
–
(0.1)
0.8
0.2
0.6
0.8
Total
£m
3.7
(1.5)
(0.3)
1.9
0.8
(0.1)
2.6
(0.2)
2.8
2.6
2.8 Trade and other payables
Financial liabilities are classified according to the substance of the contractual
arrangements entered into.
Trade payables are measured at amortised cost using the effective interest method.
In accordance with market practice, certain balances with clients, Stock Exchange
member firms and other counterparties are included as creditors.
Current elements of lease liabilities are included within other payables, being initially
calculated in line with IFRS 16. On inception a lease liability is measured as the present
value of future lease payments, discounted at the incremental borrowing rate implied within
the lease. The future lease payments of the Group are fixed, except for those that relate
to leases in a currency other than GBP, which may vary due to exchange rate movements.
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
Financial liabilities
Trade payables
Current lease liabilities
Other payables
Non-financial liabilities
Deferred income
Accruals
Social security and other taxes
At 30 June
2023
£m
At 30 June
2022
£m
487.4
4.6
38.0
530.0
0.3
26.5
8.7
565.5
406.7
4.6
31.0
442.3
0.3
38.5
7.2
488.3
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
In accordance with market practice, certain balances with clients, Stock Exchange member firms
and other counterparties totalling £483.5 million (2022: £404.9m) are included in trade payables,
similar to the treatment of trade receivables. As stated in note 2.5, where we have a legal right of
offset and the ability and intention to settle net, trade payable balances have been presented net.
Other payables principally comprise amounts owed to staff as a bonus and rebates due to the
regulated funds operated by the Group. Accruals and deferred income respectively principally
comprise amounts outstanding for trade purchases and receipts from clients, where cash is
received in advance for certain services.
All balances classified as deferred income in the prior year have been recognised in revenue
in the current year.
Hargreaves Lansdown
Report and Financial Statements 2023
159
SECTION 2: ASSETS AND LIABILITIES
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
2.9 Provisions
Provisions are recognised when the Group has a present obligation as a result of a past
event, and it is probable that the Group will be required to settle that obligation. Provisions are
measured at the Directors’ best estimate of the expenditure required to settle the obligation at
the end of the reporting period, and are discounted to present value where the effect is material.
Included within non-current liabilities
At 1 July 2021
Released in the year
Charged during the year
At 30 June 2022
Released in the year
Charged during the year
At 30 June 2023
£m
2.7
(1.7)
1.6
2.6
(1.5)
1.9
3.0
The provision brought forward relates to property related costs, including contractual obligations
that arise on the surrendering of the leases, in relation to the offices in Bristol. In the year we
increased these provisions by £1.9 million as a result of the high inflationary economy and
changes to the utilised space since the inception of our leases. These property provisions are not
expected to be fully utilised until 2026.
In the current year we released a provision for £1.5 million in relation to historic transactions as a
result of a review of our obligations present and considering their likelihood of payment.
Provisions recognised in the current year are not expected to be paid within 12 months of the
date of the Statement of Financial Position and are costs in relation to historic transactions that
are now considered more likely than not to be incurred.
2.10 Long-term liabilities
Lease liabilities are included within current other payables and non-current lease liabilities, being
initially calculated in line with IFRS 16. On inception a lease liability is measured as the present
value of future lease payments, discounted at the incremental borrowing rate implied within the
lease. The future lease payments of the Group are fixed, except for those that relate to leases
in a currency other than GBP, which may vary due to exchange rate movements.
Interest expense is incurred in relation to these leases, based on the incremental borrowing rate
implied in the contracts. This expense is recognised as a finance cost in the period to which
payment relates, see note 1.7 for further details.
Lease liabilities greater than 12 months
At 30 June
2023
£m
At 30 June
2022
£m
7.6
11.8
Finance costs and financing cash flows associated with the lease are reconciled below to show
the movement in the year.
Reconciliation of lease liability changes to cash flows
Opening balance – including discounted current
cash flows
Cash paid as rent
Lease expense recognised in finance costs
Current element of liability
Long-term liability
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
Note
4.1
1.7
2.8
16.5
(4.7)
0.4
(4.6)
7.6
19.8
(3.9)
0.5
(4.6)
11.8
Hargreaves Lansdown
Report and Financial Statements 2023
160
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 3: EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2023
Attributable to the owners of the parent
At 1 July 2021
Total comprehensive income1
Employee Benefit Trust
Shares sold in the year
Shares acquired in the year
HL EBT share sale
Reserve transfer on exercise of share options
Employee share option scheme
Share-based payments expense
Current tax effect of share-based payments (note 1.8)
Deferred tax effect of share-based payments (note 1.8)
Dividend paid (note 3.2)
At 30 June 2022
Total comprehensive income1
Change in ownership
Employee Benefit Trust
Shares sold in the year
Shares acquired in the year
HL EBT share sale
Reserve transfer on exercise of share options
Employee share option scheme
Share-based payments expense
Current tax effect of share-based payments (note 1.8)
Deferred tax effect of share-based payments (note 1.8)
Dividend paid (note 3.2)
Share
capital
£m
1.9
–
–
–
–
–
–
–
–
–
1.9
–
–
–
–
–
–
–
–
–
–
Shares held by
EBT
£m
EBT
reserve
£m
(4.8)
–
5.4
(4.2)
–
–
–
–
–
–
(3.6)
–
–
2.2
(5.0)
–
–
–
–
–
–
(3.1)
–
–
–
(2.8)
3.5
–
–
–
–
(2.4)
–
–
–
–
(2.2)
3.6
–
–
–
–
At 30 June 2023
1.9
(6.4)
(1.0)
1 Total comprehensive income includes Profit for the year and the total comprehensive income presented is equal to Profit in both years presented.
Retained
earnings
£m
599.5
216.3
–
–
–
(3.5)
8.4
0.1
(0.6)
(241.0)
579.2
323.8
(1.7)
–
–
–
(3.6)
8.2
(0.1)
(0.2)
(190.4)
715.2
Total
£m
593.5
216.3
5.4
(4.2)
(2.8)
–
8.4
0.1
(0.6)
(241.0)
575.1
323.8
(1.7)
2.2
(5.0)
(2.2)
–
8.2
(0.1)
(0.2)
(190.4)
709.7
Non-controlling
interest
£m
(1.1)
(0.5)
–
–
–
–
–
–
–
–
(1.6)
(0.1)
1.7
–
–
–
–
–
–
–
–
–
Hargreaves Lansdown
Report and Financial Statements 2023
Total
equity
£m
592.4
215.8
5.4
(4.2)
(2.8)
–
8.4
0.1
(0.6)
(241.0)
573.5
323.7
–
2.2
(5.0)
(2.2)
–
8.2
(0.1)
(0.2)
(190.4)
709.7
161
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 3: EQUITY
NOTES TO THE GROUP FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONTINUED
3.1 Share capital
3.2 Dividends
Authorised: 525,000,000 (2022: 525,000,000) ordinary
shares of 0.4p each
Issued and fully paid: ordinary shares of 0.4p each
At 30 June
2023
£m
At 30 June
2022
£m
2.1
1.9
2.1
1.9
Shares
Shares
Dividend recognition
Dividend distributions to the Company’s shareholders are recognised in the accounting period
in which the dividends are declared and paid, or, if earlier, in the accounting period when the
dividend is approved by the Company’s shareholders at the Annual General Meeting.
Amounts recognised as distributions to equity holders in the year:
Issued and fully paid: number of ordinary shares of 0.4p each
474,318,625
474,318,625
The Company has one class of ordinary shares which carry no right to fixed income.
The shares held by the EBT represents the cost of shares in Hargreaves Lansdown plc purchased
in the market and held by the Hargreaves Lansdown EBT to satisfy options under the Group’s
share option schemes.
The EBT reserve represents the cumulative gain on disposal of investments held by the HL EBT.
The reserve is not distributable by the Company as the assets and liabilities of the EBT are
subject to management by the Trustees in accordance with the EBT trust deed.
Non-controlling interests in the net assets of consolidated subsidiaries are identified
separately from the Group’s equity therein.
Non-controlling interests consist of the minority’s proportion of the net fair value of the assets
and liabilities acquired at the date of the original business combination and the non-controlling
interest’s change in equity since that date. Throughout the prior year, the non-controlling interest
in Hargreaves Lansdown Savings Limited was held by Stuart Louden, an employee of the Group.
During the prior year an agreement was reached to purchase Stuart Louden’s shares which was
executed during the year and at the year end the Company had 100% control of Hargreaves
Lansdown Savings Limited.
2022 final dividend of 27.44p (2021 final dividend: 26.6p) per share
2022 special dividend of 12.0p per share
2023 interim dividend of 12.70p (2022: 12.26p) per share
Total dividends paid during the year
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
130.2
–
60.2
190.4
126.0
56.9
58.1
241.0
After the end of the reporting period, the Directors declared a final ordinary dividend of
28.8 pence per share, payable on 15 December 2023 to shareholders on the register on
17 November 2023. Dividends are required to be recognised in the financial statements when
paid, and accordingly the declared dividend amounts are not recognised in these financial
statements, but will be included in the 2024 financial statements as follows:
2023 final dividend of 28.80p (2022 final dividend: 27.44p) per share
Total dividends
£m
136.6
136.6
Under an arrangement dated 30 June 1997, the Hargreaves Lansdown Employee Benefit Trust,
which held the following number of ordinary shares in Hargreaves Lansdown plc at the date
shown, has agreed to waive all dividends.
Hargreaves Lansdown
Report and Financial Statements 2023
Number of shares held by the Hargreaves Lansdown
Employee Benefit Trust
Representing percentage of called-up share capital
At
30 June 2023
No. of shares
At
30 June 2022
No. of shares
779,080
0.16%
424,035
0.09%
162
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 4: CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2023
Net cash from operating activities
Profit for the year after tax
Adjustments for:
Income tax expense
Depreciation of plant and equipment
Amortisation of intangible assets
Impairment of intangible assets
Share-based payment expense
Interest on lease liabilities
Increase/(decrease) in provisions
Operating cash flows before movements in working capital
(Increase)/decrease in receivables
Increase/(decrease) in payables
Cash generated from operations
Income tax paid
Net cash generated from operating activities
Investing activities
(Increase)/decrease in term deposits
Purchase of property, plant and equipment
Cash capitalisation of intangible assets
Proceeds on disposal of investments
Net cash generated (used in)/from investing activities
Financing activities
Purchase of own shares in EBT
Proceeds on sale of own shares in EBT
Payment of principal in relation to lease liabilities
Dividends paid to owners of the parent
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (including restricted cash)
Hargreaves Lansdown
Report and Financial Statements 2023
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
Note
323.7
215.8
1.8
1.3/2.3
1.3/2.2
1.3/2.2
1.5
1.7/4.1
2.3
2.2
2.10/4.1
3.2
2.6
2.6/4.2
79.0
8.5
6.8
–
8.2
0.4
0.4
427.0
(203.4)
72.2
295.8
(80.5)
215.3
(110.0)
(3.5)
(19.2)
0.3
(132.4)
(5.0)
2.2
(4.7)
(190.4)
(197.9)
(115.0)
488.3
373.3
53.4
8.9
6.2
1.0
8.3
0.5
(0.1)
294.0
305.8
(285.7)
314.1
(51.2)
262.9
40.0
(2.8)
(10.9)
0.1
26.4
(4.2)
2.8
(3.9)
(241.0)
(246.3)
43.0
445.3
488.3
163
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 4: CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
4.1 Lease payments
Cash flows in relation to lease payments, recorded under IFRS 16 are presented as follows
in the Group statement of cash flows:
• payments for the principal element of recognised lease liabilities are presented within
cash flows from financing activities.
• the interest element of recognised lease liabilities are included within cash flows from
operating activities
4.2 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits that are readily
convertible to a known amount of cash, subject to insignificant changes in value and are
considered to be holdings of less than three months or those over which the Group has an
immediate right of recall. The carrying amount of these assets is approximately equal to their
fair value.
Included within cash and cash equivalents are amounts held by the Group which are subject to
restrictions. Restricted cash balances relate to the balances held within the HL Employee
Benefit Trust. They are strictly held for the purpose of purchasing shares to satisfy options
under the Group’s share. These amounts held are not readily available to be used for other
purposes within the Group and total £5.3m (2022: £0.3m).
Cash and cash equivalents is also referred to in note 2.6.
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
164
SECTION 5: OTHER NOTES
NOTES TO THE GROUP FINANCIAL STATEMENTS
OTHER
5.1 General information
Hargreaves Lansdown plc (the Company and ultimate parent of the Group) is a company
incorporated in England and Wales with company number 02122142 and domiciled in the United
Kingdom under the Companies Act 2006 whose shares are publicly traded on the London Stock
Exchange. The address of the registered office is One College Square South, Anchor Road, Bristol
BS1 5HL, United Kingdom. The nature of the Group’s operations and its principal activities are set
out in the Operating and Financial Review and Strategic Report.
These financial statements are presented in millions of pounds sterling (£m) which is the currency
of the primary economic environment in which the Group operates.
Basis of preparation
These financial statements have been prepared in accordance with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006 as applicable to
companies reporting under those standards.
The financial statements are presented to allow users to understand the primary statements and
the related balances that make them up. It is our aim to ensure that the information provided is
pertinent and indicates balances of most importance, whilst ensuring conformity with IFRS. In
order to do this, we have aligned the notes to the financial statements with the relevant primary
statements; where there is an associated accounting policy, it is denoted by a box presented at
the beginning of the note.
The preparation of financial statements in conformity with IFRS requires the use of certain
significant accounting estimates. It also requires management to exercise its judgement in the
process of applying the Company’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, if any, are disclosed in note 5.2.
Going Concern
The financial statements are prepared on a going concern basis and in assessing this the Board
has considered the Group’s ability to continue as a going concern for at least 12 months from the
date of signing and by reference to forecasts across the next three financial years, this is in line
with the approach taken in outlining the Group’s viability as stated on page 55.
The Board expects the Group to remain profitable and has no intention or expectation of
liquidating the Group or ceasing trading. In all scenarios and testing of future cashflows, including
the most extreme, the Group and the Company maintains sufficient liquidity and capital to
continue in business, within the timeframes outline above.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and
subsidiary undertakings controlled by the Group made up to 30 June 2023. The Group controls a
subsidiary when it has power over an investee, is exposed, or has rights, to variable returns from
its involvement with the subsidiary and has the ability to affect those returns through its power
over the investee. The Group reassesses whether it controls a subsidiary when facts
and circumstances indicate that there are changes to one or more elements of control.
The results of subsidiaries acquired or disposed of during the year are included in the
Consolidated Income Statement from the effective date of acquisition or up to the effective date
of disposal, as appropriate. Where necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used into line with those used by the Group.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the
acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for
control of the acquired entity. The acquired entity’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 ‘Business Combinations’ are
recognised at their fair value at the acquisition date.
The Group recognises any non-controlling interest in the acquired entity at the non-controlling
interest’s proportionate share of the recognised amounts of acquired entity’s identifiable net
assets.
Application of new standards
The following standards have been adopted in the current year, but do not have a material impact
on these financial statements:
• Amendments to IFRS 3 – Reference to the conceptual framework.
• Amendments to IAS 16 (Property, Plant and Equipment) – Proceeds before intended use
• Amendments to IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) – Onerous
Contracts – Cost of Fulfilling a Contract.
• Annual improvements to IFRS Accounting standards, 2018 – 2020 cycle
At the date of authorisation of these financial statements, the Group has not applied the following
new and revised IFRS Standards that have been issued but are not yet effective:
• IFRS 17, ‘Insurance contracts’ as amended in December 2021
• Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8
• Amendment to IAS 12 – deferred tax related to assets and liabilities arising from a single
transaction
• Amendment to IAS 1 – Non-current liabilities with covenants
• Amendment to IAS 12 – International tax reform – pillar two model rules
• Amendment to IAS 7 and IFRS 7 – Supplier finance
• IFRS S1 – General requirements for disclosure of sustainability-related financial information
• IFRS S2 – Climate-related disclosures
Hargreaves Lansdown
Report and Financial Statements 2023
165
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 5: OTHER NOTES
NOTES TO THE GROUP FINANCIAL STATEMENTS
OTHER CONTINUED
5.1 General information continued
The Group has assessed the impact that the above noted standards and amendments will have
on the Group’s results reported in the Financial Statements. The Directors do not expect that the
adoption of the Standards or amendments listed above will have a material impact on the financial
statements of the Group in future periods.
Accounting policies
The financial statements have been prepared on the historical cost basis, except for the
revaluation of financial assets at fair value through profit and loss. The principal accounting
policies adopted are set out at the start of each note to which they relate.
5.2 Critical judgements and key sources
of estimation uncertainty
The preparation of the financial statements requires management to make estimates and
assumptions that affect the reported amount of revenues, expenses, assets and liabilities and
the disclosure of contingent liabilities. If, in the future, such estimates and assumptions, which
are based on management’s best judgement at the date of preparation of the financial statements
deviate from actual circumstances, the original estimates and assumptions will be modified as
appropriate in the period in which the circumstances change. There are no assumptions made
about the future, or any other major sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of resulting in a material adjustment to the carrying amounts of
assets and liabilities within the next financial year. There are no critical judgements regarding the
application of accounting policies or significant estimates in relation to the preparation of these
financial statements.
5.3 Contingencies and commitments
Capital commitments
At the end of the reporting period, the Group had capital commitments of £0.5 million
(2022: £5.0m) for software development and IT hardware.
Contingencies
The Group operates in a highly regulated environment and, in the ordinary course of business,
provides information to various regulators and authorities as part of informal and formal requests
and enquiries. In addition, the Group receives complaints or claims in relation to its services from
time to time brought by clients, investors or other third parties. These may be notified to the
Group or directly to third parties, such as the Financial Ombudsman Service in the case of client
and investor complaints investigated and not upheld by the Group. These include enquiries,
complaints and a threatened claim relating to the LF Equity Income Fund (formerly the Woodford
Equity Income Fund).
The Company received a letter purporting to be a pre-action letter from a law firm in March 2021.
In June 2021, the Company rejected all the claims made for lack of a substantive basis of claim.
The Company is aware that the law firm has since filed a claim form with the court against both
Link Fund Solutions Limited and Hargreaves Lansdown Asset Management Limited (“HLAM”)
for an unspecified amount in October 2022. As at the date of issuing these financial statements,
the law firm has not yet confirmed that it has secured sufficient funding to progress the claim,
HLAM has not been served with the claim form and no timetable has been set for the conduct
of any claim.
All such matters are periodically reassessed, with the assistance of external professional advisers
where appropriate, to determine the likelihood of the Group incurring a liability. There are inherent
uncertainties in the outcome of such matters and it is not practicable to reliably estimate the
financial impact if any, on the Group’s results or net assets at the period end.
These matters have been re-assessed throughout the financial year and the above statement
is accurate as at the reporting date and up to the date of issue.
5.4 Subsidiaries
A list of the investments in subsidiaries included in the consolidated results of Hargreaves
Lansdown plc is shown in note 6.5 to the parent company financial statements. Also included in
the Group Consolidated Financial Statements are ‘The Hargreaves Lansdown Employee Benefit
Trust’ and ‘The Hargreaves Lansdown plc SIP Trust’.
5.5 Events after the reporting period
On 18 September 2023 the Directors proposed a final ordinary dividend payment of 28.80 pence
per ordinary share, payable on 15 December 2023 to all shareholders on the register at the close
of business on 17 November 2023 as detailed in note 3.2.
5.6 Related party transactions
The Company has a related party relationship with its subsidiaries, its Directors and members of
the Executive Committee (the ‘key management personnel’). Transactions between the Company
and its key management personnel are disclosed below. Details of transactions between the
Company and other related parties are also disclosed below.
Trading transactions
The Company entered into the following transactions with Directors within the Hargreaves
Lansdown Group and related parties who are not members of the Group:
Throughout the prior year, the non-controlling interest in HL Savings Limited was held by Stuart
Louden, an employee of the Group. During the prior year an agreement was reached to purchase
Stuart Louden’s shares which was executed during the year and at the year end the Company had
100% control of Hargreaves Lansdown Savings Limited.
Hargreaves Lansdown
Report and Financial Statements 2023
166
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 5: OTHER NOTES
NOTES TO THE GROUP FINANCIAL STATEMENTS
OTHER CONTINUED
5.6 Related party transactions continued
During the years ended 30 June 2023 and 30 June 2022 the Company has been party to a lease
with P K Hargreaves, a significant shareholder during the year and former Director, for rental of
the premises. A five-year lease was signed in April 2021 for a rental of part of the building, to be
used for disaster recovery purposes at a market rate rent of £0.1 million per annum. No amount
was outstanding at either year end.
During the years ended 30 June 2023 and 30 June 2022, the Group has provided a range of
investment services in the normal course of business to shareholders on normal third-party
business terms.
Directors and staff are eligible for a discount on some of the services provided.
Remuneration of key management personnel
The remuneration of the key management personnel of the Group, being those personnel who
were a member of the Board and Executive Committee during the relevant year shown, is set out
below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Non-Executive Directors Fees
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
8.1
0.4
0.5
0.9
2.1
12.1
1.1
8.6
0.4
0.4
0.5
5.2
15.1
1.0
The table above has been updated to include Non-executive Directors Fees, which were not
included in the prior year.
In addition to the amounts above, 6 key management personnel (2022: eight) received gains of
£1.0 million (2022: £1.6m) as a result of exercising share options. During the year, awards were
made under executive option schemes for nine key management personnel (2022: nine).
Included within the previous table are the following amounts payable to Executive Directors of the
Company who served during the relevant year. Full details of Directors’ remuneration, including
numbers of share options exercised, are shown in the Directors’ remuneration report.
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
2.7
0.1
0.2
0.6
3.6
2.6
0.1
0.2
1.4
4.3
In addition to the amounts above, Directors of the Company received gains of £0.3 million relating
to the exercise of share options (2022: £0.7m).
Emoluments of the highest paid Director
Number of Directors who exercised share options during the year
Number of Directors who were members of money purchase
pension schemes
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
2.5¹
1.9¹
Number
Number
1
2
2
2
1 The highest paid Director was the Chief Executive Officer and full details of his emoluments can be found in the audited
‘Remuneration payable’ table in the Directors’ remuneration report
Any amounts outstanding with related parties are unsecured and will be settled in cash.
No guarantees have been given or received in respect of amounts outstanding. No provisions
have been made for doubtful debts in respect of the amounts owed by the related parties.
Hargreaves Lansdown
Report and Financial Statements 2023
167
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 5: OTHER NOTES
NOTES TO THE GROUP FINANCIAL STATEMENTS
OTHER CONTINUED
5.7 Financial instruments
Financial instruments include both assets and liabilities. Financial assets principally comprise trade
and other receivables, cash and cash equivalents and current asset listed investments. Financial
liabilities comprise trade and other payables.
Categories of financial assets and financial liabilities
The categories and carrying value of the financial assets and financial assets held in the Group’s
Statement of Financial Position are summarised in the table. The impact of climate change does
not have a material impact on the fair values of the assets.
At 30 June
Financial assets
Equity investments
Cash and cash equivalents
Trade and other receivables:
Trade receivables
Other receivables
Accrued income
Term deposits
Total financial assets
Financial liabilities
Trade payables
Other payables and current lease liabilities
Lease liabilities
Total financial liabilities
Financial assets and liabilities at
fair value through profit and loss
Financial assets
at amortised cost
Financial liabilities measured
at amortised cost
2023
£m
0.5
–
–
–
–
–
0.5
–
–
–
–
2022
£m
0.8
–
–
–
–
–
2023
£m
–
373.3
510.3
7.6
169.0
130.0
0.8
1,190.2
–
–
–
–
–
–
–
–
2022
£m
–
488.3
432.6
3.7
49.0
20.0
993.6
–
–
–
–
2023
£m
2022
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
487.4
42.6
7.6
537.6
441.4
35.6
11.8
488.8
Total
2023
£m
0.5
373.3
510.3
7.6
169.0
130.0
1,190.7
487.4
42.6
7.6
537.6
2022
£m
0.8
488.3
432.6
3.7
49.0
20.0
994.4
441.4
35.6
11.8
488.8
Hargreaves Lansdown
Report and Financial Statements 2023
168
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
SECTION 5: OTHER NOTES
NOTES TO THE GROUP FINANCIAL STATEMENTS
OTHER CONTINUED
5.7 Financial instruments continued
Fair value hierarchy
The table below sets out the classifications of each class of financial asset and liability
and their fair values.
Level 2
Directly
observable
market
inputs other
than Level 1
inputs
£m
Level 3
Inputs not
based on
observable
market data
£m
Level 1
Quoted prices
for similar
instruments
£m
0.5
0.5
0.8
0.8
–
–
–
–
–
–
–
–
Total
£m
0.5
0.5
0.8
0.8
At 30 June 2023
Financial assets at fair value
through profit or loss
At 30 June 2022
Financial assets at fair value
through profit or loss
There were no transfers between Level 1 and Level 2 assets during the year (2022: £nil). The fair
value of financial instruments traded in active markets is based on quoted market prices at the
end of the reporting period.
Instruments included in Level 1 comprise primarily equity investments and fund units entered into
on a counterparty basis. As such there is no recurring valuation of financial instruments between
reporting periods.
Hargreaves Lansdown
Report and Financial Statements 2023
Nature and extent of risks arising from financial instruments
Financial risk management
The main risks arising from financial instruments are market risk (including interest rate risk,
foreign exchange risk and price risk), liquidity risk and credit risk. Each of these risks is discussed
in detail below.
The Group monitors financial risks on a consolidated basis. The Group’s financial risk management is
based upon sound economic objectives and good corporate practice. No hedging transactions have
taken place during the years presented. The Group has designed a framework to manage the risks
of its business and to ensure that the Directors have in place risk management practices appropriate
to a listed company. The management of risk within the Group is governed by the Board.
Market risk
• Interest rate risk
Interest rate risk is the risk that the Group will sustain losses from adverse movements in rates
associated with interest bearing assets and liabilities. There is an exposure to interest rates on
banking deposits held in the ordinary course of business. At 30 June 2023, the value of financial
instruments on the Group Statement of Financial Position exposed to interest rate risk was
£503.3 million (2022: £508.3m) comprising cash, cash equivalents and term deposits.
This exposure is continually monitored to ensure that the Group is maximising its interest earning
potential within accepted liquidity and credit constraints. The Group has no external borrowings and
as such is not exposed to interest rate or refinancing risk on borrowings. Cash at bank, including
restricted cash, earns interest at floating rates based on daily bank deposit rates. Term deposits are
also made for varying periods of between one day and 13 months, depending on the immediate
cash requirements of the Group, and earn interest at the respective fixed term deposit rates.
Given that a source of revenue is based on the value of client cash under administration, the
Group has an indirect exposure to interest rate risk on cash balances held for clients, the balance
of which was £13,438 million at 30 June 2023 (2022: £15,045m). These amounts are not included
in the Group Statement of Financial Position.
The below is an analysis of the impact of a change of 25bps (0.25%) in interest rates on the
revenue received in relation to client cash. This calculation considers no other impacts on interest
income, it is an isolated adjustment to one input to our revenue stream and as such is not
indicative of a real change. The calculations assume the interest income has been earned evenly
over the period and that rates have changed in isolation in the period, without any changes to
balances or margin of interest earned by clients. 25bps has been chosen as it is illustrative of
single movements seen during the financial year from the Bank of England, it is not an expectation
of actual changes.
Net interest income
Net interest income
Change in margin
+25bps (0.25%)
-25bps (0.25%)
2023
£m
36.9
(33.9)
169
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
5.7 Financial instruments continued
• Foreign exchange translation and transaction risk
Foreign currency risk is the risk that the Group will sustain losses through adverse movements
in currency exchange rates. With substantially all of the Group’s businesses currently operating
within the UK, and therefore with minimal net assets and transactions of the Group denominated
in foreign currencies, the Group is not exposed to significant foreign exchange translation or
transaction risk and as such does not hedge any foreign current assets or liabilities.
• Price risk
Price risk is the risk that a decline in the value of assets adversely impacts on the profitability of
the Group as a result of an asset not meeting its expected value. The Group is exposed to price
risk on investments, in corporate entities, held on the Group Statement of Financial Position.
At 30 June 2023, the fair value of investments recognised on the Group Statement of Financial
Position was £0.5 million (2022: £0.8m). A 20% move in equity prices, in isolation, would have an
impact of £0.1 million (2022: £0.2m).
As a main source of revenue is based on the value of client assets under administration, the Group
has an indirect exposure to price risk on investments held on behalf of clients. These assets are
not on the Group Statement of Financial Position. The risk of lower revenues is partially mitigated
by asset class diversification. The Group does not hedge its revenue exposure to movements in
the value of client assets arising from these risks, and so the interests of the Group are aligned to
those of its clients.
In addition, the Group acts as a private client investment manager, unit trust manager and agency
stockbroker on a matched basis so its exposure to market price movements in this capacity is
limited to when there is a trade mismatch or error, or if one matched counterparty fails to fulfil
its obligations. The impact of these risks is mitigated by limits and monitoring controls.
Liquidity risk
The Group is exposed to liquidity risk, namely the risk that it may be unable to meet its payment obligations as they fall due. The Group is highly cash generative and holds significant liquid assets.
The Group actively maintains a proportion of cash balances on short-term deposit, as well as ensuring the Group has access to short-term revolving credit facilities, to help ensure that the Group has
sufficient available funds for operations.
The table below analyses the maturities of the undiscounted cash flows relating to financial liabilities of the Group based on the remaining period to the contractual maturity date at the end of the
reporting period.
Trade and other payables:
Trade payables
Other payables, including current lease liabilities
Non-current discounted lease liabilities
At 30 June 2023
At 30 June 2022
0-3 months
£m
3-12 months
£m
Over 1 year
£m
Total
£m
0-3 months
£m
3-12 months
£m
Over 1 year
£m
487.1
34.4
–
521.5
0.1
–
–
0.1
0.2
8.2
7.6
16.0
487.4
42.6
7.6
537.6
406.3
35.6
–
441.9
0.4
–
–
0.4
–
–
11.8
11.8
Total
£m
406.7
35.6
11.8
454.1
Balances due within twelve months, in the table above, equal their carrying balances as the impact of discounting is not significant. Included in the trade and other payables and the lease liabilities
above are figures in respect of leases accounted for under IFRS 16. These include discounted cash flows in relation to leases over property as outlined in note 2.10. The undiscounted maturity profiles
of these amounts is shown on the next page.
170
SECTION 5: OTHER NOTESNOTES TO THE GROUP FINANCIAL STATEMENTS OTHER CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 5.7 Financial instruments continued
The undiscounted liability in relation to leases is shown below.
Within one year
In the second to fifth years inclusive
After five years
Total minimum lease payments
The following table discloses the Group’s maximum exposure to credit risk on financial assets.
At 30 June
2023
£m
At 30 June
2022
£m
4.6
8.3
–
12.9
4.6
12.0
–
16.6
Financial assets at amortised cost
Cash and cash equivalents (including restricted cash)
Trade and other receivables
Accrued income
Term deposits
Financial assets at fair value through profit or loss
Financial investments
At 30 June
2023
£m
At 30 June
2022
£m
373.3
517.9
169.0
130.0
0.5
1,190.7
488.3
436.3
49.0
20.0
0.8
994.4
The Group has access to a revolving credit facility, with a UK bank. The facility allows the Group
to draw up to £75 million (2022: £75m) and is undrawn as at 30 June 2023. The facility incurs
interest charges, consisting of a margin of 0.85% plus SONIA per annum when drawn.
Credit risk
The Group’s credit risk is spread over a large number of counterparties and customers.
The Group is exposed to credit risk from counterparties to securities transactions during the
period between the trade date and the ultimate settlement date if the counterparty fails either
to deliver securities or to make payment. Settlement risk is substantially mitigated as a result of
the delivery versus payment mechanism whereby if a counterparty fails to make payment the
securities would not be delivered to the counterparty. Therefore the risk exposure is to an adverse
movement in market prices between the time of trade and settlement, which is generally two to
four days. Conversely, if a counterparty fails to deliver securities, no payment would be made.
The trade receivables presented in the Statement of Financial Position are net of expected
credit losses.
Also included within trade and other receivables in the Statement of Financial Position are term
deposits. These are deposits with UK licensed banks for a period of three months or greater,
where the Group does not have immediate recall on the cash. The maximum amount of time
that these deposits are outstanding at year end is 12 months.
Cash is held with UK licensed banks. The credit risk on liquid funds is managed by only depositing
with UK regulated banks and the Group takes a conservative approach to treasury management,
carrying out regular reviews of all its banks’ and custodians’ credit ratings.
The following table contains an analysis of financial assets that are past due at the end of the
reporting period. An asset is past due when the counterparty has failed to make a payment when
contractually due and is considered to be a key indicator of risk.
The Group applies the simplified approach to providing for expected credit losses for receivables,
allowing the use of lifetime expected loss provisions to be made. To determine expected credit
losses, financial assets have been grouped based on shared credit risk characteristics, such as
the counterparty and the number of days past due.
At 30 June 2023
Trade and other
receivables:
Trade receivables
Other receivables
Accrued income
Term deposits
At 30 June 2022
Trade and other
receivables:
Trade receivables
Other receivables
Accrued income
Term deposits
Within
terms
£m
0-3
months
past due
£m
3-6
months
past due
£m
6-12
months
past due
£m
Over 12
months
past due
£m
501.6
7.6
169.0
130.0
808.2
423.8
3.7
49.0
20.0
496.5
3.3
–
–
–
3.3
3.5
–
–
–
3.5
1.8
–
–
–
1.8
2.0
–
–
–
2.0
1.8
–
–
–
1.8
1.5
–
–
–
1.5
1.8
–
–
–
1.8
1.8
–
–
–
1.8
Total
£m
510.3
7.6
169.0
130.0
816.9
432.6
3.7
49.0
20.0
505.3
171
SECTION 5: OTHER NOTESNOTES TO THE GROUP FINANCIAL STATEMENTS OTHER CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 5.7 Financial instruments continued
During the year, the Group has recognised £0.1m of expected credit losses (2022: £nil) in
respect of receivables that are not expected to be recovered. At the end of the reporting
period, £0.2 million (2022: £0.1m) of expected credit losses are recognised in respect of trade
receivables. These balances have been provided for in full against the value of aged receivables
and are presented net in the table above and in the Statement of Financial Position. As a result,
the carrying amount of those receivables is £nil (2022: £nil) at year-end.
The expected credit loss in relation to receivables is considered to be immaterial, due to the
short-term nature of the receivable balance and the small value of assets that are outstanding
for long periods, without any potential recourse allowing the Group to reclaim the balance in full.
The majority of balances are related to underlying investments that the Group can sell to reclaim
losses and therefore, while they are susceptible to macroeconomic factors the potential impact
is immaterial given their short term nature, as market balances are generally settled in two
to four days.
The table to the right shows the credit quality of financial assets that are current and
not outstanding using the following counterparty grading:
• Financial institutions
In respect of trade receivables, £116.9 million (2022: £107.4m) is due from financial
institutions regulated by the FCA or PRA in the course of settlement as a result of daily trading.
Accrued income includes £135.1 million related to interest due from financial institutions regulated
by the FCA and PRA. A further £10.9 million (2022: £4.5m) relates to revenue items due from
financial institutions regulated by the FCA.
• Individuals
In respect of trade receivables, the balance is related to amounts due from individual clients in the
course of settlement as a result of daily trading. Daily trading balances generally settle in two to
four days.
The table below shows the credit category of financial assets that are within terms and
considered the lowest level of risk.
At 30 June 2023
Trade receivables
Other receivables
Accrued income
Term deposits
Investments held at fair value
through profit and loss
At 30 June 2022
Trade receivables
Other receivables
Accrued income
Term deposits
Investments held at fair value
through profit and loss
Financial
institutions
£m
Corporate
clients
£m
Individuals
£m
133.3
7.6
146.0
130.0
0.5
417.4
119.4
3.7
26.8
20.0
0.8
170.7
0.4
–
–
–
–
0.4
0.2
–
–
–
–
0.2
367.9
–
23.0
–
–
390.9
304.2
–
22.2
–
–
326.4
Total
£m
501.6
7.6
169.0
130.0
0.5
808.7
423.8
3.7
49.0
20.0
0.8
497.3
172
SECTION 5: OTHER NOTESNOTES TO THE GROUP FINANCIAL STATEMENTS OTHER CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information Other risks
Inflation risk
Inflation risk is the risk that the Group will sustain losses due to a high inflationary environment.
Our exposure to inflation risk is considered to mostly impact staff costs and support costs. The
current levels of inflation seen in the market do not have a material impact on the financial
statements.
Climate risk
We have assessed our exposure to climate risks and opportunities and undertaken scenario
analysis, At the present time there is no material impact of climate-related risks on the financial
statements.
Capital management
The Group’s objectives when managing capital are: i) to safeguard the Group’s ability to continue
as a going concern so that it can continue to provide returns for shareholders and benefits for
other stakeholders; ii) to maintain a strong capital base and utilise it efficiently to support the
development of its business; and iii) to comply with the regulatory capital requirements set by the
FCA. Capital adequacy and the use of regulatory capital are monitored by the Group’s
management and Board.
Capital management
Regulatory capital is determined in accordance with the requirements prescribed in the UK
by the FCA. This is a two-step process requiring an assessment of the minimum capital
requirements followed by an assessment of individual entity and Group risks of harm to ensure
that an additional amount of capital is held above the minimum amount to accommodate the
impact of any residual risk of harm.
Minimum capital requirements are calculated as the higher of certain baseline variables
(depending on the specific requirements for the legal entity in question). In Hargreaves
Lansdown Asset Management Limited (HLAM) this is calculated as the higher of the
permanent minimum capital requirement, fixed overhead requirement and k-factor assessment
(capital requirement based on the activities a firm undertakes), and in Hargreaves Lansdown
plc it is the group capital test which is the book value that the parent company has invested in
the underlying entities.
The second step requires investment firms to assess firm-specific and Group risk of harms,
and costs of wind down, ensuring that they hold adequate capital over and above the amount
set by the minimum capital requirements. The Group completes this assessment of regulatory
capital requirements using its Group Internal Capital Adequacy and Risk Assessment process,
which is a continuous and forward-looking exercise that includes stress testing on major risks,
such as a significant market downturn, and identifying mitigating actions.
The Group manages its retained earnings and share capital which total £717.1 million (audited)
as at 30 June 2023 (2022: £583.4m– audited). Consistent with FCA requirements, HLAM
specifically is required to disclose regulatory capital information; this will be available on the
Group’s website at www.hl.co.uk/investor-relations.
173
SECTION 5: OTHER NOTESNOTES TO THE GROUP FINANCIAL STATEMENTS OTHER CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information SECTION 6: COMPANY FINANCIAL STATEMENTS
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
ASSETS
Non-current assets
Investments in subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Net current assets
Total liabilities
Net assets
EQUITY
Share capital
Retained earnings
Total equity
The Company recorded a profit for the financial year ended 30 June 2023 of £265.7 million (2022:
£246.5m).
The financial statements of Hargreaves Lansdown plc, registered number 02122142, on pages 174
to 180, were approved by the Board and authorised for issue on 18 September 2023.
Amy Stirling
Chief Financial Officer
Note
At 30 June 2023
£m
At 30 June 2022
£m
6.5
6.6
6.7
6.8
6.10
6.10
90.9
90.9
133.8
121.0
254.8
345.7
22.5
22.5
232.3
22.5
323.2
1.9
321.3
323.2
68.9
68.9
132.0
231.9
363.9
432.8
192.0
192.0
171.9
192.0
240.8
1.9
238.9
240.8
174
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information
SECTION 6: COMPANY FINANCIAL STATEMENTS
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2023
At 1 July 2021
Profit and total comprehensive income
Increase in investment in subsidiaries
Dividend paid
At 30 June 2022
Profit and total comprehensive income
Increase in investment in subsidiaries
Dividend paid
At 30 June 2023
Details of the Company’s dividends are as set out in note 3.2 to the consolidated financial statements.
PARENT COMPANY STATEMENT OF CASH FLOWS
For the year ended 30 June 2023
Net cash from operations
Cash generated from operations
Net cash from operating activities
Investing activities
(Increase)/Decrease in term deposits
Purchase of investment in subsidiary
Net cash (used in)/from investing activities
Financing activities
Dividends paid to owners of the parent
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Share
capital
£m
1.9
–
–
–
1.9
–
–
1.9
Retained
earnings
£m
225.1
246.5
8.3
(241.0)
238.9
265.7
7.1
(190.4)
321.3
Total
equity
£m
227.0
246.5
8.3
(241.0)
240.8
265.7
7.1
(190.4)
323.2
Note
6.9
6.7
6.7
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
199.5
199.5
(110.0)
(10.0)
(120.0)
(190.4)
(190.4)
(110.9)
231.9
121.0
288.0
288.0
40.0
(11.0)
29.0
(241.0)
(241.0)
76.0
155.9
231.9
175
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information SECTION 6: COMPANY FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
6.1 General information
Hargreaves Lansdown plc (the Company) is a company incorporated and domiciled in the United
Kingdom under the Companies Act 2006 whose shares are publicly traded on the London Stock
Exchange. The address of the registered office is One College Square South, Anchor Road, Bristol
BS1 5HL, United Kingdom. The Company is the parent company of the Group, and the nature of
the Group’s operations and its principal activities are set out in the Operating and Financial Review.
The Company financial statements are presented in millions of pounds sterling which is the
currency of the primary economic environment in which the Company operates.
Basis of preparation
The separate financial statements of Hargreaves Lansdown plc have been prepared in
accordance with UK-adopted international accounting standards and with the requirements
of the Companies Act 2006 as applicable to companies reporting under those standards.
The Company financial statements are prepared on a going concern basis. The Directors believe
that they have a reasonable expectation that the Company has adequate resources to continue
in operational existence for 12 months from the date the financial statements are adopted.
The financial statements have been prepared on the historical cost basis. Accounting policies
have been applied consistently throughout the current and prior financial year.
6.2 Significant accounting policies
The accounting policies of the Company are the same as those of the Group which are set out in
the relevant notes to the consolidated financial statements, except that it has no policy in respect
of consolidation and investments in subsidiaries are carried at historical cost, less any provisions
for impairment.
6.3 Critical judgements and key sources of estimation
uncertainty
As noted in note 5.2 to the Group financial statements the preparation of the financial statements
requires management to make estimates and assumptions that affect the reported amount of
revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. There are
no critical judgements used in the preparation of the Company’s financial statements.
The estimates on the following page are made in respect of the Company financial statements only.
Investments in subsidiaries
The Company made significant investments in Hargreaves Lansdown Savings Limited to assist in
the development of the Active Savings proposition and Hargreaves Lansdown Advisory Services
Limited to assist in the development of new Advice offerings. Given the long-term economic benefit
that this is expected to bring, development costs incurred are being capitalised in both companies.
The parent company has previously held these investment at cost, in the current year an
assessment has been made of the recoverable amounts, which requires estimation of future cash
flows and appropriate discount rates for the purpose of its calculation, the uncertainty comes mainly
from assessment of the appropriate inputs into the discount rate given the unlisted nature of both
businesses. A sensitivity analysis of this estimate is presented in note 6.5.
6.4 Profit for the year
As permitted by Section 408 of the Companies Act 2006, no Income Statement or Statement
of Comprehensive Income is presented for the Company. The Company recorded a profit for
the financial year ended 30 June 2023 of £265.7 million (2022: £246.5m).
The Auditors’ remuneration for audit and other services is disclosed in note 1.4 to the consolidated
financial statements.
6.5 Investment in subsidiaries
Investments in subsidiaries are held at cost, being the fair value of consideration paid
and capital contributions made to the subsidiaries.
Impairment assessments are performed at least on an annual basis for all subsidiaries to assess
whether the valuation is still appropriate. A comparison is made between the recoverable
amount and the carrying value. This requires the calculation of either the fair value, less costs
to sell of each subsidiary or the value in use. Value in use is calculated as the present value of
discounted cash flows over an appropriate period at a discount rate appropriate for each
subsidiary. Any losses are recognised immediately in the Income Statement.
Investments in subsidiaries
At beginning of year
Capital contribution to subsidiaries
Reversal of impairment in subsidiary valuation
Impairment of subsidiary valuation
At end of year
Comprising
Non-current investments – investments in subsidiaries valued
at cost less impairment
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
68.9
16.9
15.9
(10.8)
90.9
54.5
19.4
–
(5.0)
68.9
90.9
68.9
In the financial year ended 30 June 2020, the Company impaired its holding in Hargreaves Lansdown
Savings Limited and subsequent impairment has also taken place. In the current year, the Company
has invested a further £5m in the company. Changes in the interest rate environment have led to
future forecast profitability that significantly changes the valuation determined. The amount was
determined by calculation of the recoverable amount, using future cash flows at a pre-tax discount
rate of 16.3%. The carrying amount after reversing the impairment was £39.9 million (2022: £18.8m).
176
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 6.5 Investment in subsidiaries continued
The Company has also invested in Hargreaves Lansdown Advisory Services Limited and in the year
has impaired its investment by £10.8 million, due to the short term losses recognised and upfront cash
flows being recognised as the strategic initiatives of the Group are developed. The amount was
determined by calculation of the recoverable amount, using future cash flows at a pre-tax discount
rate of 12.4%. The carrying amount prior to the impairment was £16.5 million (2022: £11.5m).
Sensitivity analysis
The valuations for both companies are performed over a range of pre-tax discount and growth
rates, between 11.0% and 12.4% for HLAS and 11.8% and 16.3% for HL Savings with value in use
calculations providing support for the new valuations. The assessment of both companies takes
place over a maximum of 5 years in line with the requirements of IAS 36, the forecast cash flows
are determined with reference to the Board approved operating plans for each company. Growth
for revenue and costs is in line with the forecasts of the Group and a range of growth rates has
been considered with 2% being the midpoint. Over the range of inputs and assumptions as
outlined above the valuations arrived at have been considered for their appropriateness for
recoverable amount and it is considered appropriate to use the valuations as outline in the
previous section. Valuation of Hargreaves Lansdown Savings Limited has a lower limit of
£39.9 million and an upper limit of £63.2 million. For Hargreaves Lansdown Advisory Services
Limited the lower range was £5.7 million with the upper limit being £7.7 million.
A list of the investments in subsidiaries is shown below, along with their country of incorporation
and principal activity. Unless otherwise disclosed below, all subsidiaries have one ordinary class
of share only and all shares are held by Hargreaves Lansdown plc.
Subsidiary company name
Hargreaves Lansdown Advisory Services Limited
Hargreaves Lansdown Asset Management Limited
Country of incorporation
and principal
UK1
UK1
Hargreaves Lansdown Fund Managers Ltd.
Hargreaves Lansdown Stockbrokers Ltd
Hargreaves Lansdown (Nominees) Limited (100% shares held by
Hargreaves Lansdown Asset Management Limited)
Hargreaves Lansdown Insurance Brokers Limited
Hargreaves Lansdown Investment Management Limited
(100% shares held by Hargreaves Lansdown Fund Managers Ltd)
Hargreaves Lansdown Savings Limited
Hargreaves Lansdown Savings (Nominees) Limited
(100% shares held by Hargreaves Lansdown Savings Limited)
Hargreaves Lansdown Pensions Limited
(100% shares held by Hargreaves Lansdown Advisory Services Limited)
Hargreaves Lansdown Pensions Trustees Limited
Hargreaves Lansdown EBT Trustees Limited
Hargreaves Lansdown Trustee Company Limited
HL Tech Sp. Z O. O (100% shares held by Hargreaves Lansdown Asset
Management Limited)
* Exempt from the requirements for audit under s394A and s448A of Companies Act 2006
† Exempt from the requirement for audit under s479A of the Companies Act 2006
1 Registered address One College Square South Anchor Road Bristol BS1 5HL
2 Registered address Pl Europejski 1 Warsaw 00-844 Poland
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
UK1
Poland2
Company purpose/function
Advisory services
Unit trust and equity broking, investment fund management,
life and pensions consultancy
Unit trust management
Dormant company*
Nominee services*
Dormant company*
Dormant company*
Cash services
Nominee services*
Dormant company*
Trustee of the HL SIPP*
Trustee of the Employee Benefit Trust†
Trustee of the Share Incentive Plan†
Service company
Percentage
ownership
100%
100%
Voting rights
100%
100%
100%
100%
100%
100%
100%
100% – Ordinary
100% – Class A
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
177
SECTION 6: COMPANY FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 6.6 Trade and other receivables
6.8 Trade and other payables
Financial assets
Amounts receivable from subsidiaries and EBT
Term deposits
Non-financial assets:
Prepayments
At
30 June 2023
£m
At
30 June 2022
£m
1.2
130.0
131.2
2.6
133.8
111.7
20.0
131.7
0.3
132.0
Financial liabilities
Amounts payable to subsidiaries
Other payables
Non-financial liabilities:
Accruals
At
30 June 2023
£m
At
30 June 2022
£m
22.1
0.1
22.2
0.3
22.5
191.5
0.1
191.6
0.4
192.0
Movement in amounts receivable from subsidiaries and EBT relates to Group cash management.
Term deposits are held by the Company on unbreakable terms greater than three months and
are classified as financial assets.
The Company applies the simplified approach to providing for expected credit losses for
receivables, allowing the use of lifetime expected loss provisions to be made. To determine
expected credit losses, financial assets have been grouped based on shared credit risk
characteristics, such as the counterparty and the number of days past due. The value of
expected credit losses on the assets subject to credit risk is immaterial.
6.7 Cash and cash equivalents
Cash and cash equivalents
Company cash and cash equivalent balances
At
30 June 2023
£m
At
30 June 2022
£m
121.0
231.9
Cash and cash equivalents comprise cash and institutional cash funds with near instant access.
No disclosures for financial instruments have been made in respect of the Company as the only
significant financial instruments held by the Company are cash and term deposit balances as
shown above.
Amounts payable to subsidiaries comprise short-term borrowing from subsidiaries, repayable
on demand. The fair values of amounts owed to subsidiaries are equal to their carrying amounts.
6.9 Notes to the company statement of cash flows
Profit for the year after tax
Adjustments for:
Income tax charge/(credit)
(Reversal of) / Impairment in investment in subsidiaries
Operating cash flows before movements in working capital:
Decrease in trade and other receivables
Decrease in trade and other payables
Cash generated from operations
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
265.7
246.5
0.2
(5.1)
260.8
108.2
(169.5)
199.5
(0.1)
5.0
251.4
43.6
(7.0)
288.0
178
SECTION 6: COMPANY FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 6.10 Share capital
Details of the Company’s share capital are as set out in note 3.1 to the consolidated financial
statements. The Company has a share premium account that represents the difference between
the issue price and the nominal value of shares issued and was unchanged at £8,000 throughout
the 2022 and 2023 financial years.
The Company has a capital redemption reserve that relates to the repurchase and cancellation
of the Company’s own shares and was unchanged at £12,000 throughout the 2022 and 2023
financial years.
Details of the movements in retained earnings are set out in the Parent Company Statement
of Changes in Equity.
6.11 Related party transactions
The key management personnel of the Company are the Directors of Hargreaves Lansdown plc.
The relevant disclosures are given in note 5.6 to the consolidated financial statements. These are
the only staff costs incurred by the Company in the year. The Company has two employees
(2022: two), being the Executive Directors. The cost of providing share scheme benefits to the
employees of the subsidiaries is not charged directly to the subsidiaries. Instead, the Company
provides a capital contribution to its subsidiaries in respect of these schemes.
The Company entered into the following transactions with subsidiaries and the Employee Benefit
Trust, which are related parties.
6.12 Events after the reporting period
Events after the reporting period are shown in note 5.5 of the consolidated financial statements
on page 166.
6.13 Financial risk management
Note 5.7 to the consolidated financial statements includes the Group’s policy on capital
management, its exposure to financial risks and its policies and processes to manage those risks.
There are financial instruments in the Company made up of amounts receivable from subsidiaries
and the Employee Benefit Trust and amounts payable to subsidiaries. The nature and extent of
risks arising from these financial instruments are as follows:
Liquidity risk
The Company is exposed to liquidity risk, namely the risk that it may be unable to meet its
payment obligations as they fall due.
The payment obligations primarily relate to amounts payable to subsidiaries which are more than
offset by the amounts owed from subsidiaries. In addition, the Company holds significant cash
balances on short-term deposit to ensure that it has sufficient available funds to meet its
obligations and fund its operations.
At the end of the reporting period, none of the liabilities of the Company are past due or represent
a significant long-term liability.
Dividends received from subsidiaries
Capital contribution to subsidiaries
Amounts owed by related parties at 30 June
Amounts owed to related parties at 30 June
Year ended
30 June 2023
£m
Year ended
30 June 2022
£m
260.0
16.9
1.2
22.1
254.0
14.4
111.7
191.5
Any amounts outstanding with related parties are unsecured and will be settled in cash.
No guarantees have been given or received in respect of amounts outstanding. Immaterial
expected credit losses have been recognised in respect of the amounts owed by the related
parties.
The capital contribution to subsidiaries does not show the impacts of impairment or their
reversals.
The decrease in amounts owed to and by related parties has reduced significantly in the year due
to the settlement of balances between Group subsidiaries, which in turn allowed the settlement
with the parent.
179
SECTION 6: COMPANY FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information 6.13 Financial risk management continued
Credit risk
Credit risk is the risk that a counterparty fails to perform its financial obligations, resulting in
financial loss; however, the amounts owed to the Company are primarily from its own subsidiaries.
Given the profitability and net assets of the majority of subsidiaries, credit risk is considered
minimal. As per the wider Group, cash is held with UK licensed banks. The credit risk on liquid
funds is mitigated because the counterparties are banks with strong credit ratings assigned
by international credit rating agencies. The Group takes a conservative approach to treasury
management and selection of banking counterparties, and carries out regular reviews of all
its banks’ and custodians’ credit ratings.
The Company applies the simplified approach to providing for expected credit losses for
receivables, allowing the use of lifetime expected loss provisions to be made. To determine
expected credit losses, financial assets have been grouped based on shared credit risk
characteristics, such as the counterparty and the number of days past due. The value of
expected credit losses on the assets subject to credit risk is immaterial.
The following table discloses the Company’s maximum exposure to credit risk on financial assets.
Market risk
Interest rate risk
Interest rate risk is the risk that the Company will sustain losses from adverse movements in rates
associated with interest bearing assets and liabilities. There is an exposure to interest rates on
banking deposits held in the ordinary course of business. At 30 June 2023, the value of financial
instruments on the Company Statement of Financial Position exposed to interest rate risk was
£251.0 million (2022: £251.9m) comprising cash, cash equivalents and term deposits.
This exposure is continually monitored to ensure that the Company is maximising its interest
earning potential within accepted liquidity and credit constraints. The Company has no external
borrowings and as such is not exposed to interest rate or refinancing risk on borrowings. Cash at
bank, including restricted cash, earns interest at floating rates based on daily bank deposit rates.
Term deposits are also made for varying periods of between one day and 13 months, depending
on the immediate cash requirements of the Group, and earn interest at the respective fixed term
deposit rates.
In isolation, with no other factors being considered a 25bps move in interest rates would have the
following impact:
Financial assets at amortised cost
Cash and cash equivalents
Included within trade and other receivables:
Term deposits
Amounts receivable from subsidiaries and EBT
At
30 June 2023
£m
At
30 June 2022
£m
Interest income +25bps (0.25%)
Interest income +25bps (0.25%)
Change in margin
+25bps (0.25%)
-25bps (0.25%)
30 June 2023
£m
0.3
(0.3)
121.0
130.0
1.2
252.2
231.9
20.0
111.7
363.6
The above assumes that interest income is earned evenly over the financial year and that
balances are consistent. This is not an illustration of expectation and should not be treated
as such. 25bps has been chosen as it is illustrative of single movements seen during the financial
year from the Bank of England, it is not an expectation of actual changes.
180
SECTION 6: COMPANY FINANCIAL STATEMENTSNOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDHargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information OTHER
INFORMATION
Directors, company secretary, advisers
and shareholder information
Five-year summary
Glossary of alternative financial
performance measures
Glossary of terms
182
183
184
187
Hargreaves Lansdown
Report and Financial Statements 2023
S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
s
t
a
t
e
m
e
n
t
s
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
181
DIRECTORS, COMPANY SECRETARY, ADVISERS AND SHAREHOLDER INFORMATION
Executive Directors
Dan Olley
Amy Stirling
Independent auditors
PricewaterhouseCoopers LLP, London
Registered office
One College Square South Anchor Road
Bristol BS1 5HL
Non-Executive Directors
Deanna Oppenheimer
Andrea Blance
Adrian Collins
Penny James
Moni Mannings
Michael Morley
Roger Perkin
Darren Pope
John Troiano
Solicitors
Freshfields Bruckhaus Deringer LLP, London
Principal bankers
Lloyds Bank Plc, Bristol
Brokers
Barclays Bank PLC
Numis Securities Limited
Website
www.hl.co.uk
Company number
02122142
Company Secretary
Claire Chapman
Registrars
Equiniti Limited
182
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information FIVE-YEAR SUMMARY
Revenue
Fair value gains on derivatives
Operating costs
Operating profit
Finance income
Finance costs
Other gains1
Profit before tax
Tax
Profit after tax
Non-controlling interests
Profit for the financial year attributable to owners of the parent company
Equity shareholders’ funds
Weighted average number of shares for the purposes of diluted EPS (million)
Equity dividends per share paid during year
Basic earnings per share
Diluted earnings per share
Underlying basic earnings per share
Underlying diluted earnings per share
1 Relates to a one-off gain on the disposal of Funds Library in the year ended 30 June 2020.
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
735.1
–
(350.7)
384.4
19.0
(0.7)
–
402.7
(79.0)
323.7
0.1
323.8
709.7
474.9
Pence
40.1
68.3
68.2
74.4
74.3
583.0
–
(313.0)
270.0
–
(0.8)
–
269.2
(53.4)
215.8
0.5
216.3
575.1
474.5
631.0
0.6
(266.0)
365.6
1.4
(1.0)
–
366.0
(69.7)
296.3
0.4
296.7
593.5
474.5
550.9
1.7
(214.9)
337.7
2.8
(1.0)
38.8
378.3
(65.1)
313.2
(0.1)
313.1
558.3
480.5
2.2
(179.4)
303.3
2.8
(0.3)
–
305.8
(58.2)
247.6
(0.2)
247.4
457.6
475.70
475.76
Pence
Pence
Pence
Pence
50.8
45.6
45.6
50.4
50.4
55.6
62.6
62.5
62.6
62.5
42.9
66.1
65.9
57.9
57.8
40.2
52.1
52.0
52.1
52.0
183
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information GLOSSARY OF ALTERNATIVE FINANCIAL PERFORMANCE MEASURES
Measure
Definition
Why we use this measure
Reconciliation
Underlying Activity costs
Underlying cost related to stockbroking, financial services
costs and marketing costs on a transactional basis related to
the volume of activity undertaken by our clients.
This has been amended in the period to provide visibility of
the costs that are associated with both client numbers and
transactional volumes, to allow comparison from year to year.
This measure is the same
as the Activity Costs figures
within note 1.3 less
strategic investment costs
that fit this categorisation
of £0.1m.
Dividend per share (pence per
share)
Total dividend payable relating to a financial year divided by
the total number of shares eligible to receive a dividend. Note
ordinary shares held in the Hargreaves Lansdown Employee
Benefit Trust have agreed to waive all dividends (see note 3.2
to the consolidated financial statements).
Dividend per share is pertinent information to shareholders
and investors and provides them with the ability to assess the
dividend yield of Hargreaves Lansdown plc shares.
N/A
Underlying People costs
Underlying cost related to staff, the main driver of cost in our
business
People costs are our largest cost category and our people are
the key driver of our Business and our strategy.
Equivalent to staff costs
figure within note 1.3, less
strategic investment costs
of £11.3m
Platform Growth
The net value of new assets brought onto the platform less
assets leaving the platform, excluding cash placed with Active
Savings.
Provides the most useful measure of tracking, over time, the
element of net new business that is made up of assets
brought onto the platform.
Net movement to Active
Savings
The net value of assets moving from the HL platform to Active
Savings
Active Savings Growth
The net value of new cash placed with Active Savings.
Separated out from Platform Growth to highlight the change in
asset mix within the business and the retention provided by
Active Savings.
Provides the most useful measure of tracking, over time, the
element of net new business that is made up of cash brought
into Active Savings.
Market growth and other
The underlying market movement and other retained
investment income, including dividends reinvested on behalf
of clients
Provides the best measure for highlighting changes in the
AUA that are not directly impacted by client activity.
Net interest margin (bps)
Revenue from cash divided by the average value of cash
under administration, net of interest received by clients
Revenue margin (bps)
Total revenue divided by the average value of assets under
administration which includes the Portfolio Management
Services assets under management held in funds on which a
platform fee is charged.
Provides the most comparable means of tracking, over time,
the margin earned on the cash under administration after
considering the amount received by clients
Provides the most comparable means of tracking, over time,
the margin earned on the assets under administration and is
used by management to assess business performance.
N/A
N/A
N/A
N/A
N/A
N/A
184
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information GLOSSARY OF ALTERNATIVE FINANCIAL PERFORMANCE MEASURES
CONTINUED
Measure
Definition
Why we use this measure
Reconciliation
Revenue margin from cash
(bps)
Revenue from cash (net interest earned on the value of client
money held on the platform divided by the average value of
assets under administration held as client money).
Provides a means of tracking, over time, the margin earned on
cash held by our clients.
N/A
Revenue margin from funds
(bps)
Revenue derived from funds held by clients (platform fees,
initial commission less loyalty bonus) divided by the average
value of assets under administration held as funds, which
includes the Portfolio Management Services assets under
management held in funds on which a platform fee is charged.
Provides the most comparable means of tracking, over time,
the margin earned on funds held by our clients.
N/A
Revenue margin from HL
Funds (bps)
Management fees derived from HL Funds (but excluding the
platform fee) divided by the average value of assets held in
the HL Funds.
Provides a means of tracking, over time, the margin earned on
HL Funds.
N/A
Revenue margin from shares
(bps)
Strategic investments costs
(Including dual running costs)
Underlying Support costs
Revenue from shares (stockbroking commissions,
management fees where shares are held in a SIPP or ISA, less
the cost of dealing errors) divided by the average value of
assets under administration held as shares.
The total Cost (excluding capitalisation), of the Strategic
Investment Programme including staff and professional fees
relating to the planning, commencement and dual running of
the digital technology strategy, strategic growth initiatives
and the cost of expanding associated compliance,
infrastructure and support functions.
Underlying support costs includes costs previously known as
legal and professional fees and office running costs, including
operating lease rentals. Also included in underlying support
costs are depreciation of owned plant and equipment,
amortisation of other intangible assets and impairment.
Provides a means of tracking, over time, the margin earned on
shares held by our clients.
N/A
Costs relating to the planning and commencement of the
digital technology strategy and core growth initiatives, which
include staff costs, professional fees and technology costs,
that are considered separately to reflect the impact on the
results of the Group.
See page 30 and 31
Provides an assessment of our other costs.
Underlying Technology costs
Costs associated with the use of third-party software and
data feeds used in the performance of daily business.
Provides a means of understanding the impact that increasing
or changing our proposition has on our costs.
The measure is the same as
Support costs, within note
1.3, less strategic
investment costs of £1.6m
The sum of Depreciation,
Amortisation, Impairment,
Operating lease rentals
payable and Support costs
per note 1.3, less strategic
investment costs of £22.7m
185
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information GLOSSARY OF ALTERNATIVE FINANCIAL PERFORMANCE MEASURES
CONTINUED
Measure
Definition
Why we use this measure
Underlying basic earnings per
share
Underlying profit after tax divided by the weighted average
number of ordinary shares for the purposes of basic EPS.
The calculation of basic earnings per share using statutory
profit after tax adjusted for those costs that are related
specifically to our strategic investments.
Reconciliation
N/A
Underlying costs
Operating costs less strategic investment costs (including
dual running costs).
Provides relevant information on the year-on-year cost of the
underlying business as we go through a period of significant
strategic investment.
Operating costs per note
1.3 less £36.1m strategic
investment costs
Underlying diluted earnings
per share
Underlying profit after tax divided by the weighted average
number of ordinary shares for the purposes of diluted EPS.
The calculation of diluted earnings per share using statutory
profit after tax adjusted for those costs that are related
specifically to our strategic investments.
N/A
Underlying profit after tax
Profit after tax attributable to equity holders of the parent
company excluding Strategic investment costs (including dual
running costs).
Profit after tax includes costs that are part of strategic
planning and development. This measure helps to provide
clarity between the profit of the business from period to
period when those costs are not considered. This is important
as we go through a period of significant strategic investment.
Underlying profit before tax
Profit before tax excluding Strategic investment costs
(including dual running costs).
Provides the best measure for comparison of profit before tax
of the underlying business performance as we go through a
period of significant strategic investment.
Profit after tax per the
Statement of
Comprehensive income
after adding back strategic
investment costs and
adjusting for a tax shield
effect, as shown on
page 28
Profit before tax per the
Statement of
Comprehensive income
after adding back strategic
investment costs as shown
on page 28
186
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information GLOSSARY OF TERMS
A
AGM Annual General Meeting
AIFMD Alternative Investment Fund
Managers Directive
Asset retention rate Based on the monthly lost
AUA as a percentage of the opening month’s
AUA and averaging for the year
AUA Assets Under Administration. This is the
value of all assets administered or managed by
Hargreaves Lansdown on behalf of its clients
AUM Assets Under Management is the value of
all assets managed by Hargreaves Lansdown
Fund Managers
AWS Amazon Web Services
B
Basic EPS Basic earnings per share
Client retention rate Based on the monthly lost
clients as a percentage of the opening month’s
total clients and averaging for the year. A lost
client is deemed as one who falls below a
holding of £100
CMD Capital Markets Day
CODM Chief Operating Decision Maker
Company Hargreaves Lansdown plc
Corporate Schemes This related to HL
Workplace Solutions which allow employers to
offer the benefits of the Hargreaves Lansdown
Vantage service to employees via the
workplace
CSR Corporate Social Responsibility
Board The Board of Directors of Hargreaves
Lansdown plc
BRC Board Risk Committee
D
D2C Direct-to-consumer
DEFRA Department for Environment Food
& Rural Affairs
Diluted EPS Diluted earnings per share
DR Disaster Recovery
DTR The FCA’s Disclosure Guidance and
Transparency Rules sourcebook
C
CASS Client Assets Sourcebook
E
EBT Employee Benefit Trust
H
HL Hargreaves Lansdown
CDP Carbon Disclosure Project
ERC Executive Risk Committee
HMRC His Majesty’s Revenue and Customs
ESG Environmental, social and governance
ExCo Executive Committee
F
FATCA Foreign Account Tax Compliance Act
FCA Financial Conduct Authority, regulator
of the UK financial services industry
FRC Financial Reporting Council
FSCS Financial Services Compensation
Scheme
FTE Full-time equivalent employees
G
GAAP Generally Accepted Accounting
Principles
I
IAS International Accounting Standards
IBS Important Business Services
ICAAP Internal Capital Adequacy
Assessment Process
ICARA Internal Capital Adequacy and
Risk Assessment
IFPR Investment Firm Prudential Regime
IFRS International Financial Reporting
Standards
IPO Initial Public Offering
ISA Individual Savings Account
ISSB International Sustainability
Standards Board
GAYE Give As You Earn
IT Information Technology
GCRO The Group Chief Risk Officer
Group Hargreaves Lansdown plc and its
controlled entities
K
KPI Key Performance Indicator
187
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information GLOSSARY OF TERMS
CONTINUED
L
LISA Lifetime ISA
Listing Rules Regulations subject to the
oversight of the FCA applicable to companies
listed on a UK stock exchange
Loyalty bonus A reward to customers for
holding certain collective investments within
the Vantage wrapper. This is paid on a regular
basis as a percentage of qualifying assets
LTIP Long-term incentive plan
M
Material Risk Takers Persons identified as
meeting the criteria of ‘material risk takers’ as
set out in the European Banking Authority
regulatory technical standard and
consequently subject to the requirements of
the Remuneration Code.
MGC Model Governance Committee
MLRO Money Laundering Reporting Officer
Multi-Manager funds A range of funds offered
by Hargreaves Lansdown which are managed
under the Fund of Funds format
T
TCFD Taskforce for Climate-related
Financial Disclosures
U
UCITS Undertakings for Collective Investment
in Transferable Securities
UK Corporate Governance Code A code
published by the FRC which sets out standards
for best boardroom practice with a focus on
Board leadership and effectiveness,
remuneration, accountability and relations
with shareholders
UNSDG United Nations Sustainable
Development Goals
Y
Year end/financial year Our financial year
starts on 1 July and ends on 30 June
N
Net new business (NNB) Represents
subscriptions, cash receipts, cash and stock
transfers in less cash withdrawals, cash and
stock transfers out
Net new clients Represents the net of new
clients less lost clients in the period
Net revenue Total revenue less commission
paid, which is primarily the Loyalty Bonus paid
to clients
Nominated Director The non-independent,
Non-Executive Director appointed to the Board
by Peter Hargreaves pursuant to his
shareholder agreement with the Company
NPS Net Promoter Score
Number of new clients Unique number of
clients holding at least one account (PMS, ISA,
SIPP or Fund and Share Account) with a value
greater than £100 at the year end
O
ONS Office for National Statistics
Organic growth Growth in assets under
administration can be attributed to two
main causes. The first is growth due to the
appreciation in the value of existing assets
and the second is organic growth through
additional contributions
ORC Operational Risk Committee
P
Pillar 1 and 2 capital requirements The Basel
Committee on Banking Supervision set out
certain capital requirements which must be met
by qualifying financial institutions
Pillar 3 A set of disclosure requirements which
enable the market to assess information on a
firm’s risks, capital and risk management
procedures
Platforum The advisory and research business
specialising in investment platforms which
compiles the Direct Platform Guide
PMS Portfolio Management Service
R
RDR Retail Distribution Review
S
SASB Sustainability Accounting Standards Board
SAYE scheme Save As You Earn scheme
SDR Sustainability Disclosure Requirements
SID Senior Independent Director
SIPP Self-invested Personal Pension
SMCR Senior Managers and Certification
Regime
SPP Sustained Performance Plan
SREP The FCA’s supervisory review and
evaluation process
188
Hargreaves LansdownReport and Financial Statements 2023Strategic reportGovernanceFinancial statementsOther information Cautionary statement concerning
forward-looking statements
This document comprises the Report and Financial
Statements for the year ended 30 June 2023 for
Hargreaves Lansdown plc (the ‘Company’) and
its subsidiaries.
It contains certain forward-looking statements with
respect to the financial condition and the results
of the Company, including statements about the
Company’s beliefs and expectations and including,
without limitation, statements containing the words
‘may’, ‘will’, ‘should’, ‘continue’, ‘aims’, ‘estimates’,
‘projects’, ‘believes’, ‘intends’, ‘expects’, ‘plans’, ‘seeks’
and ‘anticipates’, and words of similar meaning, are
forward-looking statements. These statements are
based on plans, estimates and projections as at the
time they are made, and therefore undue reliance
should not be placed on them. By their nature, all
forward-looking statements involve risk and
uncertainty because they relate to events and
depend upon circumstances that may occur in the
future. The forward-looking statements are based
on current assumptions and estimates by the
management of the Company. Past performance
cannot be relied upon as a guide to future
performance and should not be taken as a
representation that trends or activities underlying
past performance will continue in the future. Such
statements are subject to numerous risks and
uncertainties that could cause actual results to
differ materially from any expected future results
in forward-looking statements. These risks may
include, for example: changes in the global economic
situation; a lack of alignment between the Company’s
propositions and activities and its strategic
objectives; poor performance of markets adversely
affecting the Company’s revenue and impacting
strategic expectations; a failure to effectively manage
and maintain existing technological architecture,
environment or components that are key to
operational delivery; a failure to design or implement
appropriate policies, processes or technology; a
failure to comply with regulatory and legal standards
or expectations; a failure to design or implement
frameworks to counter financial crime risks; a failure
to design or implement appropriate frameworks to
manage data and data storage risk; a failure of the
Company’s culture and values to support appropriate
client-focused conduct leading to poor client
outcomes; a failure to establish robust operational
resilience solutions; and a failure to attract, retain,
develop and motivate people who are aligned to the
Company’s values. Further information on all these
risks is provided on pages 56 to 62 of the Strategic
Report section of this document. The Company
provides no guarantee that future development and
future results actually achieved will correspond to the
forward-looking statements included here and accepts
no liability if they should fail to do so. Neither the
Company nor any member of its group undertakes any
obligation to update these forward-looking statements,
which speak only as at the date of this document and
will not publicly release any revisions that may be
made to these forward-looking statements, which
may result from events or circumstances arising after
the date of this document, except as required under
applicable laws and regulations. Nothing in this
document constitutes, nor should it be construed as,
a profit forecast or estimate.
Designed and produced by
Ensemble Studio
Part of FleishmanHillard
Visit us at fhensemblestudio.com
Hargreaves Lansdown plc
One College Square South
Anchor Road
Bristol BS1 5HL
Tel: 0117 900 9000
Registered number: 02122142
www.hl.co.uk