REG - AJ Bell PLC - Interim Results
23/05/2024 07:00
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RNS Number : 5370P AJ Bell PLC 23 May 2024
23 May 2024
AJ Bell plc
Interim results for the six months ended 31 March 2024
AJ Bell plc ('AJ Bell' or the 'Company'), one of the UK's largest investment
platforms, today announces its interim results for the six-month period ended
31 March 2024.
Highlights
Financial performance
● Very strong financial performance, with revenue up 27% to £131.3 million
(HY23: £103.6 million) and profit before tax (PBT) up 47% to £61.4 million
(HY23: £41.9 million)
● PBT margin of 46.8% (HY23: 40.4%), driven by an increased revenue margin of
32.3bps (HY23: 29.0bps)
● Diluted earnings per share up 40% to 11.11 pence (HY23: 7.96 pence)
● Interim dividend of 4.25 pence per share, up 21% versus prior year (HY23: 3.50
pence)
Platform business
● Over half a million customers, with 27,000 added in the first half to close at
503,000
● Platform AUA up 13% in the first half to a record £80.3 billion, driven by
net inflows of £2.9 billion (HY23: £2.0 billion) and favourable market
movements of £6.5 billion
● Customer retention rate remained high at 94.5% (HY23: 95.5%)
AJ Bell Investments
● Assets under management ("AUM") up 23% in the first half to close at £5.8
billion
● Strong net inflows in the period of £0.8 billion (HY23: £0.9 billion net
inflows)
Michael Summersgill, Chief Executive Officer at AJ Bell, commented:
"I am pleased to announce an excellent set of first-half results. Our
dual-channel platform continued to deliver strong organic growth with 27,000
customers added in the period and total platform customers surpassing half a
million, a significant milestone for the business. We attracted platform net
inflows of £2.9 billion, up 45% versus the prior year, to take closing
platform AUA to a record £80.3 billion. This growth in customers and AUA
drove very strong financial performance, with both revenue and profit before
tax up significantly.
"Our continued strong business performance led us to review our approach to
capital allocation and the Board has recently approved a new capital
allocation framework which reaffirms our commitment to a progressive annual
ordinary dividend. We have declared an increased interim dividend for the
current year which is up 21% to 4.25 pence per share, equating to 40% of last
year's total ordinary dividend.
"Our significant scale and strong profitability has enabled us to continue
investing in several areas to support our long-term growth ambitions. We are
in the second year of our multi-channel brand campaign and are now reaping
some of the benefits of this investment, with our brand awareness showing a
meaningful improvement over the course of the last year. This has helped us
achieve strong customer and AUA growth and gives us the confidence to continue
investing in this area as we look to further strengthen the awareness of AJ
Bell amongst new and existing retail investors.
"We are delighted to have launched our new Ready-made pension to help people
easily consolidate their existing pensions with AJ Bell and invest them
automatically via our low-cost, in-house investment solutions. We have a
strong, trusted reputation in the pensions market with many of our existing
customers having already consolidated their old pensions with AJ Bell. The
Ready-made pension makes the pension consolidation journey even easier,
further broadening our appeal to ensure we capitalise on the significant
growth opportunity in the UK pensions market.
"Our philosophy is to use our economies of scale to provide customers with one
of the most competitively-priced platforms in the market. On 1 April we
reduced our custody fees for advised customers and halved our headline dealing
fee for D2C customers to £5, whilst also increasing the interest rates
payable on cash balances held across our products. This focus on keeping our
charges low, combined with high service standards and easy to use products,
puts us in a very strong position to continue growing our market share in the
future.
"The recent pricing changes were implemented later than originally planned due
to regulatory uncertainty around retention of interest margin at the tail end
of 2023. Whilst the changes are now live, the delay resulted in particularly
strong financial performance in the first half as revenue margins and PBT
margin were elevated. These metrics will moderate in the second half as
customers begin to benefit from lower overall charges, however our updated
full-year guidance reflects our expectation that both revenue and PBT will be
higher than we had anticipated back in December.
"We remain focused on our long-term organic growth strategy that has enabled
us to increase our market share year after year. The platform market benefits
from significant, structural growth drivers and the investments we are making
in our brand and propositions put us in a great position to take advantage of
that opportunity in the years to come."
Financial highlights
Six months ended Six months ended Change
31 March 2024 31 March 2023
Revenue £131.3 million £103.6 million 27%
Revenue per £AUA* 32.3bps 29.0bps 3.3bps
PBT £61.4 million £41.9 million 47%
PBT margin 46.8% 40.4% 6.4ppts
Diluted earnings per share 11.11 pence 7.96 pence 40%
Interim dividend per share 4.25 pence 3.50 pence 21%
Non-financial highlights
Six months ended Year ended Change
31 March 2024 30 September 2023
Number of retail customers 518,000 491,000 5%
- Platform 503,000 476,000 6%
- Non-platform 15,000 15,000 -
AUA* £85.8 billion £76.1 billion 13%
- Platform £80.3 billion £70.9 billion 13%
- Non-platform £5.5 billion £5.2 billion 6%
AUM* £5.8 billion £4.7 billion 23%
Customer retention rate 94.5% 95.2% (0.7ppts)
*see alternative performance measures
Contacts:
AJ Bell
● Shaun Yates, Investor Relations Director +44 (0) 7522 235 898
● Mike Glenister, Head of PR +44 (0) 7719 554 575
Results presentation details
A pre-recorded video with Michael Summersgill (CEO) and Peter Birch (CFO)
discussing these results will be available on our website
(ajbell.co.uk/investor-relations (http://www.ajbell.co.uk/investor-relations)
) along with an accompanying investor presentation from 07.00 BST today.
Management will be hosting a meeting for registered sell-side analysts at
09.30 BST today. Attendance is by invitation only.
Management will also be hosting a group call for investors today at 15.00 BST.
Please contact Camilla Crowe at c.crowe@numis.com for registration details.
Forward-looking statements
These results contain forward-looking statements that involve substantial
risks and uncertainties, and actual results and developments may differ
materially from those expressed or implied by these statements. These
forward-looking statements are statements regarding AJ Bell's intentions,
beliefs or current expectations concerning, among other things, its results of
operations, financial condition, prospects, growth, strategies, and the
industry in which it operates. By their nature, forward-looking statements
involve risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. These forward-looking
statements speak only as of the date of these results and AJ Bell does not
undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date
of these results.
Chief Executive Officer's report
I am delighted to report an excellent set of results for the first half of the
year, as we continue to increase our share of the growing platform market. The
investments we have made in our brand and propositions, alongside the
reductions to our charges, strengthen our competitive position and ensure we
are well-placed to capitalise on the significant long-term growth opportunity
in our market.
Seizing the significant growth opportunity
We delivered significant organic growth in the first half of the year,
increasing our share of the growing platform market and achieving a very
strong financial performance.
Our easy-to-use, low-cost propositions, serving both the advised and D2C
market segments, have enabled us to win new business from competitors, whilst
also attracting customers who were moving assets into the platform market.
There remains approximately two-thirds of an estimated £3 trillion
addressable market held off-platform, which provides a significant long-term
opportunity as customers seek the flexibility and control that platforms
offer.
Platform customers increased by 6% to 503,000 (FY23: 476,000). Surpassing half
a million platform customers is a significant milestone for the business, up
from just under 200,000 when we listed in 2018, reflecting the continued
success of our business model which has enabled the execution of the organic
growth strategy set out at IPO.
Platform AUA increased by 13% to a record £80.3 billion (FY23: £70.9
billion). This was driven by the investments we have continued to make in our
brand and propositions. We achieved strong net AUA platform inflows of £2.9
billion (HY23: £2.0 billion). An increase in asset values across global
equity markets led to favourable market movements of £6.5 billion (HY23:
£2.5 billion).
AJ Bell Investments AUM increased by 23% to £5.8 billion (FY23: £4.7
billion). Our range of simple, low-cost funds and managed portfolios continues
to prove particularly popular with financial advisers, regardless of which
platform they use, driving strong flows via both AJ Bell Investcentre and
third-party adviser platforms.
The continued growth of the business helped to deliver very strong financial
performance, with revenue growing by 27% to £131.3 million (HY23: £103.6
million) and profit before tax increasing by 47% to £61.4 million (HY23:
£41.9 million).
The Board has approved a new capital allocation framework which will see us
move away from a targeted 65% ordinary dividend payout ratio in favour of a
progressive ordinary dividend policy with no specific payout target. This new
approach reflects both our confidence in the outlook for the business and our
desire to optimise the mechanism by which capital is returned to shareholders.
Under our new framework we will formally review our capital position on an
annual basis. Surplus capital that is not required to fund either organic
investment in the business or potential inorganic investment opportunities to
support our strategy will be returned to shareholders as additional capital
returns, over and above ordinary dividends. Such distributions are expected be
made via share buybacks or special dividends, with the precise mechanism to be
determined on a case-by-case basis.
Investing in our propositions
A significant proportion of our addressable market sits in legacy pension
products. Most people have several employers during their career, and
subsequently accumulate a number of different pension pots which can result in
higher charges, whilst also being more difficult to manage. Our customers have
been consolidating such pensions with us for many years, but as part of our
focus on ease of use we recently launched our Ready-made pension service,
helping customers to consolidate their existing pensions with minimal effort.
The combination of a pension-finding service, a new pension product and a
multi-asset investment solution with an all-in cost of just 0.45% represents
excellent value for customers.
On our full-service advised proposition, AJ Bell Investcentre, we have
invested in improving efficiency and ease of use for advisers, helping them to
remain focused on delivering excellent service to customers. We have rolled
out significant enhancements to the client onboarding journey during the
period. The new journey has been designed in conjunction with advisers,
delivering an improved interface mapped to the advice process which
streamlines new business procedures.
Whilst our platform has always provided a broad range of investment options,
in this more normal interest rate environment, there has been increased demand
for cash-like returns. There have been various developments to our platform
propositions to enhance our capabilities in this space, notably the launch of
the AJ Bell Money Market MPS for advisers. This product has no management fees
and a low ongoing charges figure (OCF) of just 10bps.
Long-term cash savings represent a significant part of the addressable market
for platforms such as ours. There are millions of people in the UK who hold
cash savings for long periods of time, missing out on the superior returns
offered by risk-based assets. Many of these customers are deterred from
investing due to its perceived complexity and their own lack of confidence.
Dodl provides an ideal platform to address this market opportunity and in the
second half of our financial year we will be introducing a highly-competitive
cash rate to attract this cohort of customers. Customers will be able to
access investment content on the platform whilst building the confidence to
invest via Dodl's streamlined investment range.
Reducing our charges
Our philosophy has always been to use our economies of scale to provide our
customers with one of the most competitively-priced platforms in the market.
Effective from 1 April, we have delivered another significant package of
reduced charges and increased interest rates.
For our advised customers, we have reduced custody charges for assets held on
the platform, as well as increasing the interest rates paid on customer cash
balances and removing various transactional charges.
For our D2C customers, we have halved transactional dealing charges on shares,
ETFs, investment trusts and bonds from £9.95 to £5.00 per trade, while
charges for frequent traders have been reduced from £4.95 to £3.50.
We had planned to deliver these changes earlier in the financial year, however
the changes were delayed whilst we awaited clarification from the FCA
concerning interest paid on cash balances and the ability to use cross
subsidies where they help to deliver positive outcomes for customers.
Increased brand awareness
Our high-quality platform propositions and market-leading customer service
levels have enabled us to build a brand that is highly trusted by both D2C
customers and financial advisers.
We are continuing our multi-year strategy to enhance brand awareness through
our ongoing TV advertising campaign and title partnership with the AJ Bell
Great Run Series. We are starting to see the benefits of these investments,
driving new business volumes and increases in prompted and unprompted brand
awareness. This gives us the confidence to continue investing in this area as
we aim to further strengthen the awareness of AJ Bell amongst new and existing
retail investors.
Market-leading customer service
Throughout this period of continued growth, we have once again delivered an
excellent service to our customers. This is reflected in our market-leading
4.8-star Trustpilot score and our 94.5% platform customer retention rate.
What underpins these excellent customer service levels is a clear philosophy
about the support that customers and their advisers need when managing their
investments.
Our primary focus is to deliver a secure and scalable platform, providing a
high-quality digital solution for our customers. In the period we executed
over 2 million trades, settled over 4 million transactions and made tens of
thousands of pension payments - evidencing the scalability of our platform.
Whilst the vast majority of customer interactions with the platform happen
seamlessly, there are understandably points in the investment journey where
customers and advisers seek a human touchpoint to support them with a query or
transaction. In the last six months, our teams have answered over 200,000 such
phone calls. It is crucial that support is readily available when needed, and
this is where the knowledge, experience and dedication of our customer service
teams shines through. The tax year end is always one of our busiest periods,
with March 2024 being one of our busiest months ever. Even during this period
of elevated customer activity, 94% of all calls we received were answered
within 20 seconds.
This strong customer service is key to retaining the trust our customers have
placed in us and supports the growth of the business through high customer
retention and referral rates.
Market developments
Two emerging themes which have received significant coverage during the period
are the health of the UK capital markets and the advice / guidance boundary
review being jointly conducted by the Treasury and the FCA to explore
different proposals to help close the advice gap that exists in the UK.
In relation to the former, plans for a new 'UK ISA' were announced in the
March Budget statement, with the aim of boosting investment in the UK economy
and reviving the London stock market. While the aims of the UK ISA are
laudable, we do not believe this is the right solution. The product would only
be relevant to investors who already utilise their £20,000 ISA allowance,
meaning at most it will attract a few billion pounds of additional investment
a year. In the context of the £2 trillion+ UK stock market, that is a drop in
the ocean.
The UK ISA, if introduced, would also add extra complexity to an ISA picture
that has already become too complicated. Our research shows complexity deters
would-be retail investors from engaging with investing altogether, meaning
that over the long term there is a high risk a UK ISA would actually be
counterproductive.
We believe that the Government should focus on simplifying the ISA system for
the benefit of investors by combining the best features of the current
framework into a single 'One ISA' product. Attracting more retail investors
will have a far greater impact on investment into the UK market than trying to
squeeze a little extra investment out of those who fully utilise the current
allowances available to them.
In the name of international competitiveness, we have also called for the
Government to remove the stamp duty levied on most UK shares. Investors pay
0.5% in stamp duty on the price of the relevant UK-listed shares they buy, but
the tax does not apply to the purchase of shares in the vast majority of the
overseas markets to which we provide access, which can reduce the
attractiveness of UK shares versus foreign shares. Removing this tax would be
a simple and effective way of further boosting UK capital markets and there is
plenty of research showing the wider economic benefits of this change.
However, at this stage in the political cycle and with public finances tight,
this is a change unlikely to feature in the next fiscal event despite its
significant attractions.
In relation to the advice / guidance boundary review, we are working with the
Treasury and the FCA on their joint review and there are some positive early
signs from the policy paper published in December. The outcomes from this
review have the potential to be a positive step forward in enabling good
customer outcomes, particularly the proposed plans to allow firms to offer
more personalised guidance through a 'Targeted Support' regime. Creating a new
regulatory activity within existing permissions would potentially facilitate
the provision of more useful guidance to millions of people who are unlikely
to ever accumulate sufficient wealth for an independent financial adviser to
provide a bespoke financial plan at an affordable price. As ever with such
reviews, there is the risk the agenda is sidetracked and, in any event,
implementation will take time. However, the potential is there for D2C
platforms to provide a far greater level of support to retail investors who
currently fall into the advice gap.
Outlook
There is a clear and well-understood need for individuals to take control of
their long-term finances and investment platforms provide an excellent
solution. This societal need has been at the heart of the structural growth in
the platform market for many years and remains as relevant today as it has
ever been. Whilst political change always causes some uncertainty, we remain
confident that the long-term growth opportunity in the UK platform market will
remain intact under any government.
The macroeconomic environment improved during the period, with UK inflation
levels falling and global asset values increasing. These trends, alongside the
anticipated future reductions to the Bank of England's base rate, are likely
to increase the appetite for investing. The strength of our diversified
revenue model means we can deliver sustainable revenue growth in different
macroeconomic conditions.
Our philosophy remains to continually re-invest the benefits of our scale in
our platform propositions with a focus on ease of use. Our most recent pricing
changes ensure that we continue to offer outstanding value to our customers,
which together with our trusted brand and market-leading customer service
levels, mean we are well placed to capitalise on the significant opportunities
presented by the growing platform market.
Michael Summersgill
Chief Executive Officer
Financial review
Our dual-channel platform delivered a very strong financial performance in the
first half of the year. Revenue increased by 27% to £131.3 million, enabling
us to make planned investments in long-term initiatives to support future
growth, whilst also delivering a 47% increase in PBT to £61.4 million.
The strength of our diversified revenue model ensures we will continue to
generate sustainable revenue growth in changing macroeconomic environments.
Business performance
Customers
Six months ended Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
'000 '000 '000
Advised platform 165 153 159
D2C platform 338 302 317
Total platform 503 455 476
Non-platform 15 15 15
Total 518 470 491
Customer numbers increased by 27,000 during the period to a total of 518,000
(FY23: 491,000). This growth has been driven by our platform propositions,
with our advised platform customers up by 4% and our D2C platform delivering a
7% increase in customers, reflecting the benefit from investments made to
increase our brand awareness. In addition, our platform customer retention
rate remained high at 94.5% (FY23: 95.2%).
Assets under administration
Six months ended 31 March 2024 D2C platform Total platform Non-platform Total
Advised platform
£bn £bn £bn £bn £bn
As at 1 October 2023 48.2 22.7 70.9 5.2 76.1
Inflows 3.2 2.9 6.1 0.1 6.2
Outflows (2.0) (1.2) (3.2) (0.1) (3.3)
Net inflows 1.2 1.7 2.9 - 2.9
Market and other movements 4.0 2.5 6.5 0.3 6.8
As at 31 March 2024 53.4 26.9 80.3 5.5 85.8
Six months ended 31 March 2023 D2C platform Total platform Non-platform Total
Advised platform
£bn £bn £bn £bn £bn
As at 1 October 2022 44.8 19.3 64.1 5.1 69.2
Inflows 2.6 1.8 4.4 0.1 4.5
Outflows (1.5) (0.9) (2.4) (0.1) (2.5)
Net inflows 1.1 0.9 2.0 - 2.0
Market and other movements 1.4 1.1 2.5 0.1 2.6
As at 31 March 2023 47.3 21.3 68.6 5.2 73.8
We achieved significant platform gross AUA inflows in the period of £6.1
billion (HY23: £4.4 billion), with the increase driven by strong inflows from
new customers. Gross AUA inflows were particularly strong in the run up to tax
year end, with £1.4 billion added to the platform in March alone as customers
and advisers took advantage of their annual pension and ISA allowances.
Platform outflows increased to £3.2 billion (HY23: £2.4 billion), as
experienced across the industry. Advised platform outflows increased by £0.5
billion and D2C platform outflows increased by £0.3 billion, driven by the
underlying growth of the business and higher levels of withdrawals as
customers drew down on their investments amidst the continued cost of living
pressures caused by inflation and higher interest rates.
This resulted in net platform AUA inflows of £2.9 billion (HY23: £2.0
billion), an increase of 45%.
Favourable market movements contributed £6.5 billion (HY23: £2.5 billion) as
global equity markets continue to recover from headwinds experienced
throughout 2023, resulting in record closing platform AUA of £80.3 billion
(FY23: £70.9 billion), up 13% since the year end.
Non-platform AUA remained stable in line with our expectation, closing at
£5.5 billion (FY23: £5.2 billion).
Assets under management
Six months ended Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
£bn £bn £bn
Advised 3.2 2.2 2.5
D2C 1.5 1.2 1.3
Non-platform 1.1 0.5 0.9
Total 5.8 3.9 4.7
Our range of simple, low-cost investment solutions continues to prove popular,
particularly with financial advisers, which is driving strong demand via both
AJ Bell Investcentre and third-party adviser platforms. We achieved net
inflows of £0.8 billion, alongside positive investment performance leading to
market movements of £0.3 billion, resulting in total AUM closing at £5.8
billion (FY23: £4.7 billion). This is a 23% increase in the six months to
March. The consistently strong growth of our investments business illustrates
the success of our strategy in this area.
Financial performance
Revenue
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
£000 £000 £000
Recurring fixed 16,039 15,334 30,666
Recurring ad valorem 97,855 75,422 161,152
Transactional 17,360 12,855 26,416
Total 131,254 103,611 218,234
The strength of our diversified revenue model led to revenue increasing by 27%
to £131.3 million (HY23: £103.6 million), driven by strong performance in
our transactional and ad valorem revenues.
Revenue from recurring fixed fees increased by 5% to £16.0 million (HY23:
£15.3 million) due to higher pension administration revenue from our advised
platform, driven by the increase in customer numbers.
Recurring ad valorem revenue grew by 30% to £97.9 million (HY23: £75.4
million). The key drivers of this growth were increased custody fee income as
a result of higher average platform AUA, along with higher rates of interest
generated on cash balances held on the platform.
Revenue from transactional fees increased by 35% to £17.4 million (HY23:
£12.9 million) due to higher levels of dealing activity as a result of
improved retail investor sentiment. There has also been increased volumes of
deals placed in international equities in the first half of the year,
resulting in higher foreign exchange revenue versus the prior period.
Our overall revenue margin for the half year increased to 32.3bps (HY23:
29.0bps). Full year revenue margin is expected to be lower than half year as
we continue to share the benefits of higher revenue margins with our
customers. On 1 April 2024 we reduced our custody fees for advised customers
and halved our standard dealing fee for D2C customers to £5. We also
increased the interest rates payable on cash balances held across our
products.
Administrative expenses
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
£000 £000 £000
Distribution 14,518 12,376 25,928
Technology 22,526 19,107 40,317
Operational and support 35,281 30,539 65,769
Total 72,325 62,022 132,014
Administrative expenses increased by 17% to £72.3 million (HY23: £62.0
million), in line with expectation, as we delivered our planned investment in
our brand, technology and people. Total staff costs increased by £7.2 million
across the business driven by increased headcount to support our growth,
enhancements to our pay and benefits package, and higher performance-related
variable pay following our strong financial performance.
Distribution costs increased by 17% to £14.5 million (HY23: £12.4 million).
This was driven by the delivery of our multi-channel advertising campaign,
alongside our decision to increase spend on direct marketing activity in the
lead up to the tax year end with over 12,000 new customers joining the
platform in March alone. We also increased headcount in our marketing teams to
deliver our multi-year strategy to enhance brand awareness, and continued
investment in our advised business development team.
Technology costs increased by 18% to £22.5 million (HY23: £19.1 million). We
have invested in increasing resource in our change teams in order to improve
the speed at which we deliver further enhancements to our platform
propositions. We also increased investment in external hosting costs utilising
cloud technology and incurred higher licensing costs driven by the growth of
the business.
Operational and support costs increased by 16% to £35.3 million (HY23: £30.5
million). This was primarily driven by increased headcount to support the
growth of the business, as well as enhancements to staff pay and benefits and
higher performance-related variable pay. 2% of the year-on-year increase was
driven by higher transactional costs following an uptick in dealing volumes,
these additional costs were more than offset by the 35% increase in
transactional revenue referenced above.
Profit and earnings
Investment income of £2.9 million (HY23: £0.8 million) was driven by higher
interest earned on corporate cash balances in the period.
PBT of £61.4 million (HY23: £41.9 million) and PBT margin of 46.8% (HY23:
40.4%) was driven primarily by the higher revenue margin in the period. Full
year PBT margin is anticipated to be lower than the first half of the year,
reflecting the expected reductions to revenue margin, although we expect it to
be higher than the 38% we guided to in December.
The standard rate of UK corporation tax increased from 19.0% to 25.0% on 1
April 2023. Our effective rate of tax for the period was broadly in line with
this at 25.2% (HY23: 21.6%).
Basic earnings per share increased to 11.16 pence (HY23: 7.99 pence), up by
40%, which was lower than the 47% increase in PBT due to the increase in the
corporation tax rate. Diluted earnings per share (DEPS), which accounts for
the dilutive impact of outstanding share awards, increased by 40% to 11.11
pence (HY23: 7.96 pence).
Financial position
Capital and liquidity
The Group's financial position remains strong, with net assets totalling
£180.6 million at 31 March 2024 (FY23: £166.0 million) and a return on
assets for the six-month period of 25% (HY23: 22%). We have continued to
maintain a healthy surplus over our regulatory capital requirement throughout
the period.
We operate a highly cash-generative business, with a short working-capital
cycle that ensures profits are quickly converted into cash. We generated cash
from operations of £57.9 million during the six-month period and held cash
balances of £161.8 million at the period end (FY23: £146.3 million).
Dividend
The Board has declared an interim dividend of 4.25 pence per share, a 21%
increase from prior year (HY23: 3.50 pence per share), equating to 40% of last
year's total ordinary dividend.
Peter Birch
Chief Financial Officer
Responsibility statement
Directors' responsibility statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for use in the
UK; and
(b) the Interim management report includes a fair review of the
information required by:
(i) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties facing
the Group for the remaining six months of the financial year; and
(ii) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related-party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the Group during that period; and any changes in
the related-party transactions described in the last annual report that could
do so.
By order of the Board:
Olubunmi Likinyo
Company Secretary
22 May 2024
Independent review report to AJ Bell plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 March 2024 is not prepared, in
all material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
March 2024 which comprises the condensed consolidated income statement, the
condensed consolidated statement of financial position, the condensed
consolidated statement of changes in equity, the condensed consolidated
statement of cash flows and the related explanatory notes.
Basis for conclusion
We conducted our review in accordance with Revised International Standard on
Review Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410
(Revised)"). A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410 (Revised), however future events or conditions may cause the
Group to cease to continue as a going concern.
Responsibilities of Directors
The Directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the Directors are responsible
for assessing the 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 Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
22 May 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
Condensed consolidated income statement
For the six months ended 31 March 2024
Notes Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March 2024 31 March 2023 30 September
£000
£000 2023
£000
Revenue 131,254 103,611 218,234
Administrative expenses (72,325) (62,022) (132,014)
Operating profit 58,929 41,589 86,220
Investment income 2,903 801 2,393
Finance costs (436) (487) (952)
Profit before tax 61,396 41,903 87,661
Tax expense 7 (15,446) (9,064) (19,442)
Profit for the period attributable to:
Equity holders of the parent company 45,950 32,839 68,219
Earnings per ordinary share:
Basic (pence) 8 11.16 7.99 16.59
Diluted (pence) 8 11.11 7.96 16.53
All revenue, profit and earnings are in respect of continuing operations.
There were no other components of recognised income or expense in any of the
periods presented and consequently no statement of other comprehensive income
has been presented.
Condensed consolidated statement of financial position
As at 31 March 2024
Assets Notes Unaudited Unaudited Audited
Non-current assets 31 March 2024 £000 31 March 2023 £000 30 September 2023
£000
Goodwill 6,991 6,991 6,991
Other intangible assets 9 7,020 8,871 7,433
Property, plant and equipment 10 3,327 3,548 3,809
Right-of-use assets 10 9,992 11,463 10,800
Deferred tax asset 408 627 484
27,738 31,500 29,517
Current assets
Trade and other receivables 63,351 65,054 58,501
Current tax receivable - 1,395 -
Cash and cash equivalents 161,844 100,040 146,304
225,195 166,489 204,805
Total assets 252,933 197,989 234,322
Liabilities
Current liabilities
Trade and other payables (54,831) (34,374) (52,437)
Current tax liability (2,631) - (151)
Lease liabilities (1,425) (1,613) (1,540)
Provisions 11 (1,109) (1,202) (1,126)
(59,996) (37,189) (55,254)
Non-current liabilities
Lease liabilities (10,197) (11,586) (10,866)
Provisions 11 (2,165) (2,004) (2,165)
(12,362) (13,590) (13,031)
Total liabilities (72,358) (50,779) (68,285)
Net assets 180,575 147,210 166,037
Equity
Share capital 12 52 51 52
Share premium 8,963 8,963 8,963
Own shares (2,072) (582) (2,377)
Retained earnings 173,632 138,778 159,399
Total equity 180,575 147,210 166,037
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2024
Share premium Retained earnings
Share capital £000 Own shares £000 Total equity
£000 £000 £000
Balance at 1 October 2023 52 8,963 (2,377) 159,399 166,037
Total comprehensive income for the period:
Profit for the period - - - 45,950 45,950
Transactions with owners, recorded directly in equity:
Issue of shares (note 12) - - - - -
Dividends paid (note 13) - - - (29,891) (29,891)
Equity-settled share-based payment transactions - - - (1,530) (1,530)
Deferred tax effect of share-based payment transactions (note 7) - - - 9 9
Tax relief on exercise of share options (note 7) - - - - -
Share transfer relating to EIP (note 12) - - 305 (305) -
Total transactions with owners - - 305 (31,717) (31,412)
Balance at 31 March 2024 52 8,963 (2,072) 173,632 180,575
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2024
Share premium Retained earnings
Share capital £000 Own shares £000 Total equity
£000 £000 £000
Balance at 1 October 2022 51 8,930 (473) 124,886 133,394
Total comprehensive income for the period:
Profit for the period - - - 32,839 32,839
Transactions with owners, recorded directly in equity:
Issue of shares - 33 - - 33
Dividends paid - - - (18,893) (18,893)
Equity-settled share-based payment transactions - - - 208 208
Deferred tax effect of share-based payment transactions - - - (31) (31)
Tax relief on exercise of share options - - - 106 106
Share transfer relating to EIP - - 96 (96) -
Payment of tax from employee benefit trust - - - (241) (241)
Own shares acquired - - (205) - (205)
Total transactions with owners - 33 (109) (18,947) (19,023)
Balance at 31 March 2023 51 8,963 (582) 138,778 147,210
Condensed consolidated statement of cash flows
For the six months ended 31 March 2024
Cash flows from operating activities Notes Unaudited Six months ended 31 March 2024 Unaudited Six months ended 31 March 2023 Audited Year ended 30 September 2023
£000
£000
£000
Profit for the period 45,950 32,839 68,219
Adjustments for:
Investment income (2,903) (801) (2,393)
Finance costs 436 487 952
Income tax expense 15,446 9,064 19,442
Depreciation and amortisation 1,690 1,989 4,788
Share-based payment (credit)/expense (595) 435 1,103
(Decrease)/increase in provisions (17) 683 607
Loss on disposal of intangible assets, property, plant and equipment, and 318 11 16
right-of-use assets
Increase in trade and other receivables (4,850) (15,618) (9,065)
Increase in trade and other payables 2,394 18,770 36,833
Cash generated from operations 57,869 47,859 120,502
Income tax paid (12,883) (10,363) (19,092)
Net cash flows from operating activities 44,986 37,496 101,410
Cash flows from investing activities
Purchase of other intangible assets 9 (769) (953) (1,926)
Purchase of property, plant and equipment 10 (431) (758) (1,574)
Interest received 2,903 801 2,393
Net cash from/(used in) investing activities 1,703 (910) (1,107)
Cash flows from financing activities
Payments of principal in relation to lease liabilities (822) (783) (1,576)
Payments of interest on lease liabilities (436) (487) (952)
Proceeds from issue of share capital 12 - 33 34
Purchase of own shares for employee share schemes 12 - (205) (2,000)
Payment of tax from employee benefit trust - (241) (241)
Dividends paid 13 (29,891) (18,893) (33,294)
Net cash used in financing activities (31,149) (20,576) (38,029)
Net increase in cash and cash equivalents 15,540 16,010 62,274
Cash and cash equivalents at beginning of period 146,304 84,030 84,030
Cash and cash equivalents at end of period 161,844 100,040 146,304
Notes to the condensed consolidated financial statements
For the six months ended 31 March 2024
1 General information
AJ Bell plc ('the Company') is the Parent Company of the AJ Bell group of
companies (together 'the Group'). The Group provides investment
administration, dealing and custody services. The Company is a public limited
company which is listed on the Main Market of the London Stock Exchange and
incorporated and domiciled in the United Kingdom. The Company's number is
04503206 and the registered office is 4 Exchange Quay, Salford Quays,
Manchester, M5 3EE
2 Basis of preparation
The condensed consolidated interim financial statements ('interim financial
statements') have been prepared in accordance with IAS 34 'Interim Financial
Reporting' as issued by the IASB and adopted for use in the UK. They do not
include all of the information and disclosures required for full annual
financial statements and therefore should be read in conjunction with the AJ
Bell plc Annual Report and Financial Statements for the year ended 30
September 2023, which were prepared under UK-adopted International Financial
Reporting Standards.
The interim financial statements have been prepared on the historical cost
basis and are presented in sterling, which is the currency of the primary
economic environment in which the Group operates. All amounts have been
rounded to the nearest thousand, unless otherwise stated.
The financial information contained in the interim financial statements does
not constitute statutory accounts within the meaning of section 434 of the
Companies Act 2006. The financial information for the year ended 30 September
2023 has been derived from the audited financial statements of AJ Bell plc for
that year, which have been reported on by the Company's auditor and delivered
to the registrar of companies. The report of the auditor was:
(i) unqualified; and
(ii) did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report; and
(iii) did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The consolidated financial statements of the Group for the year ended 30
September 2023 are available to view online at
ajbell.co.uk/group/investor-relations.
(https://www.ajbell.co.uk/group/investor-relations)
Going concern
The Group's forecasts and objectives, considering a number of potential
changes in trading conditions, show that the Group should be able to operate
at adequate levels of both liquidity and capital for at least 12 months from
the date of signing this report. The Directors have performed a number of
stress tests, covering a significant reduction in equity market values and a
reduction in interest income with a further Group-specific, idiosyncratic
stress relating to a scenario whereby prolonged IT issues cause a reduction in
customers. These provide assurance that the Group has sufficient capital and
liquidity to operate under stressed conditions.
Consequently, after making reasonable enquiries, the Directors are satisfied
that the Group has sufficient financial resources to continue in business for
at least 12 months from the date of signing the interim report and therefore
have continued to adopt the going concern basis in preparing the interim
financial statements.
Changes in accounting policies
The accounting policies adopted by the Group in these interim financial
statements are consistent with those applied by the Group in its consolidated
financial statements for the year ended 30 September 2023.
The following amendments and interpretations became effective during the
period. Their adoption has not had any material impact on the Group.
Effective from
IFRS 17 Insurance Contracts 1 January 2023
IAS 1 Amendments to IAS 1 Disclosure of Accounting Policies and IFRS Practice 1 January 2023
Statement 2
IAS 8 Amendments to IAS 8 Definition of Accounting Estimates 1 January 2023
IAS 12 Amendments to IAS 12 Deferred tax related to Assets and Liabilities arising 1 January 2023
from a Single Transaction
The Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
3 Critical accounting judgements and key sources of estimation uncertainty
In the preparation of the interim financial statements, the Directors are
required to make judgements, estimates and assumptions to determine the
carrying amounts of certain assets and liabilities. The estimates and
associated assumptions are based on the Group's historical experience and
other relevant factors. Actual results may differ from the estimates applied.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
There are no judgements made, in applying the accounting policies, 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.
4 Seasonality of operations
There is a peak in the Group's operational activity around the tax year end.
This impacts the financial results primarily in March and April, either side
of the interim period end. As such, no significant seasonal fluctuations
affect the first or second half of the Group's financial year in isolation.
5 Segmental reporting
It is the view of the Directors that the Group has a single operating segment
being investment services in the advised and D2C space administering
investments in SIPPs, ISAs and General Investment / Dealing Accounts. Details
of the Group's revenue, results and assets and liabilities for the reportable
segment are shown within the condensed consolidated income statement and
condensed consolidated statement of financial position.
The Group operates in one geographical segment, being the UK.
Due to the nature of its activities, the Group is not reliant on any one
customer or group of customers for the generation of revenues.
6 Revenue
The analysis of the consolidated revenue is disclosed within the Financial
Review. The total revenue for the Group has been derived from its principal
activities undertaken in the UK.
7 Taxation
Tax charged in the condensed consolidated income statement:
Unaudited Six months ended 31 March 2024 Unaudited Six months ended 31 March 2023 Audited Year ended 30 September 2023
£000
£000
£000
Current taxation
UK corporation tax 15,360 9,111 19,750
Adjustment to current tax in respect of prior periods - - (346)
15,360 9,111 19,404
Deferred taxation
Origination and reversal of temporary 86 (41) (170)
differences
Adjustment to deferred tax in respect of prior periods - - 341
Effect of changes in tax rates - (6) (133)
86 (47) 38
Total tax expense 15,446 9,064 19,442
Corporation tax for the six months ended 31 March 2024 has been calculated at
25% (six months ended 31 March 2023: 22%; year ended 30 September 2023: 22%),
representing the average annual effective tax rate expected for the full year,
applied to the estimated assessable profit for the six-month period.
In addition to the amount charged to the income statement, certain tax amounts
have been recognised directly in equity as follows:
Unaudited Six months ended 31 March 2024 Unaudited Six months ended 31 March 2023 Audited Year ended 30 September 2023
£000
£000
£000
Deferred tax (credit)/charge relating to share-based payments (9) 31 88
Current tax relief on exercise of share options - (106) (123)
(9) (75) (35)
The charge for the period can be reconciled to the profit per the condensed
consolidated income statement as follows:
Unaudited Six months ended 31 March 2024 Unaudited Six months ended 31 March 2023 Audited Year ended 30 September 2023
£000
£000
£000
Profit before tax 61,396 41,903 87,661
UK corporation tax at 25% (six months ended 31 March 2023: 22%; year ended 30 15,349 9,222 19,293
September 2023: 22%)
Effects of:
Expenses not deductible for tax purposes (268) (298) (22)
Income not taxable in determining taxable profit - - (16)
Amounts not recognised 365 146 325
Effect of tax rate changes to deferred tax - (6) (133)
Adjustments to current and deferred tax in respect of prior periods - - (5)
Total tax expense 15,446 9,064 19,442
Effective tax rate 25.2% 21.6% 22.2%
Deferred tax has been recognised at 25% being the rate expected to be in force
at the time of the reversal of the temporary difference (six months ended 31
March 2023: 25%; year ended 30 September 2023: 25%). A deferred tax asset in
respect of future share option deductions has been recognised based on the
Company's share price at 31 March 2024.
8 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
the owners of the parent company by the weighted average number of ordinary
shares, excluding own shares, in issue during the period.
Diluted earnings per share is calculated by adjusting the weighted average
number of shares to assume exercise of all potentially dilutive share options.
The calculation of basic and diluted earnings per share is based on the
following data:
Unaudited Six months ended 31 March 2024 Unaudited Six months ended 31 March 2023 Audited Year ended 30 September 2023
£000
£000
£000
Earnings
Earnings for the purposes of basic and diluted EPS being profit attributable 45,950 32,839 68,219
to equity holders of the parent company
Unaudited Six months ended 31 March 2024 Unaudited Six months ended 31 March 2023 Audited Year ended 30 September 2023
Number
Number
Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS in 411,731,332 411,091,145 411,242,458
issue during the period
Effect of potentially dilutive share options 1,911,955 1,496,987 1,405,191
Weighted average number of ordinary shares for the purposes of fully diluted 413,643,287 412,588,132 412,647,649
EPS
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 March 31 March 30 September
2024 2023 2023
Earnings per share
Basic (pence) 11.16 7.99 16.59
Diluted (pence) 11.11 7.96 16.53
9 Other intangible assets
Key operating systems Computer Total
software
£000 £000 £000
Carrying amount at 1 October 2022 6,902 1,877 8,779
Additions 953 - 953
Share-based payments (227) - (227)
Amortisation charge (169) (465) (634)
Carrying amount as at 31 March 2023 7,459 1,412 8,871
Additions 966 7 973
Net book value of Disposals - (4) (4)
Share-based payments (986) - (986)
Amortisation and impairment charge (168) (1,253) (1,421)
Carrying amount as at 30 September 2023 7,271 162 7,433
Additions 769 - 769
Share-based payments (937) - (937)
Amortisation charge (197) (48) (245)
Carrying amount as at 31 March 2024 6,906 114 7,020
Additions and share-based payments capitalised as key operating systems relate
to internally generated intangible assets.
The reversal of share-based payments recognised in the period is due to the
lapse of previously issued equity instruments under the earn-out arrangement
(note 14).
10 Changes in capital expenditure
During the six months ended 31 March 2024, the Group acquired plant and
equipment with a cost of £431,000 (six months ended 31 March 2023: £758,000;
year ended 30 September 2023: £1,574,000).
Additions to the cost of right-of-use assets were £36,000 in the six months
ended 31 March 2024 (six months ended 31 March 2023: £21,000; year ended 30
September 2023: £182,000).
Disposals of plant and equipment in the six months ended 31 March 2024 had a
net book value of £318,000 (six months ended 31 March 2023: £nil; six months
ended 30 September 2023: £11,000)
11 Provisions
Office Other Total
dilapidations provisions £000
£000 £000
As at 1 October 2022 2,004 519 2,523
Additional provisions - 810 810
Provisions used - (127) (127)
As at 31 March 2023 2,004 1,202 3,206
Additional provisions 161 - 161
Provisions used - (44) (44)
Unused provision reversed - (32) (32)
As at 1 October 2023 2,165 1,126 3,291
Unused provision reversed - (17) (17)
As at 31 March 2024 2,165 1,109 3,274
Current liabilities - 1,109 1,109
Non-current liabilities 2,165 - 2,165
Office dilapidations
The Group is contractually obliged to reinstate its leased properties to their
original state and layout at the end of the lease terms. The office
dilapidations provision represents management's best estimate of the costs
which will ultimately be incurred in settling these obligations.
Other provisions
The other provisions relate to the settlement of an operational tax dispute,
the costs associated with defending a legal case and compensation required to
settle a small number of disputed claims. There is some uncertainty regarding
the amount and timing of the outflows required to settle the obligations;
therefore a best estimate has been made by assessing a number of different
outcomes considering the potential areas and time periods at risk and any
associated interest. The timings of the outflows are uncertain and could be
paid within 12 months of the date of the statement of financial position,
subject to the timing of a final resolution.
12 Share capital
Unaudited Six months ended 31 March 2024 Unaudited Six months ended 31 March 2023 Audited Year ended 30 September 2023
£
£
£
Issued, fully-called and paid:
Ordinary shares of 0.0125p each 51,626 51,511 51,526
Issued, fully-called and paid: Number Number Number
Number of ordinary shares of 0.0125p each 413,009,978 412,089,436 412,211,306
All ordinary shares have full voting and dividend rights.
The following share transactions have taken place during the period:
Transaction type Share class Number of shares Share premium £000
Exercise of EIP options Ordinary shares of 0.0125p each 81,805 -
Free shares issue Ordinary shares of 0.0125p each 716,867 -
798,672 -
Own shares
As at 31 March 2024, the Group held 718,027 own shares in an employee benefit
trust (31 March 2023: 511,192; 30 September 2023: 1,082,343).
During the period 364,316 EIP options were exercised and issued from the
employee benefit trust.
13 Dividends
The following dividends were declared and paid by the Company during the
period:
Unaudited Six months ended 31 March 2024 Unaudited Six months ended 31 March 2023 Audited Year ended 30 September 2023
£000
£000
£000
Final dividend for the year ended 30 September 2022 of 4.59p per share - 18,893 18,893
Interim dividend for the year ended 30 September 2023 of 3.50p per share - - 14,401
Final dividend for the year ended 30 September 2023 of 7.25p per share 29,891 -
-
Ordinary dividends paid on equity shares 29,891 18,893 33,294
An interim dividend of 4.25 pence per share was approved by the Board on 22
May 2024 and is payable on 28 June 2024 to shareholders on the register at the
close of business on 7 June 2024. The ex-dividend date will be 6 June 2024.
This dividend has not been included as a liability as at 31 March 2024.
The employee benefit trust, which held 718,027 ordinary shares (31 March 2023:
511,192; 30 September 2023: 1,082,343) in AJ Bell plc at 31 March 2024, has
agreed to waive all dividends.
14 Share-based payments
During the period the Group reversed share-based payment expenses of
£595,000, resulting in a credit to the income statement (six months ended 31
March 2023 an expense of: £435,000; year ended 30 September 2023 an expense
of: £1,103,000) and reversed £937,000 of capitalised share-based payment
expense (six months ended 31 March 2023: reversed capitalised amount of
£227,000; year ended 30 September 2023: reversed capitalised amount of
£1,213,000) within the statement of financial position.
The reversal recognised in the period is due to the lapse of previously issued
equity instruments under the earn-out arrangement. The costs of these
instruments had been recognised over the vesting period, but, as they have now
lapsed, the previously recognised costs have been reversed.
The Group operates the same equity-settled share-based payment arrangements as
reported at 30 September 2023 with the exception of the below new scheme
introduced during the period.
Nil Cost Option Plan (NCO)
The NCO is a discretionary scheme in which the Board, at their discretion,
grant options to employees to obtain ordinary shares at nil cost. Options
granted under the NCO can be exercised between the third and tenth anniversary
after the date of grant and are usually forfeited if the employee leaves the
Group before the option expires. The expense for share-based payments under
NCO is recognised over the respective vesting period of these options.
15 Principal risks and uncertainties
We continually review the principal risks and uncertainties facing the Group
which could pose a threat to the delivery of our strategic objectives. The
Board believes that the nature of the principal risks and uncertainties that
may have a material effect on the Group's performance over the remainder of
the financial year remain unchanged from those presented within the 2023
Annual Report and Accounts.
16 Related-party transactions
There were no changes to the related-party relationships or significant
transactions during the financial period that would materially affect the
financial position or performance of the Group. All other transactions are
consistent in nature with the disclosure in note 28 of the consolidated
financial statements for the year ended 30 September 2023.
17 Subsequent events
There have been no material events occurring between the reporting date and
the date of approval of these financial statements.
18 Cautionary statement
The interim results for the six months ended 31 March 2024 contain
forward-looking statements that involve substantial risks and uncertainties,
and actual results and developments may differ materially from those expressed
or implied by these statements. These forward-looking statements are
statements regarding AJ Bell's intentions, beliefs or current expectations
concerning, among other things, its results of operations, financial
condition, prospects, growth, strategies, and the industry in which it
operates. By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future. These forward-looking statements speak
only as of the date of these interim results and AJ Bell does not undertake
any obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date of these interim
results.
Alternative performance measures
Within the interim report and condensed consolidated financial statements,
various Alternative Performance Measures (APM) are referred to. APMs are not
defined by International Financial Reporting Standards and should be
considered together with the Group's IFRS measurements of performance. We
believe APMs assist in providing greater insight into the underlying
performance of the Group and enhance comparability of information between
reporting periods. The table below states those which have been used, how they
have been calculated and why they have been used.
APMs How have they been calculated Why they have been used
Assets Under Administration (AUA) AUA is the value of assets for which AJ Bell provides either an AUA is a measurement of the growth of the business and is the primary driver
administrative, custodial, or transactional service. of ad valorem revenue, which is the largest component of Group revenue.
Revenue margin Revenue margin is the total revenue generated during the year expressed as a Revenue margin provides a simple measurement to facilitate comparison of our
percentage of the average AUA in the year. charges with our competitors.
Assets Under Management (AUM) AUM is the value of assets for which AJ Bell provides a management service. AUM is a measurement of the growth of the business and is a driver of ad
valorem revenue.
Definitions
AUA Assets Under Administration
AUM Assets Under Management
Board, Directors The Board of Directors of AJ Bell plc
Bps Basis points
Company AJ Bell plc
Customer retention rate Relates to platform customers
DEPS Diluted earnings per share
D2C Direct-to-Consumer
Earn-out arrangement Relates to shares awarded in connection with the development of Touch by AJ
Bell, a simplified advised proposition.
EIP Executive Incentive Plan
EPS Earnings per share
ETF Exchange Traded Fund
FCA Financial Conduct Authority
IAS International Accounting Standard
IFRS International Financial Reporting Standards
ISA Individual Savings Account
IPO Initial Public Offering
MPS Managed Portfolio Service
NCO Nil Cost Option
OCF Ongoing Charges Figure
Own Shares Shares held by the Group to satisfy future incentive plans
PBT Profit before tax
Plc Public Limited Company
Ppts Percentage points
SIPP Self-Invested Personal Pension
UK United Kingdom
Company information
Executive Directors Michael Summersgill
Peter Birch
Roger Stott
Non-Executive Directors Fiona Clutterbuck
Evelyn Bourke
Eamonn Flanagan
Fiona Fry (appointed on 7 December 2023)
Margaret Hassall
Simon Turner (stepped down on 31 March 2023)
Les Platts
Company Secretary Olubunmi Likinyo
Company number 04503206
Registered office 4 Exchange Quay
Salford Quays
Manchester
M5 3EE
Auditor BDO LLP
55 Baker Street
London
W1U 7EU
Principal banker Bank of Scotland plc
The Mound
Edinburgh
EH1 1YZ
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