TIDMAJB
RNS Number : 9495Z
AJ Bell PLC
27 May 2021
27 May 2021
AJ Bell plc
Interim results for the six months ended 31 March 2021
AJ Bell plc ('AJ Bell' or the 'Company'), one of the UK's
largest investment platforms, today announces interim results for
the six-month period ended 31 March 2021.
Performance overview
-- Revenue up 21% to GBP73.9 million (HY20: GBP60.9 million)
-- Profit before tax (PBT) up 39% to GBP31.6 million (HY20:
GBP22.7 million)
-- PBT margin up 5.6 percentage points to 42.8% (HY20: 37.2%)
-- Balance sheet strengthened, with net assets up 8% in the
period to GBP117.9 million
-- Interim dividend of 2.46 pence per share, in line with the
Company's dividend policy (HY20: 1.50 pence per share)
-- Total customers increased by a record 51,492 in the period,
up 32% over the last 12 months and 17% in the first half
of the current financial year
-- Total net inflows of GBP3.1 billion (HY20: GBP2.1 billion),
driven by platform net inflows of GBP3.3 billion (HY20: GBP2.5
billion)
-- Assets under administration (AUA) up 35% over the last 12
months and 15% in the first half of the current financial
year, closing at GBP65.2 billion
-- Assets under management (AUM) up 180% over the last 12 months
and 75% in the first half of the current financial year,
closing at GBP1.4 billion
-- Customer retention rate remained high at 94.8% (FY20: 95.5%)
Andy Bell, Chief Executive Officer at AJ Bell, commented:
"We have delivered a strong financial performance in the first
half of the year, driven by record levels of new customers, inflows
and dealing activity, with revenue up 21% and profit before tax up
39%.
"The average age of our new direct-to-consumer customers was 38
in the first half of the year, five years younger than the average
of the wider customer base. Average portfolio values remained high
at GBP79,000. Our record number of new customers has been helped by
the low interest rate environment, as savers seek higher returns on
cash held in savings accounts and Cash ISAs.
"Our advised platform proposition remains very popular with
advisers, who appreciate the wider adoption of digital processes to
support their remote working and the highly competitive charging
structure. The recent acquisition of Adalpha will accelerate the
development of a new mobile-focused platform to enhance our advised
proposition and enable advisers to service a wider range of
clients.
"Our investment business has performed extremely well,
supporting both our advised and direct-to-consumer platform
propositions, with total AUM increasing by 75% in the first half of
the year. The recent additions of the AJ Bell Responsible Growth
fund and Responsible Managed Portfolio service to our suite of
investment solutions have proved very popular with customers and
advisers.
" We have a resilient business model, our financial position is
strong, we continue to grow market share and the outlook for the
business remains positive."
Financial highlights
Six months ended Six months ended
31 March 2021 31 March 2020 Change
Revenue GBP73.9 million GBP60.9 million 21%
----------------- ----------------- --------
Revenue per GBPAUA* 24.0bps 23.2bps 0.8bps
----------------- ----------------- --------
PBT GBP31.6 million GBP22.7 million 39%
----------------- ----------------- --------
PBT margin 42.8% 37.2% 5.6ppts
----------------- ----------------- --------
Diluted earnings per
share 6.26 pence 4.36 pence 44%
----------------- ----------------- --------
Interim dividend per
share 2.46 pence 1.50 pence 64%
----------------- ----------------- --------
Non-financial highlights
Year ended
Six months ended 30 September
31 March 2021 2020 Change
Number of retail customers 346,797 295,305 17%
----------------- ---------------- ----------
- Platform 332,276 281,094 18%
----------------- ---------------- ----------
- Non-platform 14,521 14,211 2%
----------------- ---------------- ----------
AUA* GBP65.2 billion GBP56.5 billion 15%
----------------- ---------------- ----------
- Platform GBP58.0 billion GBP49.7 billion 17%
----------------- ---------------- ----------
- Non-platform GBP7.2 billion GBP6.8 billion 6%
----------------- ---------------- ----------
AUM* GBP1.4 billion GBP0.8 billion 75%
----------------- ---------------- ----------
Customer retention rate 94.8% 95.5% (0.7ppts)
----------------- ---------------- ----------
*see Alternative Performance Measures below
Contacts:
AJ Bell
+44 (0) 7522 235
-- Shaun Yates, Head of Investor Relations 898
+44 (0) 7834 499
-- Charlie Musson, Head of PR 554
Analyst presentation details
A recorded Q&A with Andy Bell (CEO) and Michael Summersgill
(CFO) discussing these results will be available on our website (
ajbell.co.uk/investor-relations ) along with an accompanying
investor presentation from 07.00 BST today. Management will be
hosting a Q&A video call for sell-side analysts at 09:15 BST
today. Those wishing to participate should register their interest
with Shaun Yates by emailing ir@ajbell.co.uk .
Forward-looking statements
The interim 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 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 the interim results.
Chief Executive Officer's report
We delivered a strong financial performance in the first half of
the year, driven by record levels of new customers, inflows and
dealing activity. As more and more people look to take control of
their financial future, whether directly or via an adviser, we
remain focused on providing a high-quality service at a low cost
through our award-winning, easy-to-use platform.
Overview
We delivered strong organic growth in the six-month period to 31
March 2021, with revenue increasing by 21% to GBP73.9m (HY20:
GBP60.9m) and profit before tax (PBT) rising by 39% to GBP31.6m
(HY20: GBP22.7m). Retail customers grew by a record 51,492 during
the period to 346,797 (FY20: 295,305), an increase of 17%. The
increase was driven by significant growth in the platform business,
with our retention rate remaining high at 94.8%.
We delivered record net AUA inflows of GBP3.1bn (HY20: GBP2.1bn)
in the first half of the year, with AUA closing at GBP65.2bn (FY20:
GBP56.5bn). The strong performance across global markets during the
period led to favourable market movements of GBP5.6bn.
We operate a profitable, well-capitalised and highly
cash-generative business model. We have not participated in any of
the Government's financial support schemes during the COVID-19
pandemic and none of our people were furloughed. I am pleased to
announce that we will pay an interim dividend of 2.46 pence per
share.
Strategic update
We remain focused on our core purpose, to help people to invest.
Fundamental to this is our ability to innovate and continuously
enhance our platform propositions to support the investment needs
of our growing customer base.
Advised proposition
Customer numbers grew by 9,598 during the period to 118,509
(FY20: 108,911), an increase of 9%. Net inflows of GBP1.7bn in the
period resulted in closing AUA of GBP41.1bn.
During the period we continued to support advisers online with
the increasing use of digital processes and virtual engagement
channels, whilst providing our very popular 'Off the Road' webinars
remotely.
Financial advisers increasingly need a variety of solutions to
meet the diverse range of clients' needs and we continue to
develop, adapt and simplify our propositions for the benefit of our
customers and their advisers.
The introduction of our Retirement Investment Account (RIA), our
simplified pension proposition, designed to meet the needs of
advised customers with pension portfolios under GBP250,000,
continues to be well received following its launch last year. The
addition of the RIA to our existing product range ensures we are
highly competitive on service and price across all client scenarios
and portfolio sizes.
In March 2021, we successfully completed the acquisition of the
Adalpha group of companies. Adalpha is currently developing a
mobile-focused platform proposition, which will be known as Touch
by AJ Bell. This will complement our advised proposition and
further broaden our offering to financial advisers, helping them to
service a wider base of clients.
D2C (direct-to-consumer) proposition
Customer numbers grew by 41,584 during the period to 213,767
(FY20: 172,183), an increase of 24%. Net inflows of GBP1.6bn in the
period, resulted in closing AUA of GBP16.9bn.
We continue to see an increase in applications from younger and
less experienced investors, as a growing number of people look to
take control of their financial future and seek to generate better
returns in a low-interest-rate environment. AJ Bell Youinvest
offers our customers an award-winning platform proposition, with
access to global stock markets and a range of investment solutions
to suit different risk appetites.
High levels of customer engagement have continued throughout the
period, with a higher number of customers dealing via our mobile
app. We have seen a year-on-year increase in dealing activity and
increased demand for dealing in US equities, across our different
account types.
We continue to develop our online dealing service and, in
response to customer feedback, launched live portfolio pricing in
January 2021 allowing users to view real-time prices for UK shares
in their portfolio, during market hours.
As I outlined last year, the launch of our Cash savings hub in
September 2020 means we can now cater for our customers' cash
saving requirements as well as their investment needs. Our
customers have access to a range of competitive notice and
fixed-term savings accounts from UK authorised banks. Our Cash
savings hub offers customers greater choice and flexibility, making
it easy to generate better returns from long-term cash savings. We
anticipate growing levels of customer engagement as interest rates
increase over the longer term.
AJ Bell Investments
We have seen significant growth across our range of investment
solutions, with total AUM increasing by 75% to GBP1.4bn in the
first half of the year.
This growth was driven by increased demand for our simple,
transparent, low-cost investment solutions from both advisers and
D2C customers, as we maintain a strong three-year track record of
performance across our range of active and passive portfolios.
We continued to see an increasing level of demand for investment
solutions which place a greater emphasis on environmental, social
and governance (ESG) factors. In October 2020, we launched the AJ
Bell Responsible Growth fund, a well-diversified portfolio
favouring companies with strong ESG credentials. The fund provides
a low-cost, easy-to-understand responsible investing option for
both our advised and D2C customers. This was supplemented by the
launch of the AJ Bell Responsible MPS range in March 2021,
providing advisers with a highly-competitive ESG solution for their
clients. It is managed by our investment team, with the objective
of long-term growth, combined with a wider social and environmental
benefit.
Customer services and technology
We continue to invest in technology to enhance our platform
propositions and operational resilience, in line with the growth of
our business.
Following Board approval in September 2020, we commenced our
transition to a hybrid cloud-based technology framework. This will
provide a more efficient environment to accelerate the delivery of
our change programme to support our strategic aim to become the
easiest platform to use.
Our secure and scalable platform has been designed to facilitate
the continued growth in the business and during the first six
months we welcomed a record number of new retail customers onto our
platform and executed a record number of deals on behalf of our
customers.
During the period, and as referenced in our latest Annual
Report, the announcement of two significant events on a single day
in November 2020, the development of a vaccine for COVID-19 and the
outcome of the US election, led to an exceptional spike in activity
across the market. This resulted in intermittent service issues
over a few hours on that day. We subsequently carried out an
extensive and detailed root-cause analysis and have taken a number
of actions which have prevented any recurrence. Additionally, we
have also accelerated work on our operational resilience strategy
to further enhance the resilience of our platform.
We have continued to operate successfully within the COVID-19
environment and our customer services and operations teams have
worked incredibly hard to meet the needs of our growing customer
base.
People and culture
Our investment in technology has enabled the vast majority of
our people to work remotely since the start of the pandemic and has
resulted in a new and successful way of working. None of our staff
were furloughed and we have continued to recruit new talent to
support the continued growth in the business.
We have maintained our training and personal development
programmes and have put systems in place to ensure employees feel
secure and supported both in the office and whilst working at home.
We recognise the benefits of the current working patterns and will
consider the continued adoption of a hybrid approach to office and
home working over the longer-term, as we emerge from current
restrictions.
Our Wage War on COVID campaign continues to distribute funds to
support those in need as a result of the pandemic. As part of our
AJ Bell Easter Eats campaign, volunteers from our Manchester office
supported FareShare, the UK's largest food redistribution charity,
to distribute over 4,800 food hampers to local families. The food
hampers also included a holiday activity pack from children's
mental health charity Place2Be, which was awarded the naming rights
of the North Stand at the AJ Bell Stadium in November 2020.
Regulatory developments
During the period we have continued to engage with the
Government and the FCA on changes to the legislative and regulatory
framework that we operate within.
The low level of retirement savings remains a significant
challenge and now, more than ever, we need the Government to
promote stability in the UK pensions system so that people can
invest for their own retirement with confidence. We are encouraged
that no changes were made to the tax relief available for pension
contributions in the recent Budget and believe the focus should be
firmly on encouraging more people to save for their financial
future.
In February 2021, I co-wrote an open letter to HM Treasury,
which called for a Government consultation into retail investors'
access to participate in UK IPOs. Individual investors are
currently disadvantaged in favour of city institutions, and,
despite growing demand, were excluded from 93% of new share
listings between 2017 and 2020. Our platform propositions are well
equipped to provide quick and easy access to IPOs for retail
investors and I look forward to further discussion with the
Treasury.
In line with the final phase of the FCA's Retirement Outcomes
Review, investment pathways were introduced in February 2021 for
non-advised customers entering drawdown. We support the intention
of investment pathways to encourage investors to engage with their
portfolios, however we remain sceptical that default investments
will resolve the issues around investors holding cash in their
pension portfolios.
The FCA remains focused on ensuring the UK financial sector is
operationally resilient for consumers, firms and financial markets.
In March 2021, we welcomed the publication of the Policy Statement
'PS21/3 Building Operational Resilience', which outlines a series
of either new or enhanced requirements that firms need to meet
ahead of 31 March 2022.
Board appointments
I am delighted to announce two Board appointments during the
period. Baroness Helena Morrissey and Evelyn Bourke have been
appointed as Non-Executive Directors and will join the Board on 1
July 2021. Helena will join the Board as Chair Designate and will
succeed Les Platts, who will have served on the Board for 13 years.
Les will step down as Chair at the Company's next Annual General
Meeting, which is expected to take place in January 2022.
Helena and Evelyn bring with them a wealth of knowledge and
experience in the financial services sector. Their appointments
will further strengthen the diversity and skillset of our Board as
we progress our ambitious growth plans.
Dividend
Our strong balance sheet and robust liquidity position support
both ongoing investment in the business and continuing returns to
shareholders. The Board therefore recommends an interim dividend of
2.46 pence per share.
The Board recognises the importance that our investors place on
AJ Bell's progressive dividend history and remains committed to
this and our stated dividend policy for future dividend
distributions.
Outlook
At AJ Bell, our core purpose is to help people to invest and we
continue to develop our platform propositions and range of simple
investment solutions to make investing easier for our
customers.
We have delivered a strong set of results in the first half of
the year, with our award-winning, competitively-priced propositions
attracting record levels of new customers and AUA inflows. The
platform market continues to grow at pace in both the advised and
D2C segments, and there is a growing awareness of the importance of
investing for the future . Our secure, scalable and resilient
platform ensures we continue to be well placed to capitalise on the
resulting opportunities.
We expect to be operating in a low-interest-rate environment for
the foreseeable future, as the UK and global economies recover from
the COVID-19 pandemic. While we expect to see some normalisation of
trading activity, our balanced revenue model provides resilience
during times of market volatility and low interest rates.
The future for the business remains positive. We have a robust
business model, with a track record of delivering strong organic
growth and increasing market share.
Andy Bell
Chief Executive Officer
Financial review
The Group delivered strong growth in the first half of the year,
with revenue up 21% from GBP60.9m to GBP73.9m and PBT increasing by
39% from GBP22.7m to GBP31.6m. The strong performance was primarily
due to the continued success of our platform propositions.
Business performance
Customers
Customer numbers increased by a record 51,492 during the period
to a total of 346,797. This growth has been driven by our platform
propositions, with particularly strong customer acquisition on our
D2C platform. In addition, our platform customer retention rate
remained high at 94.8% (FY20: 95.5%).
Six months ended Six months ended
31 March 31 March
2021 2020
Platform 332,276 248,074
Non-platform 14,521 14,105
-------------- ---------------- ----------------
Total 346,797 262,179
-------------- ---------------- ----------------
Assets Under Administration (AUA)
Six months ended 31 March 2021
Advised D2C Total
platform platform platform Non-platform Total
GBPbn GBPbn GBPbn GBPbn GBPbn
--------------------------- -------- -------- -------- ------------ -----
As at 1 October 2020 36.3 13.4 49.7 6.8 56.5
--------------------------- -------- -------- -------- ------------ -----
Inflows 2.8 2.2 5.0 0.1 5.1
Outflows (1.1) (0.6) (1.7) (0.3) (2.0)
--------------------------- -------- -------- -------- ------------ -----
Net inflows/(outflows) 1.7 1.6 3.3 (0.2) 3.1
--------------------------- -------- -------- -------- ------------ -----
Market and other movements 3.1 1.9 5.0 0.6 5.6
--------------------------- -------- -------- -------- ------------ -----
As at 31 March 2021 41.1 16.9 58.0 7.2 65.2
--------------------------- -------- -------- -------- ------------ -----
Six months ended 31 March 2020
Advised D2C Total
platform platform platform Non-platform Total
GBPbn GBPbn GBPbn GBPbn GBPbn
--------------------------- -------- -------- -------- ------------ -----
As at 1 October 2019 33.8 11.1 44.9 7.4 52.3
--------------------------- -------- -------- -------- ------------ -----
Inflows 2.4 1.4 3.8 - 3.8
Outflows (0.9) (0.4) (1.3) (0.4) (1.7)
--------------------------- -------- -------- -------- ------------ -----
Net inflows/(outflows) 1.5 1.0 2.5 (0.4) 2.1
--------------------------- -------- -------- -------- ------------ -----
Market and other movements (3.9) (1.5) (5.4) (0.7) (6.1)
--------------------------- -------- -------- -------- ------------ -----
As at 31 March 2020 31.4 10.6 42.0 6.3 48.3
--------------------------- -------- -------- -------- ------------ -----
We continued to see significant growth in the level of AUA
inflows across both our advised and D2C platform propositions, with
total platform inflows increasing by 32% to GBP5.0bn, compared to
GBP3.8bn in the same period last year.
The GBP0.2bn non-platform net outflows in the period were
primarily due to the loss of an institutional stockbroking client
and were in line with our expectations for the period.
The strong performance across global markets contributed
GBP5.6bn to asset values with AUA closing at GBP65.2bn at 31 March
2021, an overall increase of 15% in the period.
Financial performance
Revenue
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
--------------------- ----------------- ----------------- ------------
Recurring fixed 14,050 13,395 26,618
Recurring ad valorem 37,917 35,978 72,422
Transactional 21,930 11,503 27,709
--------------------- ----------------- ----------------- ------------
Total 73,897 60,876 126,749
--------------------- ----------------- ----------------- ------------
Revenue increased by 21% to GBP73.9m (HY20: GBP60.9m). We have
three categories of revenue, these being: recurring fixed fees,
recurring ad valorem fees and transactional fees.
Revenue from recurring fixed fees saw an increase of 5% to
GBP14.1m (HY20: GBP13.4m), primarily as a result of increased
pension administration revenue from our advised platform
customers.
Recurring ad valorem revenue grew by 5% to GBP37.9m (HY20:
GBP36.0m). The key driver of the growth in ad valorem revenue was
the increase in average AUA, which was partially offset by a lower
interest rate earned on customer cash balances in the period.
Revenue from transactional fees grew by 91% to GBP21.9m (HY20:
GBP11.5m). This increase was driven by the strong growth in D2C
customers, elevated levels of customer dealing throughout the
period and a higher proportion of deals placed in international
equities.
Our overall revenue margin increased by 0.8bps from 23.2bps to
24.0bps in the period, primarily due to the increased transactional
revenues noted above.
Administrative expenses
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
------------------------ ----------------- ----------------- ------------
Distribution 5,402 5,517 10,245
Technology 11,482 9,784 20,027
Operational and support 24,978 21,115 45,646
CSR initiative - 1,595 1,595
------------------------ ----------------- ----------------- ------------
Total 41,862 38,011 77,513
------------------------ ----------------- ----------------- ------------
Administrative expenses increased by 10% to GBP41.9m (HY20:
GBP38.0m). We have three core categories of administrative
expenses: distribution, technology, and operational and support
.
Distribution costs remained broadly flat at GBP5.4m, with a
higher number of customers acquired by word of mouth and increased
brand awareness.
Technology costs increased by 17% to GBP11.5m (HY20: GBP9.8m).
This increase reflects the continued investment in the scalability
and resilience of the platform, to support our continuing
growth.
Operational and support costs increased by 18% to GBP25.0m
(HY20: GBP21.1m). Excluding the costs associated with the customer
dealing activity referenced in the revenue section, the underlying
increase was 5% in support of the longer-term growth of the
business.
Our 2020 share-based payment expense included a one-off charge
of GBP1.6m relating to the CSR initiative announced in December
2019.
While we do not anticipate a material change in our underlying
cost base, administrative expenses in the second half of the year
are expected to include additional costs in the region of GBP3m
relating to Adalpha and then GBP3m-GBP4m in FY22.
Profit before tax (PBT)
PBT rose to GBP31.6m (HY20: GBP22.7m), an increase of 39%
compared with the prior period, and our PBT margin increased to
42.8% (HY20: 37.2%). This was due to the continued growth in the
business and higher revenue margins.
Tax
The effective rate of tax for the period was 18.7% (HY20:
21.2%), slightly lower than the standard rate of UK Corporation tax
of 19.0 %, as a result of allowable deductions relating to employee
share schemes.
Earnings per share
Basic earnings per share increased by 44% to 6.29 pence and
diluted earnings per share (DEPS) increased by 44% to 6.26 pence.
The increase in DEPS was higher than the 39% increase in PBT due to
a change in the effective tax rate in the period, as discussed
above.
Financial position
Capital and liquidity
The Group's financial position remains strong, with net assets
totalling GBP117.9m (HY20: GBP93.3m) at 31 March 2021 and a return
on assets of 22% (HY20: 19%).
We operate a highly cash-generative business, with a short
working-capital cycle that ensures PBT is quickly converted into
cash. Our period end balance sheet included cash balances of
GBP80.6m.
Our regulatory capital requirements are continually kept under
review, incorporating comprehensive stress and scenario testing,
and are formally reviewed at least annually. We have maintained a
healthy surplus over our regulatory capital requirement throughout
the period.
Acquisition of Adalpha
On 18 March 2021, AJ Bell plc acquired Adalpha, which is
currently developing a simplified mobile-focused platform
proposition for financial advisers.
Given the proximity of the acquisition to the reporting date,
the acquisition has had minimal impact on the Group's first half
results. Costs incurred in the period relate to the costs incurred
in the development of the simplified advised platform
proposition.
On acquisition, the Group recognised an intangible asset of
GBP1.1m, relating to the development of the simplified advised
platform proposition, and goodwill of GBP3.3m. Further details can
be found within note 7.
Dividend
The Board has recommended an interim dividend of 2.46 pence per
share (HY20: 1.50 pence per share), representing 40% of the FY20
total ordinary dividend of 6.16 pence per share, in line with our
dividend policy.
The recommended interim dividend reflects the financial strength
of the business, as evidenced by our well-capitalised, profitable
and highly cash-generative business model .
Michael Summersgill
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 International Accounting Standard 34 'Interim
Financial Reporting' (IAS 34) as adopted by the European Union
(EU); 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:
Christopher Bruce Robinson
Company Secretary
26 May 2021
Independent review report to AJ Bell plc
Introduction
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 2021, 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.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and
has been approved by the 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.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting", as adopted by the
European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity', issued by the Financial Reporting Council for use
in the United Kingdom. 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.
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 2021 is not prepared, in all material respects, in accordance
with International Accounting Standard 34, as adopted by the
European Union, and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with 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
26 May 2021
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 2021
Unaudited Audited Year
Six months Unaudited ended
ended 31 March Six months 30 September
2021 ended 31 March 2020
Notes GBP000 2020 GBP000 GBP000
Revenue 73,897 60,876 126,749
Administrative expenses (41,862) (38,011) (77,513)
--------------- --------------- -------------
Operating profit 32,035 22,865 49,236
Investment income 6 219 162
Finance costs (398) (433) (848)
--------------- --------------- -------------
Profit before tax 31,643 22,651 48,550
=============== =============== =============
Tax expense 8 (5,926) (4,794) (9,721)
--------------- --------------- -------------
Profit for the period attributable
to:
Equity holders of the parent
company 25,717 17,857 38,829
--------------- --------------- -------------
Earnings per ordinary share:
Basic (pence) 9 6.29 4.38 9.51
Diluted (pence) 9 6.26 4.36 9.47
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 2021
Notes Audited 30
Unaudited Unaudited September
Assets 31 March 31 March 2020
Non-current assets 2021 GBP000 2020 GBP000 GBP000
Goodwill 6,991 3,660 3,660
Other intangible assets 10 4,350 2,189 1,986
Property, plant and equipment 11 3,426 3,387 3,224
Right-of-use assets 11 13,650 15,421 14,522
Deferred tax asset 797 551 1,003
------------ ------------ ----------
29,214 25,208 24,395
------------ ------------ ----------
Current assets
Trade and other receivables 39,727 37,172 30,561
Cash and cash equivalents 80,596 60,816 86,384
------------ ------------ ----------
120,323 97,988 116,945
------------ ------------ ----------
Total assets 149,537 123,196 141,340
------------ ------------ ----------
Liabilities
Current liabilities
Trade and other payables (11,577) (10,178) (12,368)
Current tax liabilities (1,200) (32) (17)
Lease liabilities (1,404) (1,416) (1,323)
Provisions 12 (1,570) (1,095) (1,595)
------------ ------------ ----------
(15,751) (12,721) (15,303)
------------ ------------ ----------
Non-current liabilities
Lease liabilities (14,292) (15,674) (15,022)
Provisions 12 (1,549) (1,550) (1,549)
------------ ------------ ----------
(15,841) (17,224) (16,571)
------------ ------------ ----------
Total liabilities (31,592) (29,945) (31,874)
------------ ------------ ----------
Net assets 117,945 93,251 109,466
============ ============ ==========
Equity
Share capital 13 51 51 51
Share premium 8,647 8,383 8,459
Own shares (1,037) (1,147) (1,147)
Retained earnings 110,284 85,964 102,103
------------ ------------ ----------
Total equity 117,945 93,251 109,466
------------ ------------ ----------
The condensed consolidated financial statements were approved by
the Board of Directors and authorised for issue on 26 May 2021 and
signed on its behalf by:
Michael Summersgill
Chief Financial Officer
AJ Bell plc
Company registered number: 04503206
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2021
Retained
Share capital Share premium Own shares earnings Total equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 October 2020 51 8,459 (1,147) 102,103 109,466
Total comprehensive income
for the period:
Profit for the period - - - 25,717 25,717
Transactions with owners,
recorded directly in equity:
Issue of shares - 188 - - 188
Dividends paid - - - (19,070) (19,070)
Equity-settled share-based
payment transactions - - - 1,656 1,656
Deferred tax effect of share-based
payment transactions - - - (228) (228)
Tax relief on exercise of
share options - - - 216 216
Employee share transfer - - 110 (110) -
------------- ------------- ---------- --------- ------------
Total transactions with owners - 188 110 (17,536) (17,238)
------------- ------------- ---------- --------- ------------
Balance at 31 March 2021 51 8,647 (1,037) 110,284 117,945
------------- ------------- ---------- --------- ------------
Retained
Share capital Share premium Own shares earnings Total equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 October 2019 51 7,667 (1,147) 79,136 85,707
Total comprehensive income
for the period:
Profit for the period - - - 17,857 17,857
Transactions with owners,
recorded directly in equity:
Issue of shares - 716 - - 716
Dividends paid - - - (13,601) (13,601)
Equity-settled share-based
payment transactions - - - 2,352 2,352
Deferred tax effect of share-based
payment transactions - - - (623) (623)
Tax relief on exercise of
share options - - - 843 843
Total transactions with owners - 716 - (11,029) (10,313)
------------- ------------- ---------- --------- ------------
Balance at 31 March 2020 51 8,383 (1,147) 85,964 93,251
------------- ------------- ---------- --------- ------------
Condensed consolidated statement of cash flows
For the six months ended 31 March 2021
Unaudited Unaudited Audited Year
Six months Six months ended 30
ended 31 March ended 31 March September
2021 2020 2020
Cash flows from operating activities Notes GBP000 GBP000 GBP000
Profit for the period 25,717 17,857 38,829
Adjustments for:
Investment income (6) (219) (162)
Finance costs 398 433 848
Income tax expense 5,926 4,794 9,721
Depreciation and amortisation 2,035 1,807 3,574
Share-based payment expense 1,277 2,352 3,364
(Decrease)/increase in provisions
and other payables (25) - 499
Loss on disposal of property,
plant and equipment - 1 1
Profit on disposal of right-of-use
assets (3) - -
Increase in trade and other receivables (9,154) (14,236) (7,644)
(Decrease)/increase in trade
and other payables (2,535) 295 2,485
--------------- --------------- ------------
Cash generated from operations 23,630 13,084 51,515
Income tax paid (4,766) (6,720) (11,827)
Interest expense paid (1) - -
--------------- --------------- ------------
Net cash flows from operating
activities 18,863 6,364 39,688
--------------- --------------- ------------
Cash flows from investing activities
Purchase of other intangible
assets 10 (1,413) (63) (201)
Purchase of property, plant and
equipment 11 (732) (489) (856)
Purchase of right-of-use assets - (9) -
Acquisition of subsidiary, net
of cash acquired 7 (2,561) - -
Proceeds from sale of property,
plant and equipment - 2 3
Interest received 6 218 180
--------------- --------------- ------------
Net cash used in investing activities (4,700) (341) (874)
--------------- --------------- ------------
Cash flows from financing activities
Payments of principal in relation
to lease liabilities (672) (956) (1,708)
Payments of interest on lease
liabilities (397) (433) (848)
Proceeds from issue of shares 188 716 792
Dividends paid 14 (19,070) (13,601) (19,733)
--------------- --------------- ------------
Net cash used in financing activities (19,951) (14,274) (21,497)
--------------- --------------- ------------
Net (decrease)/increase in cash
and cash equivalents (5,788) (8,251) 17,317
Cash and cash equivalents at
beginning of period 86,384 69,067 69,067
--------------- --------------- ------------
Cash and cash equivalents at
end of period 80,596 60,816 86,384
--------------- --------------- ------------
Notes to the condensed consolidated financial statements
For the six months ended 31 March 2021
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 International Accounting Standard 34 'Interim Financial
Reporting' (IAS 34) as adopted by the European Union (EU). 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 2020, which were
prepared under International Financial Reporting Standards (IFRSs)
as adopted by the EU and the Companies Act 2006.
The interim financial statements have been prepared on the
historical cost basis and are presented in pounds 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 2020 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 2020 are available to view online at
ajbell.co.uk/investor-relations.
Going concern
The Group's forecasts and objectives, taking into account a
number of potential changes in trading performance, show that the
Group should be able to operate at adequate levels of both
liquidity and capital for the foreseeable future. The Directors
have performed a number of stress tests, covering a significant
reduction in equity market values and negative Bank of England base
interest rates 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.
As a consequence, the Directors believe that the Group has
sufficient resources to continue in operation for a period of at
least 12 months from the date of approval of these interim
financial statements. Accordingly, they have continued to adopt the
going concern basis in preparing the interim financial
statements.
Significant 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 2020, except for:
-- an update to the share-based payment accounting policy (see below).
The following amendments and interpretations became effective
during the year. Their adoption has not had any significant impact
on the Group.
Effective from
IFRS 16 Covid-19-Related Rent Concessions 1 June 2020
(Amendment)
IFRS 9, IAS Interest Rate Benchmark Reform (Amendments) 1 January 2020
39 and IFRS
7
IAS 1 and IAS Definition of Material (Amendments) 1 January 2020
8
IFRS 3 Definition of a Business (Amendments) 1 January 2020
Amendments to References to the Conceptual Framework 1 January 2020
in IFRS Standards
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Effective from
IFRS 17 Insurance Contracts 1 January 2023
The accounting policies have been updated as follows.
The share-based payment accounting policy has been updated to
include a new equity-settled share-based payment arrangement
introduced during the period, as described in note 15.
Share-based payments
The Group operates a number of share-based payment arrangements
for its employees and non-employees. These generally involve an
award of share options (equity-settled share-based payments) which
are measured at the fair value of the equity instrument at the date
of grant.
The share-based payment arrangements have conditions attached
before the beneficiary becomes entitled to the award. These can be
performance and/or service conditions.
The total cost is recognised, together with a corresponding
increase in the equity reserves, over the period in which the
performance and/or service conditions are fulfilled. Costs relating
to the development of internally generated intangible assets are
capitalised in accordance with IAS 38. The cumulative cost
recognised for equity-settled transactions at each reporting date
until the vesting date reflects the extent to which the vesting
period has expired and management's estimate of shares that will
eventually vest. At the end of each reporting period, the entity
revises its estimates of the number of share options expected to
vest based on the non-market vesting conditions. It recognises any
revision to original estimates in the income statement, with a
corresponding adjustment to equity reserves.
No cost is recognised for awards that do not ultimately vest,
except for equity-settled transactions for which vesting is
conditional upon a market or non-vesting condition. These are
treated as vested irrespective of whether or not the market or
non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
The cost of equity-settled awards is determined by the fair
value at the date when the grant is made using an appropriate
valuation model or the market value discounted to its net present
value, further details of which are given in note 15. The expected
life applied in the model has been adjusted based on management's
best estimate for the effects of non-transferability, exercise
restrictions and behavioural considerations. Following the listing
of AJ Bell plc in December 2018, share price volatility has been
estimated as the average volatility applying to a comparable group
of listed companies.
3 Accounting judgements and estimates
The preparation of the interim financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on
historical experience and other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making judgements about carrying value of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The judgements, estimates and assumptions made 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 2020.
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: 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 Business combinations
On 18 March 2021, AJ Bell plc acquired the entire issued share
capital of Whiztec Limited and its wholly-owned subsidiary Ad Alpha
Solutions Limited ('Adalpha'). Adalpha is an early-stage start-up
business currently developing a simplified, mobile-focused platform
proposition for advisers.
The acquisition will complement the Group's existing adviser
platform business, AJ Bell Investcentre, and will broaden the
offering to financial advisers and help them service a wider base
of clients.
The consideration for the acquisition of Whiztec Limited was in
the form of an earn-out arrangement, conditional upon completion of
a number of operational and financial milestones. The maximum
consideration payable is GBP16.5m and will be satisfied by the
issue of shares in AJ Bell plc. This consideration is accounted for
as post-combination remuneration in accordance with IFRS 3, for
which further details are included within note 15.
Whiztec Limited acquired Ad Alpha Solutions Limited on the same
day for consideration of GBP2.6m, comprising GBP2.6m cash together
with a share-for-share exchange for the management team for nominal
value shares in Whiztec Limited.
The purchase has been accounted for as a business combination
under the acquisition method in accordance with IFRS 3. The fair
value of the identifiable assets and liabilities of Adalpha as at
the date of acquisition was as follows:
Fair value Fair value
Book value adjustments on acquisition
GBP000 GBP000 GBP000
Intangible assets - 1,142 1,142
Deferred tax liability (arising
on intangible assets) - (217) (217)
---------- ------------------ -------------------
- 925 925
Property, plant and equipment 37 - 37
Trade and other receivables 12 - 12
Cash and cash equivalents 56 - 56
---------- ------------------ -------------------
Total assets 105 925 1,030
---------- ------------------ -------------------
Trade and other payables (1,744) - (1,744)
---------- ------------------ -------------------
Total liabilities (1,744) - (1,744)
---------- ------------------ -------------------
Total net liabilities acquired (714)
-------------------
Goodwill 3,331
-------------------
Total cost of acquisition 2,617
===================
Satisfied by:
GBP000
------
Cash consideration 2,617
======
Cash outflow on acquisition:
GBP000
Cash paid for the subsidiary 2,617
Less: cash acquired (56)
------
Net cash outflow 2,561
======
Acquisition costs of GBP344,000 are recognised within
administrative expenses in the condensed consolidated income
statement.
The goodwill is attributable to the skills and technical talent
of the assembled workforce and synergies expected to arise
following the acquisition. It has been allocated to the Group's
single CGU.
In addition to the goodwill recognised, the development of the
simplified platform proposition obtained through the acquisition
met the requirements to be separately identifiable under IFRS 3. A
deferred tax liability of GBP217,000 has been provided in relation
to these fair value adjustments.
None of the acquired intangible assets or goodwill is expected
to be deductible for tax purposes.
Adalpha has not yet started to trade and therefore has not
contributed any revenue to the Group but has contributed a net loss
of GBP273,000 for the period from acquisition to 31 March 2021.
If the acquisition had occurred on 1 October 2020, Group revenue
and Group profit after tax for the half-year ended 31 March 2021
would have been an estimated GBP73.9m and GBP25.2m
respectively.
8 Taxation
Tax recognised in the condensed consolidated income
statement:
Unaudited Unaudited
Six months Six months Audited Year
ended 31 March ended 31 March ended 30 September
2021 2020 2020
GBP000 GBP000 GBP000
Current taxation
UK Corporation tax 6,167 4,793 9,830
Adjustment to current tax in respect
of prior periods - - 21
--------------- --------------- -------------------
6,167 4,793 9,851
--------------- --------------- -------------------
Deferred taxation
Origination and reversal of temporary
differences (249) (14) (132)
Adjustment in respect of prior
periods 8 21 23
Effect of changes in tax rates - (6) (21)
--------------- --------------- -------------------
(241) 1 (130)
--------------- --------------- -------------------
Total tax expense 5,926 4,794 9,721
--------------- --------------- -------------------
Corporation tax for the six months ended 31 March 2021 has been
calculated at 19% (six months ended 31 March 2020: 19%; year ended
30 September 2020: 19%), 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 Unaudited
Six months Six months Audited Year
ended 31 March ended 31 March ended 30 September
2021 2020 2020
GBP000 GBP000 GBP000
Deferred tax relating to share-based
payments 228 623 304
Current tax relief on exercise
of share options (216) (843) (811)
--------------- --------------- -------------------
12 (220) (507)
--------------- --------------- -------------------
The charge for the period can be reconciled to the profit per
the condensed consolidated income statement as follows:
Unaudited Unaudited
Six months Six months Audited Year
ended 31 March ended 31 March ended 30 September
2021 2020 2020
GBP000 GBP000 GBP000
Profit before tax 31,643 22,651 48,550
=============== =============== ===================
UK Corporation tax at 19% (six
months ended 31 March 2020: 19%;
year ended 30 September 2020:
19%) 6,012 4,304 9,225
Tax effects of:
Expenses not deductible for tax
purposes (98) 471 448
Change in recognised deductible
temporary difference 4 4 25
Effect of tax rate changes to
deferred tax - (6) (21)
Adjustments in respect of prior
periods 8 21 44
--------------- --------------- -------------------
Total tax expense 5,926 4,794 9,721
--------------- --------------- -------------------
Effective tax rate 18.7% 21.2% 20.0%
--------------- --------------- -------------------
Deferred tax has been recognised at 19% (six months ended 31
March 2020: 19%; year ended 30 September 2020: 19%), being the rate
at which the deferred tax assets are expected to reverse.
The UK Corporation tax charge is due to increase to 25% from 1
April 2023. As the tax rate increase had not been substantively
enacted at the reporting date the deferred tax asset was not
re-measured.
9 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 Unaudited
Six months Six months Audited Year
ended 31 March ended 31 March ended 30 September
2021 2020 2020
GBP000 GBP000 GBP000
Earnings
Earnings for the purposes of basic
and diluted EPS being profit attributable
to equity holders of the parent
company 25,717 17,857 38,829
=============== =============== ===================
Number Number Number
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
EPS in issue during the period 409,058,991 407,943,894 408,342,783
Effect of potentially dilutive
share options 1,685,073 1,664,706 1,722,941
----------- ----------- ------------
Weighted average number of ordinary
shares for the purposes of fully
diluted EPS 410,744,064 409,608,600 410,065,724
=========== =========== ============
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
Earnings per share Pence Pence Pence
Basic 6.29 4.38 9.51
=========== =========== ============
Diluted 6.26 4.36 9.47
=========== =========== ============
10 Other intangible assets
Key operating Contractual
systems customer relationships Computer software Total
GBP000 GBP000 GBP000 GBP000
Cost
As at 1 October 2019 8,657 2,135 5,234 16,026
Additions 50 - 13 63
------------- ----------------------- ----------------- -------
As at 31 March 2020 8,707 2,135 5,247 16,089
------------- ----------------------- ----------------- -------
Additions - - 138 138
------------- ----------------------- ----------------- -------
As at 30 September
2020 8,707 2,135 5,385 16,227
------------- ----------------------- ----------------- -------
Additions 379 - 1,413 1,792
Disposals - - (554) (554)
Arising on acquisition 1,142 - - 1,142
------------- ----------------------- ----------------- -------
As at 31 March 2021 10,228 2,135 6,244 18,607
------------- ----------------------- ----------------- -------
Amortisation
As at 1 October 2019 6,240 2,135 5,198 13,573
Amortisation charge 304 - 23 327
------------- ----------------------- ----------------- -------
As at 31 March 2020 6,544 2,135 5,221 13,900
------------- ----------------------- ----------------- -------
Amortisation charge 310 - 31 341
------------- ----------------------- ----------------- -------
As at 30 September
2020 6,854 2,135 5,252 14,241
------------- ----------------------- ----------------- -------
Amortisation charge 309 - 261 570
Eliminated on disposal - - (554) (554)
------------- ----------------------- ----------------- -------
As at 31 March 2021 7,163 2,135 4,959 14,257
------------- ----------------------- ----------------- -------
Carrying amount
As at 31 March 2021 3,065 - 1,285 4,350
============= ======================= ================= =======
As at 30 September
2020 1,853 - 133 1,986
------------- ----------------------- ----------------- -------
As at 31 March 2020 2,163 - 26 2,189
============= ======================= ================= =======
As part of the acquisition of Adalpha in the period,
GBP1,142,000 of intangibles met the requirements to be separately
identifiable under IFRS 3.
Additions include an amount of GBP379,000 relating to internally
generated assets for the period to 31 March 2021 (six months ended
31 March 2020: GBPnil; year ended 30 September 2020: GBPnil).
The net carrying amount of key operating systems include
GBP1,521,000 relating to assets in development which are currently
not amortised.
11 Changes in capital expenditure
During the six months ended 31 March 2021, the Group acquired
plant and equipment with a cost of GBP732,000 (six months ended 31
March 2020: GBP489,000; year ended 30 September 2020:
GBP856,000).
During the six months ended 31 March 2021, the Group recognised
additional right-of-use assets with a cost of GBP36,000 (six months
ended 31 March 2020: GBP9,000; year ended 30 September 2020:
GBP9,000).
12 Provisions
Office Other
dilapidations provisions Total
GBP000 GBP000 GBP000
As at 1 October 2019 1,550 1,095 2,645
-------------- ----------- -------
As at 31 March 2020 1,550 1,095 2,645
-------------- ----------- -------
Provisions used (1) - (1)
Additional provisions - 500 500
As at 1 October 2020 1,549 1,595 3,144
-------------- ----------- -------
Provisions used - (33) (33)
Additional provisions - 8 8
-------------- ----------- -------
As at 31 March 2021 1,549 1,570 3,119
============== =========== =======
Current liabilities - 1,570 1,570
Non-current liabilities 1,549 - 1,549
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 present value of costs which will
ultimately be incurred in settling these obligations.
Other provisions
The other provisions relate to the settlement of an operational
tax dispute and the costs associated with defending a legal case.
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 but
the Group expects that settlement will be within the next 12
months.
13 Share capital and share premium
Unaudited Unaudited
Six months Six months Audited Year
ended 31 March ended 31 March ended 30 September
2021 2020 2020
Issued, fully-called and paid: GBP GBP GBP
Ordinary shares of 0.0125p each 51,308 51,250 51,271
Issued, fully-called and paid: Number Number Number
Number of ordinary shares of 0.0125p
each 410,471,093 410,003,449 410,168,330
=============== =============== ===================
All ordinary shares have full voting and dividend rights.
The following share transactions have taken place during the
period:
Transaction type Share class Number Share premium
of shares GBP000
Ordinary shares of 0.0125p
Exercise of CSOP options each 302,763 188
----------- --------------
Own shares
As at 31 March 2021, the Group held 1,238,733 own shares in the
AJ Bell Employee Benefit Trust (31 March 2020: 1,369,428; 30
September 2020: 1,369,428). During the period, 130,695 EIP options
were exercised and issued from the AJ Bell Employee Benefit
Trust.
14 Dividends
The following dividends were declared and paid by the Company
during the period:
Unaudited Unaudited
Six months Six months Audited Year
ended 31 March ended 31 March ended 30 September
2021 2020 2020
GBP000 GBP000 GBP000
Final dividend for the year ended
30
September 2019 of 3.33p per share - 13,601 13,601
Interim dividend for the year
ended 30
September 2020 of 1.50p per share - - 6,132
Final dividend for the year ended
30
September 2020 of 4.66p per share 19,070 - -
--------------- --------------- -------------------
Ordinary dividends paid on equity
shares 19,070 13,601 19,733
--------------- --------------- -------------------
An interim dividend of 2.46 pence per share was approved by the
Board on 26 May 2021 and is payable on 2 July 2021 to shareholders
on the register at the close of business on 11 June 2021. The
ex-dividend date will be 10 June 2021. This dividend has not been
included as a liability as at 31 March 2021.
AJ Bell Employee Benefit Trust, which held 1,238,733 ordinary
shares (31 March 2020: 1,369,428; 30 September 2020: 1,369,428) in
AJ Bell plc at 31 March 2021, has agreed to waive all
dividends.
15 Share-based payments
The Group operates the same equity-settled share-based payment
arrangements as reported at 30 September 2020 with the exception of
the below earn-out arrangement introduced during the period.
Earn-out arrangement
The acquisition of Adalpha during the period has given rise to
an earn-out arrangement whereby share awards will be made should a
number of operational and financial milestones, relating to AUA
targets and the development of a simplified proposition for
financial advisers, be met. The awards will be equity-settled and
will vest in several tranches in line with the agreed milestones,
expiring on 30 September 2026.
Under the terms of the acquisition agreement, shares will be
awarded to eligible employees conditional upon the successful
completion of certain performance milestones and their continued
employment with the Group during the vesting period. There is no
exercise price attached to the share award and the contractual life
outstanding at the end of the period was five years (2020: nil).
There were no share awards in the period (2020: GBPnil).
The fair value of the share awards is estimated as at the date
of grant calculated by reference to the quantum of the earn-out
payment for each performance milestone and an estimated time to
completion, discounted to net present value. The performance
condition included within the arrangement is not considered a
market condition and therefore the expected vesting will be
reviewed at each reporting date.
During the period the Group recognised a total share-based
payment expense in the income statement of GBP1,277,000 (six months
ended 31 March 2020: GBP2,352,000; year ended 30 September 2020:
GBP3,364,000), and capitalised GBP379,000 (six months ended 31
March 2020: GBPnil; year ended 30 September 2020: GBPnil) within
the statement of financial position.
16 Principal risks and uncertainties
We continually review the principal risks and uncertainties
facing the Group that 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 2020 annual report
and accounts.
17 Related-party transactions
The Group has a related-party relationship with its Directors
and members of the Executive Management Board ('the key management
personnel'). 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, other than the acquisition of Adalpha
disclosed in note 7. All other transactions are consistent in
nature with the disclosure in note 29 of the consolidated financial
statements for the year ended 30 September 2020.
18 Subsequent events
There have been no material events occurring between the
reporting date and the date of approval of these interim financial
statements.
19 Cautionary statement
The interim results for the six months ended 31 March 2021
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 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 they have been calculated Why they have been used
Assets Under AUA is the value of assets AUA is a measurement of
Administration for which AJ Bell provides the growth of the business
(AUA) either an administration, and is the primary driver
custodian or transactional of ad valorem revenue,
service. which is the largest component
of Group revenue.
Revenue Revenue per GBPAUA is the Revenue per GBPAUA provides
per GBPAUA total revenue generated a simple measurement to
during the year expressed facilitate comparison of
as a percentage of the our charges with our competitors.
average AUA in the year.
Assets Under AUM is the value of assets AUM is a measurement of
Management for which AJ Bell provides the growth of the business
(AUM) a management service. and is a driver of ad valorem
revenue.
Definitions
Adalpha Acquisition of Whiztec Limited and its
wholly-owned subsidiaries
AUA Assets Under Administration
AUM Assets Under Management
BAYE Buy As You Earn Plan
Board, Directors The Board of Directors of AJ Bell plc
BPS Basis points
Company AJ Bell plc
CSOP Company Share Option Plan
CSR Corporate Social Responsibility
Customer retention Relates to platform customers
rate
DEPS Diluted Earnings per Share
D2C Direct-to-Consumer
EIP Executive Incentive Plan
EMB Executive Management Board
EPS Earnings per Share
ESG Environmental, Social and Governance
FCA Financial Conduct Authority
FTSE Financial Times Stock Exchange
GIA General Investment Account
HMRC Her Majesty's Revenue and Customs
IAS International Accounting Standard
IFPR Investment Firm Prudential Regime
IFRS International Financial Reporting Standards
IPO Initial Public Offering
ISA Individual Savings Account
MPS Managed Portfolio Service
Own Shares Shares held by the Group to satisfy future
incentive plans
PBT Profit before tax
Plc Public Limited Company
PPTS Percentage Points
RIA Retirement Investment Account
SIPP Self-Invested Personal Pension
TPDFM Third-Party Discretionary Fund Managers
UK United Kingdom
VAT Value Added Tax
Company information
Executive Directors Andy Bell
Michael Summersgill
---------------------------
Non-Executive Directors Les Platts
---------------------------
Simon Turner
---------------------------
Laura Carstensen
---------------------------
Eamonn Flanagan
---------------------------
Company Secretary Christopher Bruce Robinson
---------------------------
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
---------------------------
1 Lochrin Square
---------------------------
92-98 Fountainbridge
---------------------------
Edinburgh
---------------------------
EH3 9QA
---------------------------
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END
IR BLGDURDDDGBL
(END) Dow Jones Newswires
May 27, 2021 02:00 ET (06:00 GMT)
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