TIDMAJB
RNS Number : 8153M
AJ Bell PLC
26 May 2022
26 May 2022
AJ Bell plc
Interim results for the six months ended 31 March 2022
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 2022.
Highlights
-- Solid performance delivered across all metrics against very
strong prior year comparatives
-- Investment in new propositions has progressed in line with
expectations, with Dodl by AJ Bell launched in April 2022
and Touch by AJ Bell on track to soft launch later in the
year
-- Continued organic growth driven by platform propositions,
with total customers up by 35,555 to 418,309, net inflows
of GBP2.8 billion and assets under administration (AUA) closing
at GBP74.1 billion
-- Customer retention rate up to 95.4% (FY21: 95.0%)
-- Revenue up to GBP75.5 million (HY21: GBP73.9 million), profit
before tax of GBP26.1 million (HY21: GBP31.6 million) and
a PBT margin of 34.6% (HY21: 42.8%)
-- Diluted earnings per share of 5.08 pence (HY21: 6.26 pence)
-- Interim dividend of 2.78 pence per share in line with stated
dividend policy
-- Revenue and profit margins are expected to increase in the
second half, with PBT margin guidance for FY22 raised to
c.35% (previous guidance 32-33%) and further improvement
anticipated in FY23
Andy Bell, Chief Executive Officer at AJ Bell, commented:
"I'm pleased to announce another solid set of results for the
first half of the year. Our dual-channel platform continues to
attract and retain long-term customers in both the advised and
direct-to-consumer markets, with our platform retention rate of
95.4% evidencing the quality of our propositions and our high
customer service levels.
"The organic growth in customers and AUA helped to deliver an
increase in revenue to GBP75.5 million and we remained highly
profitable, with profit before tax of GBP26.1 million and a PBT
margin of 34.6%. This is a very good result against a significantly
more challenging market backdrop to that experienced in the first
half of last year, when retail investor engagement and dealing
activity was exceptionally high particularly in the
direct-to-consumer market.
"The impact of normalised customer dealing activity and lower
interest rates compared to the same period last year resulted in a
lower revenue margin in this period. However, our diversified
revenue model positions us well across all market conditions and we
are now seeing the positive impact of recent interest rate rises on
our revenue margins.
"Our secure and scalable platform has been designed to both
facilitate growth and drive operational gearing, enabling us to
once again exercise strong control over our operational costs. We
have also continued to invest in new customer propositions to
broaden our reach in both the advised and direct-to-consumer
markets. In April we launched Dodl by AJ Bell, a new
commission-free investing app which we believe will appeal
particularly to people who want an easy, low-cost way to get
started with investing. We plan to follow this with Touch by AJ
Bell, a simplified, mobile-led platform proposition for the advised
market, which is on track to soft launch later this year.
"As our business grows we are committed to sharing efficiency
gains with our customers, whilst continuing to invest in new
products and services for them. At a time when people are seeking
to manage the impact of rising living costs, we have announced a
number of reductions to our platform charges across both our
advised and direct-to-consumer propositions which will deliver
total annualised savings to our customers of around GBP5
million.
"This follows consistent reductions to the charges on our AJ
Bell funds as assets under management have grown. The annual
charges on the first five multi-asset funds we launched five years
ago have nearly halved from 0.50% to 0.31% during that time, again
delivering significant savings to customers.
"Our strong financial position and the Board's confidence in the
long-term prospects for the business support continuing returns to
shareholders alongside ongoing investment in our customer
propositions. We remain committed to our stated dividend policy and
the Board has declared an interim dividend of 2.78 pence per
share.
"The long-term structural drivers of growth in the UK investment
platform market remain strong with around two-thirds of our
estimated GBP3 trillion target market not yet on a platform. We
continue to see customers moving onto investment platforms to
benefit from increased flexibility and lower costs and we are well
positioned to attract an increasing market share with our leading
propositions and established brand in both the advised and
direct-to-consumer segments.
"Whilst market uncertainty is likely to persist in the
short-term, our business model ensures we can continue to invest in
our customer propositions whilst delivering strong financial
performance and we expect profit before tax for the full year to be
at least in line with consensus market expectations."
Financial highlights
Six months Six months
ended 31 March ended 31 March
2022 2021 Change
Revenue GBP75.5m GBP73.9m 2%
---------------- ---------------- ----------
Revenue per GBPAUA* 20.3bps 24.0bps (3.7bps)
---------------- ---------------- ----------
PBT GBP26.1m GBP31.6m (17%)
---------------- ---------------- ----------
PBT margin 34.6% 42.8% (8.2ppts)
---------------- ---------------- ----------
Diluted earnings per
share 5.08p 6.26p (19%)
---------------- ---------------- ----------
Interim dividend per
share 2.78p 2.46p 13%
---------------- ---------------- ----------
Non-financial highlights
Six months Year ended
ended 31 March 30 September
2022 2021 Change
Number of retail customers 418,309 382,754 9%
---------------- -------------- --------
- Platform 403,383 367,965 10%
---------------- -------------- --------
- Non-platform 14,926 14,789 1%
---------------- -------------- --------
AUA* GBP74.1bn GBP72.8bn 2%
---------------- -------------- --------
- Platform GBP66.9bn GBP65.3bn 2%
---------------- -------------- --------
- Non-platform GBP7.2bn GBP7.5bn (4%)
---------------- -------------- --------
AUM* GBP2.3bn GBP2.2bn 5%
---------------- -------------- --------
Customer retention rate 95.4% 95.0% 0.4ppts
---------------- -------------- --------
*see Alternative Performance Measures below
Contacts:
AJ Bell
Shaun Yates, Investor Relations
-- Director +44 (0) 7522 235 898
Charlie Musson, Brand and PR
-- Director +44 (0) 7834 499 554
Results presentation details
A pre-recorded video with Andy Bell (CEO) and Michael
Summersgill (Deputy CEO and 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 meeting for sell-side analysts at
08.15 BST today. Attendance is by invitation only.
Management will also be hosting a group call for investors at
15.30 BST on Wednesday 1 June. Please contact Camilla Crowe at
c.crowe@numis.com for registration details.
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
Our dual-channel platform, serving the growing advised and D2C
platform markets, continues to attract new customers with
significant net inflows delivered during the first half of the
financial year. We remain focused on our core purpose; to help
people invest, by providing the easiest platform to use.
Overview
We delivered strong net AUA inflows of GBP2.8 billion with total
AUA closing at GBP74.1 billion (FY21: GBP72.8 billion). This
performance was achieved against a very different market backdrop
to that seen in the prior year with adverse market movements of
GBP1.5 billion since the year end.
Retail customers grew by 35,555 during the period to 418,309
(FY21: 382,754), with our retention rate increasing to 95.4% (FY21:
95.0%), testament to our high-quality propositions and customer
service levels. We continue to see strong demand for our platform
propositions with our advised customers growing by 8% and our D2C
customers by 10% in the period.
The UK investment platform market, measured by AUA, has grown by
13% per annum since 2012, with the advised and D2C market segments
growing at a similar rate. During that period, we have continued to
increase our market share, growing our advised assets by 21% per
annum and our D2C by 36% per annum. Our dual-channel platform
enables us to benefit from operating in both segments of this
growing platform market.
We recorded a solid financial performance in the first half of
the year, with revenue up to GBP75.5 million (HY21: GBP73.9
million). Revenue margin on AUA was lower than the comparative
period as expected, due to the normalisation of dealing activity
and lower interest rates earned on customer assets. The reduction
in PBT, from GBP31.6 million to GBP26.1 million, represents the
lower revenue margin earned on assets coupled with increased
investment in our brand, technology and propositions to support our
long-term growth strategy. Revenue margin is expected to increase
in the second half of the year as a result of the higher interest
rate environment.
Following the period-end we launched an exciting new investing
app, Dodl by AJ Bell (Dodl), which expands our offering in the D2C
market. We believe there is a significant and underserved market
for Dodl. It is estimated that 8.6 million adults in the UK hold
more than GBP10,000 of investible assets in cash, equating to at
least GBP86 billion of excess cash savings which are being eroded
in real terms by high inflation and low interest rates. Our own
research suggests that many of these people don't know where to
start investing and are deterred by too much choice and complexity.
Dodl's ease of use, simplified investment range and low charges
make it an ideal solution for this type of customer. The
combination of Dodl and AJ Bell Youinvest means we have one of the
most comprehensive customer offerings in the D2C platform market,
ensuring we remain in a very strong position to deliver long-term
growth.
The operational gearing inherent within the business model
allows us to share efficiency gains with our customers, whilst
continuing to invest in the long-term growth of the business. At a
time where customers are seeking to reduce their living costs, we
will be reducing charges across our AJ Bell Investcentre and AJ
Bell Youinvest platform propositions in the second half of the
year. We remain committed to providing high quality, low-cost
investment platform propositions that cater for all investors.
Strategic update
Investing for all
At AJ Bell, we believe in making investing accessible to all,
whether investing directly or with the help of a financial adviser,
irrespective of age, wealth and investment approach. Our aim is to
broaden our customer reach and promote a better understanding and
awareness of investment choices that ultimately deliver good
outcomes for our customers. Our latest national TV advertising
campaign 'investing for all' reflects this belief and we continue
to invest in our brand as part of raising awareness of investing
and how we can help people to invest.
Our new simplified propositions, Dodl and Touch by AJ Bell
(Touch) will help to broaden our reach to a new generation of
investors across both the D2C and advised segments. Dodl is aimed
at younger, less experienced investors, offering a simplified
investment range and will be amongst the best value investment
platforms in the market. Touch, which is on track to soft launch
later in the year, will be a mobile-focused platform service that
will broaden our offering to financial advisers and help them serve
a wider base of clients.
Our research shows that, on average, women in the UK have half
the level of savings and investments that men do, a statistic that
we want to help change. The launch of AJ Bell Money Matters in
November 2021 has seen us roll out a range of initiatives focused
on encouraging women to engage with investing, in order to help
close the gender investment gap. This includes dedicated website
content, a regular podcast, monthly newsletters, webinars, live
events and social media interaction.
Advised propositions
The advised market continues to demonstrate steady year-on-year
growth and we delivered strong net inflows of GBP1.5 billion in the
period. This was partially offset by GBP0.8 billion of adverse
market movements, resulting in closing AUA of GBP46.5 billion
(FY21: GBP45.8 billion). Customer numbers increased by 10,281
during the period to 137,201 (FY21: 126,920); an increase of
8%.
We continued to improve our AJ Bell Investcentre proposition for
the benefit of our customers and their advisers, making several
enhancements with a focus on ease of use. We also launched our
flexible ISA, allowing temporary withdrawals during the tax year
without affecting annual ISA subscription limits.
We aim to share the benefits of operating at scale with our
customers, an example of this is through regularly reviewing our
charges to ensure they position us well to support advisers and
their clients. From 10 June, we will remove our charge for SIPP
establishment, where the process is initiated online. We will also
remove our charge for transferring pensions to SIPPs in cash and
some of our dealing charges.
The development of Touch, our simplified, mobile-led platform
proposition is progressing well, ahead of its planned soft launch
later this year.
Investival, our flagship adviser conference, was held in a
hybrid format in November 2021 having been entirely online in 2020.
More than 400 finance professionals attended in person with over
300 joining virtually, making it the most popular one yet. The
event was very well received and is now recognised as one of the
largest investment conferences for advisers in the UK. We have also
continued to deliver our 'On the Road' seminars alongside monthly
'Off the Road' webinars following positive feedback and ongoing
demand. The success of our ongoing engagement with advisers
highlights the value they see in us as a trusted partner.
D2C propositions
We delivered strong net inflows of GBP1.5 billion in the period.
This was partially offset by GBP0.6 billion of adverse market
movements, resulting in closing AUA of GBP20.4 billion (FY21:
GBP19.5 billion). Customer numbers continued to grow, increasing by
25,137 during the period to 266,182 (FY21: 241,045), an increase of
10%.
We have continued to develop AJ Bell Youinvest, with multiple
enhancements focused on ease of use delivered during the
period.
Our efficient operating model and robust cost control allows us
to reduce charges for our customers to ensure we continue to
provide excellent value for money. Last year, we commenced a review
of our trading model following the higher levels of dealing
activity experienced during the pandemic, in order to reduce the
costs for customers. As a result, I am pleased to announce that we
will be reducing our foreign exchange commission rates on 1 July,
whilst also reducing the cap on funds custody charges, removing
charges for in-specie transfers out and simplifying our dividend
re-investment charge.
Dodl launched on 19 April 2022 and sits alongside our existing
D2C platform proposition AJ Bell Youinvest. Together they provide
great value investment platform options for retail investors,
catering for all levels of experience and investment needs. Dodl
offers ISAs, LISAs, pensions and GIAs with an annual charge of just
0.15% and no commission for buying or selling investments. The
proposition's simplified investment range offers customers 30 funds
catering for different themes and risk appetites. It also features
50 popular shares in UK-listed companies for those who like to
invest in their favourite brands, with US shares coming later in
the year.
AJ Bell Investments
Our range of investment solutions continue to be a popular
choice with investors, with total AUM up to GBP2.3 billion (FY21:
GBP2.2 billion).
The first five AJ Bell multi-asset funds launched in 2017 have
recently passed their fifth anniversary, an important performance
milestone particularly for advisers. Performance of all five funds
was in the top 30% when compared against their peer groups, with
four being in the top quintile. Since launching these funds we have
shared the benefits of our increasing scale with customers,
reducing the Ongoing Charges Figure (OCF), by nearly half from
0.50% to 0.31% during that time. In February this year we also
implemented a new simplified pricing structure, setting a single
OCF for all of our multi-asset growth funds, making it easier for
customers and advisers to understand.
Customer services and technology
Our dual-channel single operating model ensures we can
efficiently service our customers whilst maintaining our
high-quality customer service levels. In a period of continued
customer growth, our operational performance indicators have shown
excellent levels of customer service as demonstrated by our high
4.5-star Trustpilot score, rated by our retail customers. The
strength of our customer service and proposition is also reflected
in our platform customer retention rate, which is in excess of
95%.
Our secure and scalable platform has been designed to both
facilitate growth and drive operational gearing. In the period we
continued to invest in our technology, enhancing our existing
propositions alongside the development of Dodl and Touch. Our
hybrid technology model serves us well, allowing us to build
adaptable, easy-to-use interfaces and minimise the cost impact of
ongoing regulatory compliance.
We have embedded the FCA's new regulatory requirements on
operational resilience, effective from 31 March 2022, into our
operating framework and processes. These rules are designed to
ensure regulated firms are better able to prevent, adapt to,
respond to, recover from and learn from operational
disruptions.
We continue to drive improvements and invest for the future to
ensure that we provide a high-quality service to our customers.
People and culture
Our new hybrid working model came into effect from 1 January
2022 and is working well in balancing the needs of our people and
business operations. As the Government removed restrictions during
the period, we have gradually increased office numbers and were
pleased to see the return of our programme of social activities and
events in-person to enhance engagement.
We run a wide programme of activities and events to facilitate
engagement between the Board, senior management and the wider
workforce. Following the appointment of Helena Morrissey as our
designated Non-Executive Director for employee engagement, we
hosted the first Employee Voice Forum of the year at our head
office in March 2022. I look forward to hearing feedback from the
forum as we progress through the year.
It was pleasing to see more events and opportunities to support
our local communities as COVID-19 restrictions were lifted. Our
people have taken part in a number of charitable initiatives and
fundraising events during the first half of the year, continuing to
support a range of local charities including Fare Share, Wood
Street Mission and City of Trees. We have also launched an
initiative to support education in our communities by refurbishing
IT kit that we no longer need, and then donating it to local
schools.
Regulatory developments
There are a number of significant regulatory developments
underway that will shape the market we operate in.
The FCA Consumer Investments Strategy recently identified that
nearly 8.6 million people in the UK have more than GBP10,000 of
investible assets held predominantly in cash. The FCA's stated aim
is to reduce this number of people by 20%, on the basis they would
be better off in a risk-based investment. We believe Dodl is
ideally placed to benefit from this drive by the regulator as it
gives investors an easy, low-cost way to start investing.
Another key output from the Consumer Investments Strategy is the
new Consumer Duty. This is a major regulatory development which
puts the onus on providers to ensure good customer outcomes. We
support the intention here, even though most regulated firms would
argue that this is already well embedded. Any concerns we have are
centred around making sure that providers understand what this
means at a practical level.
Investment pathways were an example of the challenges caused by
micro-regulation. What is right for an insured personal pension may
not be right for a platform pension. The regulatory solution to a
failure in administration and oversight by insured pension
providers - customers inadvertently remaining invested in cash -
created significant pain for platform pension providers with little
discernible customer benefit.
More recent regulatory proposals to introduce default funds for
non-workplace pensions, which includes platform pensions, again
demonstrates a desire for the regulator to micro-manage the
solution. Lifestyle funds are the proposed default fund solution.
These funds, which shift from equities to bonds as the pension
saver reaches their retirement age, are from a bygone era.
Retirement is no longer defined by a single date, with income
drawdown now the main delivery mechanism for taking an income in
retirement, rather than buying an annuity. We support the idea of a
default fund but with a focus on creating good outcomes for
consumers, we urge the regulator to let providers decide what type
of default fund best suits their customers.
Another aim of both the Consumer Investments Strategy and the
new Consumer Duty is to make it easier for firms to help consumers
access and identify investments that suit their circumstances and
attitude to risk. Investment platforms are ideally placed to
provide this guidance to customers but the current regulatory
guidance around what constitutes financial advice (as opposed to
investment guidance) makes it difficult for execution-only
providers to offer services - such as risk profiling or information
on specific investments held by customers - which could help them
improve their investment strategy.
The FCA's proposal for pensions dashboards is another
significant development that aims to help customers build a better
picture of their retirement savings, allowing them to see all of
their pensions in one place and get an impression of the income
they could expect from each in retirement. Statutory Money Purchase
Illustrations (SMPI) have been around for nearly twenty years and
it is fair to say that these have been routinely ignored by pension
savers. Going forward they will be the foundation on which pensions
dashboards will deliver estimates of pension income to pension
savers. We are at the early stages of the consultation being led by
the Financial Reporting Council (FRC), on behalf of the DWP, to
determine the underlying actuarial basis for these projections.
Once again, despite platform pensions dominating the market, the
proposals are being driven by what works for insured pensions and
are unworkable for platform pensions. I have urged the FCA and the
FRC to get together and agree a simple and consistent basis so that
the pension projected at the point of sale is consistent with the
pension projections during the lifetime of the pension.
Dividend
Our strong balance sheet, robust liquidity position and future
prospects for the business support both ongoing investment in the
business and continuing returns to shareholders. The Board has
therefore declared an interim dividend of 2.78 pence per share in
line with our stated dividend policy, to which we remain
committed.
Outlook
The long-term structural drivers of growth in the UK investment
platform market remain strong with around two-thirds of our
estimated GBP3 trillion target addressable market not yet on a
platform. We continue to see a structural shift from non-platform
providers to platforms, where assets already in the financial
system are migrated onto platforms to increase flexibility and
reduce costs for customers. We expect this to continue to be a
driver of significant inflows in the platform market and are well
positioned to attract an increasing share with our leading
propositions and established brand in both the advised and D2C
segments.
The macro-economic environment is uncertain as high inflation in
the UK has led to interest rate rises and the growing
cost-of-living crisis has been further exacerbated by the ongoing
war in Ukraine. The rising cost of living is likely to impact
investable income across the economy with the savings ratio falling
back towards pre-pandemic levels. This presents a potential
short-term headwind for inflows, particularly in the D2C market and
the likelihood of increased administrative expenses. Our
diversified revenue model provides inflation protection, ensuring
we are well-equipped to succeed in different macro-economic
conditions. A higher interest rate environment will provide a
significant benefit, with higher revenue and profit margins
expected both in the second half of the financial year and
FY23.
In a high-inflation environment where consumers are increasingly
looking for low-cost solutions, we are reducing a number of charges
across our existing propositions as we look to share our economies
of scale with our customers. Our existing propositions,
complemented by our two new app-based, simplified, low-cost
platform propositions, ensure we are well placed to support the
next generation of investors and to capitalise on future growth
opportunities.
Our secure and scalable platform propositions and established
brand position us well to deliver further organic growth and
capture an increasing share of the market.
Andy Bell
Chief Executive Officer
Financial review
The Group delivered a solid financial performance in the first
half of the year, with revenue up to GBP75.5 million and PBT of
GBP26.1 million. We have invested in our brand, technology and
platform propositions as part of our growth strategy to capitalise
on the opportunities created in the UK platform market, that
continues to benefit from long-term structural growth drivers.
Business performance
Customers
Customer numbers increased by 35,555 during the period to a
total of 418,309. This growth has been driven by our platform
propositions, with our D2C platform delivering a 10% increase in
customers to 266,182 and our advised platform customers up by 8% to
137,201. In addition, our platform customer retention rate remained
high at 95.4% (FY21: 95.0%).
Six months ended Six months ended Year ended
31 March 31 March 30 September
2022 2021 2021
Platform 403,383 332,276 367,965
Non-platform 14,926 14,521 14,789
------------- ----------------------- ---------------- ------------
Total 418,309 346,797 382,754
------------- ----------------------- ---------------- ------------
Assets Under Administration
Six months ended 31 March 2022
Advised D2C Total
platform platform platform Non-platform Total
GBPbn GBPbn GBPbn GBPbn GBPbn
--------------------------- -------- -------- -------- ------------ -----
As at 1 October 2021 45.8 19.5 65.3 7.5 72.8
--------------------------- -------- -------- -------- ------------ -----
Inflows 3.2 2.2 5.4 0.1 5.5
Outflows (1.7) (0.7) (2.4) (0.3) (2.7)
--------------------------- -------- -------- -------- ------------ -----
Net inflows/(outflows) 1.5 1.5 3.0 (0.2) 2.8
--------------------------- -------- -------- -------- ------------ -----
Market and other movements (0.8) (0.6) (1.4) (0.1) (1.5)
--------------------------- -------- -------- -------- ------------ -----
As at 31 March 2022 46.5 20.4 66.9 7.2 74.1
--------------------------- -------- -------- -------- ------------ -----
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
--------------------------- -------- -------- -------- ------------ -----
We continued to see strong AUA inflows, driven by our platform
propositions. Gross inflows in the period were GBP5.5 billion, up
8% compared to the previous year (HY21: GBP5.1 billion).
Outflows increased by GBP0.7 billion to GBP2.7 billion versus
the comparative period. This increase was driven partly by an
exceptional bulk annuity purchase by an adviser firm which resulted
in a one-off outflow of GBP0.2 billion from both advised platform
AUA and AJ Bell Investments AUM. We also saw GBP0.3 billion of
non-platform outflows in the period following our decision to close
our institutional stockbroking service during the first half. The
final non-platform outflows relating to this closure, totalling
approximately GBP1.8 billion, are expected to complete in the
second half of the financial year.
The uncertainty across global markets driven by inflationary
pressure on the cost of living and the war in Ukraine contributed a
GBP1.5 billion adverse movement on asset values. This compares to
favourable market movements of GBP5.6 billion in the comparative
period last year. AUA closed at GBP74.1 billion, an increase of
GBP1.3 billion in the period.
Financial performance
Revenue
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
--------------------- ----------------- --------------------------------- ------------
Recurring fixed 14,982 14,050 28,598
Recurring ad valorem 42,365 37,917 77,955
Transactional 18,181 21,930 39,273
--------------------- ----------------- --------------------------------- ------------
Total 75,528 73,897 145,826
--------------------- ----------------- --------------------------------- ------------
Revenue increased by 2% to GBP75.5 million (HY21: GBP73.9
million).
Revenue from recurring fixed fees increased by 7% to GBP15.0
million (HY21: GBP14.1 million), primarily due to higher pension
administration revenue from our advised platform customers.
Recurring ad valorem revenue grew by 12% to GBP42.4 million
(HY21: GBP37.9 million). The key driver of this growth was the
increase in average AUA in the period. This was partially offset by
a lower average interest rate earned on customer cash balances than
in the comparative period last year.
Revenue from transactional fees decreased by 17% to GBP18.2
million (HY21: GBP21.9 million). This decrease was due to a
normalisation of dealing activity levels in the current period
following the significantly elevated levels seen in the first half
of the prior year.
Our overall revenue margin of 20.3bps (HY21: 24.0bps) in the
period reflects the reduced transactional revenues and lower
average interest rate earned on cash as noted above.
Since the start of the financial year, the Bank of England base
rate has increased from 0.1% to 1.0%. This higher interest rate
environment will deliver a gradual increase in recurring ad valorem
revenue across our platform. Whilst allowing for the impact of our
planned price reductions for AJ Bell Investcentre and AJ Bell
Youinvest, our consolidated revenue margin for FY22 is currently
expected to be higher than the 20.3bps reported in the first half,
with a further improvement anticipated in FY23.
Administrative expenses
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March 31 March 30 September
2022 2021 2021
GBP000 GBP000 GBP000
------------------------ ----------------- ----------------- ------------
Distribution 7,592 5,402 11,095
Technology 14,771 11,482 25,765
Operational and support 26,681 24,978 53,115
------------------------ ----------------- ----------------- ------------
Total 49,044 41,862 89,975
------------------------ ----------------- ----------------- ------------
Administrative expenses increased by 17% to GBP49.0 million
(HY21: GBP41.9 million).
Distribution costs increased by 41% to GBP7.6 million (HY21:
GBP5.4 million) as we continued to invest in our brand to help
deliver long-term growth. In February we launched a new national TV
advertising campaign and we also increased D2C marketing activity
in the period. The year-on-year increase is also partly reflective
of a lower than normal spend in the prior year, when both
advertising and sponsorship opportunities were limited by COVID-19
restrictions. We expect the rate of increase in distribution costs
to moderate over the course of the full year as planned, following
the higher activity undertaken in the first half in the lead-up to
the tax year end.
Technology costs increased by 29% to GBP14.8 million (HY21:
GBP11.5 million). This increase reflects the continued investment
in growing the size of our technology team, enabling us to deliver
change initiatives to support our continued growth whilst also
developing our new propositions, Dodl and Touch. A significant
proportion of the increase in technology costs related to the
Adalpha acquisition in March 2021. Excluding Adalpha-related costs
in the period of GBP1.7 million (HY21: GBP0.3 million), underlying
technology costs increased by 17% year-on-year.
Operational and support costs increased by 7% to GBP26.7 million
(HY21: GBP25.0 million) as the business continued to scale
efficiently. The higher costs were driven by an increase in the
average number of employees to support our continued growth,
partially offset by lower costs resulting from the reduced customer
dealing activity during the period. Excluding the impact of
dealing-related costs, underlying operational and support costs
increased by 10% year-on-year.
Profit and earnings
PBT of GBP26.1 million (HY21: GBP31.6 million) and PBT margin of
34.6% (HY21: 42.8%) reflect the lower revenue margin in the period
and planned investment in our brand, technology and product
propositions to drive long term growth. PBT margin for the full
year is expected to increase, driven by the higher revenue margin
that is more than offsetting increases in administrative
expenses.
The effective rate of tax for the period was 20.0% (HY21:
18.7%), slightly higher than the standard rate of UK Corporation
Tax of 19.0%, as a result of disallowable charges relating to the
Adalpha earn-out arrangement.
Basic earnings per share fell by 19% to 5.10p (HY21: 6.29p).
Diluted earnings per share (DEPS), which accounts for the dilutive
impact of outstanding share awards, decreased by 19% to 5.08p
(HY21: 6.26p).
Financial position
Capital and liquidity
The Group's financial position remains strong, with net assets
totalling GBP115.9 million (HY21: GBP117.9 million) at 31 March
2022 and a return on assets of 18% (HY21: 22%).
We operate a highly cash-generative business, with a short
working capital cycle that ensures profits are quickly converted
into cash. Our period end balance sheet included cash balances of
GBP73.2 million.
We have continued to maintain a healthy surplus over our
regulatory capital requirement throughout the period. The
Investment Firm Prudential Regime (IFPR) came into effect from 1
January 2022, focusing prudential requirements on the potential
harm the firm can pose to its customers, markets and itself whilst
introducing a basic liquidity requirement for all investment firms.
We are currently undertaking our first Internal Capital and Risk
Assessment (ICARA) process as required by the new regime; this is
not expected to have a material impact on our capital
requirements.
Dividend
The Board has declared an interim dividend of 2.78 pence per
share (HY21: 2.46 pence per share), representing 40% of the FY21
total ordinary dividend of 6.96 pence per share, in line with our
dividend policy.
The interim dividend declared reflects the financial strength of
the business, as evidenced by our well-capitalised, profitable and
highly cash-generative business model.
Michael Summersgill
Deputy Chief Executive Officer and 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 issued by
the IASB and 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:
Christopher Bruce Robinson
Company Secretary
25 May 2022
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 2022 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 2022 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 International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). 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, 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
25 May 2022
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 2022
Audited
Unaudited Unaudited Year ended
Six months Six months 30 September
ended 31 March ended 31 March 2021
Notes 2021 GBP000 2021 GBP000 GBP000
Revenue 75,528 73,897 145,826
Administrative expenses (49,044) (41,862) (89,975)
---------------- ---------------- --------------
Operating profit 26,484 32,035 55,851
Investment income 13 6 23
Finance costs (381) (398) (790)
---------------- ---------------- --------------
Profit before tax 26,116 31,643 55,084
================ ================ ==============
Tax expense 7 (5,216) (5,926) (11,262)
---------------- ---------------- --------------
Profit for the period
attributable to:
Equity holders of the
parent company 20,900 25,717 43,822
---------------- ---------------- --------------
Earnings per ordinary
share:
Basic (pence) 8 5.10 6.29 10.71
Diluted (pence) 8 5.08 6.26 10.67
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 2022
Notes Audited
Unaudited Unaudited 30 September
Assets 31 March 31 March 2021
Non-current assets 2022 GBP000 2021 GBP000 GBP000
Goodwill 6,991 6,991 6,991
Other intangible assets 9 7,716 4,350 6,014
Property, plant and equipment 9 3,501 3,426 3,351
Right-of-use assets 9 12,531 13,650 13,325
Deferred tax asset 598 797 940
------------ ------------ -------------
31,337 29,214 30,621
------------ ------------ -------------
Current assets
Trade and other receivables 39,921 39,727 34,408
Current tax receivable 673 - 51
Cash and cash equivalents 73,205 80,596 97,062
------------ ------------ -------------
113,799 120,323 131,521
------------ ------------ -------------
Total assets 145,136 149,537 162,142
------------ ------------ -------------
Liabilities
Current liabilities
Trade and other payables (11,555) (11,577) (12,765)
Current tax liabilities - (1,200) -
Lease liabilities (1,658) (1,404) (1,708)
Provisions 10 (1,466) (1,570) (1,526)
------------ ------------ -------------
(14,679) (15,751) (15,999)
------------ ------------ -------------
Non-current liabilities
Lease liabilities (13,058) (14,292) (13,886)
Provisions 10 (1,549) (1,549) (1,549)
------------ ------------ -------------
(14,607) (15,841) (15,435)
------------ ------------ -------------
Total liabilities (29,286) (31,592) (31,434)
------------ ------------ -------------
Net assets 115,850 117,945 130,708
============ ============ =============
Equity
Share capital 11 51 51 51
Share premium 8,917 8,647 8,658
Own shares (488) (1,037) (740)
Retained earnings 107,370 110,284 122,739
------------ ------------ -------------
Total equity 115,850 117,945 130,708
------------ ------------ -------------
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2022
Share Share Own Retained Total
capital premium shares earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
------------------ ------------------ ------------------ ------------------ ------------------- -----------------
Balance at 1
October 2021 51 8,658 (740) 122,739 130,708
------------------ ------------------ ------------------ ------------------ ------------------- -----------------
Total
comprehensive
income for the
period:
Profit for the
period - - - 20,900 20,900
Transactions with
owners, recorded
directly
in equity:
Issue of shares - 259 - - 259
Dividends paid - - - (38,971) (38,971)
Equity-settled
share-based
payment
transactions - - - 3,016 3,016
Deferred tax
effect of
share-based
payment
transactions - - - (224) (224)
Tax relief on
exercise of share
options - - - 162 162
Share transfer
relating to EIP - - 252 (252) -
------------------ ------------------ ------------------ ------------------ ------------------- -----------------
Total transactions
with owners - 259 252 (36,269) (35,758)
------------------ ------------------ ------------------ ------------------ ------------------- -----------------
Balance at 31
March 2022 51 8,917 (488) 107,370 115,850
------------------ ------------------ ------------------ ------------------ ------------------- -----------------
Share Share Own Retained Total
capital premium shares earnings 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
Share transfer
relating to EIP - - 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
------------------ ------------------ ------------------ ------------------ ------------------- -----------------
Condensed consolidated statement of cash flows
For the six months ended 31 March 2022
Unaudited Audited
Unaudited Six Six months Year ended
months ended ended 31 30 September
31 March 2022 March 2021 2021
Cash flows from operating activities Notes GBP000 GBP000 GBP000
Profit for the period 20,900 25,717 43,822
Adjustments for:
Investment income (13) (6) (23)
Finance costs 381 398 790
Income Tax expense 5,216 5,926 11,262
Depreciation and amortisation 1,741 2,035 3,623
Share-based payment expense 2,193 1,277 4,952
Decrease in provisions and other
payables (60) (25) (69)
Loss on disposal of property,
plant and equipment 5 - 13
Profit on disposal of right-use-assets - (3) (3)
Increase in trade and other receivables (5,513) (9,154) (3,835)
Decrease in trade and other payables (1,210) (2,535) (1,347)
-------------- ----------- -------------
Cash generated from operations 23,640 23,630 59,185
Income Tax paid (5,558) (4,766) (11,455)
Interest expense paid - (1) (1)
-------------- ----------- -------------
Net cash flows from operating
activities 18,082 18,863 47,729
-------------- ----------- -------------
Cash flows from investing activities
Additions to other intangible
assets 9 (1,317) (1,413) (2,370)
Purchase of property, plant and
equipment 9 (664) (732) (1,174)
Acquisition of subsidiary, net
of cash acquired - (2,561) (2,561)
Interest received 13 6 23
-------------- ----------- -------------
Net cash used in investing activities (1,968) (4,700) (6,082)
-------------- ----------- -------------
Cash flows from financing activities
Payments of principal in relation
to lease liabilities (878) (672) (1,241)
Payments of interest on lease
liabilities (381) (397) (789)
Proceeds from issue of share
capital 11 259 188 199
Dividends paid 12 (38,971) (19,070) (29,138)
-------------- ----------- -------------
Net cash used in financing activities (39,971) (19,951) (30,969)
-------------- ----------- -------------
Net (decrease)/increase in cash
and cash equivalents (23,857) (5,788) 10,678
Cash and cash equivalents at
beginning of period 97,062 86,384 86,384
-------------- ----------- -------------
Cash and cash equivalents at
end of period 73,205 80,596 97,062
-------------- ----------- -------------
Notes to the condensed consolidated financial statements
For the six months ended 31 March 2022
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 2021, which were prepared under International
Financial Reporting Standards (IFRSs) as adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
and in accordance with the requirements of the Companies Act 2006.
The change from EU adopted IFRS to UK adopted international
accounting standards did not result in any changes to the
accounting policies applied.
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 2021 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 2021 are available to view online at
ajbell.co.uk/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.
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 2021.
The following amendments and interpretations became effective
during the year. Their adoption has not had any significant impact
on the Group.
Effective
from
IFRS 9, IAS Interest Rate Benchmark Reform - 1 January 2021
39, IFRS 7, Phase 2 (Amendments)
IFRS 4 and
IFRS 16
IFRS 16 Covid-19-Related Rent Concessions 1 April 2021
beyond 30 June 2021 (Amendments)
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: 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 Unaudited
Six months Six months Audited Year
ended 31 March ended 31 March ended 30 September
2022 2021 2021
GBP000 GBP000 GBP000
Current taxation
UK Corporation Tax 5,098 6,167 11,629
Adjustment to current tax in respect
of prior periods - - (11)
--------------- --------------- -------------------
5,098 6,167 11,618
--------------- --------------- -------------------
Deferred taxation
Origination and reversal of temporary
differences 266 (249) (328)
Adjustment in respect of prior
periods - 8 12
Effect of changes in tax rates (148) - (40)
--------------- --------------- -------------------
118 (241) (356)
--------------- --------------- -------------------
Total tax expense 5,216 5,926 11,262
--------------- --------------- -------------------
Corporation Tax for the six months ended 31 March 2022 has been
calculated at 19% (six months ended 31 March 2021: 19%; year ended
30 September 2021: 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
2022 2021 2021
GBP000 GBP000 GBP000
Deferred tax relating to share-based
payments 224 228 202
Current tax relief on exercise
of share options (162) (216) (231)
--------------- --------------- -------------------
62 12 (29)
--------------- --------------- -------------------
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
2022 2021 2021
GBP000 GBP000 GBP000
Profit before tax 26,116 31,643 55,084
UK Corporation Tax at 19% (six months
ended
31 March 2021: 19%; year ended 30
--------------- --------------- -------------------
September 2021: 19%) 4,962 6,012 10,466
--------------- --------------- -------------------
Tax effects of:
Expenses not deductible for tax
purposes 399 (98) 709
Change in recognised deductible
temporary differences 3 4 126
Effect of tax rate changes to deferred
tax (148) - (40)
Adjustments in respect of prior
periods - 8 1
--------------- --------------- -------------------
Total tax expense 5,216 5,926 11,262
--------------- --------------- -------------------
Effective tax rate 20.0% 18.7% 20.4%
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 2021: 19%; year ended 30
September 2021: 19% or 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 2022.
8 Earnings per share
Basic earnings per share (EPS) 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 Unaudited Six Audited Year
ended 31 months ended ended 30 September
March 2022 31 March 2021 2021
GBP000 GBP000 GBP000
Earnings
Earnings for the purposes of basic
and diluted EPS being profit attributable
to equity holders of the parent
company 20,900 25,717 43,822
Number Number Number
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
EPS in issue during the period 410,008,946 409,058,991 409,249,186
Effect of potentially dilutive
share options 1,602,638 1,685,073 1,643,911
-------------- -------------- -------------------
Weighted average number of ordinary
shares for the purposes of fully
diluted EPS 411,611,584 410,744,064 410,893,097
============== ============== ===================
Unaudited Six Unaudited Six Audited Year
months ended months ended ended 30 September
31 March 2022 31 March 2021 2021
GBP000 GBP000 GBP000
Earnings per share
Basic (pence) 5.10 6.29 10.71
============== ============== ===================
Diluted (pence) 5.08 6.26 10.67
============== ============== ===================
9 Changes in capital expenditure
During the six months ended 31 March 2022, the Group acquired
plant and equipment with a cost of GBP664,000 (six months ended 31
March 2021: GBP732,000; year ended 30 September 2021:
GBP1,174,000).
During the six months ended 31 March 2022, the Group acquired
intangible assets with a cost of GBP2,140,000 (six months ended 31
March 2021: GBP2,934,000; year ended 30 September 2021:
GBP4,890,000). Prior year additions include GBP1,142,000 of
intangible assets arising on acquisition of Adalpha on 18 March
2021.
Additions to intangible assets include an amount of GBP2,098,000
relating to internally generated assets for the period ended 31
March 2022 (six months ended 31 March 2021: GBP379,000; year ended
30 September 2021: GBP2,289,000), of which GBP823,000 relates to
capitalised share-based payment expenses (six months ended 31 March
2021: GBP379,000; year ended 30 September 2021: GBP1,378,000).
Additions to the cost of right-of-use assets were GBPnil in the
six months ended 31 March 2022 (six months ended 31 March 2021:
GBP36,000; year ended 30 September 2021: GBP460,000).
10 Provisions
Office Other
dilapidations provisions Total
GBP000 GBP000 GBP000
As at 1 October 2020 1,549 1,595 3,144
Additional provisions - 8 8
Provisions used - (33) (33)
As at 31 March 2021 1,549 1,570 3,119
---------------- -------------- ----------------
Additional provisions - 7 7
Provisions used - (14) (14)
Unused provision reversed - (37) (37)
---------------- -------------- ----------------
As at 1 October 2021 1,549 1,526 3,075
---------------- -------------- ----------------
Provisions used - (60) (60)
As at 31 March 2022 1,549 1,466 3,015
================ ============== ================
Current liabilities - 1,466 1,466
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.
11 Share capital
Audited
Unaudited Unaudited Year ended
Six months Six months 30 September
ended 31 ended 31 2021
March 2022 March 2021 GBP000
Issued, fully-called and paid:
Ordinary shares of 0.0125p each 51,382 51,308 51,311
Issued, fully-called and paid: Number Number Number
Number of ordinary shares of 0.0125p
each 411,053,142 410,471,093 410,491,708
============ ============ ==================
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 251,387 259
Exercise of EIP options Ordinary shares of 0.0125p
each 154,073 -
Earn-out issue Ordinary shares of 0.0125p
each 155,974 -
561,434 259
=========== ===================
Own shares
As at 31 March 2022, the Group held 584,877 own shares in the AJ
Bell Employee Benefit Trust (31 March 2021: 1,238,733; 30 September
2021: 885,701). During the period 300,824 EIP options were
exercised and issued from the AJ Bell Employee Benefit Trust.
12 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
2022 2021 2021
GBP000 GBP000 GBP000
Final dividend for the year ended
30
September 2020 of 4.66p per share - 19,070 19,070
Interim dividend for the year
ended 30
September 2021 of 2.46p per share - - 10,068
Final dividend for the year ended
30
September 2021 of 4.50p per share 18,460 - -
Special dividend for the year
ended 30
September 2021 of 5.00p per share 20,511 - -
--------------- --------------- -------------------
Ordinary dividends paid on equity
shares 38,971 19,070 29,138
--------------- --------------- -------------------
An interim dividend of 2.78 pence per share was approved by the
Board on 24 May 2022 and is payable on 1 July 2022 to shareholders
on the register at the close of business on 10 June 2022. The
ex-dividend date will be 9 June 2022. This dividend has not been
included as a liability as at 31 March 2022.
AJ Bell Employee Benefit Trust, which held 584,877 ordinary
shares (31 March 2021: 1,238,733; 30 September 2021: 885,701) in AJ
Bell plc at 31 March 2022, has agreed to waive all dividends.
13 Share-based payments
During the period the Group recognised a total share-based
payment expense in the income statement of GBP2,193,000 (six months
ended 31 March 2021: GBP1,277,000; year ended 30 September 2021:
GBP4,952,000) and capitalised GBP823,000 (six months ended 31 March
2021: GBP379,000; year ended 30 September 2021: GBP1,378,000)
within the statement of financial position.
14 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 2021 annual report
and accounts.
The Group has reviewed the impact of the recent Russian invasion
of Ukraine and concluded that whilst the level of inherent risk for
some of Group's principal risks and uncertainties has increased,
e.g. information security / cyber-attacks, the Group's controls
continue to mitigate this increase in risk. The Group will continue
to monitor and respond to any new developments from the war in
Ukraine that may impact the Group.
15 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. All other transactions are consistent in
nature with the disclosure in note 29 of the consolidated financial
statements for the year ended 30 September 2021.
16 Subsequent events
There have been no material events occurring between the
reporting date and the date of approval of these interim financial
statements.
17 Cautionary statement
The interim results for the six months ended 31 March 2022
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 have they 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 administrative, and is the primary driver
custodial, or transactional of ad valorem revenue, which
service. 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 average our charges with our competitors.
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 AJ Bell Touch 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
Customer retention Relates to platform customers
rate
DEPS Diluted Earnings per Share
D2C Direct-to-Consumer
DWP Department for Work and Pensions
EIP Executive Incentive Plan
EMB Executive Management Board
EPS Earnings per Share
ESG Environmental Social and Governance
FCA Financial Conduct Authority
FRC Financial Reporting Council
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
ISA Individual Savings Account
LISA Lifetime 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
Roger Stott
Non-Executive Directors Helena Morrissey
Evelyn Bourke
Eamonn Flanagan
Margaret Hassall
Simon Turner
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 BRGDUIUDDGDU
(END) Dow Jones Newswires
May 26, 2022 02:00 ET (06:00 GMT)
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