TIDMAJB
RNS Number : 9500V
AJ Bell PLC
07 December 2023
7 December 2023
AJ Bell plc
Final results for the year ended 30 September 2023
AJ Bell plc ('AJ Bell' or the 'Company'), one of the UK's
largest investment platforms, today announces its final results for
the year ended 30 September 2023.
Highlights
Financial performance
-- Record financial performance, with revenue up 33% to GBP218.2
million (FY22: GBP163.8 million) and profit before tax
(PBT) up 50% to GBP87.7 million (FY22: GBP58.4 million)
-- PBT margin of 40.2% (FY22: 35.6%), reflecting an increased
revenue margin of 29.8bps (FY22: 22.6bps) together with
total cost growth in line with previous guidance
-- Diluted earnings per share up 46% to 16.53 pence (FY22:
11.35 pence)
-- Final dividend of 7.25 pence per share proposed, increasing
the total ordinary dividend for the year by 46% to 10.75
pence per share (FY22: 7.37 pence per share) in line with
the Company's stated dividend policy. This is the 19(th)
consecutive year of ordinary dividend growth
Platform business
-- Another successful year, with customers increasing by 50,880
to 476,532 and platform net inflows of GBP4.2 billion (FY22:
GBP5.8 billion)
-- Record assets under administration (AUA) of GBP70.9 billion
(FY22: GBP64.1 billion), up 11% driven by the net inflows
across the platform and favourable market movements of
GBP2.6 billion
-- Customer retention rate remained high at 95.2% (FY22: 95.5%)
-- Consistently high customer service levels evidenced by
AJ Bell's Trustpilot rating of 4.8
AJ Bell Investments
-- Record net inflows in the year of GBP1.65 billion, up 57%
versus the prior year (FY22: GBP1.05 billion underlying
net inflows)
-- Assets under management ("AUM") of GBP4.7 billion, up 68%
in the year (FY22: GBP2.8 billion)
Michael Summersgill, Chief Executive Officer at AJ Bell,
commented:
"I am pleased to report another year of strong financial
performance for the business which has demonstrated our ability to
continue to grow in different market conditions. Revenue increased
33% to GBP218.2 million, enabling us to reinvest in our customer
proposition and our people, whilst delivering a record profit
before tax of GBP87.7 million which supports an increased dividend
for shareholders.
"We added over 50,000 customers to the platform in the year,
reflecting the quality and value of our propositions, as well as
increased investment in our brand. The growth in customers enabled
us to deliver over GBP4 billion of net inflows, an excellent result
which again highlights the benefit of operating our dual-channel
platform.
"As we approach half a million platform customers, we remain
focused on providing a great value proposition, with a philosophy
of sharing our scale benefits with customers. Having reduced
several fees across the platform in 2022, this year we have
increased the interest rates paid to customers several times and
will soon be increasing them further, with a particular focus on
pension drawdown where there is a customer need to hold cash to
fund income payments.
"We continue to invest in our customer proposition with a focus
on making it easy for people to invest. In the D2C market we have
recently added the option to purchase bonds and gilts online in
response to increased demand for these investments in the higher
interest rate environment. Our free pension finding service has
proved popular with customers trying to track down and consolidate
lost pension pots and next year we will be expanding this into a
low-cost pension consolidation service. This will enable people to
find and automatically consolidate their existing pensions into one
simple pension with ready-made investment options and a single
annual charge of between 0.45% and 0.60%.
"In the advised market we continue to invest in new
functionality to help advisers manage their client portfolios. A
focus this year has been supporting advisers with the
implementation of the Consumer Duty and next year we will roll out
a new client onboarding process which will streamline the new
business process for advisers. We have recently added a money
market portfolio to our MPS range to provide another investment
option for advisers and their clients in the current interest
environment.
"Maintaining a strong culture and motivated workforce is
essential to facilitating our continued business growth. We made
several enhancements to our pay and benefits package in the year,
including a new free share award scheme for all employees which
encourages our staff to think and act like business owners. The
success of our business is down to the quality of work and
commitment of our people, and I would like to thank them for their
outstanding contribution during the year.
"The strong financial performance of the business has led the
Board to propose a final ordinary dividend of 7.25 pence per share,
increasing the ordinary dividend for the year by 46% to 10.75 pence
per share. This extends our record of ordinary dividend increases
to 19 years.
"Our dual-channel platform has continued to perform strongly
against the current backdrop of elevated inflation and interest
rates, demonstrating our resilience through the economic cycle.
Whilst the current challenging environment is likely to persist in
the short term, I am confident that our long-term focus and
continued investment in the business positions us well to take
advantage of the structural growth opportunity for the platform
market."
Financial highlights
Year ended Year ended
30 September 30 September
2023 2022 Change
Revenue GBP218.2 million GBP163.8 million 33%
----------------- ----------------- --------
Revenue per GBPAUA* 29.8bps 22.6bps 7.2bps
----------------- ----------------- --------
PBT GBP87.7 million GBP58.4 million 50%
----------------- ----------------- --------
PBT margin 40.2% 35.6% 4.6ppts
----------------- ----------------- --------
Diluted earnings per share 16.53 pence 11.35 pence 46%
----------------- ----------------- --------
Total ordinary dividend
per share 10.75 pence 7.37 pence 46%
----------------- ----------------- --------
Non-financial highlights
Year ended Year ended
30 September 30 September
2023 2022 Change
Number of retail customers 491,402 440,589 12%
---------------- ---------------- ----------
- Platform 476,532 425,652 12%
---------------- ---------------- ----------
- Non-platform 14,870 14,937 -
---------------- ---------------- ----------
AUA* GBP76.1 billion GBP69.2 billion 10%
---------------- ---------------- ----------
- Platform GBP70.9 billion GBP64.1 billion 11%
---------------- ---------------- ----------
- Non-platform GBP5.2 billion GBP5.1 billion 2%
---------------- ---------------- ----------
AUM* GBP4.7 billion GBP2.8 billion 68%
---------------- ---------------- ----------
Customer retention rate 95.2% 95.5% (0.3ppts)
---------------- ---------------- ----------
*see definitions
Contacts:
AJ Bell
Shaun Yates, Investor Relations
-- Director +44 (0) 7522 235 898
-- Mike Glenister, Head of PR +44 (0) 7719 554 575
Results presentation details
A pre-recorded video with Michael Summersgill (CEO) and Peter
Birch (CFO) discussing these results will be available on our
website ( ajbell.co.uk/investor-relations ) along with an
accompanying investor presentation from 07.00 GMT today. Management
will be hosting a meeting for sell-side analysts at 09:30 GMT
today. Attendance is by invitation only.
Management will also be hosting a group call for investors at
15.00 GMT today. Please contact Camilla Crowe at
c.crowe@dbnumis.com for registration details.
Forward-looking statements
The full year 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 full year results and AJ Bell does not undertake any
obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after
the date of these results.
Chair's statement
Dear shareholder
"AJ Bell is a great business with a justifiable reputation for
innovation, customer focus and a commitment to delivering real
value to customers and advisers."
I am delighted to present my first Annual Report as your new
Chair.
Since my appointment on 1 May 2023, I have spent time getting to
know many people across the business, as well as having the
pleasure of engaging with some of our shareholders and other key
stakeholders, discussing both AJ Bell's business and the wider
platform market. It has been a really interesting and informative
period since joining, which has reaffirmed my initial very
favourable impression of the people and the business. I am very
excited to lead the Board and support the executive team in the
goals we have set ourselves.
I am pleased to report that we have delivered a strong financial
performance during the year with PBT of GBP87.7 million. Over the
past 12 months customer numbers increased by 50,813 to 491,402 and
we delivered GBP4.1 billion of net inflows, ending the year with
total AUA of GBP76.1 billion. This strong performance demonstrates
the resilience of our business model during a challenging year and
continued uncertainties around the UK economy. The Financial review
contains further information on this year's performance.
As the uncertainties in the wider economy continued into 2023,
it created further challenges for our customers, our people and our
wider stakeholders. As a Board we were particularly mindful of this
and so our focus remained on the wellbeing of our staff, while
maintaining a high-quality, value-for-money service to our
customers and delivering positive outcomes for all our
stakeholders.
Our governance structure and cohesive culture provide a solid
framework for achieving our long-term strategic goals. The Board
remains focused on delivering AJ Bell's purpose; to help people
invest.
Culture, purpose and stakeholder engagement
The Board plays a vital role in shaping and embedding a strong
and healthy culture through promoting the core values and
principles of the Group and this continued to be a focus throughout
the year. We welcomed the opportunity to engage with our staff and
shareholders in person again this year, providing invaluable
insight into the operation and culture of our business. I was
delighted to be appointed as the nominated Employee Engagement
Director in May, which has given me an opportunity to refresh the
Employee Voice Forum (EVF).
During the year we also reviewed the AJ Bell Way and our guiding
principles; challenging ourselves on their continued alignment with
our purpose and culture following significant growth of the
business. It was encouraging to see the level of engagement from
our people and our customers and advisers, affirming how well our
core values resonate with our key stakeholders. Whilst the key
elements of our guiding principles remain relevant, some
refinements have been made to simplify them and reflect the
feedback received to ensure they continue to be embraced by our
people on a day-to-day basis.
Consideration of our wider stakeholders in some of our key
decisions in the year are outlined in our Section 172
statement.
We recognise the importance of an engaged workforce and it was
pleasing to see that this year's staff survey showed positive
progress with an overall response rate of 87%. Our people are at
the heart of our continued growth and success and so how we
motivate, reward and support them is a key priority for the Board.
The introduction of the new free share award scheme for all
employees has been very well received and we expect the level of
share ownership to increase further for the coming year. Our pay
and benefits package introduced at the start of FY23 has also seen
further enhancements to base pay and pension contributions for the
coming year.
We have made good progress embedding our Diversity and Inclusion
framework. As reported last year our primary focus was on the
senior management and talent pipeline where I am pleased to see we
have already made positive steps on the recruitment at executive
level. The Board will continue to monitor and challenge progress on
our initiatives for the wider workforce where we expect to see
further improvements in the coming year.
Further details on our ESG-related activities can be found in
our Responsible Business section.
Board changes and succession
On 1 May 2023 I succeeded Baroness Helena Morrissey as Chair. On
behalf of the Board, I would like to thank Helena for her
significant contribution to AJ Bell as Chair and look forward to
her continued involvement through her consultancy role where we are
benefiting from her passion and commitment to diversity and
inclusion.
As previously announced when Andy Bell stepped down from the
Board in September 2022, it was agreed that he would have the right
to nominate a Non-Executive Director to represent his interests on
the Board whilst a significant shareholder. This agreement was
formalised in July 2023 when we announced that Les Platts would
join the Board as Andy's Representative Director. I would like to
take this opportunity to formally welcome Les to the Board and very
much look forward to working with him. Les' in-depth knowledge of
the financial services sector and AJ Bell in particular, will
further enhance the experience on the Board and help us drive the
future growth of the Company.
During the year we resumed our search for two new independent
Non-Executive Directors (NED), the first being a replacement for
Simon Turner who has completed nine years' service and will step
down from the Board once a successful handover is complete. The
Board is extremely mindful of the importance of having a diverse
range of skills, experience and perspective around the Board table
and so this was at the forefront of our minds throughout the
recruitment process. I am pleased to report that since the year end
we have appointed Fiona Fry as an independent Non-Executive
Director with effect from 7 December 2023. Fiona will succeed Simon
Turner, as Chair of the Risk & Compliance Committee, subject to
regulatory approval. Fiona is a highly experienced risk
professional, having spent the majority of her career at KPMG
where, as a partner she focused on financial services regulation.
Fiona sat on the UK Board of KPMG for six years. She was previously
Head of investigations at the Financial Services Authority (now the
FCA). Fiona is currently Chair of the Risk Committee at Aviva
Insurance Limited.
Our commitment to addressing both the Parker Review
recommendations and the FCA diversity requirements remains a key
consideration as we continue our search for a further independent
NED to join the Board in the coming year. Whilst we are pleased
with our progress, we acknowledge there is still more to be done to
continue to drive greater diversity at both Board and executive
level.
Further details on Board changes can be found in the Nomination
Committee report.
Dividend
In line with our commitment to a progressive dividend, the Board
is pleased to announce a final ordinary dividend of 7.25p per
share, reflecting the financial strength of the business and strong
capital position. The final ordinary dividend will be paid, subject
to shareholder approval, at our AGM on 30 January 2024, to
shareholders on the register at the close of business on 12 January
2024.
This brings the total ordinary dividend for the financial year
to 10.75p per share, representing an increase of 46% on the
previous year.
Looking ahead
I have really enjoyed my first seven months as AJ Bell's Chair.
First impressions are of a committed, strong management team,
collaborative Board and strong performance despite the wider
economic backdrop. I truly believe this is a great business and I
can see the growth potential. Our dual-channel business model is a
real strength in the investment platform market and with a focus on
ease of use and value for money, AJ Bell is well-positioned to
continue to attract new customers and assets to the platform and
further increase our market share.
I am very grateful to the Board and all those in the business
who have helped me over the first few months as part of my
induction and I am very much looking forward to continuing to work
with them over the coming years.
AJ Bell is a financially strong business as evidenced by a
profitable, well-capitalised and highly cash-generative business
model, and the Board remains confident in the long-term prospects
of the business. Whilst the macroeconomic environment remains
challenging in the short term, it is clear that the fundamental
growth drivers for the platform market remain firmly in place and I
look forward to working with Michael, the executive team and the
Board to ensure the business takes advantage of the growth
opportunities that lie ahead.
Fiona Clutterbuck
Chair
6 December 2023
Board Priorities
Performance and resilience:
I am very proud of the strong performance that the business has delivered
in 2023. However, I am acutely aware of the need to continue growing
the business, whilst at the same time managing our cost base against
a backdrop of significant macroeconomic uncertainty. These are two
key priorities in the coming year. I am also keen that we continue
to embrace the entrepreneurial culture which was so much a hallmark
of the business under Andy Bell's leadership.
Performance such as that which the business has demonstrated this
year is only achievable if the business is resilient; technology plays
a very important role in embedding this resilience so this too will
be a focus for FY24.
Culture:
AJ Bell has always justifiably prided itself on a strong cohesive
culture. In my first few months as Chair I have had the opportunity
to experience this first hand. Interactions with my colleagues across
the business have confirmed an open and transparent culture that permeates
throughout the whole organisation. Our role as a Board is to monitor
how we nurture this culture and ensure it remains a real strength
as we continue to grow.
One of the most important facets of the AJ Bell purpose-led culture
has been its extraordinary focus on doing the right thing for its
customers. We place good customer outcomes at the heart of everything
we do, with good value products, simple communications and strong
processes to support our customers.
The initial implementation of the Consumer Duty has been a key area
of focus for the Board and the business as a whole during the year,
with Simon Turner, our Chair of the Risk & Compliance Committee being
appointed as our designated Non-Executive Director Consumer Duty Champion.
Although we believe our culture is aligned with the requirements of
Consumer Duty, we are by no means complacent and the Board's focus
during FY24 will be on maintaining oversight to ensure the business
is delivering good outcomes for its customers which are consistent
with the Duty.
Succession planning:
The Board remains focused on maintaining good corporate governance
and ensuring these principles are embedded into our culture. I strongly
believe that diversity in all its forms leads to more productive and
balanced Board discussions, and maintaining a diverse and inclusive
Board is a key priority. This includes meeting our targets for gender
and ethnic diversity, whilst at the same time ensuring that all Board
appointments are made on merit.
As I have already mentioned, we are well progressed in our search
for two new independent NEDs. It will be important to ensure that
our new NEDs receive an appropriate induction, matched to their skills
and experience, together with the right level of support from the
Board in their first year. We will also be focusing on putting in
place succession planning for the Committee Chair roles.
Chief Executive Officer's review
Overview
"We are in a great position to maintain our growth momentum and
capitalise on the significant long-term opportunities in our market
by providing investors with an easy-to-use, low-cost platform,
supported by excellent customer service."
We are pleased to report another strong set of results for 2023,
delivering organic growth in customer numbers, AUA and AUM, across
both the advised and D2C market segments. This growth, alongside a
record financial performance, demonstrates the strength of our
dual-channel platform and diversified revenue model to deliver in
different market conditions.
In the five years since our IPO in December 2018 we have
delivered the significant growth that was expected, increasing our
share of the fast-growing platform market each year, whilst also
paying an increasing ordinary dividend to shareholders. Our focus
on providing great value through our high-quality products has led
to nearly half a million platform customers now trusting us with
their investments.
The investment platform market continues to grow. Whilst we are
winning new business from our competitors within the platform
market, crucially we are still growing the platform market by
attracting assets held off-platform in legacy products, as
investors seek the flexibility and control that platforms offer.
This growth is set to continue with approximately two-thirds of the
estimated GBP3 trillion addressable market currently held
off-platform. Our dual-channel model, serving both the advised and
D2C segments of the market, enables us to capture assets across the
whole addressable market, whilst the benefits of our scale, coupled
with our efficient operating model, enable us to keep costs low for
customers and invest in our platform with a focus on ease of use.
Together with our market-leading customer service levels, these
factors have been key to our success to date and ensure we are
positioned at the forefront of the platform market to capitalise on
the significant long-term growth opportunities.
The current macroeconomic environment has presented challenges
for investors and advisers, with high inflation leading to higher
interest rates. These conditions have impacted consumer confidence
and led to stronger demand for cash savings products. We expect
these conditions to persist in the short term, however the
versatility of our open-architecture platform enables us to
continue to grow across a range of market conditions, as
demonstrated in recent years. Our platform provides customers with
the flexibility to choose from a broad range of investment options,
enabling them to respond to changing market dynamics. In the higher
interest rate environment, we have seen increased demand for
government bonds and money market funds. Separately, our Cash
savings hub has provided a convenient option for customers seeking
higher returns on their cash savings.
Strong performance
Our platform delivered growth of over 50,000 customers in the
year, increasing total platform customers by 12% to 476,532 (FY22:
425,652). Our low-cost products position us well at a time when
customers are increasingly looking for value. Demand has been
strong from D2C customers, supported by the investments in our
brand and improved mobile app functionality. We maintained our
excellent service levels throughout this period, as evidenced by
our high customer retention rate of 95.2% (FY22: 95.5%).
The strength of our open-architecture platform, offering
customers a wide range of investment options, was demonstrated as
we delivered over GBP4 billion of net inflows. This contributed to
an 11% increase in platform AUA which ended the year at GBP70.9
billion (FY22: GBP64.1 billion). Our investments business achieved
another year of significant growth, with total AUM increasing by
68% to GBP4.7 billion (FY22: GBP2.8 billion). The strong demand has
been fuelled by our excellent long-term investment performance,
with all six of our multi-asset growth funds being placed in the
top quartile of returns when compared to their Investment
Association peers over the last five years.
Our diversified revenue model has enabled us to deliver a record
financial performance whilst also investing in long-term
initiatives to support future growth. Revenue increased by 33% to
GBP218.2 million (FY22: GBP163.8 million), largely driven by growth
in platform AUA and higher rates of interest generated on cash
balances held on the platform.
We have been mindful of the need to share the benefits of higher
revenue margins across all our stakeholders. For customers we have
kept our prices low, paid a competitive interest rate on their cash
balances and invested in our propositions; for our people we have
improved our pay and benefits package in response to the rising
cost of living; and for our shareholders our investments in brand
and propositions position us to continue to increase our market
share, whilst once again increasing our ordinary dividend.
Investing for long-term growth
We continue to innovate and invest in our products with a focus
on ease of use.
A significant proportion of our addressable market sits in
legacy pension products. Most adults have several employers during
their career, and subsequently accumulate a number of different
pension pots which can be inefficient to manage separately. Our
free pension finding service, which is now live for new and
existing customers, has proved popular with customers trying to
track down and consolidate pension pots. In FY24, we will launch
our new ready-made pension product that consolidates a customer's
pension into a simple product, offering an investment range of four
AJ Bell growth funds with a transparent all-in charging structure
starting from 45bps. The streamlined nature of this product will
reduce barriers for customers who are less confident in managing
their own investments and provides an enhanced journey for new
customers opening a pension with us in the future.
Our product philosophy of utilising our scale to keep charges
low for our customers ensures we continue to provide excellent
value for money. We reduced a number of charges across our
full-service propositions in the second half of FY22 and are
committed to continually reviewing our customer charges as we
grow.
Trust and brand awareness are key drivers of a new customer's
decision when choosing an investment platform.
We have built a brand which is highly trusted by our customers,
and this year, we commenced our multi-year strategy to enhance
brand awareness and to continue increasing our share of the growing
platform market. This strategy was kick-started with our 'feel
good, investing' multi-channel advertising campaign, alongside our
new five-year partnership as the title sponsor of the Great Run
Series.
Q&A with Michael Summersgill
It has now been five years since AJ Bell's IPO. How do you
reflect on this time?
We have achieved significant organic growth in customers and
AUA, in line with the strategy set out to investors at the time of
the IPO. Over this period, platform AUA has increased by 84% to
GBP70.9 billion and platform customers have risen by 160% to
476,532. This growth has been organic and hasn't required
shareholder capital, in fact we have paid GBP147.5 million in
dividends since the IPO.
Key to this growth has been investing in our platform
propositions whilst consistently delivering excellent service to
our customers, as reflected by our recognition as the Which?
Recommended Investment Platform provider for five consecutive years
and our market-leading Trustpilot score of 4.8-stars.
This service would not be possible without the dedication of our
people. Culture and employee engagement have always been key
strengths of the business, and we have maintained this as we
continued to grow, achieving a 3-star accreditation in the Best
Companies to Work For survey every year since we listed.
Looking ahead to the next five years, I am confident we will
deliver on the significant growth opportunities our market
continues to present.
How will your platform products drive growth?
I expect AJ Bell and Investcentre, our well-established
full-service platform propositions, to continue to be the core
drivers of growth. Alongside this, our new simplified products
represent a key area of our growth strategy. Dodl, our simplified
D2C platform proposition, is aimed at less-experienced investors.
Given the success we have seen on our D2C brand work in 2023, we
have decided to revitalise Dodl in FY24, so that it is brought much
closer to our core AJ Bell branding and delivers an optimised
marketing approach. We are confident in the high-quality customer
outcomes the product delivers and this change will help to maximise
future growth.
We continue to develop Touch, our simplified advised product.
This will expand our offering for advisers, helping them to cater
for clients looking for a digital service model. We completed a
closed beta launch in the year and plan to deliver the initial
proposition to market during 2024.
How will you maintain a strong culture?
Maintaining a strong, purpose-led culture is key for me. Our
guiding principles are an important tool in fostering the right
culture, having been first established around 10 years ago. We have
revisited them this year to ensure they continue to reflect who we
are as a business. This involved stakeholder engagement which
highlighted how deep-rooted our guiding principles are. We have
made some changes which are a refinement of the existing framework
that has served us well, rather than a fundamental change. These
refreshed guiding principles have been embraced by our people who
continue to apply them in their roles each day.
Employee share ownership is ingrained in our culture, ensuring
staff share in the success of the business. The introduction of our
annual all-employee free share scheme will facilitate a
continuation of this culture, with the first awards having been
made in January 2023.
Business update
Advised
Advised customers Advised AUA
159,256 GBP48.2 billion
+10% +8%
Our advised business has performed resiliently during a
challenging period for the market, delivering a 13,885 increase in
customer numbers and GBP3.4 billion increase in AUA. This increase
was driven by net AUA inflows of GBP1.9 billion (FY22: GBP3.3
billion) and GBP1.5 billion of favourable market movements (FY22:
GBP4.3 billion of adverse market movements). Net AUA inflows were
42% lower than prior year as a result of a moderation in transfer
activity as advisers and their clients exercised more caution in
the face of ongoing uncertainty in the macroeconomic
environment.
We have continued to develop our full-service advised
proposition, Investcentre, with a focus on ease of use. This
included new dealing functionality which allows advisers to make
one-off investments using their customers' model portfolio asset
allocation, helping to avoid any unnecessary friction when adding
money to portfolios. We have also made significant progress on
enhancements to the onboarding journey, due to be rolled out in the
first half of FY24, delivering an improved interface mapped to the
advice process which streamlines the new business process for
advisers.
In the higher interest environment a number of customers are
looking for cash-like returns, whilst maintaining the benefits of
remaining in their existing tax wrappers and having the flexibility
to easily invest in other assets again at a time of their choosing.
To support advisers in servicing those customers, we launched the
AJ Bell Investments Money Market MPS in November. This product is
at a market-leading low-price with no management fees and an
ongoing charges figure (OCF) of just 10bps.
We engage with advisers through a range of events and technical
support every year. We continued our 'on and off the road'
seminars, and hosted our flagship Investival conference in
November, which was attended by over 400 financial professionals.
This regular communication with advisers allows us to forge strong
relationships and earn their trust as a platform provider.
D2C
D2C customers D2C AUA
317,276 GBP22.7 billion
+13% +18%
Our D2C business has delivered a strong performance, with a
36,995 increase in customer numbers and a GBP3.4 billion increase
in AUA. This increase was driven by net inflows of GBP2.3 billion
(FY22: GBP2.5 billion), with over 95% of these net inflows into
tax-wrappers and dealing accounts, and GBP1.1 billion of favourable
market movements (FY22: GBP2.7 billion of adverse market
movements).
At the start of the financial year we retired the Youinvest
sub-brand, renaming our full-service D2C platform as AJ Bell. This
change has helped to drive the strong growth in the year by
simplifying the journey for new customers, and improving the
effectiveness of our direct marketing activity.
We have continued to focus on making the customer journey easier
and have rolled out multiple enhancements to the AJ Bell platform.
In November, we introduced the ability to purchase a select list of
gilts online in response to increased demand for those instruments
in the higher interest rate environment. We also delivered our
pension finding service for new and existing customers.
Following the increases in the UK base rate throughout the year,
we raised the rates we pay to customers on cash held on the
platform. Early in 2024, we will be introducing a higher interest
rate on cash held in SIPP drawdown, reflecting the fact that these
customers often hold more of their portfolio in cash to fund their
short-to-medium term retirement plans, as well as higher rates for
SIPP and ISA customers with large cash balances.
We provide high-quality investment content for our D2C
customers, covering the latest market trends. In May, we made our
weekly Shares magazine free for all D2C customers, and our weekly
Money & Markets and Money Matters podcasts provide further
market information and expert analysis to support our customers in
navigating their investment decisions.
Investments
AUM
GBP4.7 billion
+68%
Our investments business offers a range of simple, transparent
investment solutions at a low cost. In a market where many asset
managers are suffering persistent net outflows, the strong
performance and low-cost nature of our multi-asset investment
solutions continue to attract new assets in both the advised and
D2C markets.
The growth has been particularly strong from advised and
external platform customers who value the long-term track record of
performance our investments have delivered.
Customer services and technology
We provide a high-quality service to our customers, with over
95% of customer calls in the year answered within 20 seconds. This
excellent service is reflected in our 4.8-star Trustpilot score, as
rated by our D2C customers, and our 95.2% platform customer
retention rate.
We continue to invest in our technology to deliver a great
customer experience. Our secure and scalable platform has been
designed to facilitate growth and drive operational gearing,
utilising a hybrid technology model which allows us to build
adaptable, easy-to-use interfaces. During the year, we have
continued to invest in the resilience of our platform through
further investment in our cyber security and disaster recovery
capabilities. In addition, we have increased the resource in the
change teams in order to improve the speed at which we deliver
further enhancements to our platform propositions.
We recognise the significant opportunities that artificial
intelligence presents for us to increase our efficiency as a
business as well as the risks it presents for customer security. In
June, we dedicated engineering and business resources to execute an
artificial intelligence hackathon, building several innovative
proofs of concept. The output of this process was very encouraging,
with lots of initiatives discussed and many ideas generated which
we will consider adopting in the future. We will embrace artificial
intelligence, with the focus initially on internal,
non-customer-facing operations, as part of our efforts to
continually improve operational efficiency.
People and culture
As our business continues to grow, it is important that we
maintain a strong culture, along with our high levels of staff
engagement and wellbeing. It is therefore pleasing to have once
again achieved a 3-star accreditation in the 'Best Companies to
Work For', and to be recognised as one of the top 20 large
companies to work for in the UK.
At the start of FY23 we introduced several enhancements to our
pay and benefits package, representing an increase in staff costs
of over 10%, including our new free share award scheme for all
employees. We remained mindful of the impact of the continuing
cost-of-living pressures on our people when considering employee
benefits for the forthcoming year. A number of additional
enhancements to our pay and benefits package were made, including
an average increase in base pay of 5.8% and a further uplift in
pension contributions.
As part of our review of the AJ Bell Way, we have refreshed some
of our guiding principles and relaunched these to staff across the
business, further details of which can be found in our Responsible
Employer section.
Our apprenticeship programmes continue to be a huge success,
with this year's intake of 34 new digital and investment
apprentices being the largest cohort since it was launched in 2017.
We were also pleased to have been recognised as the 'Large Employer
of the Year' at the North West Apprenticeship Awards. In addition,
our commitment to developing our internal talent pipeline was
recognised with an 'Outstanding' Ofsted rating following their
inspection of our Talent Development Programme which upskills and
develops our Team Leaders and Managers through apprenticeships.
We launched the AJ Bell Futures Foundation at the start of the
year to develop long-term partnerships with our local communities.
It has been great to see staff participating in volunteering
activities with both of our partner charities, Smart Works and
IntoUniversity, as well as taking up the chance to nominate local
charities for donations. Further information on the work of the
Foundation can be found in our Responsible Business report.
Regulatory developments
There are a number of ongoing regulatory developments that will
impact customers in our market and we continue to engage
proactively with Government and regulators on their behalf.
We were well prepared for the implementation of the new Consumer
Duty which came into force at the end of July. We are supportive of
this development and believe it will be positive for consumers,
with an increased focus on value for money and ensuring good
customer outcomes. It is disappointing the new Duty does not yet
apply to legacy schemes, as the FCA has recently stated savers in
older schemes may be at greatest risk of poor value for money.
We are continuing to work with the Government and the FCA on
their review of the boundary between advice and guidance, and their
exploration of new ways to offer support and guidance to consumers.
We believe any new rules should be applicable to new and existing
D2C customers and enable firms to deliver solutions that meet the
needs of their customer cohorts. An overly prescriptive approach
would stifle innovation and risk poor customer outcomes.
ISAs should be a simple, easy-to-use tax-efficient savings
vehicle but we now have six variations of ISAs, all aiming to cater
for slightly different customer needs, with complicated rules. We
have been campaigning for the Government to simplify ISAs by
creating a single ISA solution that is easy for consumers to
understand and will encourage them to invest more. Whilst some
relaxations were announced in the Autumn Statement such as allowing
people to subscribe to more than one of the same type of ISA each
year, we think this was a missed opportunity to launch a wider
consultation with the aim of simplifying ISAs and helping people to
invest. Whilst significant change may take some time to achieve,
our proposals have been received well both by government and the
industry, so we will continue to campaign for further change in
this area.
Executive Committee changes
Bruce Robinson stepped down from his role as Company Secretary
and Group Legal Services Director, and as a member of the Executive
Committee, at the end of September 2023. I would like to thank
Bruce for his exceptional service over the last 11 years at AJ Bell
and look forward to continuing to work with him in his new role as
an Executive Consultant.
Following this, I am pleased to report the internal promotion of
Kina Sinclair to the role of Group Legal Services Director and as a
member of the Executive Committee with effect from 1 October 2023.
Kina joined AJ Bell in July 2018 and brings extensive knowledge of
the business alongside her broad commercial law expertise.
As part of the succession plan for Bruce, we have separated the
Company Secretary role and are pleased to announce the appointment
of Olubunmi Likinyo as Company Secretary with effect from 1 October
2023.
Following the year end Kevin Doran, Managing Director of D2C and
Investments, informed the business of his decision to leave. He
will therefore be departing AJ Bell in the new year. Kevin has
helped us to build a terrific investment business and I would
particularly like to thank him for his work in this part of the
business. I am pleased to announce that Charlie Musson, our Chief
Communications Officer, has taken over as Acting Managing Director
D2C. Having worked with Charlie for many years, I look forward to
working with him in his new role as we continue to drive our D2C
platform propositions forward.
Outlook
Investment platforms play a hugely important role in helping
individuals to take control of their long-term investments. At AJ
Bell, we operate a scalable platform that provides a high-quality,
trusted service to our customers. Our continued investment in our
advised and D2C platform propositions means we are well equipped
and ready to serve both existing platform customers and new
customers seeking to invest in the future.
In the short term, the macroeconomic environment will continue
to present some headwinds. However, as we have seen this year, our
versatile platform offering enables us to continue delivering
robust growth in these conditions and the long-term structural
drivers of growth in the UK platform market remain strong. Our aim
remains to continue increasing our share of the platform market,
which for many years has grown quicker than the broader financial
services sector.
Our diversified revenue model means we are well placed to
succeed in different macroeconomic conditions. Our philosophy
remains to continually re-invest the benefits of our scale to drive
long-term growth, ensuring that we offer a great value proposition
to customers whilst investing in our brand, technology and people
at the levels required to deliver on our long-term growth
ambitions.
As a final point, I would like to thank all of our staff;
without their ongoing commitment and quality of work our continued
success would not be possible.
Michael Summersgill
Chief Executive Officer
6 December 2023
Financial review
"The advantages of our dual-channel model and diversified
revenue streams enabled us to deliver a record financial
performance in the year."
Overview
Our dual-channel platform achieved robust net inflows of GBP4.2
billion (FY22: GBP5.8 billion) and customer growth of 12% (FY22:
16%) in a challenging external environment. Our ability to continue
to grow in these circumstances is testament to the quality of our
platform propositions.
Our diversified revenue model enabled us to deliver a strong
financial performance, with revenue increasing by 33% to GBP218.2
million (FY22: GBP163.8 million) and PBT up 50% to GBP87.7 million
(FY22: GBP58.4 million), whilst investing in our people,
propositions and brand to ensure we are well placed to achieve
future growth.
Business performance
Customers
Customer numbers increased by 50,813 during the year to a total
of 491,402 (FY22: 440,589). This growth has been driven by our
platform propositions, with our advised customers up by 10% and our
D2C customers increasing by 13%.
Our platform customer retention rate remained high at 95.2%
(FY22: 95.5%).
Year ended Year ended
30 September 30 September
2023 2022
No. No.
================== ============== ==============
Advised platform 159,256 145,371
D2C platform 317,276 280,281
===================== ============== ==============
Total platform 476,532 425,652
Non-platform 14,870 14,937
===================== ============== ==============
Total 491,402 440,589
--------------------- -------------- --------------
Assets under administration
Year ended 30 September 2023
Advised Total
platform D2C platform platform Non-platform Total
GBPbn GBPbn GBPbn GBPbn GBPbn
-------------------------- ========== ============= ========== ============= =======
As at 1 October 2022 44.8 19.3 64.1 5.1 69.2
-------------------------- ---------- ------------- ---------- ------------- -------
Inflows 5.0 4.3 9.3 0.2 9.5
Outflows (3.1) (2.0) (5.1) (0.3) (5.4)
-------------------------- ---------- ------------- ---------- ------------- -------
Net inflows / (outflows) 1.9 2.3 4.2 (0.1) 4.1
-------------------------- ---------- ------------- ---------- ------------- -------
Market and other
movements 1.5 1.1 2.6 0.2 2.8
========================== ========== ============= ========== ============= =======
As at 30 September
2023 48.2 22.7 70.9 5.2 76.1
-------------------------- ---------- ------------- ---------- ------------- -------
Year ended 30 September 2022
Advised Total
platform D2C 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 6.2 3.9 10.1 0.2 10.3
Outflows (2.9) (1.4) (4.3) (2.2) (6.5)
-------------------------- ---------- ------------- ---------- ------------- -------
Net inflows / (outflows) 3.3 2.5 5.8 (2.0) 3.8
-------------------------- ---------- ------------- ---------- ------------- -------
Market and other
movements (4.3) (2.7) (7.0) (0.4) (7.4)
========================== ========== ============= ========== ============= =======
As at 30 September
2022 44.8 19.3 64.1 5.1 69.2
-------------------------- ---------- ------------- ---------- ------------- -------
We achieved robust total net inflows of GBP4.1 billion (FY22:
GBP3.8 billion), driven by our platform.
Total advised platform net inflows were GBP1.9 billion (FY22:
GBP3.3 billion). The year-on-year reduction was driven by a fall in
gross inflows to GBP5.0 billion (FY22: GBP6.2 billion). There has
been a moderation in transfer activity as advisers and their
clients exercise more caution in the face of ongoing uncertainty in
the macroeconomic environment, whilst existing customer inflows
into tax-wrapped products remained stable. Advised outflows in the
year increased to GBP3.1 billion (FY22: GBP2.9 billion).
Total D2C platform net inflows were GBP2.3 billion (FY22: GBP2.5
billion). Gross inflows increased to GBP4.3 billion (FY22: GBP3.9
billion) with the increase driven by changes to the annual pension
allowance, competitive dynamics and strong inflows from new
customers supported by the investments made in our brand. Outflows
increased to GBP2.0 billion (FY22: GBP1.4 billion) as customers
drew down on their investments amidst the cost-of-living
pressures.
Non-platform net outflows of GBP0.1 billion (FY22: GBP2.0
billion) were significantly lower than FY22 following the closure
of the institutional stockbroking business in the prior year.
Favourable market movements contributed GBP2.8 billion as global
equity markets recovered some of the losses experienced in the
prior year, when adverse market movements contributed to a GBP7.4
billion reduction in AUA. This resulted in closing AUA of GBP76.1
billion (FY22: GBP69.2 billion).
Assets under management
Year ended Year ended
30 September 30 September
2023 2022
GBPbn GBPbn
============== ============== ==============
Advised 2.5 1.7
D2C 1.3 1.0
Non-platform 0.9 0.1
================= ============== ==============
Total 4.7 2.8
----------------- -------------- --------------
Our range of funds and MPSs are highly valued by financial
advisers, their clients and our retail customers. Total AUM closed
at GBP4.7 billion (FY22: GBP2.8 billion), representing a 68%
increase in the year. The growth has been particularly strong from
our advised customers, as well as a significant increase in AUM
from customers investing via external third-party platforms.
Financial performance
Revenue
Year ended Year ended
30 September 30 September
2023 2022
GBP000 GBP000
====================== ============== ==============
Recurring fixed 30,666 29,787
Recurring ad valorem 161,152 102,184
Transactional 26,416 31,876
======================= ============== ==============
Total 218,234 163,847
------------------------- -------------- --------------
Revenue increased by 33% to GBP218.2 million (FY22: GBP163.8
million).
Revenue from recurring fixed fees increased by 3% to GBP30.7
million (FY22: GBP29.8 million), primarily due to higher pension
administration revenue from our advised platform customers.
Recurring ad valorem revenue grew by 58% to GBP161.2 million
(FY22: GBP102.2 million). The key driver of this growth was the
higher levels of interest generated on cash balances held on the
platform following increases to market rates of interest in the
year, combined with elevated average cash balances in the first
half of the year. Our economies of scale enable us to benefit from
these interest rate rises whilst also sharing them with our
customers by paying a market-competitive rate on their cash
balances. Further information on the impact to revenue of changes
to the UK base interest rate has been disclosed in note 25 to the
consolidated financial statements. Increased custody fee income as
a result of higher average platform AUA also contributed to this
revenue growth.
Revenue from transactional fees decreased by 17% to GBP26.4
million (FY22: GBP31.9 million). This decrease was due to lower
dealing activity levels in the current year, impacted by the
macroeconomic environment.
Our overall revenue margin increased by 7.2bps to 29.8bps (FY22:
22.6bps).
Administrative expenses
Year ended Year ended
30 September 30 September
2023 2022
GBP000 GBP000
========================= ============== ==============
Distribution 25,928 14,998
Technology 40,317 32,706
Operational and support 65,769 57,162
========================== ============== ==============
Total 132,014 104,866
---------------------------- -------------- --------------
Administrative expenses increased by 26% to GBP132.0 million
(FY22: GBP104.9 million), in line with expectation, as we delivered
our planned investment in our people, technology and brand, whilst
absorbing some one-off inflationary impacts and supporting
sustainable growth. Total staff costs increased by GBP9.9 million
across the business driven by the roll out of a comprehensive new
pay and benefits package which took effect on 1 October 2022 and
increased headcount to support our growth.
Distribution costs increased by 73% to GBP25.9 million (FY22:
GBP15.0 million) as we executed our plans to increase investment in
our brand. This included our multi-channel 'feel good, investing'
advertising campaign, and our new partnership as the title sponsor
of the AJ Bell Great Run Series.
Technology costs increased by 23% to GBP40.3 million (FY22:
GBP32.7 million). This increase reflects investment in our
proposition development teams, as well as increases to our
licensing and external hosting costs.
Operational and support costs increased by 15% to GBP65.8
million (FY22: GBP57.2 million). The higher costs were driven by an
increase in the average number of employees in order to support our
continued growth, as well as the investment in our pay and benefits
package for staff. This was partially offset by lower dealing costs
in the year as a result of reduced customer dealing activity.
The 26% total increase in the year reflects our investments, as
planned, to deliver on our long-term growth plans. In FY24 we
expect this growth rate to moderate to around 15% as inflationary
pressures settle and we benefit from the operational gearing
inherent in our business model, along with a focus on efficiency.
The same factors are expected to result in lower levels of cost
growth in the medium term.
Profitability and earnings
PBT increased by 50% to GBP87.7 million (FY22: GBP58.4 million)
whilst PBT margin increased to 40.2% (FY22: 35.6%). The higher
margin versus the prior year reflects the higher revenue
margin.
Corporation tax for the period has been calculated at a rate of
22.0%, representing the average annual tax rate for the year, as
the standard rate of UK corporation tax increased from 19.0% to
25.0% on 1 April 2023. Our effective rate of tax for the period was
22.2% (FY22: 20.0%).
Basic earnings per share rose by 46% to 16.59 pence (FY22: 11.39
pence) in line with the increase to PBT. Diluted earnings per share
(DEPS), which accounts for the dilutive impact of outstanding share
awards, also increased by 46% to 16.53 pence (FY22: 11.35
pence).
Financial position
The Group's financial position remains strong, with net assets
totalling GBP166.0 million (FY22: GBP133.4 million) as at 30
September 2023 and a return on assets of 41% (FY22: 35%).
Financial resources and regulatory capital position
Our financial resources are continually kept under review,
incorporating comprehensive stress and scenario testing which is
formally reviewed and agreed at least annually.
Year ended Year ended
30 September 30 September
2023 2022
GBP000 GBP000
======================================== ============== ==============
Total shareholder funds 166,037 133,394
Less: unregulated business capital (3,675) (3,718)
=========================================== ============== ==============
Regulatory group shareholder funds 162,362 129,676
Less: foreseeable dividends (29,807) (18,843)
Less: non-qualifying assets (12,887) (14,233)
------------------------------------------- -------------- --------------
Total qualifying capital resources 119,668 96,600
Less: capital requirement (53,930) (49,252)
------------------------------------------- -------------- --------------
Surplus capital 65,738 47,348
------------------------------------------- -------------- --------------
% of capital resource requirement held 222% 196%
=========================================== ============== ==============
During the year, we have continued to maintain a healthy surplus
over our regulatory capital requirement and as at the balance sheet
date this was 222% (FY22: 196%) of the capital requirement.
We operate a highly cash-generative business, with a short
working-capital cycle that ensures profits are quickly converted
into cash. We generated cash from operations of GBP120.5 million
(FY22: GBP57.2 million) and held a significant surplus over our
basic liquid asset requirement during the period, with our year end
balance sheet including cash balances of GBP146.3 million (FY22:
GBP84.0 million).
Dividend
At half year, the Board declared an interim dividend of 3.50
pence per share (FY22: 2.78 pence per share). This was higher than
would have resulted from applying our stated interim dividend
policy, to ensure that the growth in interim dividend more closely
aligned with the increase in financial performance during the
current year.
The full year dividend policy of paying out 65% of statutory
profit after tax remains unchanged and therefore the Board has
recommended a final dividend of 7.25 pence per share (FY22: 4.59
pence per share), resulting in a total ordinary dividend of 10.75
pence (FY22: 7.37 pence).
Peter Birch
Chief Financial Officer
6 December 2023
Principal risks and uncertainties
The Board is committed to a continual process of improvement and
embedment of the risk management framework within the Group. This
ensures that the business identifies both existing and emerging
risks and continues to develop appropriate mitigation
strategies.
The Board believes that there are a number of potential risks to
the Group that could hinder the successful implementation of its
strategy. These risks may arise from internal and external events,
acts and omissions. The Board is proactive in identifying,
assessing and managing all risks facing the business, including the
likelihood of each risk materialising in the shorter or longer
term.
The principal risks and uncertainties facing the Group are
detailed below, along with potential impacts and mitigating
actions. The majority of the Group's principal risks and
uncertainties' residual risk has remained stable, however the
residual risk has increased for information security and financial
crime due to the heightened threat landscape in these areas.
Residual risk direction
Increased Stable Decreased
Risk Potential impact Mitigations
Strategic risk
Strategic risk The Group regularly
* Loss of competitive advantage, such that AUA and reviews its products
The risk that the Group customer number targets are adversely impacted. This against competitors, in
fails to remain competitive would have a negative impact on profitability. relation to pricing,
in its peer group, due to functionality
lack of innovative and service, and actively
products and services, * Reputational damage as a result of underperformance seeks to make enhancements
increased competitor and / or regulatory scrutiny. where necessary to
activity, regulatory maintain or improve
expectations, and lack of its competitive position
marketing focus and spend in line with the Group's
to keep pace with strategic objectives.
competitors. The Group remains closely
aligned with trade and
Residual risk direction industry bodies, and other
policy makers
Stable across our market. The use
of ongoing competitor
analysis provides insight
and an opportunity
to adapt strategic
direction in response to
market conditions.
------------------------------------------------------------- --------------------------
ESG risk The Group has established
* Environmental, physical and transition risks an ESG Working Group to
The risk that resulting from climate change, which may impact the manage all ESG-related
environmental, social and Group and our customers' assets. matters, including
governance factors could people- and social-related
negatively impact the matters, as well as the
Group, * Social risks, include employee wellbeing and Group's Task Force for
its customers, investors diversity and inclusion. Climate-related
and the wider community. Financial Disclosures
(TCFD). ESG-related
Residual risk direction * Governance risks, including the risks related to the strategic objectives are
Group's governance structures being ineffective, incorporated in the
Stable which could manifest in governance-related Group's
reputational and conduct risks. Business Planning Process
(BPP).
The Group is committed to
creating an inclusive
workplace and prioritising
employee wellbeing,
to establish an
environment where all
employees feel valued and
supported. The Group's
Employee
Voice Forum promotes
health and wellbeing in
and outside of the office.
The Group has a robust
governance framework.
------------------------------------------------------------- --------------------------
Operational risk
Legal and regulatory risk The Group maintains a
* Regulatory censure and / or fines, including fines strong compliance culture
The risk that the Group from the FCA and Information Commissioner's Office geared towards positive
fails to comply with (ICO). customer outcomes
regulatory and legal and regulatory compliance.
standards. The Group performs regular
* Related negative publicity could reduce customer horizon scanning to ensure
confidence and affect ability to generate new all regulatory change is
Residual risk direction inflows. detected and
highlighted to the Group
Stable for consideration.
* Poor conduct could have a negative impact on customer The Group maintains an
outcomes, impacting the Group's ability to achieve open dialogue with the FCA
strategic objectives. and actively engages with
them on relevant
proposed regulatory
change.
The Compliance function is
responsible for ensuring
all standards of the
regulatory system
are being met by the
Group. This is achieved by
implementing policies and
procedures across
the business, raising
awareness and developing
an effective control
environment. Where
appropriate,
the Compliance Monitoring
Team conducts reviews to
ensure compliance
standards have been
embedded
into the business.
------------------------------------------------------------- --------------------------
Information security risk The Group continually
* Information security breaches could adversely impact reviews its cyber security
The risk of a vulnerability individuals' data rights and freedoms and could position to ensure that it
in the Group's result in fines / censure from regulators, such as protects the
infrastructure being the ICO and FCA. confidentiality,
exploited or user misuse integrity and availability
that causes harm to of its network and the
service, data and / or an * Failure to maintain or quickly recover operations data that it holds.
asset causing material could lead to intolerable harm to customers and the A defence in-depth
business impact. Group. approach is in place with
firewalls, web gateway,
Residual risk direction email gateway and
* The Group could suffer damage to its reputation anti-virus
Increased eroding trust and making it difficult to attract and amongst the technologies
retain customers, employees, partners, and investors. deployed. Staff awareness
is seen as being a key
component of the
layered defences, with
regular updates, training
and mock phishing
exercises.
Our security readiness is
subject to independent
assessment by a
penetration testing
partner
that considers both
production systems and
development activities.
This is supplemented by
running a programme of
weekly vulnerability scans
to identify configuration
issues and assess
the effectiveness of the
software patching
schedule.
The Group regularly
assesses its maturity
against an acknowledged
security framework, which
includes an ongoing
programme of staff
training and assessment
through mock security
exercises.
------------------------------------------------------------- --------------------------
Data risk The Group monitors the
* Data breaches could adversely impact individuals' adequacy of its data
Data risk is defined as the data rights and freedoms and could result in fines / governance framework via
potential threats and censure from regulators, such as the ICO and FCA. the Data Forum .
vulnerabilities that can The Group has data
compromise the protection policies and
confidentiality, integrity, * A data breach could result in financial loss due to procedures, security
availability, and the cost of investigating the breach, notifying controls to protect data
compliance of sensitive or impacted individuals, and implementing remediation such
valuable data within measures. as encryption, access
the Group and its controls and monitoring.
third-party suppliers. This The Group educates
risk encompasses the * The Group could suffer damage to its reputation, employees about data
possibility of unauthorised eroding trust and making it difficult to attract and security and the
access, loss, theft, retain customers, employees, partners, and investors. importance of protecting
alteration, or exposure of sensitive
data. data.
The Group conducts regular
Residual risk direction data audits to identify
and address potential
Stable security risks.
The Group's Data
Protection Officer / CRO
provides an assessment of
the adequacy of the
Group's
data protection framework
as part of the annual DPO
report.
------------------------------------------------------------- --------------------------
Financial crime risk Extensive controls are in
* The Group may be adversely affected, including place to minimise the risk
regulatory censure or enforcement, if we fail to of financial crime.
The risk of failure to mitigate the risk of being used to facilitate any Policies and procedures
protect the Group and its form of financial crime. include:
customers from all aspects mandatory financial crime
of financial crime, training in anti-money
including anti-money * Potential customer detriment as customers are at risk laundering and
laundering, terror of losing funds or personal data, which can subject counter-terrorist
financing, proliferation them to further loss via other organisations. financing,
financing, sanctions fraud, market abuse and
restrictions, the Criminal Finances Act
market abuse, fraud, * Fraudulent activity leading to identity fraud and / for all employees to aid
cyber-crime and the or loss of customer holdings to fraudulent activity. the detection,
facilitation of tax prevention and reporting
evasion. of financial crime. The
* The Group could suffer damage to its reputation, Group has an extensive
Residual risk direction eroding trust and making it difficult to attract and recruitment process
retain customers, employees, partners, and investors. in place to screen
Increased potential employees.
The Group actively
maintains defences against
a broad range of likely
attacks by global actors,
bringing together tools
from well-known providers,
external consultancy and
internal expertise
to create multiple layers
of defence. The latter
includes intelligence
shared through
participation
in regulatory, industry
and national cyber
security networks.
------------------------------------------------------------- --------------------------
Third-party management risk To mitigate the risk posed
* Loss of service from a third-party provider could by third-party suppliers,
The risk that a third-party have a negative impact on customer outcomes due to the Group conducts
provider materially fails website unavailability, delays in receiving and / or onboarding due diligence
to deliver the contracted processing customer transactions or interruptions to and monitors performance
services. settlement and reconciliation processes. against documented service
standards to ensure their
Residual risk direction continued commitment
* Financial impact through increased operational to service, financial
Stable losses. stability and viability.
Performance metrics are
discussed monthly with
* Regulatory fine and / or censure. documented actions for any
identified improvements.
This is supplemented by
attendance at formal user
groups with other clients
of the key suppliers,
sharing experience and
leveraging the strength of
the user base. Where
relevant and appropriate,
annual financial due
diligence on critical
suppliers and on-site
audits are also
undertaken.
------------------------------------------------------------- --------------------------
Technology risk The Group continues to
* The reliance on evolving technology remains crucial implement a programme of
The risk that the design, to the Group's effort to develop its services and increasing annual
implementation and enhance products. Prolonged underinvestment in investment in the
management of applications, technology would affect our ability to serve our technology
infrastructure and customers and meet their needs. platform. This is informed
services fail to meet by recommendations that
current and future business result from regular
requirements. * Failing to deliver and manage a fit-for-purpose architectural reviews
technology platform could have an adverse impact on of applications and of the
Residual risk direction customer outcomes and affect our ability to attract underpinning
new customers. infrastructure and
Stable services.
Daily monitoring routines
* Technology failures may lead to financial or provide oversight of
regulatory penalties, and reputational damage. performance and capacity.
Our rolling programme of
both business continuity
planning and testing, and
single point
of failure management,
maintains our focus on the
resilience of key systems
in the event of
an interruption to
service.
------------------------------------------------------------- --------------------------
Operational resilience risk The Group has developed a
* Failure to maintain or quickly recover operations comprehensive operational
The risk that the Group could lead to intolerable harm to customers and the resilience framework,
does not have an adequate Group. under the direction
operational resilience of the Operations
framework to prevent, sub-committee of ExCo. The
adapt to, respond to, * Operational resilience disruptions may lead to R&CC and Board also
recover from and learn from financial or regulatory penalties, and reputational provide oversight.
operational disruptions. damage. An annual operational
resilience self-assessment
Residual risk direction document is reviewed by
the Board and R&CC.
Stable The Group's Risk Team also
provide a 2(nd) line of
defence review of the
operational resilience
self-assessment.
------------------------------------------------------------- --------------------------
Process risk There is an ongoing
* A decline in the quality of work would have a programme to train staff
The risk that, due to financial impact through increased operational on multiple operational
unexpectedly high volumes, losses. functions. Diversifying
the Group is unable to the workforce enables the
process work within business to deploy staff
agreed service levels and / * Unexpectedly high volumes coupled with staff when high work volumes are
or to an acceptable quality recruitment and retention issues could lead to poor experienced.
for a sustained period. customer outcomes and reputational damage. Causes of increased
volumes of work, for
Residual risk direction example competitor
behaviour, are closely
Stable monitored
in order to plan resource
effectively.
The Group focuses on
increasing the
effectiveness of its
operational procedures
and, through
its business improvement
function,
aims to improve and
automate more of its
processes. This reduces
the need for manual
intervention
and the potential for
errors.
------------------------------------------------------------- --------------------------
Change risk All operational and
* Operational resilience disruptions resulting from regulatory change is
The risk of potential crystallisation of change risk may lead to financial prioritised, captured, and
negative consequences and or regulatory penalties, and reputational damage. monitored through the
uncertainties associated Operations sub-committee
with introducing of ExCo.
modifications, alterations, * Change can increase costs if not delivered within Technical Change is
or adjustments to budget or introduce complexity to end users due to a prioritised, captured, and
established processes or lack of compatibility with existing systems. monitored within
systems. Technology Services and
through
Residual risk direction * Reduced quality because of a change can lead to associated Committees.
customer dissatisfaction, rework, and additional Product Change is managed
Stable costs. within the Product areas
and overseen by the
corresponding Proposition
* An inability to deliver change can result in Committee.
reputational damage to the Group, making it difficult
to attract customers and talent.
------------------------------------------------------------- --------------------------
Financial control The Group's financial
environment risk * Reputational damage with regulators, leading to control and fraud
increased capital requirement. prevention policies and
The risk that the financial procedures are designed to
control environment is ensure that the risk of
weak. This includes the * Potential customer detriment resulting from fraudulent access to
risk of loss to inadequate protection of customer assets. customer or corporate
the business, or its accounts is minimised.
customers, because of Anti-fraud training is
either the actions of an * Increased expenditure in order to compensate provided to all members of
associated third party customers for loss incurred. staff who act as first
or the misconduct of an line of defence
employee. to facilitate early
detection of potentially
Residual risk direction fraudulent activity.
Strong technology controls
Stable are in place to identify
potential money laundering
activity or
market abuse.
------------------------------------------------------------- --------------------------
Conduct / Consumer Outcomes The Group's customer focus
risk * Poor conduct could have a negative effect on customer is founded on our guiding
outcomes. principles, which drive
The risk that the fair the culture of
treatment of customers is the business and ensure
not central to the Group's * Reputational damage resulting from poor levels of customers remain at the
corporate culture. customer service. heart of everything we do.
Training on the
Residual risk direction importance and awareness
* The Group may be adversely affected, including of the delivery of good
Stable regulatory censure or enforcement. customer outcomes is
provided to all staff
on a regular basis.
The Group continues to
focus on enhancements to
its framework, in relation
to the identification,
monitoring and mitigation
of risks of poor customer
outcomes, and to its
product management
process to reduce the
potential for customer
detriment.
All developments are
assessed for potential
poor customer outcomes,
and mitigating actions
are delivered alongside
the developments as
appropriate.
The Group implemented the
Consumer Duty in July 2023
which provides higher and
clearer standards
of consumer protection.
------------------------------------------------------------- --------------------------
People risk The Group has improved its
* Difficulties in recruiting the right people to work recruitment processes to
The risk that the Group for the Group. attract the best people
fails to attract, retain, possible to join
develop and engage the Group.
employees who are aligned * Existing employees who are not motivated, do not The Group undertakes a
to the Group's guiding perform well and may leave the Group. staff engagement survey at
principles. least annually and uses
this feedback to
Residual risk direction * Talented employees who are not appropriately address any areas for
developed and / or have limited opportunities to improvement to ensure
Stable progress are likely to leave the Group. staff engagement remains
high.
The Group conducts regular
* Resource shortfalls may impact quality and service reviews of its employee
and could lead to poor service / consumer outcomes benefits package to ensure
and reputational damage. it is competitive.
The Group operates a
talent development
programme.
------------------------------------------------------------- --------------------------
Investment risk The Group maintains robust
* Outflows or loss of assets under management as a Investment Governance
Risk of failures result of underperformance or reputational damage. arrangements for decision
surrounding the investment making in relation
activities carried out by to the AJBI products and
AJ Bell Investments * Compensation required to cover operational losses, services. The performance
(AJBI). The risks specific such as trading errors. of AJBI products and
to the AJBI entity include services is monitored
operational, reputational on an ongoing basis for
and conduct * Potential customer detriment resulting from alignment with customer
risks. inadequate governance arrangements. expectations and mandates,
including through
Residual risk direction dedicated committees and
by the independent 2(nd)
Stable line of defence Investment
Risk function.
Enterprise risks are
reviewed and monitored
through AJBI's Department
Risk Forum, with
escalation
routes to the Investment
Proposition Committee
(IPC) and Risk &
Compliance Committee.
Consumer
Duty Evidential MI is
monitored and reported up
through the IPC and
Operational Committee.
Any trading undertaken on
the AJ Bell Funds or in
model portfolios is
subject to a number
of internal controls to
minimise the risk of any
operational losses .
------------------------------------------------------------- --------------------------
Financial risk
Market risk The Group's products are
* Adverse effect on customer transactional activity or targeted at UK residents.
The risk that a significant ad valorem fees generated from assets under We do not do business in
and prolonged capital administration from which the Group derives revenue. any other countries
market or economic downturn Sensitivities for interest rate and market movements and have relatively few
has an adverse are shown in note 25 to the consolidated financial customers outside the UK.
effect on customer statements. However, in the event that
confidence, asset values the economy falls
and interest rates. back into a prolonged
recession, this may impact
Residual risk direction contribution levels and
confidence generally
Stable in the savings and
investment markets. The
Directors believe that the
Group's overall income
levels and in particular
the balance between the
different types of assets
and transactions
from which that income is
derived, provide a robust
defensive position against
a sustained
economic downturn.
Revenue from retained
interest income is derived
from the pooling of
customer cash balances.
The Group has a variety of
transactional and
recurring revenue streams,
some of which are
monetary amounts while
others are ad valorem.
This mix of revenue types
helps to limit the
Group's exposure to
interest rate fluctuations
and capital market
fluctuations.
------------------------------------------------------------- --------------------------
Capital risk The Group adopts a
* Inability to cover unexpected losses. cautious and controlled
The risk that the Group approach to managing its
does not maintain capital risk.
sufficient capital * Additional regulatory scrutiny and potential The Group conducts an
resources to cover increased regulatory capital resource requirements. Internal Capital and Risk
unexpected Assessment (ICARA) process
losses. aligned with its
risk management framework
Residual risk direction to identify, monitor and
mitigate harms.
Stable Where harms cannot be
mitigated, the Group holds
capital to cover potential
unexpected losses
(its capital resource
requirement). The Group's
capital risk appetite is
to maintain its capital
resources at least >125%
more than the Group's
capital resource
requirement.
------------------------------------------------------------- --------------------------
Credit risk The Group's credit risk
* Unintended market exposure. extends principally to its
The risk of potential financial assets, cash
failure of clients, market balances held with
counterparties or banks * Customer detriment. banks and trade and other
used by the Group receivables. The Group
to fulfil contractual carries out initial and
obligations. ongoing due diligence
on the market
Residual risk direction counterparties and banks
that it uses, and
Stable regularly monitors the
level of exposure.
The Group continues to
diversify across a range
of approved banking
counterparties, reducing
the concentration of
credit risk as exposure is
spread over a larger
number of counterparties.
The banks currently used
by the Group are detailed
in note 25 to the
consolidated financial
statements. With regard to
trade receivables, the
Group has implemented
procedures that require
appropriate credit or
alternative checks on
potential customers before
business is undertaken.
This has minimised credit
risk in this area.
The Group will maintain
its existing strategy of
diversification to ensure
acceptable exposure
across a wide range of
well-capitalised banks
with appropriate credit
ratings.
It will continue to
regularly monitor its
level of exposure and to
assess the financial
strength
of its banking
counterparties.
------------------------------------------------------------- --------------------------
Liquidity risk The Group has robust
* Reputational damage. systems and controls and
The risk that the Group monitors all legal
suffers significant entities to ensure they
settlement default or * Potential customer detriment. have
otherwise suffers major sufficient funds to meet
liquidity problems or their liabilities as they
issues of liquidity * Financial loss. fall due.
deficiency which severely
impact on the Group's The Group continues to
reputation in the markets. * Unable to meet obligations as they fall due. monitor trade settlement
on both an intra-day and
The risk that the Group daily basis.
does not have available
readily realisable The Group continues to be
financial resources to a highly cash-generative
enable it to meet its business and to maintain
obligations as they fall sufficient cash
due or can only secure such and standby banking
resources at excessive facilities to fund its
cost. foreseeable trading
requirements.
Residual risk direction
Stable
------------------------------------------------------------- --------------------------
Viability statement
In accordance with provision 31 of the UK Corporate Governance
Code 2018, the Board has assessed the viability of the Group,
considering a four-year period to September 2027. The Board
considers a four-year horizon to be an appropriate period to assess
the Group's strategy and its capital requirements, considering the
investment needs of the business and the potential risks that could
impact the Group's ability to meet its strategic objectives.
This assessment has been made considering the Group's financial
position and regulatory capital and liquidity requirements in the
context of its business model, strategy and four-year financial
forecasts and in consideration of the principal risks and
uncertainties, as detailed in the Strategic report. The principal
risks and uncertainties are those that may adversely impact the
Group based on its business model and strategy and are derived from
both the Group's business activities and the wider macroeconomic
environment in which the Group operates but does not control.
As an FCA-regulated entity, as part of its Internal Capital and
Risk Assessment (ICARA) the Group is required to use stress testing
of the business model and strategy to identify whether it holds
sufficient own funds and liquid assets. Forward-looking
hypothetical stress testing scenarios have been determined by
considering potential macroeconomic and idiosyncratic events that
would have a significant adverse impact on the Group's ability to
generate profits, and therefore maintain the existing levels of own
funds and liquid assets, over the business planning period.
The Board-approved four-year financial forecast assumes the
business continues to grow customer numbers and AUA through
investment in our brand, product propositions, technology and
people. The financial forecasts assume that the Bank of England
base interest rate has peaked, gradually falling throughout the
forecast period, in line with market projections. There are no
significant market movements in underlying asset values based on
the position at the point the projections were approved by the
Board.
The Board has considered the potential impact of three stress
test scenarios, which cumulatively represent a severe, remote but
plausible scenario:
1) Macroeconomic (Market risk) - a significant reduction in
equity market values, based on the 2008-09 global financial crisis.
Asset values fall by 40% in year one, recovering to 20% below the
level they were prior to the fall in year two, and remain flat in
years three and four.
2) Macroeconomic (Market risk) - Bank of England base interest
rate reduced to 0.50% throughout the assessment period, leading to
a lower interest rate retained on customer cash balances.
3) Idiosyncratic (Technology risk, Third-party management risk)
- prolonged IT issues with key operating software suppliers cause
significant damage to AJ Bell's service and reputation, which
results in a reduction in customers. Following year one the Group
incurs development and license costs to upgrade or replace key
components of the platform software, with service levels and net
inflows returning to normal in year three.
The Board have identified a number of potential management
actions that could be taken, the action selected would be dependent
upon the nature of the scenario.
The results have confirmed that the Group would be able to
withstand the adverse financial impact of these three scenarios
occurring simultaneously over the four-year assessment period. This
assumes that dividends are paid in line with the recommendation
made in the 30 September 2023 annual report and with the Group
dividend policy on a forward-looking basis. During the period, the
Group continues to retain surplus financial resources over and
above its regulatory capital and liquidity requirements, with or
without any management remediation actions.
The Group's strategy and four-year financial forecasts were
approved by the Board in September 2023. The Directors confirm that
they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due
over the four-year period ending September 2027.
The Strategic report was approved by the Board of Directors and
signed on its behalf by:
Michael Summersgill
Chief Executive Officer
6 December 2023
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with UK-adopted
international accounting standards and applicable law and
regulations.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. Under that
law the Directors are required to prepare the Group financial
statements in accordance with UK-adopted international accounting
standards and have elected to prepare the Parent Company financial
statements in accordance with UK accounting standards and
applicable law including FRS 101 Reduced Disclosure Framework.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent Company and of
the profit or loss for the Group for that period. The Directors are
also required to prepare the Group financial statements in
accordance with international financial reporting standards as
adopted by the UK.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- for the Group financial statements, state whether they have
been prepared in accordance with UK-adopted international
accounting standards, subject to any material departures disclosed
and explained in the financial statements;
-- for the Parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the financial
statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group or Parent
Company will continue in business; and
-- prepare a Directors' report, a Strategic report and
Directors' Remuneration report which comply with the requirements
of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Parent Company and enable them
to ensure that the financial statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for ensuring the Annual Report and
the Financial Statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Each of the Directors, whose names and responsibilities are
listed in the Corporate Governance report, confirms that, to the
best of their knowledge:
-- The financial statements have been prepared in accordance
with the applicable set of accounting standards and give a true and
fair view of the assets, liabilities, financial position and profit
and loss of the Group.
-- The Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Group and Parent Company, together with a description of the
principal risks and uncertainties that they face.
We consider that the Annual Report and Financial Statements,
taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Group's
position and performance, business model and strategy.
Approved by the Board on 6 December 2023 and signed on its
behalf by:
Olubunmi Likinyo
Company Secretary
4 Exchange Quay
Salford Quays
Manchester
M5 3EE
Consolidated income statement
for the year ended 30 September 2023
2023 2022
Notes GBP000 GBP000
-------------------------------------------- ------ ---------- ----------
Revenue 5 218,234 163,847
Administrative expenses (132,014) (104,866)
--------------------------------------------- ------ ---------- ----------
Operating profit 6 86,220 58,981
Investment income 8 2,393 198
Finance costs 9 (952) (768)
--------------------------------------------- ------ ---------- ----------
Profit before tax 87,661 58,411
Tax expense 10 (19,442) (11,672)
--------------------------------------------- ------ ---------- ----------
Profit for the financial year attributable
to:
Equity holders of the parent company 68,219 46,739
--------------------------------------------- ------ ---------- ----------
Earnings per share
Basic (pence) 12 16.59 11.39
Diluted (pence) 12 16.53 11.35
--------------------------------------------- ------ ---------- ----------
All revenue, profit and earnings are in respect of continuing
operations.
There were no other components of recognised income or expense
in either period and, consequently, no statement of other
comprehensive income has been presented.
Consolidated statement of financial position
as at 30 September 2023
2023 2022
Notes GBP000 GBP000
----------------------------- ------ --------- ---------
Assets
Non-current
assets
Goodwill 13 6,991 6,991
Other intangible assets 14 7,433 8,779
Property, plant and
equipment 15 3,809 3,325
Right-of-use
assets 16 10,800 12,273
Deferred tax
asset 18 484 610
------------------------------ ------ --------- ---------
29,517 31,978
----------------------------- ------ --------- ---------
Current assets
Trade and other receivables 19 58,501 49,436
Current tax receivable - 38
Cash and cash equivalents 20 146,304 84,030
------------------------------- ------ --------- ---------
204,805 133,504
----------------------------- ------ --------- ---------
Total assets 234,322 165,482
------------------------------ ------ --------- ---------
Liabilities
Current liabilities
Trade and other payables 21 (52,437) (15,604)
Current tax liability (151) -
Lease liabilities 16 (1,540) (1,566)
Provisions 22 (1,126) (519)
------ --------- ---------
(55,254) (17,689)
----------------------------- ------ --------- ---------
Non-current liabilities
Lease liabilities 16 (10,866) (12,395)
Provisions 22 (2,165) (2,004)
------ --------- ---------
(13,031) (14,399)
----------------------------- ------ --------- ---------
Total liabilities (68,285) (32,088)
------------------------------ ------ --------- ---------
Net assets 166,037 133,394
============================== ====== ========= =========
Equity
Share capital 23 52 51
Share premium 8,963 8,930
Own shares (2,377) (473)
Retained earnings 159,399 124,886
------------------------------ ------ --------- ---------
Total equity 166,037 133,394
------------------------------ ------ --------- ---------
The financial statements were approved by the Board of Directors
and authorised for issue on 6 December 2023 and signed on its
behalf by:
Peter Birch
Chief Financial Officer
AJ Bell plc
Company registered number: 04503206
Consolidated statement of changes in equity
for the year ended 30 September 2023
Share Share Retained Own Total
capital premium earnings shares equity
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------------- -------- -------- --------- -------- ---------
Balance at 1 October
2022 51 8,930 124,886 (473) 133,394
-------------------------------------------------- -------- -------- --------- -------- ---------
Total comprehensive income
for the year:
Profit for the year - - 68,219 - 68,219
Transactions with owners, recorded
directly in equity:
Issue of shares 1 33 - - 34
Dividends
paid - - (33,294) - (33,294)
Equity settled share-based payment transactions - - (110) - (110)
Deferred tax effect of share-based
payment transactions - - (88) - (88)
Tax relief on exercise of share
options - - 123 - 123
Share transfer relating to
EIP (note 23) - - (96) 96 -
Payment of tax from employee
benefit trust - - (241) - (241)
Own shares acquired
(note 23) - - - (2,000) (2,000)
Total transactions
with owners 1 33 (33,706) (1,904) (35,576)
-------------------------------------------------- -------- -------- --------- -------- ---------
Balance at 30 September
2023 52 8,963 159,399 (2,377) 166,037
================================================== ======== ======== ========= ======== =========
Share Share Retained Own Total
capital premium earnings shares equity
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------------------- -------- -------- --------- ------- ---------
Balance at 1 October
2021 51 8,658 122,739 (740) 130,708
---------------------------------------------- -------- -------- --------- ------- ---------
Total comprehensive income
for the year:
Profit for the year - - 46,739 - 46,739
Transactions with owners, recorded directly
in equity:
Issue of shares - 272 - - 272
Dividends
paid - - (50,383) - (50,383)
Equity settled share-based payment
transactions - - 6,162 - 6,162
Deferred tax effect of share-based
payment transactions - - (275) - (275)
Tax relief on exercise of share
options - - 171 - 171
Share transfer relating
to EIP - - (267) 267 -
Total transactions
with owners - 272 (44,592) 267 (44,053)
---------------------------------------------- -------- -------- --------- ------- ---------
Balance at 30 September 2022 51 8,930 124,886 (473) 133,394
================================================ ======== ======== ========= ======= =========
Consolidated statement of cash flows
for the year ended 30 September 2023
2023 2022
Notes GBP000 GBP000
--------------------------------------------- ------ --------- ---------
Cash flows from operating activities
Profit for the financial year 68,219 46,739
Adjustments for:
Investment income (2,393) (198)
Finance costs 952 768
Income tax expense 19,442 11,672
Depreciation, amortisation and impairment 4,788 3,643
Share-based payment expense 24 1,103 4,728
Increase/(decrease) in provisions 607 (1,007)
Loss on disposal of property, plant
and equipment 16 21
Increase in trade and other receivables (9,065) (11,974)
Increase in trade and other payables 36,833 2,839
--------------------------------------------- ------ --------- ---------
Cash generated from operations 120,502 57,231
--------------------------------------------- ------ --------- ---------
Income tax paid (19,092) (11,433)
Net cash flows from operating activities 101,410 45,798
--------------------------------------------- ------ --------- ---------
Cash flows from investing activities
Purchase of other intangible assets 14 (1,926) (2,365)
Purchase of property, plant and equipment 15 (1,574) (1,014)
Interest received 2,393 198
--------------------------------------------- ------
Net cash flows used in investing activities (1,107) (3,181)
--------------------------------------------- ------ --------- ---------
Cash flows from financing activities
Payments of principal in relation to
lease liabilities 16 (1,576) (1,716)
Payment of interest on lease liabilities 16 (952) (768)
Proceeds from issue of share capital 23 34 272
Purchase of own shares for employee
share schemes 23 (2,000) -
Payment of tax from employee benefit
trust (241) -
Dividends paid 11 (33,294) (50,383)
--------------------------------------------- ------
Net cash flows used in financing activities (38,029) (52,595)
--------------------------------------------- ------ --------- ---------
Net increase/(decrease) in cash and
cash equivalents 62,274 (9,978)
Cash and cash equivalents at beginning
of year 20 84,030 94,008
--------------------------------------------- ------ --------- ---------
Total cash and cash equivalents at
end of year 20 146,304 84,030
============================================= ====== ========= =========
Notes to the consolidated financial statements
for the year ended 30 September 2023
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 nature
of the Group's operations and its principal activities are set out
in the Strategic report and the Directors' report.
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. A list of investments in subsidiaries,
including the name, country of incorporation, registered office,
and proportion of ownership is given in note 6 of the Company's
separate financial statements.
The consolidated financial statements were approved by the Board
on 6 December 2023.
The financial information contained in this report does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. The financial information set out in this
report has been extracted from the Group's 2023 Annual Report and
Financial Statements, which have been approved by the Board of
Directors on 6 December 2023. The Auditors have reported on the
2022 and 2023 accounts, their reports were (i) unqualified; (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 sections 498(2) or (3)
of the Companies Act 2006.
2 Significant accounting policies
Basis of accounting
The consolidated financial statements of AJ Bell plc have been
prepared in accordance with UK-adopted International Financial
Reporting Standards.
The financial statements are prepared on the historical cost
basis and prepared on a going concern basis. They are presented in
sterling, which is the currency of the primary economic environment
in which the Group operates, rounded to the nearest thousand.
The accounting policies have been applied consistently to all
periods presented in these financial statements and by all Group
entities, unless otherwise stated.
Changes to International Reporting Standards
Interpretations and standards which became effective during the
year:
The following amendments and interpretations became effective
during the year. Their adoption has not had any significant impact
on the Group.
Effective
from
IAS 37 Onerous Contracts: Cost of Fulfilling a Contract 1 January
(Amendments) 2022
IAS 16 Property, Plant and Equipment: Proceeds before 1 January
intended use (Amendments) 2022
Annual Improvements to IFRS Standards 2018-2020 1 January
2022
IFRS Reference to the Conceptual Framework (Amendments) 1 January
3 2022
Interpretations and standards in issue but not yet effective
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 30 September each year. The Group
controls an entity when it is exposed to, or it has rights to
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The Group reassesses whether it controls an entity if facts and
circumstances indicate there are changes to one or more elements of
control. The results of a subsidiary undertaking are included in
the consolidated financial statements from the date the control
commences until the date that control ceases.
All intercompany transactions, balances, income and expenses are
eliminated on consolidation.
2.1 Going concern
The Group's business activities, together with its financial
position and the factors likely to affect its future development
and performance are set out in the Strategic report and the
Directors' report. Note 25 includes the Group's policies and
processes for managing exposure to credit and liquidity risk.
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, a fall in the Bank
of England base interest rate leading to a lower interest rate
retained on customer cash balances, and a further Group-specific
idiosyncratic stress relating to a scenario whereby prolonged IT
issues cause a reduction in customers. Further detail of the
forecasts and stress test scenarios are set out in the Viability
statement. These scenarios 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 report and therefore have continued to adopt the going
concern basis in preparing the financial statements.
2.2 Business combinations
A business combination is recognised where separate entities or
businesses have been acquired by the Group. The acquisition method
of accounting is used to account for the business combinations made
by the Group. The cost of a business combination is measured at the
aggregate of the fair values (at the date of exchange), of assets
given, liabilities incurred or assumed and equity instruments
issued by the Group in exchange for control of the acquired entity.
Where the consideration includes a contingent consideration
arrangement, the contingent consideration is measured at its
acquisition date fair value and included as part of the cost of the
acquisition. Subsequent changes in such fair values are adjusted
against the cost of acquisition where they qualify as measurement
period adjustments. All other subsequent changes in the fair value
of contingent consideration are charged to the income statement,
except for obligations that are classified as equity, which are not
re-measured. Where consideration is dependent on continued
employment within the business this is treated as a separate
transaction as post-acquisition remuneration.
Acquisition related costs are expensed as incurred in the income
statement, except if related to the issue of debt or equity
securities. Identifiable assets acquired and liabilities and
contingent liabilities assumed in the business combination are
measured initially at their fair values at the acquisition date.
The excess of the cost of acquisition over the fair value of the
Group's share of the identifiable net assets acquired is recorded
as goodwill. If this is less than the fair value of the Group's
share of the identifiable net assets of the subsidiary acquired,
the difference is taken immediately to the income statement.
2.3 Segmental reporting
The Group determines and presents operating segments based on
the information that is provided internally to the Board, which is
the Group's Chief Operating Decision Maker (CODM). In assessing the
Group's operating segments the Directors have considered the nature
of the services provided, product offerings, customer bases,
operating model and distribution channels amongst other factors.
The Directors concluded there is a single segment as it operates
with a single operating model; operations, support and technology
costs are managed and reported centrally to the CODM. A description
of the services provided is given within note 4.
2.4 Revenue recognition
Revenue represents fees receivable from investment
administration and dealing and custody services for both client
assets and client money. Revenue is measured based on the
consideration specified in a contract with a customer. The Group
recognises revenue when it transfers control over a good or service
to a customer.
Recurring fixed
Recurring fixed revenue comprises recurring administration fees
and media revenue.
Administration fees include fees charged in relation to the
administration services provided by the Group and are recognised
over time as the related service is provided.
Included within administration fees are annual pension
administration fees. The Group recognises revenue from such fees
over time, using an input method to measure progress towards
complete satisfaction of a single performance obligation. The Group
determined that the input method is the best method in measuring
progress of the services relating to these fees because there is a
direct relationship between the Group's effort (i.e. labour hours
incurred) and the transfer of service to the customer.
The Group recognises revenue on the basis of the labour hours
expended relative to the total expected labour hours to complete
the service.
Certain pension administration fees are received in arrears or
in advance. Where revenue is received in arrears for an ongoing
service, the proportion of the income relating to services provided
but not yet received is accrued. This is recognised as accrued
income until the revenue is received. Where revenue is received in
advance for an ongoing service, the proportion of the income
relating to services that have not yet been provided is deferred.
This is recognised as deferred income until the services have been
provided.
Media revenue includes advertising, subscriptions, events and
award ceremony and corporate solutions contracts. Subscriptions and
corporate solutions revenue is recognised evenly over the period in
which the related service is provided. Advertising, event and award
ceremony revenue is recognised in the period in which the
publication is made available to customers or the event or award
ceremony takes place.
Recurring ad valorem
Recurring ad valorem revenue comprises custody fees, retained
interest income and investment management fees provided by the
Group and is recognised evenly over the period in which the related
service is provided.
Ad valorem fees include custody fees charged in relation to the
holding of client assets and interest received on client money
balances. Custody fees and investment management fees are accrued
on a time basis by reference to the AUA.
Transactional fees
Transactional revenue comprises dealing fees and pension scheme
activity fees. Transaction-based fees are recognised when received
in accordance with the date of settlement of the underlying
transaction.
Other non-recurring fees are recognised in the period to which
the service is rendered.
Customer incentives
Customer incentives paid to new retail customers are considered
to be a reduction in revenue under IFRS 15. In line with IFRS 15,
customer incentives to acquire new customers are offset against
recurring ad valorem revenue and spread over the period which the
customer is required to remain a customer in order to be eligible
for the incentive. Customer incentives are paid in cash.
2.5 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 and to
intangible assets where appropriate, 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 24. 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.
2.6 Investment income
Investment income comprises the returns generated on corporate
cash at banks and short-term highly-liquid investments. Investment
income is recognised in the income statement as it accrues, using
the effective interest rate method.
2.7 Finance costs
Finance costs comprise interest incurred on lease liabilities
recognised under IFRS 16. Finance costs are recognised in the
income statement using the effective interest rate method.
2.8 Taxation
The tax expense represents the sum of the current tax payable
and deferred tax. Tax is recognised in the income statement except
to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year and any adjustment to tax
payable or receivable in respect of previous years, using tax rates
enacted or substantively enacted at the reporting date.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax
is not recognised if the temporary difference arises from:
-- the initial recognition of goodwill; or
-- investments in subsidiaries to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable they will not reverse in the
foreseeable future; or
-- the initial recognition of an asset and liability in a
transaction other than a business combination that, at the time of
the transaction, affects neither the accounting nor taxable profit
or loss.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that taxable profits will be available in the
future, against which deductible temporary differences can be
utilised. Recognised and unrecognised deferred tax assets are
reassessed at each reporting date.
The principal temporary differences arise from accelerated
capital allowances, provisions for share-based payments and
unutilised losses.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
2.9 Dividends
Dividend distributions to the Company's shareholders are
recognised in the period in which the dividends are declared and
paid. The final dividend is approved by the Company's shareholders
at the Annual General Meeting.
2.10 Goodwill
Goodwill arising on consolidation represents the difference
between the consideration transferred and the fair value of net
assets acquired of the subsidiary at the date of acquisition.
Goodwill is not amortised, but is reviewed at least annually for
impairment. Any impairment is recognised immediately through the
income statement and is not subsequently reversed.
For the purposes of impairment testing goodwill acquired in a
business combination is allocated to the cash generating unit (CGU)
expecting to benefit from the synergies of the combination. CGUs to
which goodwill has been allocated are reviewed annually or more
frequently when there is an indication that the goodwill relating
to that CGU may have been impaired. If the recoverable amount from
the CGU is less than the carrying amount of the assets present on
the consolidated statement of financial position forming that CGU,
the impairment loss is allocated first to reduce the carrying
amount of any goodwill
allocated to the assets forming that CGU and then to the assets
of the CGU pro-rata on the basis of the carrying amount of each
asset in the CGU.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the profit or loss on
disposal.
2.11 Intangible assets (excluding goodwill)
Intangible assets comprise computer software and mobile
applications, and the Group's Key Operating Systems (KOS). These
are stated at cost less amortisation and any recognised impairment
loss. Amortisation is charged on all intangible assets excluding
goodwill and assets under construction at rates to write off the
cost or valuation, less estimated residual value, of each asset
evenly using a straight-line method over its estimated useful
economic life as follows:
Computer software and mobile applications - 3 - 4 years
KOS - 15 years
KOS enhancements - Over the remaining life of the KOS
The assets' estimated useful lives, amortisation rates and
residual values are reviewed, and adjusted if appropriate at the
end of each reporting period. An asset's carrying value is written
down immediately to its recoverable amount if its carrying value is
greater than the recoverable amount.
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in the
income statement immediately.
2.12 Internally-generated intangible assets
An internally-generated asset arising from work performed by the
Group is recognised only when the following criteria can be
demonstrated:
-- the technical feasibility of completing the intangible
asset so that it will be available for use or sale;
-- the intention to complete the intangible asset and use
or sell it;
-- the ability to use or sell the intangible asset;
-- how the intangible asset will generate probable future
economic benefits;
-- the availability of adequate technical, financial and other
resources to complete the development and to use or sell
the intangible asset; and
-- the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally-generated
intangible assets is the sum of expenditure incurred from the date
when the asset first meets the recognition criteria listed above.
Development expenditure that does not meet the criteria is
recognised as an expense in the period which it is incurred.
Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis
as intangible assets that are acquired separately. Assets under
construction are not amortised until the asset is operational and
available for use.
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
2.13 Property, plant and equipment
All property, plant and equipment is stated at cost, which
includes directly attributable acquisition costs, less accumulated
depreciation and any recognised impairment losses. Depreciation is
charged on all property, plant and equipment, except assets under
construction, at rates to write off the cost, less estimated
residual value, of each asset evenly using a straight-line method
over its estimated useful economic life as follows:
Leasehold improvements - Over the life of the lease
Office equipment - 4 years
Computer equipment - 3 - 5 years
The assets' estimated useful lives, depreciation rates and
residual values are reviewed, and adjusted if appropriate at the
end of each reporting period. An asset's carrying value is written
down immediately to its recoverable amount if its carrying value is
greater than the recoverable amount.
Assets under construction relate to capital expenditure on
assets not yet in use by the Group and are therefore not
depreciated.
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in the
income statement immediately.
2.14 Leased assets and lease liabilities
Leases
(i) Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the leases. Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted
for any re-measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made
at or before the commencement date less any lease incentives
received.
Depreciation is applied in accordance with IAS 16: Property,
Plant and Equipment. Right-of-use assets are depreciated over the
lease term.
Right-of-use assets are subject to impairment.
(ii) Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments less any lease incentives receivable.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the addition of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is re-measured if there is a
modification, a change in the lease term, a change in the fixed
lease payments or a change in the assessment to purchase the
underlying asset.
2.15 Impairment of intangible assets (excluding goodwill),
property, plant and equipment and leased assets
At each reporting date the Group reviews the carrying amount of
its intangible assets, property, plant and equipment and leased
assets to determine whether there is any indication that those
assets have suffered impairment. If such an indication exists then
the recoverable amount of that particular asset is estimated.
An impairment test is performed for an individual asset unless
it belongs to a CGU, in which case the present value of the net
future cash flows generated by the CGU is tested. A CGU is the
smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of
other assets or of groups of other assets. An intangible asset with
an indefinite useful life or an intangible asset not yet available
for use is tested for impairment annually and whenever there is an
indication that the asset may be impaired.
The recoverable amount is the higher of its fair value less
costs to sell and its value-in-use. In assessing its value-in-use,
the estimated net future pre-tax cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset or CGU in which the asset
sits is estimated to be lower than the carrying value, then the
carrying amount is reduced to the recoverable amount. An impairment
loss is recognised immediately in the income statement as an
expense.
An impairment loss is reversed only if subsequent events reverse
the effect of the original event which caused the recognition of
the impairment. An impairment loss is reversed only to the extent
that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised. An
impairment reversal is recognised in the income statement
immediately.
2.16 Retirement benefit costs
The Group makes payments into the personal pension schemes of
certain employees as part of their overall remuneration package.
Contributions are recognised in the income statement as they are
payable.
The Group also contributes to employees' stakeholder pension
schemes. The assets of the scheme are held separately from those of
the Group in independently-administered funds. Any amount charged
to the income statement represents the contribution payable to the
scheme in respect of the period to which it relates.
2.17 Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event and
it is probable that the Group will be required to settle that
obligation.
The amount recognised as a provision is the Directors' best
estimate of the consideration required to settle that obligation at
the reporting date and is discounted to present value where the
effect is material.
2.18 Levies
The Group applies the guidance provided in IFRIC 21 to levies
issued under the Financial Services Compensation Scheme. The
interpretation clarifies that an entity should recognise a
liability when it conducts the activity that triggers the payment
of the levy under law or regulation.
2.19 Financial instruments
Financial assets and liabilities are recognised in the statement
of financial position when a member of the Group becomes party to
the contractual provisions of the instrument.
Financial assets
Financial assets are classified according to the business model
within which the asset is held and the contractual cash-flow
characteristics of the asset. All financial assets are classified
at amortised cost.
Financial assets at amortised cost
The Group's financial assets at amortised cost comprise trade
receivables, loans, other receivables and cash and cash
equivalents.
Financial assets at amortised cost are initially recognised at
fair value including any directly attributable costs. They are
subsequently measured at amortised cost using the effective
interest method, less any impairment. No interest income is
recognised on financial assets measured at amortised cost, with the
exception of cash and cash equivalents, as all financial assets at
amortised cost are short-term receivables and the recognition of
interest would be immaterial. Financial assets are derecognised
when the contractual right to the cash flows from the asset
expire.
Trade and other receivables
Trade and other receivables are initially recorded at the fair
value of the amount receivable and subsequently measured at
amortised cost using the effective interest method, less any
provision for impairment. Other receivables also represent client
money required to meet settlement obligations.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, on demand
deposits with banks and other short-term highly-liquid investments
with original maturities of three months or less, or those over
which the Group has an immediate right of recall. Where
appropriate, bank overdrafts are shown within borrowings in current
liabilities in the consolidated statement of financial
position.
Impairment of financial assets
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and contract assets. To measure
the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and number of days past
due. The Group considers a trade receivable to be in default when
it is past due by more than 90 days, or when the value of a
client's receivable balance exceeds the value of the assets they
hold with AJ Bell.
The expected loss rates are based on the payment profiles of
sales over a period of 12 months before 30 September 2023 and the
corresponding historical credit losses experienced within this
period.
The carrying amount of the financial assets is reduced by the
use of a provision. When a trade receivable is considered
uncollectable, it is written off against the provision. Subsequent
recoveries of amounts previously written off are credited against
the provision. Changes in the carrying amount of the provision are
recognised in the income statement.
Financial liabilities
Financial liabilities are classified according to the substance
of the contractual arrangements entered into.
Lease liabilities
Lease liabilities consist of amounts payable by the Group
measured at the present value of lease payments to be made over the
lease term.
Other financial liabilities
The Group's other financial liabilities comprised borrowings and
trade and other payables. Other financial liabilities are initially
measured at fair value, net of transaction costs. They are
subsequently carried at amortised cost using the effective interest
rate method. A financial liability is derecognised when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Trade and other payables
Trade and other payables consist of amounts payable to clients
and other counterparties and obligations to pay suppliers for goods
and services in the ordinary course of business, including amounts
recognised as accruals. Trade and other payables are measured at
amortised cost using the effective interest method.
2.20 Employee benefit trust
The employee benefit trusts provide for the granting of shares,
principally under share option schemes. AJ Bell plc is considered
to have control of the trusts and so the assets and liabilities of
the trusts are recognised as those of AJ Bell plc.
Shares of AJ Bell plc held by the trusts are treated as 'own
shares' held and shown as a deduction from equity. Subsequent
consideration received for the sale of such shares is also
recognised in equity, with any difference between the sales
proceeds and original cost being taken to equity.
3 Critical accounting adjustments and key sources of estimation
uncertainty
In the application of the Group's accounting policies, which are
described in note 2, 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 Segmental reporting
It is the view of the Directors that the Group has a single
operating segment being investment services in the advised and D2C
space administering investments in SIPPs, ISAs and General
Investment/Dealing accounts. Details of the Group's revenue,
results and assets and liabilities for the reportable segment are
shown within the consolidated income statement and 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 generation of
revenues.
5 Revenue
The analysis of the consolidated revenue is as follows:
2023 2022
GBP000 GBP000
---------------------- -------- --------
Recurring fixed 30,666 29,787
Recurring ad valorem 161,152 102,184
Transactional 26,416 31,876
---------------------- -------- --------
218,234 163,847
---------------------- -------- --------
Recurring ad valorem fees include custody fees. These recurring
charges are derived from the market value of retail customer
assets, based on asset mix and portfolio size, and are therefore
subject to market and economic risks. The rate charged is variable
dependent on the product, portfolio size and asset mix within the
portfolio. The risks associated with this revenue stream in terms
of its nature and uncertainty is discussed further within the
financial instruments and risk management note..
Recurring ad valorem fees also include retained interest income
earned on the level of customer cash balances, which are based on
product type, customers' asset mix and portfolio size and are
therefore subject to market and economic risks. The risks
associated with this revenue stream in terms of its nature and
uncertainty is discussed further within the financial instruments
and risk management note 25.
The total revenue for the Group has been derived from its
principal activities undertaken in the United Kingdom.
6 Operating profit
Profit for the financial year has been arrived at after
charging:
2023 2022
GBP000 GBP000
----------------------------------------------- ------- -------------
Amortisation and impairment of intangible
assets 2,055 1,034
Depreciation of property, plant and equipment 1,079 1,019
Depreciation of right-of-use assets 1,654 1,590
Loss on the disposal of property, plant
and equipment 16 21
Auditor's remuneration (see below) 1,093 496
Staff costs (see note 7) 64,758 54,887
----------------------------------------------- ------- -------------
During the year there was no expenditure in relation to research
and development expensed to the income statement (2022:
GBPnil).
Auditor's remuneration
The analysis of auditor's remuneration is as follows:
2023 2022
GBP000 GBP000
--------------------------------------------- ------- ----------------
Fees payable to the Company's auditor for
the audit of the Company's annual accounts 329 155
Fees payable to the Company's auditor for
the audit of the Company's subsidiaries'
accounts, pursuant to legislation 589 204
Audit-related assurance services 115 89
Other assurance services 60 48
1,093* 496
--------------------------------------------- ------- ----------------
* Of which GBP215,000 relates to the audit for the year ended
2022.
Of the above, audit-related services for the year totalled
GBP1,063,000 (2022: GBP473,000).
7 Staff costs
The average monthly number of employees (including Executive
Directors) of the Group was:
2023 2022
No. No.
------------------------------------------ ------------------- ----------------
Operational and support 856 761
Technology 279 225
Distribution 140 109
------------------------------------------ ------------------- ----------------
1,275 1,095
------------------------------------------ ------------------- ----------------
Employee benefit expense for the Group
during the year:
2023 2022
GBP000 GBP000
------------------------------------------ ------------------- ----------------
Wages and salaries 51,854 41,427
Social security costs 5,846 4,808
Retirement benefit costs 5,937 3,857
Termination benefits 18 67
Share-based payments (note 24) 1,103 4,728
------------------------------------------ ------------------- ----------------
64,758 54,887
------------------------------------------ ------------------- ----------------
In addition to the above, GBP1,919,000 staff costs (2022:
GBP1,315,000) have been capitalised as an internally generated
intangible asset (see note 14).
8 Investment income
2023 2022
GBP000 GBP000
------------------------------------------- -------- ---------
Interest income on cash balances 2,393 198
------------------------------------------- -------- ---------
9 Finance costs
2023 2022
GBP000 GBP000
------------------------------------------- -------- -------
Interest on lease liabilities 952 768
------------------------------------------- -------- -------
10 Taxation
Tax charged in the income statement:
2023 2022
GBP000 GBP000
----------------------------------------- ------------------------- --------------
Current taxation
UK Corporation Tax 19,750 11,855
Adjustment to current tax in respect of
prior periods (346) (238)
----------------------------------------- --------------
19,404 11,617
----------------------------------------- ------------------------- --------------
Deferred taxation
Origination and reversal of temporary
differences (170) 62
Adjustment to deferred tax in respect
of prior periods 341 45
Effect of changes in tax rates (133) (52)
----------------------------------------- --------------
38 55
----------------------------------------- ------------------------- --------------
Total tax expense 19,442 11,672
----------------------------------------- ------------------------- --------------
Corporation Tax is calculated at 22% of the estimated assessable
profit for the year to 30 September 2023 (2022: 19%).
In addition to the amount charged to the income statement,
certain tax amounts have been credited directly to equity as
follows:
2023 2022
GBP000 GBP000
----------------------------------------------- ------- -------
Deferred tax relating to share-based payments
(note 18) 88 275
Current tax relief on exercise of share
options (123) (171)
(35) 104
----------------------------------------------- ------- -------
The charge for the year can be reconciled to the profit per the
income statement as follows:
2023 2022
GBP000 GBP000
---------------------------------------------------- ------------------ --------------
Profit before tax 87,661 58,411
---------------------------------------------------- ------------------ --------------
UK Corporation Tax at 22% (2022: 19%): 19,293 11,098
Effects of:
Expenses not deductible for tax purposes (22) 669
Income not taxable in determining taxable profit (16) (86)
Amounts not recognised 325 236
Effect of rate changes to deferred tax (133) (52)
Adjustments to current and deferred tax in respect
of prior periods (5) (193)
---------------------------------------------------- ------------------ --------------
19,442 11,672
---------------------------------------------------- ------------------ --------------
Effective tax rate 22.2% 20.0%
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 (2022: 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 30 September 2023.
11 Dividends
2023 2022
GBP000 GBP000
-------------------------------------------------- ------- --------------
Amounts recognised as distributions to equity
holders during the year:
Final dividend for the year ended 30 September
2022 of 4.59p (2021: 4.50p per share) 18,893 18,460
Special dividend for the year ended 30 September
2022 of nil (2021: 5.00p per share) - 20,511
Interim dividend for the year ended 30 September
2023 of 3.50p (2022: 2.78p per share) 14,401 11,412
-------------------------------------------------- ------- --------------
Total dividends paid on equity shares 33,294 50,383
-------------------------------------------------- ------- --------------
Proposed final dividend for the year ended
30 September 2023 of 7.25p (2022: 4.59p)
per share 29,807 18,843
A final dividend declared of 7.25p per share is payable on 9
February 2024 to shareholders on the register on 12 January 2024.
The ex-dividend date will be 11 January 2024. The final dividend is
subject to approval by the shareholders at the Annual General
Meeting on 30 January 2024 and has not been included as a liability
within these financial statements.
Dividends are payable on all ordinary shares as disclosed in
note 23.
The employee benefit trusts, which held 1,082,343 ordinary
shares (2022: 567,100) in AJ Bell plc at 30 September 2023, have
agreed to waive all dividends. This represented 0.3% (2022: 0.1%)
of the Company's called-up share capital. The maximum amount held
by the trusts during the year was 1,082,343.
12 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 year.
Diluted earnings per share is calculated by adjusting the
weighted average number of shares to assume exercise of all
potentially dilutive share options.
The weighted average number of anti-dilutive share options and
awards excluded from the calculation of diluted earnings per share
was 148,995 as at 30 September 2023 (FY22: 201,774).
The calculation of basic and diluted earnings per share is based
on the following data:
2023 2022
GBP000 GBP000
---------------------------------------------- ------------ ------------
Earnings
Earnings for the purposes of basic and
diluted earnings per share being profit
attributable to the owners of the Parent
Company 68,219 46,739
---------------------------------------------- ------------ ------------
2023 2022
No. No.
---------------------------------------------- ------------ ------------
Number of shares
Weighted average number of ordinary shares
for the purposes of basic EPS in issue
during the year 411,242,458 410,248,095
Effect of potentially dilutive share options 1,405,191 1,485,721
---------------------------------------------- ------------ ------------
Weighted average number of ordinary shares
for the purposes of fully diluted EPS 412,647,649 411,733,816
---------------------------------------------- ------------ ------------
2023 2022
---------------------------------------------- ------------ ------------
Earnings per share (EPS)
Basic (pence) 16.59 11.39
Diluted (pence) 16.53 11.35
---------------------------------------------- ------------ ------------
13 Goodwill
2023 2022
GBP000 GBP000
---------------------------------- ------------------ ----------------
Cost
As at 1 October and 30 September 7,103 7,103
----------------------------------- ------------------ ----------------
Impairment
As at 1 October and 30 September (112) (112)
----------------------------------- ------------------ ----------------
Carrying value at 30 September 6,991 6,991
----------------------------------- ------------------ ----------------
Goodwill relates to acquisitions allocated to the Group's single
cash generating unit (CGU).
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired.
The recoverable amount of the assets within the CGU is
determined using value-in-use calculations. In assessing the
value-in-use the estimated future cash flows of the CGU are
discounted to their present value using a pre-tax discount rate.
Cash flows are based upon the most recent forecasts, approved by
the Board, covering a two-year period.
The key assumptions for value-in-use calculations are those
regarding discount rate, growth rates and expected changes to
revenues and costs in the period, as follows:
- a compound rate of 9.5% (2022: 20%) has been used to assess
the expected growth in revenue for the two-year forecast period.
This is based on a combination of historical and expected future
performance;
- benefits realised from our economies of scale are passed onto
customers in the form of price reductions; and
- modest ongoing maintenance expenditure is required on the
assets within the CGU in order to generate the expected level of
cash flows.
The Directors have made these assumptions based upon past
experience and future expectations in the light of anticipated
market conditions and the results of streamlining processes through
implementation of the target operating model for customer
services.
Cash flows have been discounted using a pre-tax discount rate of
8.6% (2022: 8.1%).
The pre-tax discount rate has been calculated using an
independent external source. The Directors have performed
sensitivity analysis on their calculations, with key assumptions
being revised adversely to reflect the potential for future
performance being below expected levels. Changes to revenue are the
most sensitive as they would have the greatest impact on future
cash flows. However, even with nil growth in revenue, there would
still be sufficient headroom to support the carrying value of the
assets under the CGU.
Based upon the review above the estimated value-in-use of the
CGU comfortably supports the carrying value of the assets held
within it, and so the Directors are satisfied that for the period
ended 30 September 2023 goodwill is not impaired.
14 Other intangible assets
Computer
Contractual software
Key operating customer and mobile
system relationships applications Total
GBP000 GBP000 GBP000 GBP000
-------------------------------- -------------- --------------- -------------- --------
Cost
At 1 October 2021 11,681 2,135 6,469 20,285
Additions 2,749 - 1,050 3,799
Disposals - (2,135) (483) (2,618)
At 30 September 2022 14,430 - 7,036 21,466
-------------------------------- -------------- --------------- -------------- --------
Additions 706 - 7 713
Disposals - - (36) (36)
-------------------------------- -------------- --------------- -------------- --------
At 30 September 2023 15,136 - 7,007 22,143
-------------------------------- -------------- --------------- -------------- --------
Amortisation
-------------------------------- -------------- --------------- -------------- --------
As at 1 October 2021 7,191 2,135 4,945 14,271
Amortisation charge 337 - 697 1,034
Eliminated on disposal - (2,135) (483) (2,618)
At 30 September 2022 7,528 - 5,159 12,687
-------------------------------- -------------- --------------- -------------- --------
Amortisation and impairment 337 - 1,718 2,055
Eliminated on disposal - - (32) (32)
At 30 September 2023 7,865 - 6,845 14,710
-------------------------------- -------------- --------------- -------------- --------
Carrying amount
At 30 September 2023 7,271 - 162 7,433
-------------------------------- -------------- --------------- -------------- --------
At 30 September 2022 6,902 - 1,877 8,779
-------------------------------- -------------- --------------- -------------- --------
At 30 September 2021 4,490 - 1,524 6,014
-------------------------------- -------------- --------------- -------------- --------
Average remaining amortisation
period 2 years Nil
The amortisation and impairment charge above is included within
administrative expenses in the income statement.
Additions include an amount of GBP706,000 relating to internally
generated assets for the year ended 30 September 2023 (2022:
GBP3,556,000).
Total additions in the period are net of a credit of
GBP1,213,000 related to the reversal of capitalised share-based
payment expenses (2022: additions of GBP1,434,000). The reversal
recognised in the period is due to a change in estimate regarding
the expected vesting of milestones relating to the earn-out
arrangement (note 24).
The net carrying amount of key operating systems includes
GBP6,430,000 (2022: GBP5,724,000), relating to assets in
development which are currently not amortised. At the year end, the
Group had not entered into any contractual commitments (2022:
GBP103,000) for the acquisition of intangible assets.
15 Property, plant and equipment
Leasehold Computer
improvements Office equipment equipment Total
GBP000 GBP000 GBP000 GBP000
------------------------ -------------- ----------------- ----------- -------
Cost
At 1 October 2021 2,192 954 5,610 8,756
Additions 9 22 983 1,014
Disposals - (1) (324) (325)
At 30 September 2022 2,201 975 6,269 9,445
------------------------ -------------- ----------------- ----------- -------
Additions 186 42 1,346 1,574
Disposals - (9) (241) (250)
------------------------ -------------- ----------------- ----------- -------
At 30 September
2023 2,387 1,008 7,374 10,769
------------------------ -------------- ----------------- ----------- -------
Depreciation
At 1 October 2021 655 797 3,953 5,405
Charge for the year 167 72 780 1,019
Eliminated on disposal - (1) (303) (304)
------------------------ -------------- ----------------- ----------- -------
At 30 September 2022 822 868 4,430 6,120
------------------------ -------------- ----------------- ----------- -------
Charge for the year 174 58 847 1,079
Eliminated on disposal - (9) (230) (239)
At 30 September
2023 996 917 5,047 6,960
------------------------ -------------- ----------------- ----------- -------
Carrying amount
At 30 September
2023 1,391 91 2,327 3,809
------------------------ -------------- ----------------- ----------- -------
At 30 September 2022 1,379 107 1,839 3,325
------------------------ -------------- ----------------- ----------- -------
At 30 September 2021 1,537 157 1,657 3,351
------------------------ -------------- ----------------- ----------- -------
The depreciation charge above is included within administrative
expenses in the income statement.
At the year end, the Group had not entered into contractual
commitments for the acquisition of property, plant and equipment
(2022: GBP471,000).
Computer equipment includes assets under construction of
GBP68,000 (2022: GBP37,000) which are currently not
depreciated.
16 Leases
i) Right-of-use assets
Computer
and office
Property equipment Total
GBP000 GBP000 GBP000
Cost
At 1 October 2021 16,158 252 16,410
Additions 538 - 538
At 30 September 2022 16,696 252 16,948
Additions 161 21 182
Disposals - (6) (6)
At 30 September 2023 16,857 267 17,124
Depreciation
At 1 October 2021 2,940 145 3,085
Charge for the year 1,541 49 1,590
At 30 September 2022 4,481 194 4,675
Charge for the year 1,617 37 1,654
Disposals - (5) (5)
At 30 September 2023 6,098 226 6,324
Carrying amount
At 30 September 2023 10,759 41 10,800
At 30 September 2022 12,215 58 12,273
At 30 September 2021 13,218 107 13,325
The depreciation charge above is included within administrative
expenses in the income statement.
The Group has entered into various leases in respect of property
and computer and office equipment as a lessee. Lease terms are
negotiated on an individual basis and contain a range of different
terms and conditions. Property leases typically run for a period of
six to fifteen years and computer and office equipment for a period
of one to six years.
Additions include GBP161,000 relating to the increase in the
Group's dilapidation provision (2022: GBP455,000) (see note
22).
Other than property and computer and office equipment there are
no further classes of assets leased by the Group.
ii) Lease liabilities
2023 2022
GBP000 GBP000
Current 1,540 1,566
Non-current 10,866 12,395
12,406 13,961
The undiscounted maturity analysis of lease liabilities is shown
below:
2023 2022
GBP000 GBP000
Within one year 2,384 2,517
In the second to fifth years
inclusive 8,216 8,579
After five years 5,525 7,533
Total minimum lease payments 16,125 18,629
The total lease interest expense for the year ended 30 September
2023 was GBP952,000 (2022: GBP768,000). Principal cash outflow for
leases accounted for under IFRS 16 for the year ended 30 September
2023 was GBP1,576,000 (2022: GBP1,716,000).
17 Subsidiaries
The Group consists of a Parent Company, AJ Bell plc incorporated
within the UK, and a number of subsidiaries held directly and
indirectly by AJ Bell plc which operate and are incorporated in the
UK. Note 6 to the Company's separate financial statements lists
details of the interests in subsidiaries.
18 Deferred tax asset
2023 2022
GBP000 GBP000
Deferred tax asset 999 906
Deferred tax liability (515) (296)
484 610
The movement on the deferred tax account and movement between
deferred tax assets and liabilities is as follows:
Accelerated Short-term
capital Share-based timing
allowances payments differences Losses Total
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October 2021 (199) 990 149 - 940
(Charge)/credit to
income statement (97) 31 11 - (55)
Charge to equity - (275) - - (275)
At 30 September 2022 (296) 746 160 - 610
(Charge)/credit to
income statement (219) 80 101 - (38)
Charge to equity - (88) - - (88)
At 30 September
2023 (515) 738 261 - 484
The current year deferred tax adjustment relating to share-based
payments reflects the estimated total future tax relief associated
with the cumulative share-based payment benefit arising in respect
of share options granted but unexercised as at 30 September
2023.
Deferred tax assets have been recognised in respect of other
temporary differences giving rise to deferred tax assets where it
is probable that these assets will be recovered. As at 30 September
2023, deferred tax assets have not been recognised on trading
losses of GBP5,524,000 (2022: GBP4,051,000).
19 Trade and other receivables
2023 2022
GBP000 GBP000
Trade receivables 2,613 2,207
Prepayments 8,861 6,824
Accrued income 33,662 21,960
Other receivables 13,365 18,445
58,501 49,436
The Directors consider that the carrying amount of trade and
other receivables approximates their fair value. Included within
other receivables is client money required to meet settlement
obligations and are payable on demand.
Included within accrued income is GBP1,081,000 (2022:
GBP984,000) relating to contract assets, a movement of GBP97,000
(2022: GBP6,000) during the year due to increased revenues.
The ageing profile of trade receivables was as follows:
2023 2022
GBP000 GBP000
Current - not past
due 1,137 747
Past due:
0 to 30 days 476 886
31 to 60 days 279 116
61 to 90 days 173 39
91 days and over 1,341 1,024
3,406 2,812
Provision for impairment (793) (605)
2,613 2,207
The movement in the provision for impairment of trade
receivables is as follows:
2023 2022
GBP000 GBP000
Opening loss allowance as at 1 October 605 524
Loss allowance recognised 254 174
Receivables written off during the year as
uncollectable (8) (21)
Unused amount reversed (58) (72)
Balance at end
of year 793 605
20 Cash and cash equivalents
2023 2022
GBP000 GBP000
Group cash and cash equivalent balances 146,304 84,030
Cash and cash equivalents at 30 September 2023 and 30 September
2022 are considered to be holdings of less than one month, or those
over which the Group has an immediate right of recall.
21 Trade and other payables
2023 2022
GBP000 GBP000
Trade payables 960 138
Social security and other taxes 3,453 2,151
Other payables 859 678
Accruals 45,043 10,428
Deferred income 2,122 2,209
52,437 15,604
Trade payables, accruals and deferred income principally
comprise amounts outstanding for trade purposes including payment
of interest to customers and ongoing costs of the business. The
Directors consider that the carrying amount of trade payables
approximates their fair value.
Deferred income in the current and prior year relates to
contract liabilities. The prior year deferred income balance has
now all been recognised as revenue and the current year balance all
relates to cash received in the current period. Total deferred
income as at 30 September 2023 is expected to be recognised as
revenue in the coming year.
22 Provisions
Office dilapidations Other provision Total
GBP000 GBP000 GBP000
At 1 October 2022 2,004 519 2,523
Additional provisions 161 778 939
Provisions used - (171) (171)
At 30 September 2023 2,165 1,126 3,291
Included in current liabilities - 1,126 1,126
Included in non-current
liabilities 2,165 - 2,165
Office dilapidations
The Group is contractually obliged to reinstate its leased
properties to their original state and layout at the end of the
lease terms. During the year, management reviewed the Group's
dilapidation provision and the assumptions on which the provision
is based. The estimate is based upon property location, size of
property and an estimate of the charge per square foot. A further
charge of GBP161,000 has been recognised in relation to an increase
in the estimated charge per square foot. The office dilapidations
provision represents management's best estimate of the costs which
will ultimately be incurred in settling these obligations.
Other provisions
The other provisions relate to the settlement of an operational
tax dispute, the costs associated with defending a legal case and
compensation required to settle a small number of disputed claims.
There is some uncertainty regarding the amount and timing of the
outflows required to settle the obligations; therefore a best
estimate has been made by assessing a number of different outcomes
considering the potential areas and time periods at risk and any
associated interest. The timings of the outflows are uncertain and
could be paid within 12 months of the date of the statement of
financial position, subject to the timing of a final
resolution.
23 Share capital
2023 2022 2023 2022
Issued, fully-called
and paid: Number Number GBP GBP
Ordinary shares of 0.0125p
each 412,211,306 411,091,634 51,526 51,386
All ordinary shares have full voting and dividend rights.
The following transactions have taken place during the year:
Number of Share premium
Transaction type Share class shares GBP000
Exercise of CSOP Ordinary shares of
options 0.0125p each 31,462 33
Exercise of EIP Ordinary shares of
options 0.0125p each 530,303 -
Ordinary shares of
Free shares 0.0125p each 557,907 -
1,119,672 33
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at general meetings of the Company. They are entitled to
share in the proceeds on the return of capital, or upon the winding
up of the Company in proportion to the number of and amounts paid
on shares held. The shares are non-redeemable.
Own shares
As at 30 September 2023, the Group held 1,082,343 in own shares
in employee benefit trusts to satisfy future share incentive plans.
Shares held by the Trust are held at GBP2,377,000 (2022:
GBP473,000) being the price paid to repurchase, and the carrying
value is shown as a reduction within shareholders' equity.
During the year, 631,151 ordinary own shares were purchased
through AJ Bell's employee benefit trust in exchange for
consideration of GBP2,000,000 (2022: GBPnil). 115,908 EIP options
were exercised and issued from the employee benefit trusts in the
year.
The costs of operating the trusts are borne by the Group but are
not material. The trusts waived the right to receive dividends on
these shares.
24 Share-based payments
Company Share Option Plan (CSOP)
The CSOP is a HMRC approved scheme in which the Board, at their
discretion, grant options to employees to purchase ordinary shares.
Each participating employee can be granted options up to the value
of GBP60,000. Options granted under the CSOP can be exercised
between the third and tenth anniversary after the date of grant and
are usually forfeited if the employee leaves the Group before the
option expires. The expense for share-based payments under the CSOP
is recognised over the respective vesting period of these
options.
Option To Buy Scheme (OTB) - Growth shares
The OTB scheme is a historical award scheme whereby the Board at
its discretion granted growth shares to employees. Growth shares
entitled the holder to participate in the growth value of the Group
above a certain threshold level, set above the current market value
of the Group at the time the shares were issued. Growth shares
granted under the OTB scheme had different vesting conditions. The
vesting condition attached to all growth shares granted is that the
threshold level needs to be met and an exit event needs to have
occurred. As part of the AJ Bell listing process all awards were
converted into ordinary shares and those awards granted with an
additional employment condition of four or six years after the date
of grant, continue to be recognised as a share-based payment.
Awards that were issued subject to employment conditions are
subject to buy back options under which the Group can buy back the
shares for their issue price if the employee leaves the Group
before the expiry of the employment condition period.
Buy As You Earn plan (BAYE)
The BAYE plan is an all-employee share plan under which shares
can be issued to employees as either free shares or partnership
shares.
The Company may grant free shares up to a maximum of GBP3,600
per employee in a tax year. During the year, free shares up to a
maximum value of GBP2,000 have been offered to all employees who
were employed by the Company at 30 September 2022 (2022: nil).
Employees have been offered the opportunity to participate in
the partnership plan to enable such employees to use part of their
pre-tax salary to acquire shares. The limit to the pre-tax salary
deduction is GBP1,800 or, if lower, 10% of salary each year.
The plan entitles employees to use this deduction to buy shares
in the Company on a monthly basis at the current market value.
Employees are able to withdraw their shares from the plan at any
time but may be subject to income tax and national insurance
charges if withdrawn within three years of purchasing the shares.
Therefore the monthly partnership plan does not give rise to a
share-based payment charge.
Executive Incentive Plan (EIP)
The EIP is a performance share plan that involves the award of
nominal cost options to participants conditional on the achievement
of specified performance targets and continuous employment over a
certain period of time. Individual grants will be dependent on the
assessment of performance against a range of financial and
non-financial targets set at the beginning of the financial
year.
Senior Manager Incentive Plan (SMIP)
The SMIP is a performance share plan that involves the award of
nominal cost options to participants conditional on the achievement
of specified performance targets and continuous employment over a
certain period of time. Individual grants will be dependent on the
assessment of performance against a range of financial and
non-financial targets set at the beginning of the financial
year.
CSR initiative
A CSR initiative was introduced in December 2019 with the
intention of giving an additional contribution to charity through
the donation of share options should a number of stretching targets
be met by the Group. The awards made are equity-settled awards and
involved the grant of market value options to the AJ Bell Trust
conditional on the achievement of diluted earnings per share (DEPS)
targets for the financial years 2022, 2023 and 2024 (Performance
Period).
The exercise of each tranche will be conditional upon the DEPS
having increased in relation to the 7.47 pence DEPS for the year
ended 30 September 2019, by more than:
- 90% for September 2022;
- 115% for September 2023; and
- 140% for 30 September 2024.
These are considered to be the lower DEPS targets. The upper
DEPS target for each performance period is 10% above the lower DEPS
target.
The percentage of shares granted that will vest in each
performance period is determined as follows:
- If actual DEPS is below the lower DEPS target, the vesting percentage is equal to zero;
- If actual DEPS is above the upper DEPS target, the vesting percentage is equal to 100%; and
- If actual DEPS is between the lower and upper target, then the
vesting percentage is determined by linear interpolation on a
straight-line basis and rounded down to the nearest 10%.
As no service is being provided by the AJ Bell Trust, all
conditions involved in the arrangement are considered to be
non-vesting conditions. Non-vesting conditions should be taken into
account when estimating the fair value of the equity instrument
granted. The fair value has been estimated using the Monte Carlo
simulation model.
Earn-out arrangement
The acquisition of Adalpha gave 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.
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.
The fair value of the earn-out arrangement 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 proposition completion, discounted to net present value.
The performance conditions included within the arrangement are not
considered market conditions and therefore the expected vesting is
reviewed at each reporting date.
Movements during the year
The tables below summarise the outstanding options for each
share-based payment scheme.
2023 2022
CSOP Weighted Weighted
Average Average
Exercise
Price Exercise
Number GBP Number Price GBP
Outstanding at
the beginning
of the year 1,101,893 3.90 1,015,763 3.23
Granted during
the year 223,167 3.73 461,744 3.73
Forfeited during
the year (1,111,523) 3.94 (108,611) 4.05
Exercised during
the year (31,462) 1.04 (267,003) 1.02
Outstanding at
the end
of the year 182,075 3.91 1,101,893 3.90
Exercisable at
the end
of the year 39,339 3.94 31,462 1.04
The lowest exercise price for share options outstanding at the
end of the period was 298p (2022: 104p) and the highest exercise
price was 434p (2022: 434p). The weighted average remaining
contractual life of share options outstanding at the end of the
period was 7.6 years (2022: 8.3 years).
2023 2022
OTB - Growth Shares Weighted Weighted
Average Average
Exercise Exercise
Number Price GBP Number Price GBP
Outstanding at the
beginning of the
year 1,166,131 0.63 3,192,268 0.63
Vested - - (2,026,137) 0.63
Outstanding at the
end of the year 1,166,131 0.63 1,166,131 0.63
Upon listing to the London Stock Exchange, all growth shares
were converted to ordinary shares and therefore no exercise price
exists for growth shares outstanding at the end of the period. The
weighted average remaining contractual life of growth shares
converted to ordinary shares under a call option agreement at the
end of the period was 0.2 years (2022: 1.2 years).
2023 2022
EIP Weighted Weighted
Average Average
Exercise Exercise
Number Price GBP Number Price GBP
Outstanding at
beginning
of the year 1,615,868 0.000125 1,487,313 0.000125
Granted during
the year 912,833 0.000125 736,015 0.000125
Exercised during
the year (646,211) 0.000125 (495,550) 0.000125
Lapsed during
the year (207,298) 0.000125 (111,910) 0.000125
Outstanding at
the end
of the year 1,675,192 0.000125 1,615,868 0.000125
Exercisable at
the end
of the year 349,055 0.000125 565,636 0.000125
The weighted average remaining contractual life of EIP shares
outstanding at the end of the period was 8.3 years (2022: 8
years).
2023
SMIP initiative Weighted Average
Exercise Price
Number GBP
Outstanding at beginning of the
year - -
Granted during the year 3,999 0.000125
Outstanding at the end of the
year 3,999 0.000125
Exercisable at the end of the year - -
2023 2022
CSR initiative Weighted Weighted
Average Average
Exercise Exercise
Number Price GBP Number Price GBP
Outstanding at
beginning
of the year 1,662,510 4.01 2,493,766 4.01
Forfeited
during the
year (332,502) 4.01 (831,256) 4.01
Outstanding at
the
end of the
year 1,330,008 4.01 1,662,510 4.01
Exercisable at
the
end of the
year 498,753 4.01 - -
The weighted average remaining contractual life of CSR options
outstanding at the end of the period was 6.2 years (2022: 7.2
years).
Weighted average share price of options exercised.
The weighted average share price of all options exercised during
the year was GBP3.46 (2022: GBP3.67).
Earn-out arrangement
2023 2022
Weighted Weighted
Average Average
Exercise Exercise
Number Price GBP Number Price GBP
Shares granted during the
year - - 155,974 3.15
Measurement
The fair value of equity-settled share options granted is
estimated as at the date of grant using the Black-Scholes model,
taking into account the terms upon which the options and awards
were granted.
The inputs into the Black-Scholes model and assumptions used in
the calculations are as follows:
EIP
Grant date 09/12/2022 09/12/2022 09/12/2022
Number of shares under option 425,873 121,478 365,482
Fair value of share from generally
accepted business model (GBP) 3.54 3.40 3.33
Share price (GBP) 3.61 3.61 3.61
Exercise price of an option
(GBP) 0.000125 0.000125 0.000125
Expected volatility 36.90% 35.09% 35.09%
Expected dividend yield 2.04% 2.04% 2.04%
Risk-free interest rate 3.15% 3.18% 3.22%
Expected option life to exercise
(months) 12 36 48
CSOP
Grant date 08/12/2022
Number of shares under option 223,167
Fair value of share option from generally
accepted business model (GBP) 0.82
Share price (GBP) 3.61
Exercise price of an option (GBP) 3.73
Expected volatility 35.09%
Expected dividend yield 2.04%
Risk-free interest rate 3.18%
Expected option life to exercise (months) 36
SMIP
Grant date 08/02/2023
Number of shares under option 3,999
Fair value of share option from generally
accepted business model (GBP) 3.25
Share price (GBP) 3.46
Exercise price of an option (GBP) 0.000125
Expected volatility 14.79%
Expected dividend yield 2.13%
Risk-free interest rate 3.15%
Expected option life to exercise (months) 36
Expected volatility is estimated by considering historic average
share price volatility at the grant date.
The expected life of the options is based on the minimum period
between the grant of the option, the earliest possible exercise
date and an analysis of the historical exercise data that is not
necessarily indicative of exercise patterns that may occur. The
expected volatility reflects the assumption that historical
volatility is indicative of future trends, which may also not
necessarily be the case.
During the year, the Group recognised a total share-based
payment expense of GBP1,103,000 (2022: GBP4,728,000), inclusive of
a GBP1,213,000 reversal of capitalised share-based payment expense
(2022: capitalised GBP1,434,000) within the statement of financial
position.
The reversal recognised in the period is due to a change in
estimate regarding the expected vesting dates of milestones
relating to the earn-out arrangement. Under the terms of the
earn-out arrangement, 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. 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.
25 Financial instruments and risk management
The Group's activities expose it to a variety of financial
instrument risks; market risk (including interest rate and foreign
exchange), credit risk and liquidity risk. Information is presented
below regarding the exposure to each of these risks, including the
procedures for measuring and managing them.
Financial instruments include both financial assets and
financial liabilities. Financial assets principally comprise trade
and other receivables and cash and cash equivalents. Financial
liabilities comprise trade and other payables, accruals and
obligations under leases. The Group does not have any derivative
financial instruments.
Risk management objectives
The Group has identified the financial, business and operational
risks arising from its activities and has established policies and
procedures to manage these items in accordance with its risk
appetite. The Board of Directors has overall responsibility for
establishing and overseeing the Group's risk management framework
and risk appetite.
The Group's financial risk management policies are intended to
ensure that risks are identified, evaluated and subject to ongoing
monitoring and mitigation (where appropriate). These policies also
serve to set the appropriate control framework and promote a robust
risk culture within the business.
The Group regularly reviews its financial risk management
policies and systems to reflect changes in the business,
counterparties, markets and range of financial instruments that it
uses.
The Group's Treasury Committee has principal responsibility for
monitoring exposure to the risks associated with cash and cash
equivalents. Policies and procedures are in place to ensure the
management and monitoring of each type of risk. The primary
objective of the Group's treasury policy is to manage short-term
liquidity requirements whilst maintaining an appropriate level of
exposure to other financial risks in accordance with the Group's
risk appetite.
Significant accounting policies
Details of the significant accounting policies, including the
criteria for recognition, the basis of measurement and the basis on
which income and expenses are recognised, in respect of each
financial asset and financial liability, are disclosed within note
2 to the financial statements.
Categories of financial instrument
The financial assets and liabilities of the Group are detailed
below:
2023 2022
Amortised Financial Carrying Amortised Financial Carrying
cost liabilities value cost liabilities value
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Financial
assets
Trade receivables 2,613 - 2,613 2,207 - 2,207
Accrued income 33,662 - 33,662 21,960 - 21,960
Other receivables 13,365 - 13,365 18,445 - 18,445
Cash and cash
equivalents 146,304 - 146,304 84,030 - 84,030
195,944 - 195,944 126,642 - 126,642
Financial liabilities
Trade and
other payables - 46,030 46,030 - 10,598 10,598
Lease liabilities - 12,406 12,406 - 13,961 13,961
- 58,436 58,436 - 24,559 24,559
The carrying amount of all financial assets and liabilities is
approximate to their fair value due to their short-term nature.
Market risk
Interest rate risk
The Group holds interest bearing assets in the form of cash and
cash deposits. Cash at bank earns interest at floating rates based
on daily bank deposit rates. Term deposits can also be made for
varying periods depending on the immediate cash requirements of the
Group, and interest is earned at the respective fixed-term rate.
Based on the cash balances shown in the Group's statement of
financial position at the reporting date, if interest rates were to
move by 25bps it would change profit before tax by
approximately:
2023 2022
GBP000 GBP000
+ 25 bps (0.25%) 293 191
- 25 bps (0.25%) (293) (154)
As at the year end the Group had no borrowings, and therefore
was not exposed to a material interest rate risk related to debt as
the interest rate is fixed at the inception of the lease.
The Group retains a proportion of the interest income generated
from the pooling of customer cash balances and as a result, the
Group revenue has an indirect exposure to interest rate risk. The
cash balances are held with a variety of banks and are placed in a
range of fixed-term, notice and call deposit accounts with due
regard for counterparty credit risk, capacity risk, concentration
risk and liquidity risk requirements. The spread of rate retained
by the Group is variable dependent on rates received by banks
(disclosed to customers at between 1.15% below and 0.15% above the
prevailing base rate) and amounts paid away to customers.
The impact of a 50bps increase or decrease in UK base interest
rates on the Group's revenue has been calculated and shown below.
This has been modelled on a historical basis for each year
separately assuming that the UK base rate was 50bps higher or lower
for the year.
2023 2022
GBP000 GBP000
+ 50 bps (0.50%) - 11,827
- 50 bps (0.50%) - (12,759)
In FY23, movements in the UK base interest rate would not have
impacted the retained interest income earned by the Group, as any
increases or decreases to the UK base interest rate when it is at
higher levels would be passed to customers in the form of higher or
lower pay away rates respectively.
Conversely, in FY22 a 50bps increase would result in an
additional GBP11.8m retained interest income, as the majority of
the increased gross interest income earned would be retained by the
Group to rebuild revenue margins when UK base is at low levels. A
50bps decrease would result in a reduction of GBP12.8m with the
reduction in gross interest income earned being absorbed by the
Group. At low levels of UK base rate it would not be possible to
reduce the pay away rates significantly as they would already be at
low levels.
Customer cash balances are not a financial asset of the Group
and so are not included in the statement of financial position.
Market movement sensitivity
The Group's custody fees are derived from the market value of
the underlying assets held by the retail customer in their account,
based on product type, mix and portfolio size which are charged on
an ad valorem basis. As a result, the Group has an indirect
exposure to market risks, as the value of the underlying customers'
assets may rise or fall. The impact of a 10% increase or reduction
in the value of the customers underlying assets subject to the
custody fees on the Group's revenue has been calculated and shown
below. This has been modelled on a historical basis for each year
separately assuming that the value of the customers' assets were
10% higher or lower than the actual position at the time.
2023 2022
GBP000 GBP000
+ 10% higher 6,341 5,846
- 10% lower (6,341) (5,846)
Foreign exchange risk
The Group is not exposed to significant foreign exchange
translation or transaction risk as the Group's activities are
primarily within the UK. Foreign exchange risk is therefore not
considered material.
Credit risk
The Group's exposure to credit risk, which is the risk that a
counterparty will be unable to pay amounts in full when due, arises
principally from its cash balances held with banks and trade and
other receivables.
Trade receivables are presented net of expected credit losses
within the statement of financial position. The Group applies the
IFRS 9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, trade
receivables have been grouped based on shared credit risk
characteristics and number of days past due. Details of those trade
receivables that are past due are shown within note 19.
The Group has implemented procedures that require appropriate
credit or alternative checks on potential customers before business
is undertaken. This minimises credit risk in this area.
The credit and concentration risk on liquid funds, cash and cash
equivalents is limited as deposits are held across a number of
major banks. The Directors continue to monitor the strength of the
banks used by the Group. The principal banks currently used by the
Group are Bank of Scotland plc, Barclays Bank plc, Lloyds Bank plc,
Lloyds Bank Corporate Markets plc, HSBC Bank plc, NatWest Markets
plc, Santander UK plc, Clearstream Banking SA and Qatar National
Bank (Q.P.S.C). Bank of Scotland plc, the Group's principal banker,
is substantial and is 100% owned by Lloyds Banking Group plc. All
these banks currently have long-term credit ratings of at least A
(Fitch). Where the services of other banks are used, the Group
follows a rigorous due diligence process prior to selection. This
results in the Group retaining the ability to further mitigate the
counterparty risk on its own behalf and that of its customers.
The Group has no significant concentration of credit risk as
exposure is spread over a large number of counterparties and
customers. The maximum exposure to credit risk is represented by
the carrying amount of each financial asset at the reporting date.
In relation to dealing services, the Group operates as agent on
behalf of its underlying customers and in accordance with London
Stock Exchange Rules.
Any settlement risk during the period between trade date and the
ultimate settlement date is substantially mitigated as a result of
the Group's agency status, its settlement terms and the delivery
versus payment mechanism whereby if a counterparty fails to make
payment, the securities would not be delivered to the counterparty.
Therefore any risk exposure is to an adverse movement in market
prices between the time of trade and settlement. Conversely, if a
counterparty fails to deliver securities, no payment would be
made.
There has been no material change to the Group's exposure to
credit risk during the year.
Liquidity risk
This is the risk that the Group may be unable to meet its
liabilities as and when they fall due. These liabilities arise from
the day-to-day activities of the Group and from its obligations to
customers. The Group is a highly cash-generative business and
maintains sufficient cash and standby banking facilities to fund
its foreseeable trading requirements.
There has been no change to the Group's exposure to liquidity
risk or the manner in which it manages and measures the risk during
the year.
The following table shows the undiscounted cash flows relating
to non-derivative financial liabilities of the Group based upon the
remaining period to the contractual maturity date at the end of the
reporting period.
1 to After
Due within 5 5
1 year years years Total
GBP000 GBP000 GBP000 GBP000
2023
Trade and other payables 46,030 - - 46,030
Lease liabilities 2,384 8,216 5,525 16,125
48,414 8,216 5,525 62,155
2022
Trade and other payables 10,598 - - 10,598
Lease liabilities 2,517 8,579 7,533 18,629
13,115 8,579 7,533 29,227
Capital management
The Group's objectives in managing capital are to:
- safeguard the Group's ability to continue as a going concern
so that it can continue to provide returns for shareholders,
security for our customers and benefits for other stakeholders;
- maintain a strong capital base to support the development of
its business; and
- comply with regulatory requirements at all times.
The capital structure of the Group consists of share capital,
share premium and retained earnings. As at the reporting date the
Group had capital of GBP166,037,000 (2022: GBP133,394,000).
Capital generated from the business is both reinvested in the
business to generate future growth and returned to shareholders
principally in the form of dividends. The capital adequacy of the
business is monitored on an ongoing basis and as part of the
business planning process by the Board. It is also reviewed before
any distributions are made to shareholders to ensure it does not
fall below the agreed surplus as outlined in the Group's capital
management policy. The liquidity of the business is monitored by
management on a daily basis to ensure sufficient funding exists to
meet the Group's liabilities as they fall due. The Group is highly
cash-generative and maintains sufficient cash and standby banking
facilities to fund its foreseeable trading requirements.
The Group conducts an ICARA, as required by the FCA to assess
the appropriate amount of regulatory capital and liquid resources
to be held by the Group. Regulatory capital and liquid resources
for ICARA are calculated in accordance with published rules.
The ICARA compares the Group's financial resources against
regulatory capital and liquidity requirements as specified by the
relevant regulatory authorities. Our current financial resources,
regulatory capital and liquidity requirements can be found in the
Financial Review.
The Group maintained a surplus of regulatory capital and liquid
resources throughout the year. The disclosures required under
MIFIDPRU 8 of the Investment Firms Prudential Regime are available
on the Group's website at ajbell.co.uk.
26 Interests in unconsolidated structure entities
The Group manages a number of investment funds (open-ended
investments) acting as agent of the Authorised Corporate Director.
The dominant factor in deciding who controls these entities is the
contractual arrangement in place between the Authorised Corporate
Director and the Group, rather than voting or similar rights. As
the Group directs the investing activities through its investment
management agreement with the Authorised Corporate Director, the
investment funds are deemed to be structured entities. The
investment funds are not consolidated into the Group's financial
statements as the Group is judged to act as an agent rather than
having control under IFRS 10.
The purpose of the investment funds is to invest capital
received from investors in a portfolio of assets in order to
generate a return in the form of capital appreciation, income from
the assets, or both. The Group's interest in the investment funds
is in the form of management fees received for its role as
investment manager. These fees are variable depending on the value
of the assets under management.
The funds do not have any debt or borrowings and are financed
through the issue of units to investors.
The following table shows the details of unconsolidated
structured entities in which the Group has an interest at the
reporting date:
Management charge
Number Net AUM Annual management receivable at
of funds of funds charge 30 September
Year Type GBPm GBP000 GBP000
2023 OEIC 9 2,426.6 2,859 280
2022 OEIC 9 1,465.5 1,816 369
The annual management charge is included within recurring ad
valorem fees within revenue in the consolidated income
statement.
The annual management charge receivable is included within trade
and other receivables in the consolidated statement of financial
position.
The maximum exposure to loss relates to a reduction in future
management fees should the market value of the investment funds
decrease.
27 Reconciliation of liabilities arising from financing
activities
1 October Change in lease 30 September
2022 Cashflows liability 2023
2023 GBP000 GBP000 GBP000 GBP000
Lease liabilities 13,961 (1,576) 21 12,406
Total liabilities
from financing
activities 13,961 (1,576) 21 12,406
1 October Change in lease 30 September
2021 Cashflows liability 2022
2022 GBP000 GBP000 GBP000 GBP000
Lease liabilities 15,594 (1,716) 83 13,961
Total liabilities
from financing
activities 15,594 (1,716) 83 13,961
28 Related party transactions
Transactions between the Parent Company and its subsidiaries,
which are related parties, have been eliminated on consolidation
and are not disclosed.
Transactions with key management personnel:
Key management personnel is represented by the Board of
Directors and the ExCo.
The remuneration expense of key management personnel is as
follows:
2023 2022
GBP000 GBP000
Short-term employee benefits (excluding
NI) 2,893 2,779
Retirement benefits 66 114
Share-based payment 1,484 2,389
4,443 5,282
During the year there were no material transactions or balances
between the Group and its key management personnel or members of
their close families, other than noted below.
Transactions with directors:
The remuneration of individual directors is provided in the
Directors' Remuneration report.
Dividends totalling GBP163,000 (2022: GBP11,743,000) were paid
in the year in respect of ordinary shares held by the Company's
directors.
The aggregate gains made by the Directors on the exercise of
share options during the year were GBP469,000 (2022:
GBP772,000).
During the year Directors and their families received beneficial
staff rates in relation to personal portfolios. The discount is not
material to the Directors or to AJ Bell.
Other related party transactions:
Charitable donations
During the year the Group made donations of nil (2022:
GBP298,000) to the AJ Bell Trust, a registered charity of which Mr
A J Bell is a trustee.
EQ Property Services Limited
The Group is party to three leases with EQ Property Services
Limited for rental of the Head Office premises, 4 Exchange Quay,
Salford Quays, Manchester, M5 3EE. Mr M T Summersgill and Mr R
Stott are directors and shareholders of both AJ Bell plc and EQ
Property Services Limited, Mr A J Bell is a shareholder of both AJ
Bell plc and EQ Property Services Limited. The leases for the
rental of the building were entered into on 17 August 2016 for
terms which expire on 30 September 2031, at an aggregate market
rent of GBP2,009,000 (2022: GBP1,826,000 per annum).
At the reporting date, there is no payable outstanding (2022:
GBPnil) with EQ Property Services Limited.
Andy Bell consultancy
On 1 October 2022 Andy Bell stepped down as CEO into a
consultancy role for the Group, and remains a significant
shareholder of AJ Bell plc. In his capacity as a consultant, he was
paid GBP157,000 (2022: GBPnil).
Any amounts outstanding with related parties are unsecured and
will be settled in cash. No guarantees have been given or received.
No provision has been made for doubtful debts in respect of amounts
owed by related parties.
29 Subsequent events
There have been no material events occurring between the
reporting date and the date of approval of these consolidated
financial statements.
Glossary
Adalpha AJ Bell Touch Limited and its wholly-owned
subsidiaries
AGM Annual General Meeting
AJBI AJ Bell Investments
AJBIC AJ Bell Investcentre
BAYE Buy as you earn
BBSL Blythe Business Services Limited
Board, Directors The Board of Directors of AJ Bell plc
BPP Business Planning Process
BPS Basis points
CAM Combined Assurance Model
CASS Client Assets Sourcebook
CBT Computer-Based Training
CDP Carbon Disclosure Project
CGU Cash Generating Unit
CODM Chief Operating Decision Maker
CSOP Company Share Option Plan
CSR Corporate Social Responsibility
CTP Competitive Tender Process
DC Defined Contribution
DEPS Diluted Earnings Per Share
DTR Disclosure Guidance and Transparency Rules
DWP Department for Work and Pensions
D2C Direct to Consumer
EIP Executive Incentive Plan
EPS Earnings Per Share
ERC Executive Risk Committee
ESG Environmental, Social and Governance
EVF Employee Voice Forum
EVIC Enterprise Value Including Cash
ExCo Executive Committee (formerly EMB)
FCA Financial Conduct Authority
FRC Financial Reporting Council
FRS Financial Reporting Standards
FTE Full Time Equivalent
FTSE The Financial Times Stock Exchange
FX Foreign Exchange
GHG Greenhouse Gas
HMRC His Majesty's Revenue and Customs
HR Human Resources
ICARA Internal Capital and Risk Assessment
ICO Information Commissioner's Office
IFRIC International Financial Reporting Interpretations
Committee
IFPR Investment Firm Prudential Regime
IFRS International Financial Reporting Standards
IPO Initial Public Offering
ISA Individual Savings Account
ISO International Organisation for Standardisation
ISSB International Sustainability Standards Board
IT Information Technology
KOS Key Operating System
KPI Key Performance Indicator
KRI Key Risk Indicator
LISA Lifetime ISA
MiFID Markets in Financial Instruments Directive
MIFIDPRU Prudential Sourcebook for MiFID Investment
Firms
MPS Managed Portfolio Service
MSCI Morgan Stanley Capital International
NGFS Network for Greening the Financial System
OCF Ongoing Charges Figure
OEIC Open-Ended Investment Company
OTB Option To Buy
PBT Profit Before Tax
PCAF Partnership for Carbon Accounting Financials
PLC Public Limited Company
PR&U Principal Risks and Uncertainties
R&CC Risk and Compliance Committee
RMF Risk Management Framework
SID Senior Independent Director
SIPP Self-Invested Personal Pension
SMIP Senior Management Incentive Plan
SSAS Small Self-Administered Scheme
TCFD Task Force on Climate-related Financial Disclosures
WACI Weighted Average Carbon Intensity
Definitions
Ad valorem According to value
AUA Assets Under Administration
AUM Asset Under Management
Customer retention The customer retention rate is the average
rate number of funded platform customers during
the financial year that remain funded at
the year end
Lifetime value The total amount of revenue a business expects
to generate over the lifetime of a customer
Listing rules Regulations subject to the oversight of the
FCA applicable to companies listed on a UK
stock exchange
MSCI ESG rating MSCI's assessment of a Company's resilience
to long-term, industry material ESG risks
and how well they manage those risks relative
to peers
Own shares Shares held by the Group to satisfy future
incentive plans
Platforum The advisory and research business specialising
in investment platforms
Recurring ad valorem Includes custody fees, retained interest
revenue income and investment management fees
Recurring fixed Includes recurring pension administration
revenue fees and media revenue
Revenue per GBP Represents revenue as a percentage of the
AUA average AUA in the year. Average AUA is calculated
as the average of the opening and closing
AUA in each quarter averaged for the year
Transactional revenue Includes dealing fees and pension scheme
activity fees
UK Corporate Governance A code which sets out standards for best
Code boardroom practice with a focus on Board
leadership and effectiveness, remuneration,
accountability and relations with shareholders
Company information
Company number
04503206
Company Secretary
Olubunmi Likinyo
Registered office
4 Exchange Quay
Salford Quays
Manchester
M5 3EE
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Banker
Bank of Scotland plc
The Mound
Edinburgh
EH1 1YZ
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END
FR FLFETFELRIIV
(END) Dow Jones Newswires
December 07, 2023 02:00 ET (07:00 GMT)
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