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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Aj Bell Plc | LSE:AJB | London | Ordinary Share | GB00BFZNLB60 | ORD GBP0.000125 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.50 | -0.14% | 350.50 | 350.00 | 351.50 | 356.50 | 349.00 | 349.00 | 264,915 | 10:58:02 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investment Advice | 218.23M | 68.22M | 0.1659 | 21.16 | 1.44B |
From May 2019 to May 2024
TIDMAJB
RNS Number : 9159Z
AJ Bell PLC
23 May 2019
23 May 2019
AJ Bell plc
Interim results for the six months ended 31 March 2019
AJ Bell plc ("AJ Bell" or the "Company"), one of the UK's largest investment platforms, today announces interim results for the six-month period ended 31 March 2019.
Performance overview
-- Revenue up 17% to GBP50.1 million (HY18: GBP42.9 million) -- Profit before tax (PBT) up 27% to GBP17.7 million (HY18: GBP13.9 million) -- PBT margin up 2.9 ppts to 35.3% (HY18: 32.4%) -- Balance sheet strengthened, with net assets up 15% in the period to GBP73.8 million
-- Interim dividend of 1.50 pence per share in accordance with the Board's stated dividend policy
-- Customers increased by 16,941 in the period, up 9% to 214,853 -- Assets under administration (AUA) up 3% during the period to GBP47.7 billion -- Total net inflows of GBP1.8 billion, driven by platform net inflows of GBP2.1 billion -- Customer retention rate of 95.3%, up from 95.1% in the previous financial year
Andy Bell, Chief Executive Officer at AJ Bell, commented:
"Our first set of financial results as a publicly-listed company demonstrates the strength of our business model as outlined ahead of our IPO. The quality of our low-cost, easy-to-use investment platform enabled us to continue to attract customers and assets and this is reflected in our strong financial performance. Revenue and profit both increased considerably and the Board has declared an interim dividend of 1.50 pence per share in line with our dividend policy."
"This robust financial performance enables us to continue to invest in the platform to achieve our ambition of becoming the easiest platform to use, underpinning our principal purpose of helping people to invest. This core focus on meeting the needs of advisers and customers, alongside our competitive pricing and high quality service model, means we are well positioned to capitalise on the growing market for investment platforms in the coming years."
Financial highlights
Hot Features
Premium
Six months ended Six months ended
31 March 2019 31 March 2018 Change
Revenue GBP50.1 million GBP42.9 million 17%
----------------- ----------------- --------
Revenue per GBPAUA* 22.0 bps 20.7 bps 1.3bps
----------------- ----------------- --------
PBT GBP17.7 million GBP13.9 million 27%
----------------- ----------------- --------
PBT margin 35.3% 32.4% 2.9ppts
----------------- ----------------- --------
Diluted earnings per
share(1) 3.50 pence 2.82 pence 24%
----------------- ----------------- --------
Interim dividend per
share(1) 1.50 pence 1.46 pence 3%
----------------- ----------------- --------
(1) Comparative restated to reflect share reorganisation on 15 November 2018
Non-financial highlights
Year ended
Six months ended 30 September
31 March 2019 2018 Change
Number of retail customers 214,853 197,912 9%
----------------- ---------------- --------
- Platform 200,922 183,213 10%
----------------- ---------------- --------
- Non-platform 13,931 14,699 (5%)
----------------- ---------------- --------
AUA GBP47.7 billion GBP46.1 billion 3%
----------------- ---------------- --------
- Platform GBP40.6 billion GBP38.6 billion 5%
----------------- ---------------- --------
- Non-platform GBP7.1 billion GBP7.5 billion (5%)
----------------- ---------------- --------
Customer retention rate* 95.3% 95.1% 0.2ppts
----------------- ---------------- --------
*see definitions
Contacts:
AJ Bell
-- Shaun Yates, Head of Investor Relations +44 (0) 7522 235 898
-- Charlie Musson, Head of PR +44 (0) 7834 499 554
Instinctif Partners
Public relations adviser to AJ Bell
-- Ross Gillam +44 (0) 207 457 2020
-- Kaj Sahota +44 (0) 7341 731 189
-- Katie Bairsto +44 (0) 7946 424 651
Analyst presentation
AJ Bell will be hosting an analyst presentation at 09:00 on Thursday 23 May 2019 following the release of these results for the six months ended 31 March 2019. Attendance is by invitation only. Slides accompanying the analyst presentation will be made available on the AJ Bell website after the presentation.
Forward-looking statements
The interim results contains forward-looking statements that involve substantial risks and uncertainties, and actual results and developments may differ materially from those expressed or implied by these statements. These forward-looking statements are statements regarding AJ Bell's intentions, beliefs or current expectations concerning, among other things, its results of operations, financial condition, prospects, growth, strategies and the industry in which it operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as of the date of these interim results and AJ Bell does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these interim results.
Chief Executive Officer's report
I am pleased to present our interim report for the six months ended 31 March 2019, our first set of results as a publicly-listed company. The first half of the year saw us deliver a strong financial performance with our investment platform continuing to attract high levels of new customers and assets. Our commitment to providing a quality service at a competitive price through our multi-award-winning, easy-to-use platform remains our key focus and we remain well positioned to capitalise on a platform market that continues to grow.
Overview
Revenue increased by 17% to GBP50.1m and profit before tax increased by 27% to GBP17.7m in the six-month period to 31 March 2019, in comparison to the same period in the previous year. Our PBT margin increased from 32.4% to 35.3% during the period, reflecting our robust business model and embedded operational gearing. The market and wider economy may not be without its challenges, with the FTSE All-Share index falling 4% in the six months to 31 March 2019, but our diversified revenue model ensures we are well placed to deal with such conditions. We remain confident in the growth of the platform market and our ability to capitalise on the resulting opportunities.
The key drivers of our business, customers and AUA, grew by 9% and 3% respectively in the six months to 31 March 2019. Net AUA inflows were GBP1.8bn in the period, driving an increase in total AUA to GBP47.7bn, despite economic and political uncertainty impacting our customers' behaviour, with dealing activity falling 14% in comparison to the prior year. Defined benefit (DB) pension transfers continued to decline in line with industry trends and expectations, though still accounted for GBP0.5bn of inflows during the period, compared with GBP1.1bn in the prior year. The number of retail customers increased by 16,941 to 214,853 during the period, with our platform customer retention rate remaining high at 95.3%.
It is always pleasing to see the quality of our propositions being recognised and during the first half of the year we won two key industry awards. We retained top spot in Platforum's UK D2C Investor Experience report, which looks at the customer experience of investing and how it has evolved. In addition we were named 'Best Overall Advised Platform of the Year' at the recent lang cat awards, whose criteria include a need to demonstrate a market-leading reputation for both service and proposition.
I am also delighted that we have strengthened our position within the Sunday Times' 100 Best Companies to Work For. We have now been awarded a three-star accreditation, which Best Companies uses to recognise 'extraordinary levels of workplace engagement'. An engaged workforce is absolutely vital to our business. Our staff work tirelessly to provide a first-class service to our customers and ensure their high expectations are met, which in turn helps to fuel the growth of our business. Staff engagement remains a key focus for us and it is particularly pleasing to see our Best Companies ranking improve at the same time as we have continued to grow our workforce to support the expansion of the business.
In December, we successfully completed our IPO on the Main Market of the London Stock Exchange, representing a significant milestone for us and the beginning of the next growth phase in the business. We believe the listing will, over the long term, help to enhance both the profile of the business and our brand awareness, which will in turn support us to fulfil our ambitious growth plans.
Strategic update
Helping customers to invest is at the heart of what we do and our strategic aim is to become the easiest platform to use. We continue to invest in technology and innovation to develop our platform, propositions and services for the benefit of our customers. Much of our focus over the last six months has been on enhancing the look and feel of our key proposition websites and mobile apps, building additional functionality whilst committing ongoing investment in our infrastructure to support our scalable platform.
During the period our Advised Platform, AJ Bell Investcentre, extended its service to include an execution-only dealing option for ISA and GIA account holders, with advised customers now having the ability to deal online and via our mobile app. The AJ Bell Investcentre website is currently undergoing a series of enhancements, with the recent release incorporating a new intuitive layout and design together with increased functionality and responsiveness across devices. The next release will include the provision of enhanced reporting templates and customisation of our new adviser-facing client reporting tool.
Our 'On the Road' tour was well received in early March, with attendance at record levels. The content this year focused on a range of topical issues, including barriers to switching platforms, the cost of investing, and the FCA's product intervention and governance rules. Our 'Investival' conference held in November continues to go from strength to strength, and is now recognised as one of the biggest and best investment conferences for UK advisers.
In addition, as part of our commitment to keep our pricing under review and ensure value for money, we made some changes to the AJ Bell Investcentre core charges during the period. From 1 January we removed the GBP1 dealing charge previously incurred on all deals executed through the Bulks & Models tool, as well as removing the majority of standard pension administration charges for Junior SIPPs.
AJ Bell Youinvest, our D2C Platform, launched its new website in March this year, delivering a modern design and improved mobile responsiveness. We have continued to enhance investment content on our website and mobile app including the successful launch of our new podcast, 'Money & Markets', together with a range of investment-focused seminars and webinars. In addition, we reduced our foreign exchange charges for international dealing and foreign currency funds, together with increasing the tiered interest rates for customers. The latter part of the year will see us continue to develop the Mywealth proposition, which enables customers to see their other investments and savings alongside those held with AJ Bell, to include automated balance updates, utilising open banking interfaces and enhancing pension information.
A new range of ready-made portfolios has been launched for our AJ Bell Youinvest customers, offering four portfolios constructed from some of the best actively managed funds in the market. These funds are designed to offer guidance to our D2C customers in accordance with their different risk appetites and investor needs, be it capital growth or income.
We have been busy extending our range of simple, low-cost investment solutions for both our advised and D2C customers during the period. We have launched a number of new solutions for our customers, with the latest being our two new income funds in April, whilst also reducing the ongoing charges figure (OCF) cap on our passive funds from 0.50% to 0.35%, demonstrating our commitment to lowering costs for all of our investors.
We also launched the 'Pactive' portfolios during February, the latest addition to our Managed Portfolio Service range on AJ Bell Investcentre. The new Pactive portfolios are aligned to the same six risk levels as our existing portfolios, investing half in the currently actively managed portfolios and half in the AJ Bell Passive funds. This latest offering is a clear example of how we listen to our customers and continually evolve our propositions.
We recognise that the planned growth of our platform business requires continual investment in technology, infrastructure and innovation, at least in part driven by the potential for technological disruption in our industry. The last six months have seen us invest in our development teams to ensure the continued and effective delivery of change to enhance our customers' experience and facilitate operational efficiencies.
Market and regulatory developments
As part of our drive to help people to invest, we continue to be an active participant in industry consultations and market studies. We believe the market could benefit from increased visibility and simplification in many areas to make it more efficient and easier to understand for customers, hence encouraging long-term savings.
The FCA's Investment Platforms Market Study was the first time the regulator has taken a detailed look at the platform market. The final report concluded that the platform market generally works well, although processes around switching providers could be improved. We agree with this assessment and have recently sponsored a report by the lang cat consultancy entitled Signal to Noise, which identifies some of the challenges faced by advisers and addresses how these can be overcome.
Alongside its final report, the FCA launched a consultation which included a discussion chapter on a potential ban or cap on platform exit fees. We believe platforms should be able to charge reasonable fees that cover the cost of platform transfers and would welcome a cap to ensure the fees charged are commensurate with the work platforms have to carry out. Any restriction or ban on platform exit fees will not have a significant impact on our business. The FCA has stated that its current view is that any ban or cap on exit fees should also apply to firms offering comparable services, so we expect any changes to apply to firms that compete with platforms.
In the interim report of the market study the FCA highlighted revenue margin, measured as revenue per GBPAUA, as an important metric for assessing platform charges. We would like to have seen a requirement in the final report for platforms to publish this figure prominently on their website. This could provide a single, highly visible measure on which different platform charging structures can be compared, making it easier for customers to make value-for-money assessments.
As the FCA continues to monitor the development of the platform market, we would like to see the regulator look at the support and guidance services that DIY platforms offer customers to help them to invest. We believe there is more that can be done here to make it easier for platforms to help their customers to select investments that suit their needs without this being classed as a personal recommendation.
The other major regulatory development during the period was the launch of a consultation into the introduction of investment pathways. These are intended to help non-advised customers entering income drawdown choose an investment solution in line with their retirement objectives. Whilst such proposals are broadly positive, we feel improvements could be made on the timing of when investment pathways are presented to customers, the number of pathways available and to ensure that the solutions on offer take account of customers' risk appetite, which they currently do not.
Outside of the current market studies, we believe there is scope for further simplification in the mainstream pension and ISA markets that would make it easier for people to invest. The UK has seven different variations of an ISA, which makes it harder for people to know which one they should use. We see no reason why a single ISA could not cover all customer needs. In pensions, we now have three different annual allowances and a lifetime allowance restricting how much people can save. We believe there only needs to be one control on how much people can save via pensions and that is an annual allowance for defined contribution pension schemes and a lifetime allowance for defined benefit schemes. This would dramatically simplify pensions at a stroke for millions of people and the legislators could then spend their time focusing on how to deal with situations where people are in both types of scheme at the same time and switch between the two regimes.
The Markets in Financial Instruments Directive II (MiFID II) and the General Data Protection Regulation (GDPR) have also both been introduced over the past 16 months with the aims of improving transparency and visibility of costs within financial markets and also to enhance customer protection. We have implemented the necessary changes within the required time periods.
Dividends
The Board continues to adopt a progressive dividend policy, which is supported by our capital-light and highly cash-generative business model as reflected in the strength of our balance sheet. The Board has declared an interim dividend of 1.50 pence per share, in accordance with its stated policy, which is designed to ensure that we retain sufficient funds for continued investment in the business and to meet our regulatory capital requirements.
Outlook
Whilst 2019 has seen a partial recovery in markets, further volatility is expected as the current economic and political uncertainty continues to impact on our customers' decision-making. We are confident that the continued growth of the platform market, the robustness of our business model and our ongoing investment in systems and processes will enable us to support our customers' future needs in the face of unpredictable markets.
The UK base rate remains historically low, despite the increase to 0.75% in August last year. Any further moves from the Bank of England are likely to be influenced by Brexit. We have remained highly profitable whilst operating in a low interest rate environment for over a decade, and our diversified revenue model ensures we maintain a degree of resilience to further changes in the UK's monetary policy.
We have delivered a strong financial performance in the interim period. Our strategy is clear, we remain committed to helping our customers to invest by delivering the easiest platform to use in the market and we remain focused on growing the business.
Finally, I would like to thank all our staff for their efforts, the quality of their work and the commitment that has seen us list on the Main Market of the London Stock Exchange and deliver another excellent set of results. We continue to build on our successes and I look forward to the next phase in our journey to build an outstanding business for the long term.
Andy Bell Chief Executive Officer
Financial review
The Group has continued to deliver strong growth during the first half of the financial year, with revenue up 17% to GBP50.1m (HY18: GBP42.9m) and profit before tax increasing 27% to GBP17.7m (HY18: GBP13.9m). The two key drivers of our performance, customers and AUA, grew by 9% and 3% respectively in the six-month period.
Business performance
Customers
Customer numbers grew by 9% in the period. This growth has been driven by our Platform business, with particularly strong customer acquisition delivered by our D2C Platform. In addition, our Platform customer retention rate remained high at 95.3%.
Assets under administration
Six months ended 31 March 2019
Advised D2C Total
Platform Platform Platform Non-platform Total
GBPbn GBPbn GBPbn GBPbn GBPbn
---------------------------------- -------- -------- -------- ------------ -----
As at 1 October 29.9 8.7 38.6 7.5 46.1
---------------------------------- -------- -------- -------- ------------ -----
Underlying inflows 1.6 0.9 2.5 0.1 2.6
Outflows (0.8) (0.3) (1.1) (0.4) (1.5)
---------------------------------- -------- -------- -------- ------------ -----
Underlying net inflows/(outflows) 0.8 0.6 1.4 (0.3) 1.1
---------------------------------- -------- -------- -------- ------------ -----
DB inflows 0.5 - 0.5 - 0.5
Bulk migration inflows - 0.2 0.2 - 0.2
---------------------------------- -------- -------- -------- ------------ -----
Total net inflows/(outflows) 1.3 0.8 2.1 (0.3) 1.8
---------------------------------- -------- -------- -------- ------------ -----
Market and other movements (0.3) 0.2 (0.1) (0.1) (0.2)
---------------------------------- -------- -------- -------- ------------ -----
As at 31 March 30.9 9.7 40.6 7.1 47.7
================================== ======== ======== ======== ============ =====
Six months ended 31 March 2018
Advised D2C Total
Platform Platform Platform Non-platform Total
GBPbn GBPbn GBPbn GBPbn GBPbn
----------------------------- -------- -------- -------- ------------ -----
As at 1 October 24.3 6.6 30.9 8.9 39.8
----------------------------- -------- -------- -------- ------------ -----
Underlying inflows 1.6 0.8 2.4 0.2 2.6
Outflows (0.7) (0.2) (0.9) (0.2) (1.1)
----------------------------- -------- -------- -------- ------------ -----
Underlying net inflows 0.9 0.6 1.5 - 1.5
----------------------------- -------- -------- -------- ------------ -----
DB inflows 1.1 - 1.1 - 1.1
Bulk migration inflows
/(outflows) - 0.3 0.3 (0.7) (0.4)
----------------------------- -------- -------- -------- ------------ -----
Total net inflows/(outflows) 2.0 0.9 2.9 (0.7) 2.2
----------------------------- -------- -------- -------- ------------ -----
Market and other movements - - - (0.2) (0.2)
----------------------------- -------- -------- -------- ------------ -----
As at 31 March 26.3 7.5 33.8 8.0 41.8
============================= ======== ======== ======== ============ =====
In spite of weak investor sentiment in the period, our strong customer proposition has allowed us to continue to deliver growth in AUA. Total AUA increased 3% to GBP47.7bn at 31 March 2019. The growth in the period was primarily driven by the Platform business, which saw total net inflows of GBP2.1bn.
Advised Platform inflows from defined benefit transfers declined in line with expectations, contributing GBP0.5bn to inflows during the period compared with GBP1.1bn in the prior period.
D2C Platform inflows included GBP0.2bn that related to AJ Bell plc shares held by current and former employees of the Company. These shares were migrated onto the D2C Platform ahead of our listing on the Main Market of the London Stock Exchange in December 2018.
Financial performance
Revenue
Unaudited Unaudited Audited
Six months Six months Year ended
ended 31 March ended 31 March 30 September
2019 2018 2018
GBP000 GBP000 GBP000
--------------------- -------------- -------------- ------------
Recurring fixed 12,750 12,568 25,212
Recurring ad valorem 29,385 21,939 47,890
Transactional 7,949 8,421 16,589
--------------------- -------------- -------------- ------------
Total 50,084 42,928 89,691
===================== ============== ============== ============
Revenue increased by 17% to GBP50.1m (HY18: GBP42.9m). We have three categories of revenue, these being recurring fixed fees, recurring ad valorem fees, and transactional fees.
Recurring fixed revenue (which includes recurring pension administration fees and media revenue) saw an increase of 2% to GBP12.8m (HY18: GBP12.6m). This modest increase was a result of the increased revenues from our Advised Platform customers being offset by a reduction in pension administration fees from our non-platform business. The reduction in non-platform revenue was a result of our decision to discontinue two of our third-party administration contracts during the prior financial year.
Recurring ad valorem revenue (comprised of custody fees, retained interest income, and investment management fees) grew by 34% to GBP29.4m (HY18: GBP21.9m). The key driver of the growth in ad valorem revenue was the growth in AUA. Retained interest income also increased due to a higher level of cash balances held by our customers and higher interest rates, following the increases in the UK base rate to 0.50% in November 2017 and 0.75% in August 2018.
Transactional revenue (comprised of dealing fees and pension scheme activity fees) fell by 6% to GBP7.9m (HY18: GBP8.4m), due to prior period fees including GBP0.5m of one-off revenue, for one of our third-party SIPP administration contracts that was discontinued in the prior financial year.
Revenue margin increased by 1.3bps from 20.7bps to 22.0bps in the six-month period, an increase of 6%. This was primarily due to the increase in ad valorem revenue in the Platform business.
Administrative expenses
Unaudited Unaudited Audited
Six months Six months Year ended
ended 31 March ended 31 March 30 September
2019 2018 2018
GBP000 GBP000 GBP000
------------------------ -------------- -------------- ------------
Distribution 5,176 3,954 7,711
Technology 8,223 7,578 15,208
Operational & support 18,174 17,305 36,747
Initial public offering
(IPO) 946 201 1,769
------------------------ -------------- -------------- ------------
Total 32,519 29,038 61,435
======================== ============== ============== ============
Administrative expenses increased by 12% to GBP32.5m (HY18: GBP29.0m). We have three categories of administrative expenses, these being distribution, technology, and operational and support.
Distribution costs increased 30% from GBP4.0m to GBP5.2m. This was due to an increase in our marketing activity, which was a key driver of our growth in both customer numbers and AUA in the period.
Technology costs increased 8% to GBP8.2m (HY18: GBP7.6m), reflecting investment in our development teams, allowing us to accelerate the development of our platform propositions
There was a modest increase in operational and support costs, which rose 5% to GBP18.2m (HY18: GBP17.3m). The increase was caused by the growth of the Platform business, but costs increased at a lower rate than revenue as the business continues to benefit from operational gearing. Prior period costs also included one-off costs for the relocation of the stockbroking operation.
Costs relating to our IPO, which was successfully completed in December 2018, amounted to GBP0.9m in the period, bringing overall costs to GBP2.7m.
Profit before tax (PBT)
PBT rose to GBP17.7m, an increase of 27% compared to the prior period (HY18: GBP13.9m) due to the continued growth of the business. Our PBT margin has increased from 32.4% to 35.3%, as a result of a combination of higher revenue margins and favourable operational gearing.
Earnings per share
Diluted earnings per share (DEPS) increased by 24% to 3.50 pence per share.
Tax
The effective rate of tax for the period was 20.3% (HY18: 18.9%), slightly higher than the standard rate of UK Corporation Tax. The increase in the period reflects the IPO-related costs that are partially disallowable.
Financial position
Capital and liquidity
The Group's balance sheet remains strong, with net assets totalling GBP73.8m at 31 March 2019 (HY18: GBP65.4m) and a healthy surplus of regulatory capital held at all times during the period.
Cash balances also increased by 23% from GBP45.3m to GBP55.8m. Our significant cash surplus ensures we have sufficient liquidity buffers and funds available to invest in the continued growth of the business.
Dividends
The Board has declared an interim dividend of 1.50 pence per share, in accordance with the policy set out in the prospectus issued at the time of our IPO. The Board remains committed to a progressive dividend policy, whilst also ensuring we have sufficient capital for future investment in the business and to maintain an appropriate surplus over and above our regulatory capital requirements.
Michael Summersgill Chief Financial Officer
Responsibility statement
Directors' Responsibility Statement
The Directors confirm that this consolidated interim financial information has been prepared in accordance with International Accounting Standard 34 (IAS 34) as adopted by the European Union and that the interim report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
- an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
- material related-party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report.
By order of the Board:
Christopher Bruce Robinson
Company Secretary
22 May 2019
Independent review report to AJ Bell plc
Conclusion
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2019 which comprises the condensed consolidated income statement, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2019 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
The impact of uncertainties due to the UK exiting the European Union on our review
Uncertainties related to the effects of Brexit are relevant to understanding our review of the condensed financial statements. Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. An interim review cannot be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Alexander Simpson
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square
Manchester
M2 3AE
22 May 2019
Condensed consolidated income statement
For the six months ended 31 March 2019
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2019 2018 2018
Notes GBP000 GBP000 GBP000
Revenue 50,084 42,928 89,691
Administrative expenses (32,519) (29,038) (61,435)
----------- ----------- -------------
Operating profit 17,565 13,890 28,256
Investment income 148 43 128
Finance costs (33) (5) (25)
----------- ----------- -------------
Profit before tax 17,680 13,928 28,359
Tax expense 7 (3,594) (2,628) (5,713)
----------- ----------- -------------
Profit for the period 14,086 11,300 22,646
=========== =========== =============
Profit for the period attributable
to:
Equity holders of the parent
company 14,086 11,300 22,646
=========== =========== =============
Earnings per ordinary share:
Basic (pence) 8 3.52 2.87 5.76
Diluted (pence) 8 3.50 2.82 5.63
All revenue, profit and earnings are in respect of continuing operations.
There were no other components of recognised income or expense in any of the periods presented and consequently no statement of other comprehensive income has been presented.
Condensed consolidated statement of financial position
As at 31 March 2019
Unaudited Unaudited Audited
31 March 31 March 30 September
2019 2018 2018
Notes GBP000 GBP000 GBP000
Assets
Non-current assets
Goodwill 3,660 3,660 3,660
Other intangible assets 2,782 3,255 3,124
Property, plant and equipment 4,284 3,952 4,433
Deferred tax asset 1,321 371 372
--------- --------- -------------
12,047 11,238 11,589
--------- --------- -------------
Current assets
Trade and other receivables 23,242 23,652 20,075
Cash and cash equivalents 55,769 45,344 49,695
--------- --------- -------------
79,011 68,996 69,770
--------- --------- -------------
Total assets 91,058 80,234 81,359
--------- --------- -------------
Liabilities
Current liabilities
Trade and other payables (10,230) (9,488) (11,438)
Current tax liabilities (3,359) (2,441) (2,491)
Other financial liabilities (316) (47) (300)
Provisions 9 (1,095) (1,925) (1,282)
--------- --------- -------------
(15,000) (13,901) (15,511)
--------- --------- -------------
Non-current liabilities
Trade and other payables (1,021) (133) (603)
Other financial liabilities (427) (46) (431)
Provisions 9 (818) (741) (778)
--------- --------- -------------
(2,266) (920) (1,812)
--------- --------- -------------
Total liabilities (17,266) (14,821) (17,323)
--------- --------- -------------
Net assets 73,792 65,413 64,036
========= ========= =============
Equity
Share capital 10 51 42 42
Share premium 7,026 3,531 4,410
Own shares (1,147) (1,278) (1,364)
Retained earnings 67,862 63,118 60,948
--------- --------- -------------
Total equity 73,792 65,413 64,036
========= ========= =============
The condensed consolidated financial statements were approved by the Board of Directors and authorised for issue on 22 May 2019 and signed on its behalf by:
Michael Summersgill
Chief Financial Officer
AJ Bell plc
Company registered number: 04503206
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2019
Share capital Share premium Own shares Retained earnings Total equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 October 2017 40 2,806 - 58,516 61,362
Total comprehensive income for the period:
Profit for the period - - - 11,300 11,300
Transactions with owners, recorded directly
in equity:
Issue of shares 2 725 - - 727
Dividends paid - - - (6,362) (6,362)
Purchase of own share capital - - - (402) (402)
Own shares acquired - - (1,278) - (1,278)
Equity settled share-based payment
transactions - - - 59 59
Deferred tax effect of share-based payment
transactions - - - 7 7
------------- ------------- ---------- ----------------- ------------
Total transactions with owners 2 725 (1,278) (6,698) (7,249)
------------- ------------- ---------- ----------------- ------------
Balance at 31 March 2018 42 3,531 (1,278) 63,118 65,413
============= ============= ========== ================= ============
Share capital Share premium Own shares Retained earnings Total equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 October 2018 42 4,410 (1,364) 60,948 64,036
Adjustment on initial application of IFRS
9 - - - 78 78
Adjustment on initial application of IFRS
15 - - - 172 172
------------- ------------- ---------- ----------------- ------------
Balance at 1 October 2018 - as restated 42 4,410 (1,364) 61,198 64,286
Total comprehensive income for the period:
Profit for the period - - - 14,086 14,086
Transactions with owners, recorded directly
in equity:
Issue of shares - 440 - - 440
Settlement of part-paid shares 1 2,185 - - 2,186
Dividends paid - - - (8,827) (8,827)
Bonus issue 9 (9) - - -
Purchase of own share capital (1) - - - (1)
Own shares acquired - - (50) - (50)
Equity settled share-based payment
transactions - - - 510 510
Tax relief on exercise of share options - - - 357 357
Deferred tax effect of share-based payment
transactions - - - 805 805
Employee share transfer - - 267 (267) -
------------- ------------- ---------- ----------------- ------------
Total transactions with owners 9 2,616 217 (7,422) (4,580)
------------- ---------- ------------
Balance at 31 March 2019 51 7,026 (1,147) 67,862 73,792
============= ============= ========== ================= ============
Condensed consolidated statement of cash flows
For the six months ended 31 March 2019
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2019 2018 2018
Note GBP000 GBP000 GBP000
Cash flows from operating activities
Profit for the period 14,086 11,300 22,646
Adjustments for:
Investment income (148) (43) (128)
Finance costs 33 5 25
Income tax expense 3,594 2,628 5,713
Depreciation and amortisation 1,039 1,145 1,971
Share-based payment expense 510 59 112
Increase in provisions and non-current
other payables 271 244 108
Loss on disposal of property,
plant and equipment 1 2 11
(Increase)/decrease in trade
and other receivables (2,917) (1,480) 2,137
(Decrease)/increase in trade
and other payables (1,208) (627) 1,323
----------- ----------- -------------
Cash generated from operations 15,261 13,233 33,918
Income tax paid (2,512) (2,181) (5,045)
Interest paid (33) (5) (25)
----------- ----------- -------------
Net cash flows from operating
activities 12,716 11,047 28,848
----------- ----------- -------------
Cash flows from investing activities
Purchase of other intangible
assets - (6) (6)
Purchase of property, plant and
equipment (394) (513) (951)
Interest received 148 43 128
----------- ----------- -------------
Net cash used in investing activities (246) (476) (829)
----------- ----------- -------------
Cash flows from financing activities
Payments of obligations under
finance leases and hire purchase
contracts (144) (50) (199)
Proceeds from issue of shares 440 727 1,292
Proceeds from settlement of part-paid
shares 2,186 - 314
Payments for purchase of own
shares (1) (402) (410)
Purchase of own shares for employee
share schemes (50) (1,278) (1,364)
Dividends paid 11 (8,827) (6,362) (20,095)
----------- ----------- -------------
Net cash used in financing activities (6,396) (7,365) (20,462)
----------- ----------- -------------
Net increase in cash and cash
equivalents 6,074 3,206 7,557
Cash and cash equivalents at
beginning of period 49,695 42,138 42,138
----------- ----------- -------------
Cash and cash equivalents at
end of period 55,769 45,344 49,695
=========== =========== =============
Notes to the condensed consolidated financial statements
For the six months ended 31 March 2019
1 General information
AJ Bell plc (formerly AJ Bell Holdings Limited) ("the Company") is the Parent Company of the AJ Bell group of companies (together "the Group"). The Company is a public limited company which is listed on 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.
The principal activity of the Group is the provision of an investment platform operating in the advised and D2C markets.
2 Basis of preparation
The condensed consolidated interim financial statements ("interim financial statements") have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" (IAS 34) as adopted by the European Union (EU). They do not include all of the information and disclosures required for full annual financial statements and therefore should be read in conjunction with the AJ Bell plc Annual Report and financial statements for the year ended 30 September 2018, which were prepared under International Financial Reporting Standards (IFRSs) as adopted by the EU and the Companies Act 2006.
The interim financial statements have been prepared on the historical cost basis and are presented in pounds sterling, which is the currency of the primary economic environment in which the Group operates. All amounts have been rounded to the nearest thousand, unless otherwise stated.
The financial information contained in the interim financial statements does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the year ended 30 September 2018 has been derived from the audited financial statements of AJ Bell plc for that year, which have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was:
(i) unqualified, and
(ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The consolidated financial statements of the Group for the year ended 30 September 2018 are available to view online at www.ajbell.co.uk/investor-relations.
Going concern
The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future. Accordingly, they have continued to adopt the going concern basis in preparing the interim financial statements.
Significant accounting policies
The accounting policies adopted by the Group in these interim financial statements are consistent with those applied by the Group in its consolidated financial statements for the year ended 30 September 2018, except for the adoption of new standards effective as of 1 October 2018.
The Group applies the following new standards for the first time:
- IFRS 9 Financial Instruments, and
- IFRS 15 Revenue from Contracts with Customers.
The impact of the adoption of these standards is disclosed in note 3 below.
Several other amendments and interpretations apply for the first time on 1 October 2018 but do not have an impact on the interim financial statements of the Group.
Developments in reporting standards and interpretations
A number of standards and amendments to standards and interpretations are effective for periods beginning on or after 1 October 2019. These new standards are not applicable to these interim financial statements and they are not expected to have a material impact when they become effective, with the exception of IFRS 16 Leases, the impact of which is detailed below. The Group plans to apply these standards and amendments in the reporting period in which they become effective.
IFRS 16 - Leases
IFRS 16 was issued in 2016 and represents a significant change in the accounting and reporting of leases for lessees as it provides a single lessee accounting model that replaces the current model where leases are either recognised as operating or finance leases. Accounting requirements for lessors are substantially unchanged from IAS 17 Leases. IFRS 16 is effective for accounting periods commencing on or after 1 January 2019. The Group does not intend to adopt the standard early and therefore expects to apply IFRS 16 from the accounting period commencing 1 October 2019.
On transition to IFRS 16, the Group can choose to apply one of two transition methods:
- full retrospective transition method, prepared as if the standard had always applied; or
- modified retrospective transition approach, with an option to apply a practical expedient and retain its previous assessments of which contracts contain a lease.
It is anticipated that the Group will adopt the modified retrospective transition approach, taking advantage of the practical expedient as detailed above.
A preliminary assessment of the impact of adopting this standard has been performed, concluding that the primary impact will be to bring the Group's leasehold properties onto the statement of financial position, recognising both a right-of-use asset and a lease liability for future lease payments. Whilst there will be a material adjustment to gross assets and liabilities, there is unlikely to be a material impact on net assets at Group level. The right-of-use asset will be depreciated over the shorter of the expected life of the asset and the lease term on a straight-line basis, recognised in the income statement. The lease liability will be reduced by the lease payments over the lease term with interest being recognised on the lease liability and charged to the income statement. Depreciation and interest charges will replace the lease costs currently charged to the income statement. Higher interest charges will be recognised in earlier years of the lease as the discount rate unwinds. We will complete our final assessment to quantify the impact once all inputs are known in the latter half of the current financial year.
3 Changes in accounting policies
IFRS 9: Financial Instruments
The Group has applied IFRS 9 Financial Instruments (IFRS 9) and the related amendments in the current period. IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) for annual periods beginning on or after 1 January 2018. IFRS 9 introduces new requirements for:
i) classification and measurement of financial assets and financial liabilities
ii) impairment for financial assets
iii) hedge accounting
Classification and measurement
The basis of classification for financial assets under IFRS 9 has changed from those of IAS 39. Under IFRS 9 financial assets are classified as; amortised cost, fair value through profit or loss, or fair value through other comprehensive income which replace the categories of available-for-sale, loans and receivables and held to maturity. An assessment of the classification of financial assets has been undertaken, taking into account both the business model within which the asset is held and the contractual cash-flow characteristics of the asset.
The Group has no financial assets for which these changes lead to an adjustment in recognition or carrying amount. The Group's financial assets consist of trade and other receivables and cash and cash equivalents. The cash flows arising on these assets are solely payments of principal and interest and therefore continue to be recognised at amortised cost on transition. As a result the impact of IFRS 9, classification changes are presentational in nature.
The classification and measurement of financial liabilities remains unchanged from IAS 39, therefore there has been no impact on the Group's financial liabilities on adoption of the new standard.
Impairment of financial assets
IFRS 9 replaces the 'incurred-loss' model in IAS 39 with a forward looking "expected credit loss" (ECL) model. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The expected credit loss model requires the Group to account for credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. Essentially this means that it is not necessary for a credit event to have occurred before credit losses are recognised.
The Group has one type of financial asset which is subject to the expected credit loss model being trade and other receivables. The Group has applied the IFRS 9 simplified approach and has calculated ECLs based on lifetime expected credit losses.
As a result of adopting the expected credit loss model, the loss allowance for trade receivables on 1 October 2018 is as follows:
GBP000
Opening loss allowance - calculated under IAS 39 463
Amounts restated through opening retained earnings (78)
------
Opening loss allowance - calculated under IFRS 9 385
=================================================== ======
Hedge accounting
IFRS 9 incorporates new hedge accounting requirements. The Group does not carry out, and does not intend to carry out, any material hedging activities which would be accounted for in accordance with IFRS 9.
Transition impact
The date of initial application is 1 October 2018. The Group has elected not to restate comparatives, and to recognise the impact of the new accounting requirements in opening retained earnings on the date of adoption in accordance with the transitional provisions in IFRS 9 (7.2.15) and (7.2.26). Accordingly the comparatives presented do not reflect the accounting requirements of IFRS 9 but rather those of IAS 39.
On application of IFRS 9 the Group has recognised an increase in retained earnings and a corresponding decrease in the provision for trade receivables following the introduction of a new expected credit loss impairment model. The total impact on the Group's retained earnings as at 1 October 2018 is as follows:
GBP000
Opening retained earnings IAS 39 60,948
Decrease in provision for trade receivables 78
---------------------------------------------------- ------
Total adjustment to retained earnings from adoption
of IFRS 9 78
------
Opening retained earnings IFRS 9 61,026
==================================================== ======
The impact on the income statement for the interim period is a reduction of GBP60,186.
IFRS 15: Revenue from Contracts with Customers
The Group has applied IFRS 15 Revenue from Contracts with Customers (IFRS 15) and the related amendments in the current period. IFRS 15 replaces IAS 18 Revenue (IAS 18), IAS 11 Construction Contracts (IAS 11) and related interpretations for annual periods beginning on or after 1 January 2018.
IFRS 15 changes how and when revenue is recognised from contracts with customers and the treatment of the costs of obtaining a contract with a customer. The new standard is based on the principle that revenue is recognised when control of goods or services transfer to the customer. IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.
Impact on revenue recognition
The Group performed an assessment to determine the impact of the new standard on the Group's statement of financial position and performance.
It considered the five-step model prescribed by the standard, taking into account the different types of contracts it has with its customers, the corresponding types of services provided to customers and when these performance obligations are satisfied. The assessment concluded that the accounting treatment for the majority of revenue streams remains unchanged, except for annual pension administration fees and cash incentives. The impact on annual pension administration fees resulted in the acceleration of certain income streams and the deferral of others due to the timing of satisfying performance obligations. Under IFRS 15, cash incentives should be recognised as a reduction of the transaction price, and therefore of revenue, whereas previously these incentives were considered to be an operating cost.
Transition impact
The date of initial application is 1 October 2018. The Group has elected not to restate comparatives, and to recognise the impact of the new accounting requirements in opening retained earnings on the date of adoption in accordance with the transitional provisions in IFRS 15 (C3(b)). Accordingly the comparatives presented do not reflect the accounting requirements of IFRS 15 but rather those of IAS 18.
The following table summarises the impact on the Group's retained earnings as at 1 October 2018:
GBP000
Opening retained earnings IAS 18 60,948
Increase in deferred income (192)
Increase in deferred cash incentives 93
Increase in accrued income 271
---------------------------------------------------- ------
Total adjustment to retained earnings from adoption
of IFRS 15 172
------
Opening retained earnings IFRS 15 61,120
==================================================== ======
The impact on the income statement for the interim period is a reduction of GBP185,982.
4 Accounting judgements and estimates
The judgements, estimates and assumptions made by the Group in these interim financial statements are consistent with those applied by the Group in its consolidated financial statements for the year ended 30 September 2018.
5 Seasonality of operations
There is a peak in the Group's operational activity around the tax year-end. This impacts the financial results primarily in March and April, either side of the interim period-end. As such, no significant seasonal fluctuations affect the first or second half of the Group's financial year in isolation.
6 Segmental reporting
It is the view of the Directors that the Group has a single operating segment; Investment services in the advised and D2C space administering investments in SIPP's, ISA's, LISA's and General Investment/Dealing Accounts. It is considered that a further disaggregation of the single operating segment does not provide a clearer or more accurate view of the reporting within the Group. Details of the Group's revenue, results and assets and liabilities for the reportable segment are shown within the condensed consolidated income statement and condensed consolidated statement of financial position.
The Group operates in one geographical segment, being the UK.
Due to the nature of its activities, the Group is not reliant on any one customer or group of customers for generation of revenues.
7 Taxation
Tax recognised in the condensed consolidated income statement:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2019 2018 2018
GBP000 GBP000 GBP000
Current taxation
UK Corporation Tax 3,737 2,765 5,694
Adjustment in respect of prior
periods - 1 113
----------- ----------- -------------
3,737 2,766 5,807
----------- ----------- -------------
Deferred taxation
Origination and reversal of
temporary differences (145) (135) (16)
Adjustment in respect of prior
periods - - (80)
Effect of changes in tax rates 2 (3) 2
----------- ----------- -------------
(143) (138) (94)
----------- ----------- -------------
Total tax expense 3,594 2,628 5,713
=========== =========== =============
Corporation Tax for the six months ended 31 March 2019 has been calculated at 19% (six months ended 31 March 2018: 19%; year ended 30 September 2018: 19%), representing the average annual effective tax rate expected for the full year, applied to the estimated assessable profit for the six-month period.
In addition to the amount charged to the income statement, certain tax amounts have been recognised directly in equity as follows:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2019 2018 2018
GBP000 GBP000 GBP000
Deferred tax relating to share-based
payments (805) (7) (51)
Current tax relief on exercise
of share options (357) - (128)
----------- ----------- -------------
(1,162) (7) (179)
=========== =========== =============
The charge for the period can be reconciled to the profit per the condensed consolidated income statement as follows:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2019 2018 2018
GBP000 GBP000 GBP000
Profit before tax 17,680 13,928 28,359
=========== =========== =============
UK Corporation Tax at 19% (six
months ended 31 March 2018:
19%; year ended 30 September
2018: 19%): 3,359 2,646 5,388
Tax effects of:
Expenses not deductible for
tax purposes 233 47 338
Change in recognised deductible
temporary differences - (63) (47)
Effect of tax rate changes to
deferred tax 2 (3) 2
Adjustments in respect of prior
periods - 1 32
----------- ----------- -------------
Total tax expense 3,594 2,628 5,713
=========== =========== =============
Effective tax rate 20.3% 18.9% 20.1%
8 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of the parent company by the weighted average number of ordinary shares, excluding own shares, in issue during the period.
Diluted earnings per share is calculated by adjusting the weighted average number of shares to assume exercise of all potentially dilutive share options.
The calculation of basic and diluted earnings per share is based on the following data:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2019 2018 2018
GBP000 GBP000 GBP000
Earnings
Earnings for the purposes of
basic and diluted earnings per
share being profit attributable
to equity holders of the parent
company 14,086 11,300 22,646
=========== ============ =============
(restated) (restated)
No. No. No.
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
EPS in issue during the period 399,918,952 393,863,211 393,407,642
Effect of potentially dilutive
share options 3,025,687 7,008,242 8,821,105
----------- ------------ -------------
Weighted average number of ordinary
shares for the purposes of fully
diluted EPS 402,944,639 400,871,453 402,228,747
=========== ============ =============
Unaudited (restated) (restated)
Six months Unaudited Audited
ended Six months ended Year ended
31 March 31 March 30 September
2019 2018 2018
Earnings per share Pence Pence Pence
Basic 3.52 2.87 5.76
=========== ================= =============
Diluted 3.50 2.82 5.63
=========== ================= =============
On 15 November 2018, as part of the AJ Bell plc listing process, a bonus issue and sub-division of shares occurred resulting in the number of shares in issue increasing from 42,950,663 to 412,326,184. The nominal value of each share was reduced from 0.1p to 0.0125p per share. The calculation of earnings per share for the comparative periods presented have been adjusted to reflect these changes.
9 Provisions
Restructuring
Office dilapidations Other provisions costs Total
GBP000 GBP000 GBP000 GBP000
As at 1 October 2017 790 1,095 492 2,377
Additional provisions 43 - 246 289
-------------------- ---------------- ------------- -------
As at 31 March 2018 833 1,095 738 2,666
-------------------- ---------------- ------------- -------
Additional provisions 37 - - 37
Provisions used - - (568) (568)
Unused provision
reversed (75) - - (75)
-------------------- ---------------- ------------- -------
As at 1 October 2018 795 1,095 170 2,060
-------------------- ---------------- ------------- -------
Additional provisions 40 - - 40
Provisions used (17) - (170) (187)
-------------------- ---------------- ------------- -------
As at 31 March 2019 818 1,095 - 1,913
==================== ================ ============= =======
Non-current liabilities 818 - - 818
Current liabilities - 1,095 - 1,095
Office dilapidations
The Group is contractually obliged to reinstate its leased properties to their original state and layout at the end of the lease terms. The office dilapidations provision represents management's best estimate of the present value of costs which will ultimately be incurred in settling these obligations.
Other provisions
The other provision recognised is to cover the settlement of a one-off tax liability. There is some uncertainty regarding the amount and timing of the outflow required to settle the obligation; therefore a best estimate has been made by assessing a number of different outcomes considering the potential areas and time periods at risk and any associated interest. The timings of the outflows are uncertain but the Group expects that settlement will be within the next 12 months.
Restructuring costs
The restructuring provision represents the estimated costs associated with the relocation of our stockbroking operation. Following completion of the move, the provision has been released in full during the period.
10 Share capital and share premium
Unaudited Six Unaudited Audited Year
months ended Six months ended 30
31 March 2019 ended 31 March September
2018 2018
Issued, fully-called and paid: Number Number Number
Ordinary Shares of 0.0125p
each 407,336,653 - -
Ordinary Shares of 0.1p each - 38,691,894 38,840,741
Non-voting Ordinary Shares
of 0.1p each - 75,000 75,000
A Non-voting Ordinary Shares
of 0.1p each - 878,561 957,692
X Non-voting Ordinary Shares
of 0.1p each - 767,465 767,465
B Non-voting Ordinary Shares
of 0.1p each - 158,890 158,890
C Non-voting Ordinary Shares
of 0.1p each - 194,633 188,056
D Non-voting Ordinary Shares
of 0.1p each - 261,855 255,189
E Non-voting Ordinary Shares
of 0.1p each - 931,660 919,160
F Non-voting Ordinary Shares
of 0.1p each - 203,500 203,500
407,336,653 42,163,458 42,365,693
============== =============== ============
Issued, partly-called and
paid:
A Non-voting Ordinary Shares
of 0.1p each - 325,104 260,973
X Non-voting Ordinary Shares
of 0.1p each - 318,497 318,497
407,336,653 42,807,059 42,945,163
============== =============== ============
On 15 November 2018 the Company passed an ordinary and special resolution authorising:
- a bonus issue to the holders of Ordinary Shares, Non-voting Ordinary Shares, A Shares, B Shares, C Shares, D Shares, E Shares, F Shares and X Shares in issue at close of business on 31 October 2018, in the proportion of one for every five shares held;
- the sub-division of those Ordinary Shares, Non-voting Ordinary Shares, A Shares, B Shares, C Shares, D Shares, E Shares, F Shares and X Shares into eight shares of the same class with a nominal value of 0.0125p each.
Immediately prior to admission on the London Stock Exchange each Non-voting Ordinary Shares, A Shares, B Shares, C Shares, D Shares, E Shares, F Shares and X Shares were then re-designated as Ordinary Shares of 0.0125p each.
All Ordinary Shares have full voting and dividend rights.
The following share transactions have taken place during the period:
Transaction type Share class Number of Share premium
shares GBP000
Exercise of CSOP Ordinary Shares of 0.1p
options each 213,895 111
A Non-voting Ordinary Shares
Full payment of 0.1p each 260,973 1,120
X Non-voting Ordinary Shares
Full payment of 0.1p each 318,497 1,065
All share classes of 0.1p
Bonus issue each 8,590,131 (9)
All share classes of 0.1p
Sub-division each to 0.0125p each 360,785,390 -
Exercise of CSOP Ordinary Shares of 0.0125p
options each 856,149 329
Deferred shares Ordinary Shares of 0.0125p
cancellation each (6,054,075) -
364,970,960 2,616
=========== =============
Own shares
As at 31 March 2019, the Group held 1,369,896 own shares in the AJ Bell Employee Benefit Trust (31 March 2018: 1,465,987; 30 September 2018: 1,619,645). Comparative periods presented have been adjusted to reflect the share reorganisation as described above.
11 Dividends
The following dividends were declared and paid by the Company during the period:
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 March 31 March 30 September
2019 2018 2018
GBP000 GBP000 GBP000
Final dividend of 15.50p per
share paid 15 December 2017 - 6,362 6,362
Interim dividend of 14.00p per
share paid 25 May 2018 - - 5,728
Special dividend of 19.50p per
share paid 28 September 2018 - - 8,005
Final dividend of 21.50p per
share paid 13 November 2018 8,827 - -
----------- ----------- -------------
Ordinary dividends paid on equity
shares 8,827 6,362 20,095
=========== =========== =============
An interim dividend of 1.50 pence per share was approved by the Board on 22 May 2019 and is payable on 28 June 2019 to shareholders on the register at the close of business on 7 June 2019. The ex-dividend date will be 6 June 2019. This dividend has not been included as a liability as at 31 March 2019.
As disclosed in note 10, prior to the listing of AJ Bell plc, a share reorganisation took place. The restated equivalent comparable dividend per share for the prior interim period was 1.46 pence per share.
AJ Bell Employee Benefit Trust, which held 1,369,896 ordinary shares (31 March 2018: 1,465,987; 30 September 2018: 1,619,645) in AJ Bell plc at 31 March 2019, has agreed to waive all dividends.
12 Share-based payments
The Group had the following equity-settled share-based payment arrangements during the period:
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 GBP30,000. Options granted under the CSOP can be exercised between the third and tenth anniversary after the date of grant and usually lapse if the employee leaves the Group before the option expires in circumstances in which they are considered to be a bad leaver. In the case of a good leaver, the employee is able to exercise options for a limited time after the cessation of employment. The expense for share-based payments under the CSOP is recognised over the respective vesting period of these options.
Option To Buy scheme (OTB)
The OTB scheme is an award scheme whereby the Board at their discretion grant growth shares to employees. Growth shares entitle 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 have 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)
During the period the Group introduced a BAYE plan which is an all-employee share plan under which shares can be issued to employees as either free shares or partnership shares. During the period, free shares up to a maximum value of GBP750 have been offered to all employees who were employed by the Group at 6 December 2018.
Employees have been offered the opportunity to participate in the partnership plan where employees are required to save an amount of their gross monthly salary, up to a maximum of GBP150 per month, for a period of 12 months. Under the terms of the plan, at the end of the 12 month period, the employees are entitled to purchase shares using funds saved at the lower of the IPO price of GBP1.60 or the market value at the date of purchase. Employees who cease their employment before the 12 month period expires, will be refunded their saved amounts.
Executive Incentive Plan (EIP)
An EIP has been introduced during the period to replace the Executive Bonus scheme and OTB scheme. This is a performance related share plan. The awards made during the period involved the grant of nominal cost options to participants conditional on the achievement of specified performance targets. 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.
During the period the Group recognised total share-based payment expenses of GBP510,000 (six months ended 31 March 2018: GBP59,000; year ended 30 September 2018: GBP112,000).
13 Principal risks and uncertainties
We continually review the principal risks and uncertainties facing the Group that could pose a threat to the delivery of our strategic objectives. The Board believes that the nature of the principal risks and uncertainties that may have a material effect on the Group's performance over the remainder of the financial year remain unchanged from those presented within the 2018 annual report and accounts.
14 Related-party transactions
The Group has a related-party relationship with its Directors and members of the Executive Management Board ("the key management personnel"). There were no changes to the related-party transactions during the financial period that would materially affect the financial position or performance of the Group. Transactions are consistent in nature with the disclosure in note 27 of the consolidated financial statements for the year ended 30 September 2018.
15 Subsequent events
There have been no material events occurring between the reporting date and the date of approval of these interim financial statements.
Definitions
AUA Assets Under Administration
BAYE Buy As You Earn Plan
Board, Directors The Board of Directors of AJ Bell plc
BPS Basis points
Brexit The withdrawal of the United Kingdom from the
European Union
Company AJ Bell plc
CSOP Company Share Option Plan
Customer retention Relates to platform customers
rate
DEPS Diluted Earnings per Share
D2C Direct-to-Consumer
ECL Expected Credit Loss
EIP Executive Incentive Plan
EMB Executive Management Board
EPS Earnings per Share
FCA Financial Conduct Authority
FTSE Financial Times Stock Exchange
GDPR General Data Protection Regulations
GIA General Investment Account
HMRC Her Majesty's Revenue and Customs
IAS International Accounting Standard
IFRS International Financial Reporting Standards
IPO Initial Public Offering
ISA Individual Savings Account
LISA Lifetime ISA
MiFID II Markets in Financial Instruments Directive II
OCF Ongoing Charges Figure
OTB Option To Buy Scheme
Own shares Shares held by the Group to satisfy future incentive
plans
PBT Profit Before Tax
PLC Public Limited Company
PPTS Percentage Points
Revenue per GBP Average AUA is calculated as the average of the
AUA opening and closing AUA in each quarter averaged
for the year*
SIPP Self Invested Personal Pension
UK United Kingdom
VAT Value Added Tax
* Prior year comparative restated to reflect the inclusion of AJ Bell Media revenue
Company information
Executive Directors
Andy Bell
Michael Summersgill
Non-Executive Directors
Les Platts
Simon Turner
Laura Carstensen
Eamonn Flanagan
Company Secretary
Christopher Bruce Robinson
Company number
04503206
Registered office
4 Exchange Quay
Salford Quays
Manchester
M5 3EE
Auditor
KPMG LLP
1 St Peter's Square
Manchester
M2 3AE
Principal banker
Bank of Scotland plc
1 Lochrin Square
92 - 98 Fountainbridge
Edinburgh
EH3 9QA
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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May 23, 2019 02:00 ET (06:00 GMT)
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