AJ Bell plc
Annual Report and Financial Statements 30 September 2022
We make
investing easier
AJ Bell plcAnnual Report and Financial Statements 30 September 2022
How we do it
What we do
Our purpose
Total customers
440,589
+15%
Assets under
administration (AUA)
1
£69.2bn
-5%
Revenue
£163.8m
+12%
Profit before tax (PBT)
£58.4m
+6%
“We are well
placed to deliver
long-term
growth.”
Michael Summersgill
Chief Executive Officer
Diluted earnings per share
11.35p
+6%
Total ordinary dividend
7.37p
+6%
MSCI ESG rating
AA
Charitable donations
£299,000
Top 25 Best Companies
to Work For 2022
People and culture
Our people are at the heart of our continued
growth and success. We take pride in their career
development, and we support and empower them
to drive the business forward.
For more see pages
39 to 43
A clear strategy
Our strategy remains focused
on providing high-quality
platform propositions to meet
the evolving needs of investors,
emphasising user experience,
excellent service, and value
for money.
For more see pages
10 to 15
Supporting our
communities
We ensure that our communities
share in our business success and
the passion of our people.
For more see pages
44 and 45
Market overview
The long-term structural drivers of
growth in the UK investment platform
market remain strong with around
£2 trillion of our estimated £3 trillion
target addressable market not yet
on a platform.
For more see pages
16 to 19
Welcome to our Annual Report 2022
AJ Bell is one of the UK’s largest and
best-regarded investment platforms.
Over 440,000 customers currently
trust us with their investments, and
by continuously striving to make investing
easier, we aim to help even more people
take control of their financial futures.
From our offices in Manchester, London
and Bristol, we offer an award-winning
range of solutions that caters for everyone,
from professional financial advisers, to
DIY investors with little to no experience.
Find out how we make investing
easier and more at ajbell.co.uk
Strategic report
01 Our purpose
04 At a glance
06 Chair’s statement
10 Chief Executive
Officer’s review
16 Market overview
20 Business model
22 Strategy in action
24 Key performance indicators
26 Stakeholder engagement
28 Section 172 statement
32 Responsible business
54 Financial review
58 Risk management
62 Principal risks and uncertainties
67 Viability statement
Governance
70 Chair’s introduction
72 Board of directors
76 Executive Committee
78 Corporate Governance report
86 Nomination Committee report
90 Audit Committee report
96 Risk and Compliance
Committee report
100 Directors’ Remuneration report
126 Directors’ report
129 Statement of Directors’
responsibilities
Financial statements
132 Independent auditor’s report
to the members of AJ Bell plc
139 Consolidated income
statement
140 Consolidated statement
of financial position
141 Consolidated statement
of changes in equity
142 Consolidated statement
of cash flows
143 Notes to the consolidated
financial statements
169 Company statement
of financial position
170 Company statement
of changes in equity
171 Notes to the Company
financial statements
Other information
176 Consolidated unaudited
five-year summary
177 Glossary
178 Definitions
179 Company information
1. See pages 24 and 25 for definition of
Alternative Performance Measures.
Advised market: See page 16
Our guiding principles
Our strategic drivers: See pages 22 and 23
D2C market: See page 16
Serving the needs of our customers
AJ Bell is one of the UK’s largest and best-regarded investment platforms. Whether through a financial adviser,
or managing your investments yourself, we offer a range of products to help you achieve your financial goals.
Creating sustainable value
We make investing easier
Our company is built on a set of guiding principles that define the way we do business.
At the heart of our business is a clear and succinct purpose which drives everything we do:
We help people to invest
We want to make investing as easy as possible for our customers to enable them to take control
of their finances and realise their financial goals.
Responsible propositions
Offering products and
services that are aligned
with our purpose.
Responsible employer
Developing and supporting our
people to help them achieve
their potential.
Supporting local communities
Playing a positive and
supporting role in our
local communities.
Environmental awareness
Minimising our impact
on the environment.
See pages 36 to 38 See pages 39 to 43 See pages 44 to 45 See pages 46 to 53
Sustainable
growth
Excellent customer
experience
Scalable technology
solutions
Financial security and
regulatory compliance
Strong employer
brand and culture
We want to provide our customers with the easiest investment platform to enable them to take control
of their finances and realise their financial goals.
Straightforward
We make
investing easy
and accessible
Intelligent
We know
our stuff
Personal
We are human.
Not robots
Principled
We do the
right thing
Focused
We give customers
what they need.
Not what they don’t
Energetic
We never
stand still
Strategic report
Governance
Financial statements
Other information
AJ Bell plc Annual Report and Financial Statements 2022 01
Age: 56 years old
Mission: To enjoy a comfortable retirement
Gill, who has been self-employed for the last
31 years, has worked in many areas including
London and Belgium. She has experience in
investor relations so is familiar with financial
services and holds a SIPP and ISA with AJ Bell. She
holds a mixture of stocks and funds in her portfolio
and prioritises simplicity when investing to make
her journey as smooth and easy as possible.
We make investing easier
Helping
invest for her
retirement
See more at ajbell.co.uk
How we help Gill to invest
High-quality service
Gill believes that our customer
service sets us out from the rest,
with our uncomplicated approach
to helping customers navigate their
investing journey. Gill loves that she
is never kept waiting on the phone,
and is always supported by one
of our knowledgeable Customer
Services Team to quickly resolve
any queries she might have.
Investment ideas
We have helped Gill to start
achieving her investing mission
by providing informative content
and investment ideas. Gill uses
our favourite funds list; chosen by
our investment specialists, which
she believes have made her more
confident in her own investing
decisions. In addition, she looks
forward to reading our weekly
Shares magazine and enjoys
listening to our Money & Markets
podcasts, which provide her with
information she finds accessible
and thought provoking.
Through AJ Bell’s easy-to-use
platform, Gill has found her
experience to be one of low cost,
but high quality, and she trusts that
we will continue to support her in
her investing journey in the long
term. Gill has even recommended
us to her husband who now also
holds his pension with AJ Bell!
Gill is a real AJ Bell customer sharing
her honest opinions.
Strategic report
Governance
Financial statements
Other information
02 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 03
At a glance
We make
investing
easier
We are on a mission to make investing easier.
As one of the UK’s largest and best-regarded
investment platforms, we help our customers
to realise their financial goals, whether directly
or with the help of a financial adviser.
Listed company
FTSE 250
Customers
440,589
Assets under administration
£69.2bn
Employees
1,173
Manchester
London
Bristol
Office locations
Our market
Our propositions
Advised D2C
Other products and services
Total Advised Customers
145,371 +15%
2021: 126,920
AUA
£44.8bn -2%
2021: £45.8bn
AJ Bell Investcentre is an investment platform
proposition for regulated financial advisers and
wealth managers providing a suite of products,
services, investment solutions and online tools to
help manage their retail customers’ portfolios.
Touch by AJ Bell is a streamlined, app-based
investment platform proposition, offering advisers
a digital service model that expands the range of
clients they can service.
Total D2C Customers
280,281 +16%
2021: 241,045
AUA
£19.3bn -1%
2021: £19.5bn
AJ Bell is an investment platform proposition for
execution-only retail customers which includes
investment solutions through our in-house funds and
ready-made portfolios, and guidance via the AJ Bell
Favourite funds list. It also offers a cash savings solution.
Dodl by AJ Bell is an easy-to-use, no-nonsense
investment app. The platform proposition has a
streamlined range of investments available with a
simplified charging structure.
AJ Bell Investments
Provides simple, transparent, low-cost investment management solutions through advisers and direct to customers.
AJ Bell Platinum
Provides adviser-led and D2C pension
administration services to customers
with bespoke SIPP and SSAS accounts.
AJ Bell Media
Publishes Shares magazine
and other proprietary investment
content to support our
platform propositions.
AJ Bell Securities
Provides flexible, low-cost, tailored
wealth management solutions.
Our awards
~£1tn
Currently held
on platforms
~£2tn
Off-platform
Total addressable
market
~£3tn
“A significant
opportunity”
Full serviceSimplified
We operate in a fast-growing
investment platform market.
The long-term structural drivers
of market growth are strong, with
around two-thirds of our estimated
£3 trillion target addressable
market not yet on a platform.
See Market overview on pages 16 to 19
2012 2015 2018 2021
983
716
473
308
A fast-growing platform market
£bn
+14%
CAGR
Strategic report
Governance
Financial statements
Other information
04 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 05
Chair’s statement
A clear purpose
Additional Board
focus areas
Dear shareholder
I am pleased to be writing to you as Chair,
having joined the business in July last year
before taking over as Chair at the AGM
in January.
I have spent a lot of time getting to know
many people across the business, which
has been wonderful. I have been greatly
impressed by the calibre of our employees
and the collegiate culture. I have also had
the pleasure of engaging with some of our
shareholders and other key stakeholders,
discussing both AJ Bells business and
the wider platform market. It has been
insightful to hear the feedback and to
understand what each stakeholder group
believes our priorities should be going
forward.
During the year the Boards long-
established succession plan came to
fruition with Andy stepping down on 30
September 2022 and our Deputy CEO,
Michael Summersgill, being appointed
to the role. My priority as Chair has
been to ensure a smooth transition
of responsibilities and this has been
achieved. As co-founder and CEO, Andy
has been the heart and soul of AJ Bell for
27 years, shaping it into the successful
listed business it is today. On behalf of
the Board I would like to thank Andy for
the incredible legacy he has created and
strong culture that we shall build on
going forward.
Uncertainties in the wider economy and
the increasing pressures from the rising
cost of living are bringing many challenges
to our customers, our people and our
wider stakeholders. As a Board we are
particularly mindful of this and so our
focus continues to be 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.
Overview
I am pleased to report that we have
delivered a strong financial performance
during the year with PBT of £58.4 million.
Over the past 12 months customer
numbers increased by 57,835 to 440,589
and we delivered £3.8 billion of net
inflows of AUA, ending the year with
total AUA of £69.2 billion. This strong
performance demonstrates the resilience
of our business model during a turbulent
Culture
AJ Bell has always prided itself on a strong collegiate culture; staff
recruited over the pandemic have obviously not had as many
opportunities to benefit from this. Particular efforts are being made
to ensure that this is a focus for managers as well as the Board.
Diversity and inclusion
Having founded the 30% Club and now Chair of the Diversity
Project, this is clearly something that matters greatly to me.
I have seen so often the benefits yielded by improving diversity
of thought and creating an inclusive workplace. So, it has been
great to see us push diversity and inclusion higher onto the
Boards agenda this year. We have established a framework
within which we can improve the current situation to ensure our
talent is consistent with AJ Bells strategic ambitions. We are now
also monitoring the data to enable us to measure progress. Our
D&I framework encompasses both demographic and cognitive
diversity; while the initial focus has been on senior management
and the talent pipeline, the commitment is there to widen this to
the broader workforce.
Money Matters – helping women invest
There is not a single good reason why women should have less
money than men. Despite that, the fact remains that on average
women have less than half the levels of savings and investments
than men. That gender investment gap is one of the biggest
challenges facing our society today. AJ Bell is determined to
help solve this.
I am proud to be championing AJ Bell Money Matters, which is
designed to give women the information and inspiration they need
to become more confident investors. It aims to get women talking
about money and investing. We have a range of articles on our
website, a dedicated podcast series, a regular newsletter, webinars
and in-person live events.
Consumer Duty
Over the long term, the Consumer Duty should improve trust
in financial services, which in turn should lead to more people
making better decisions about their short, medium and long-term
savings and investments. AJ Bell already places good consumer
outcomes at the heart of everything we do, with good value
products, simple communications and strong processes to support
customers front-and-centre. We recognise however, the step
change that the FCA is expecting of firms to proactively evidence
and review how they deliver good consumer outcomes.
As a Board we are actively engaged in the Consumer Duty and will
be overseeing the delivery of the implementation plan ahead of the
regulatory deadline of July 2023.
Chair succession
As announced on 27 September, I advised the Board that I will
stand down from the Board once a suitable replacement as Chair
is found. Work has already commenced on the formal recruitment
process, which is being led by Evelyn Bourke, the Senior
Independent Director. My focus will be to ensure an efficient
handover of responsibilities to the successor in due course.
“ I have long admired AJ Bell and its
commitment to helping people to invest.
At AJ Bell we are a purpose-driven
organisation who put our customers
at the heart of everything we do.”
Baroness Helena Morrissey DBE
Chair
year and continued uncertainties around
the UK economy. The Financial Review
contains further information on this years
performance on pages 54 to 57.
Our governance structure and cohesive
culture provide a solid framework for
achieving our long-term strategic goals
and the Board remains focused on
delivering AJ Bells purpose which is
simply to help people to invest.
Governance and culture
The Board remains focused on applying
high standards of corporate governance
and ensuring these principles are
embedded into our culture. We believe
effective stakeholder engagement is key to
the long-term success of our business and
we aim to proactively engage with our key
stakeholders and understand what is most
important to them.
We welcomed the opportunity to engage
with our staff and shareholders in person
again this year as COVID restrictions
lifted, providing invaluable insight into the
operation and culture of our business,
particularly for those Board members who
joined us during 2021. I was delighted to
be appointed as the nominated employee
engagement director in January this year,
which has given me an opportunity to
refresh the Employee Voice Forum (EVF),
increasing the frequency of our gatherings
and making it more inclusive.
We have been particularly mindful of the
impact of cost-of-living pressures on
our people and the wider implications
of a challenging labour market during
2022. With this in mind we have made a
significant investment in pay and benefits
from 1 October 2022 and believe that
the needs of our workforce as a whole
have been taken into account through a
combination of higher pay rises, enhanced
benefits, increased bonus pool and a free
share scheme for all employees. To ensure
we considered those areas most important
to our staff for our benefits review, we
sought feedback through a staff survey
which highlighted that benefits associated
with health and wellbeing, saving for
the future and share ownership were
considered most important.
Consideration of our wider stakeholders in
some of our key decisions in the year are
outlined in our Section 172 statement on
pages 28 and 29.
Total ordinary dividend
7.37p
per share
(FY21: 6.96p per share)
Strategic report
Governance
Financial statements
Other information
06 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 07
Named in the UK’s top 25 Best
Large Companies to Work For
A look back at Andy’s key achievements
Launch of Sippdeal the UKs first online
SIPP for execution-only investors
2000
Launch of Sippcentre a low-cost
SIPP for financial advisers
2002
Onboarded first institutional investor
2005
Acquisition of Lawshare Limited,
rebranded to AJ Bell Securities
2007
ISA and Dealing accounts launched on
propositions, and Custody Solutions
service for wealth managers
2011
Acquisition of MSM Media Limited,
rebranded to AJ Bell Media
2012
Sippdeal and Sippcentre rebranded to
AJ Bell Youinvest and AJ Bell Investcentre
2013
Acquisition of Mansard Capital LLP
and Indexx Markets Limited, rebranded
to AJ Bell Investments
2016
Launched first range of Funds and relocated
to new head office at Exchange Quay
2017
Listed on the London Stock Exchange
2018
Acquisition of Adalpha, rebranded
to Touch, developing a mobile focused
proposition for advisers
2021
Launch of Dodl, a D2C app-only
simplified investment proposition
2022
The Board continues to provide strong
support and appropriate challenge to the
executive team to ensure the Groups
strategy is appropriate, achievable and
ultimately delivered. During the year
the Board worked closely with Michael
Summersgill, who led a key project to
replace the current Executive Management
Board (EMB) structure with an enlarged
Executive Committee (ExCo) and sub-
committees. The new ExCo structure will
provide additional executive level oversight
and support the ongoing growth of the
business.
Full details of the work of the Board, its
Committees and the revised executive
structures are set out in the Corporate
Governance report from pages 78 to 85.
Responsible business
We have made good progress during the
year to further embed our environmental,
social and governance (ESG) framework
into our wider business strategy. Our
senior management team has been busy
driving forward a number of key objectives
around diversity and inclusion (D&I), a new
charitable framework and our paperless
ambition. In addition, we have also looked
carefully at our own climate impact and
have produced our first Task Force on
Climate-Related Financial Disclosures
(TCFD) report. Peter Birch became
the lead Executive for ESG, following
his appointment as Chief Financial
Officer (CFO), taking the reins from
Michael Summersgill.
Particular focus has been given to
establishing a D&I framework this year,
taking into account both demographic
and cognitive diversity, which the Board
approved in July. Our primary focus
has been on senior management and
the talent pipeline, although we are
also looking more broadly at the wider
workforce. I am confident that the work
this year has formed a solid basis for
the Groups continued development
in this area.
I am also particularly pleased to report the
formation of a Non-Executive Director
forum during the year to provide further
oversight and challenge of specific ESG
initiatives. Our first meeting in July focused
on a deep dive into the D&I framework,
reflecting its importance to the Board.
Further details on our ESG-related
activities can be found in our Responsible
Business section on pages 32 to 53.
Board changes and succession
This has been a year of change for
the Board, welcoming new Executive
members and overseeing succession
plans. I succeeded Les Platts as Chair at
the 2022 AGM. Les provided excellent
stewardship of the Group during his
tenure and the Board wishes him well
for the future.
Andy stepped down as CEO from
30 September 2022, succeeded by
Michael Summersgill, our Deputy CEO.
As a Board we would like to formally
welcome Michael in his new role and
look forward to supporting him in
driving the growth of the business.
As a Board we were keen for Andy to
remain involved in the business in a
Non-Executive capacity to ensure the
business continues to benefit from his
deep experience of AJ Bell and the wider
investment platform market. Although
we were unable to agree our preferred
role for Andy with the Financial Conduct
Authority (FCA), we are delighted that he
will continue to support the business in
a consultancy role, focusing on building
the AJ Bell brand and assisting AJ Bells
campaigning on behalf of retail investors
and financial advisers.
Following the conclusion of our dialogue
with the FCA, I decided with great regret
that I should step down from the Board
once a successor is found, so a new Chair
can take the Board forward. I will continue
to work with the business as a consultant,
focusing on our Money Matters
initiative to encourage more women
to consider investing and to also further
the Companys progress on diversity
and inclusion.
Laura Carstensen also stepped down
from the Board at the 2022 AGM and we
thank her for her valuable contribution
to the Group during her tenure. As part
of the Boards succession plans, Evelyn
Bourke was appointed Senior Independent
Director (SID) and Margaret Hassall Chair
of the Remuneration Committee.
As previously announced, we welcomed
Roger Stott to the Board on 1 October
2021 as Chief Operating Officer (COO),
and more recently, Peter Birch as CFO
from 1 July 2022. The Board has overseen
an orderly transition for the role of CFO
from Michael Summersgill who was
appointed Deputy CEO at the start of
the year.
We continually monitor our Board
composition and effectiveness through
the work of the Nomination Committee
to ensure we have the right skillset and
breadth of experience with which to
function as an effective Board. Following
the commencement of the recruitment
of a new Chair, the Board has agreed
to pause the search for two new Non-
Executive Directors until that process
is completed. Both the Board and I are
extremely mindful of the importance of
having a diverse range of skills, experience
and perspective around the Board table
and this will be uppermost in our minds
throughout the recruitment process.
Further details on Board changes can be
found in the Nomination Committee
report on pages 86 to 89.
Dividend
In line with our commitment to a
progressive dividend policy, the Board
is pleased to announce a final ordinary
dividend of 4.59p 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 8 February 2023, to shareholders
on the register at the close of business
on 20 January 2023.
This brings the total ordinary dividend
for the financial year to 7.37p per share,
representing an increase (excluding the
special dividend in the prior year) of 6%
on the previous year.
Chair’s statement
Building on Andy’s legacy
as we look ahead
Andys achievements in building AJ Bell
cannot be overstated. From SIPP-only
offering in 1995 to todays dual-channel
FTSE 250 listed platform business, Andy
has been the driving force. He has of
course also created a great team to take
the business forward, motivated by the
same purpose; to help people to invest.
While the difficult economic outlook may
lessen the immediate opportunity for
growth, over the long term, it is clear that
the fundamental drivers of an expanding
addressable market remain firmly in place.
With a focus on ease of use and value
for money, and having also invested in
our simplified propositions, Dodl and
Touch, AJ Bell is well-positioned to both
gain market share and to capitalise on
an expanding universe of investors, both
direct and advised.
AJ Bell is financially strong with a well-
capitalised and highly cash-generative
business model, and the Board remains
confident in the long-term prospects of
the business.
Baroness Helena Morrissey DBE
Chair
30 November 2022
Andy Bell and Nicholas Littlefair set up AJ Bell
1995
Strategic report
Governance
Financial statements
Other information
08 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 09
Chief Executive Officer’s review
Creating long-term value
Our strategy remains focused on
providing high-quality platform products
to meet the evolving needs of investors,
emphasising user experience, excellent
service, and value for money. Our full-
service D2C platform, now called AJ Bell
(formerly Youinvest), and our full-service
advised platform Investcentre, have been
established for many years and continue
to attract thousands of new customers
every year. They are complemented by our
simplified platform products, Dodl (which
was brought to the market in April 2022),
and Touch (which is scheduled to launch
in 2023), furthering our growth potential
by targeting a broader range of customers.
Integrated throughout our platform
products is our range of in-house
investment solutions. These low-cost
funds and managed portfolios have
delivered consistently strong performance
and are well positioned to continue their
strong growth.
In 2022, we achieved another year of
strong customer growth in challenging
market conditions. The macroeconomic
outlook significantly changed during
the year, with UK inflation at levels not
seen for 40 years, interest rates rising to
their highest level in 13 years and global
asset values falling. In the short term
this has reduced both the appetite, and
funds available, for investing, however
our dual-channel business model has a
proven history of delivering growth under
different macroeconomic conditions, as
demonstrated again this year.
Our business model proved
its strength
Our platform business delivered net
AUA inflows of £5.8 billion over the year,
once again demonstrating the strength
of our dual-channel model, with both
advised and D2C channels performing
very well. Advised platform inflows were
strong throughout the year as advisers
helped their clients to navigate significant
market volatility, whilst our D2C platform
also delivered substantial inflows and
remained resilient during the traditionally
quieter summer months, with £0.3 billion
of net inflows in the final quarter despite
a slowdown in new contributions from
customers impacted by the rising cost
of living.
“ The foundations are firmly
in place for us to deliver
long-term growth in both
the advised and D2C
segments of the platform
market. My focus is
on continuing to evolve
our platform products
and service capabilities
to meet the ever-changing
needs of advisers and
customers.”
Michael Summersgill
CEO
Platform customers
425,652
16%
Overview
It is a huge privilege to take on the role of
CEO from Andy, having worked alongside
him on the Board since 2011. During that
time, we have built the Company into one
of the largest investment platforms in the
UK, establishing a track record of sustained
organic growth and high-quality service
to our customers. Helena has covered
Andys many achievements in his time as
CEO, so I will not repeat them here, but I
will take the opportunity to put on record
my thanks for the faith he has shown in me
and the support he has given me over
the years.
I believe we are well placed to maintain
our long-term growth and capitalise
on the opportunities in a fast-growing
platform market. The addressable market
is estimated at £3 trillion, with two-thirds
currently held off-platform. Each year a
significant proportion of our new business
comes from assets already in the financial
system, where customers transfer their
assets from adjacent markets to access
the increased flexibility, investment
choice and value that a platform can offer.
I expect this trend will continue and our
dual-channel offering puts us in a unique
position to take advantage, maximising our
growth opportunity by serving both the
advised and D2C segments of the market.
Q&A with our
new CEO
As incoming CEO, what is your focus on?
I believe that the foundations are firmly in place for us to deliver
long-term growth in both the advised and D2C markets.
My focus is on continuing to develop our platform products and
service capabilities to meet the ever-changing needs of advisers
and customers, ensuring we deliver on the significant market
opportunity.
In the short term, I have also focused on increasing our brand
awareness and enhancing our employee offer at a time when
the cost of living is rising.
How are you supporting staff through the
cost-of-living squeeze?
We conducted a full review of our pay and benefits offering this
year and I was pleased to reward our team for their ongoing
commitment by introducing several changes with a focus on
protecting them from the current inflationary environment,
supporting their wellbeing and helping them to strengthen their
long-term finances. These changes, effective from 1 October
2022, represent an annualised increase of over 10% in total
employee costs. The element that was most important to me
was the introduction of a new share award for all employees.
Why have you introduced a new free
share award?
Employee share ownership is ingrained in our culture with over
50% of our workforce having share interests in the Company.
I am passionate about ensuring that all employees feel a sense
of ownership and continue to share in the success of the business,
so one of my first acts as CEO has been to implement an annual
free share award worth £2,000 per year for all employees outside
of the senior management team.
What changes are you making to the brand?
Following the year end, we retired the AJ Bell Youinvest sub-brand
with our full-service D2C platform now rebranded to AJ Bell.
This will improve the effectiveness of our direct marketing activity,
by simplifying the journey for new customers leading to better
conversion rates. In addition to this, we are evolving our brand
strategy with a focus on communicating how we can help people
to feel good investing.
Why are you making these changes?
When customers entering the market are choosing a platform
to invest with, less than half research more than one provider.
For most new customers, trust and brand awareness are key
drivers of their decision.
With over 27 years of experience, we have built a trusted brand
through our high-quality service and easy-to-use, award-winning
platform products. We have strong brand affinity but relatively
low brand awareness. Given the lifetime value of a customer
and significant platform market opportunity, we are increasing
investment in our brand to deliver long-term growth. These
brand changes simplify our brand architecture and position us
to maximise the returns on this investment, ensuring we capture
more of the new customers coming into the market.
Q
Q
Q
Q
Q
Testament to our high-quality products,
we achieved organic growth in platform
customer numbers of 57,687, an increase
of 16% in the year. Our excellent customer
service levels also ensured our customer
retention rates remained high, increasing
to 95.5% (FY21: 95.0%).
Revenue margin on AUA climbed to
22.6bps (FY21: 22.2bps) as our diversified
revenue streams once again ensured we
are well placed to succeed in different
macroeconomic environments. We
delivered a 31% increase in recurring ad-
valorem revenue due to higher average
AUA in the year and the rise in the UK base
rate leading to increased interest income,
providing protection from inflationary
pressures in our cost base. We continue
to scale the business effectively, which
in combination with increasing interest
rates, enabled us to reduce our charges
(representing annualised customer savings
of approximately £5million), and increase
the interest rates we pay to customers on
cash held on the platform.
Alongside delivering value for our
customers, the operational efficiency
of our business model means we also
continue to deliver strong returns for
shareholders, reflected in our record PBT
of £58.4 million whilst also investing in our
brand, technology, people and products
to ensure we take advantage of the
significant opportunities presented by
the platform market.
Our strong financial performance is
reflected in the 6% increase in basic
earnings per share to 11.39p (FY21: 10.71p)
with our well-capitalised, highly cash-
generative business model meaning that
the Board has yet again recommended
an increased ordinary dividend for the
18th successive year.
Platform AUA
£64.1 bn
-2%
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10 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 11
Chief Executive Officer’s review
Advised
The advised market has remained
resilient in the face of current market
headwinds, and the strength of our
Investcentre platform has delivered
growth in customer numbers of 18,451
to 145,371 (FY21: 126,920), an increase
of 15%. Strong net AUA inflows of
£3.3billion were offset by £4.3 billion
of adverse market movements, resulting
in closing AUA of £44.8 billion (FY21:
£45.8 billion). During the year the FTSE
All-Share Index fell by 7%, whilst the
FTSE 250 Index fell by 25%, reflecting
the weakened markets caused by high
inflation and geopolitical uncertainty.
It was pleasing to be recognised as
the Best Platform, Best Retirement
Provider and Provider of the Year
for the second consecutive year at
the 2022 Money Marketing Awards.
Judged by a panel of industry experts,
these awards are further evidence of
the high-quality service we provide to
advisers and their clients.
We have continued to develop our
Investcentre platform, making several
enhancements with a focus on ease of
use. We regularly review our charges to
ensure they position us well to support
advisers and their clients and were
pleased to share the benefits of our
scale with our customers by removing
our frictional charges for establishing
and transferring SIPPs on to our
platform, where the process is initiated
online, whilst also removing some of
our dealing charges.
We continue to develop Touch ahead
of its launch in 2023. Touch will further
expand our offering for advisers,
helping them to cater for clients
looking for a digital service model.
As part of our high-quality customer
service we have strong ongoing
engagement with advisers, highlighting
the value they see in us as a trusted
partner. We host a range of events
providing them with industry insights,
contributing to their continuing
professional development. In November
2022, we again hosted our flagship
adviser conference, Investival, with over
300 finance professionals attending. We
have also continued to deliver numerous
other events including Luminary and
our On the Road seminars alongside
monthly Off the Road webinars due
to strong demand.
Investments
Our investments business is delivering
on its commitment to offer a choice of
simple, transparent investment solutions
at a low cost. This range of investment
solutions continue to be a popular
choice with investors, growing strongly
in the year with underlying net inflows
of over £1 billion across our multi-asset
funds and managed portfolio service,
excluding the impact of a £0.2 billion
one-off outflow. Total AUM closed at
£2.8 billion (FY21: £2.2 billion).
Our asset allocation approach has
delivered for our customers, with all our
multi-asset funds outperforming their
Investment Association sector average
over the last one, three and five years.
It was particularly pleasing to see the
resilient performance of our Cautious
portfolio, protecting cautious investors
through difficult market conditions.
Since launching our first AJ Bell multi-
asset funds in 2017 we have shared
the benefits of our increasing scale
with customers, reducing the Ongoing
Charges Figure (OCF), by nearly half
from 0.50% to 0.31% during that time.
In February we also implemented a
new simplified pricing structure, setting
a single OCF for all of our multi-asset
growth funds, making it easier for
customers and advisers to understand.
We are delighted to have won Best
Medium Sized Company at the
Citywire Wealth Manager Investment
Performance Awards 2022, further
reflecting the strength of our
investment solutions and the progress
that has been made since our first funds
were launched five years ago.
Business update
Customer services and technology
We have provided an excellent
service to our customers through
a year of continued growth. This is
reflected in our 4.6-star Trustpilot
score, as rated by our retail
customers, and our 95.5%
platform customer retention rate.
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.
Our platform is integral to our
business performance and we have
consistently invested in its evolution
to provide great customer service.
The increased spend on our
technology in the year reflects the
development of our new products,
Dodl and Touch, alongside
further enhancing our existing
technology infrastructure. Our
developer modernisation journey
has increased our pace of change
with improvements made across
security, scale and resilience. These
improvements enable us to deliver
change initiatives more quickly to
take advantage of our significant
market opportunity. We also
continued to invest in information
security as part of our ongoing
commitment to provide a safe,
secure online experience for our
customers.
We have embedded the FCAs
new regulatory requirements for
operational resilience, effective
from 31 March 2022, into our
operating framework and processes.
These rules are designed to ensure
regulated firms are better able
to prevent, adapt to, respond
to, recover from and learn from
operational disruption.
multiple enhancements focused on ease
of use. In July we started beta-testing a
new pension finding service, simplifying
the pension consolidation journey for
our customers by providing us with
some basic information, we will find their
previous pensions free of charge. During
the coming year, we will continue to
trial and develop this service, enabling
customers to combine their pensions into
their AJ Bell pension in just a few quick
and simple steps. We also added new pay
by bank functionality: this feature utilises
open banking to direct customers to their
online bank account before transferring
funds via Faster Payments, arriving in their
account almost instantly and in just a
few clicks.
Our efficient operating model and robust
cost control allow us to simplify and
reduce charges for our customers to
ensure we continue to provide excellent
value for money. We reviewed our trading
model following the higher levels of
dealing activity experienced during the
pandemic, in order to reduce the costs for
customers. As a result, we were pleased to
reduce our FX commission rates on
1 July, whilst also simplifying our dividend
re-investment charge, reducing the cap on
custody charges for funds and removing
charges for in-specie transfers out.
To ensure we remain an attractive
employer and reward our committed
employees, we have strengthened our pay
and benefits package for all employees
effective from 1 October 2022. The
changes focused on protecting our
employees from the current inflationary
environment, supporting their wellbeing
and helping them to strengthen their
long-term finances. There are additional
details of the changes in our Responsible
employer report on page 40, but the
element that was most important to
me was the new share award for all
employees. For those outside of the senior
management team, £2,000 worth of
AJ Bell plc shares will be awarded every
year from FY23. This will help to keep
share ownership and the associated
benefits at the heart of the business for
years to come.
We are committed to being an inclusive
workplace and ensuring the diversity
of our workforce represents the
society we serve. As Helena has noted
in her Chairs statement, we have
implemented a new D&I framework this
year, considering both demographic
and cognitive diversity, to measure and
drive our development in this area.
We recently established our new
charitable framework, the AJ Bell
Futures Foundation, to develop more
deep-rooted, long-term partnerships
in our communities. We will work with
charitable organisations to empower
people to take control of their future
and finances. We have committed to
contribute 0.5% of our PBT each year,
which will be distributed to chosen
partner charities; we are delighted to
have partnered with IntoUniversity and
SmartWorks for FY23.
Our low prices position us well at a
time where customers are increasingly
looking for value.
Dodl is a simplified investment app
which we launched in April and sits
alongside our existing D2C platform
product. Together they provide great
value investment platform options for
retail investors, catering for all levels
of experience and investment needs.
Dodl offers ISAs, LISAs, pensions and
GIAs with an annual charge of just
0.15% and no commission for buying
or selling investments. The simplified
investment range offers customers
30 funds catering for different themes
and risk appetites. It also features 50
popular shares in UK-listed companies
for those who like to invest in their
favourite brands. Since its launch, we
have added a selection of 30 US shares
to its investment universe and launched
transfer functionality, allowing customers
to transfer cash and investments into
Dodls full range of accounts.
In the rising interest rate environment,
our Cash savings hub is increasingly
relevant for our customers, providing
access to a range of competitive notice
and fixed-term savings accounts from
UK authorised banks.
People and culture
Andy instilled a positive culture in
the business from day one. He kept a
keen focus on it throughout his tenure
as CEO, ensuring it remained a real
strength as the business grew. I see it as
one of my key challenges to repeat that
achievement. As a management team,
we will need to approach that challenge
differently as the business continues to
evolve and grow, but staying true to our
Guiding Principles and maintaining high
levels of staff engagement will continue
to be crucial.
It was very pleasing to achieve our
highest ever score, and a place in
the top 25 of the 100 Best UK Large
Companies to work for in 2022,
maintaining our status as a three-star
company, which is the best standard
of workplace engagement, for the fifth
consecutive year.
D2C
Our D2C customer numbers grew
by 39,236 in the year to 280,281
(FY21: 241,045), an increase of 16%.
We delivered net AUA inflows of
£2.5 billion, offset by adverse market
movements of £2.7 billion resulting
in closing AUA of £19.3 billion (FY21:
£19.5 billion). We are pleased by the
continued growth of our full-service
D2C platform through challenging
market conditions, with the strength
of the product underpinned by an
excellent 95.8% customer retention rate
(FY21: 94.8%). In the final quarter, which
is typically quieter, we experienced a
slowdown in new contributions from
customers as disposable incomes were
squeezed across UK households by the
rising cost of living.
Our full-service D2C platform is highly
valued by customers, as evidenced by
the multitude of industry awards it has
won during the year, including being
recognised as a Which? Recommended
Investment Platform provider for the
fourth consecutive year.
We rebranded AJ Bell Youinvest to
AJ Bell in October 2022. We have
continued to develop the AJBell
platform during the year, rolling out
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12 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 13
Why invest
in AJ Bell?
Excellent market
opportunities
£3tn
Total addressable market
Award-winning advised
and D2C platform
products
95.5%
Customer retention rate
A growing base of loyal
high-quality customers
57,835
New customers in 2022
A scalable platform
with long-term margin
growth opportunities
35.6%
PBT margin
A diversified mix
of revenue types
£163.8m
2022 total revenue
Highly cash generative
with a progressive
dividend policy
18 years
Successive ordinary
dividend growth
Highly-engaged staff
providing excellent
service
Top 25
Best UK large company
to work for
See our investment case at
ajbell.co.uk/investor-relations/investment-case
Market developments
In the short-term, the rising cost of
living is likely to lead to lower investable
income across the economy, with the
UK household savings ratio falling back
towards pre-pandemic levels. We see
this having a bigger impact on the D2C
market, as these customers typically have
lower levels of accumulated wealth and
investable income than advised customers.
Our low-cost solutions in both segments
of the platform market should be highly
appealing to investors who are increasingly
looking for value.
However, over the longer-term, the
structural drivers of growth in the UK
investment platform market remain strong,
as detailed in our Market overview on
page 17.
Chief Executive Officer’s review
There are also a number of regulatory
developments underway that will shape
the market over time.
We support the focus on positive customer
outcomes in the FCAs new Consumer
Duty. Our ingrained customer focus,
providing low-cost, easy-to-use products
and accessible investment content,
positions us well to operate successfully
in the new regulatory environment but
we are using it as an opportunity to
review everything we do through the
new Consumer Duty lens to ensure our
products, communications and customer
service functions continue to deliver good
customer outcomes.
As part of the FCAs Consumer Investments
Strategy, they have announced a review
of the boundary between advice and
guidance. We continue to push for a
guidance framework which we believe
could provide an opportunity for
investment platforms to offer more
personalised guidance to customers in
the D2C channel and help to deliver good
customer outcomes. We are not expecting
imminent change in this area, but look
forward to working with the FCA on
this review.
The Pensions Dashboards proposal aims
to enable people to see all of their pension
savings in one place. We will comply
with all requirements and are closely
monitoring the initiative to assess what
opportunities it may present.
“ I remain a committed
long-term shareholder.
In my new role, my focus
will be on helping to build
the AJ Bell brand, whilst
continuing to campaign
on behalf of customers
and financial advisers
for increased simplicity
and fairness in retail
financial services.”
Andy Bell BSc. FIA
A message from Andy Bell
It has been an honour to lead AJ Bell as CEO for over 27 years.
I would like to thank everyone involved for their support in
helping to grow the business into what it is today.
I am delighted to be handing over to Michael, who has proven
himself an outstanding leader during his 15 years in the
business. His knowledge, passion and integrity make him the
right person to lead AJ Bell into what is an exciting future.
Outlook
Whilst there are undoubtedly some
short-term headwinds, the long-term
growth potential of the platform market
is significant. We have put strong
foundations in place that will enable us to
continue to grow the business. The launch
of Dodl during 2022 and Touch in 2023
reflects our aim to cater for more investors
and in doing so, further penetrates the
platform market with products that provide
simplicity, ease of use and excellent
service at a compelling price.
Our diversified revenue model ensures
we are well equipped to operate in
different macroeconomic conditions,
as demonstrated by our track record of
continued growth. Whilst no business is
immune to inflationary pressures, the rise
in UK base rates provides an opportunity
to combat this, by rebuilding our revenue
margins that suffered in an exceptionally
low interest rate environment. Our PBT
margins are expected to increase in
FY23 as higher revenue margins and
the operational gearing inherent in our
business model outweigh the impact of
inflationary pressures and our planned
investment in our brand and products.
Finally, I would like to thank all of my
AJ Bell colleagues; without their ongoing
commitment and quality of work our
continued success would not be possible.
I am incredibly excited about the future
of the business as we seek to deliver on
the long-term growth opportunity in the
platform market.
Michael Summersgill
Chief Executive Officer
30 November 2022
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14 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 15
Market overview
Well-positioned to capture
growth opportunities
The UK investment platform market forms part of the
broader UK savings and investment industry. Across the
industry, trillions of pounds of assets are held by individuals
in products such as pensions, ISAs, general investment
accounts, bonds and cash savings.
Historically, most individuals in the UK held their savings
and investments in products offered by banks, building
societies, investment managers, pension schemes,
stockbrokers and life insurance companies. A significant
proportion of the overall market continues to be held
off-platform.
Investment platforms are increasingly attracting assets
previously held in legacy products, driven by the improved
customer outcomes they can deliver such as the ability
to manage investments easily in one place, increased
flexibility and investment choice, and often lower charges.
As a result, there is an established trend of non-platform
assets gradually moving into the platform market.
This trend is expected to continue.
The total addressable market for platforms is currently
estimated to be worth approximately £3 trillion. With only
one-third of this currently held on platforms there is a
significant long-term growth opportunity for investment
platforms.
The platform market is currently worth £1 trillion, with
around two-thirds held on adviser platforms and the
remainder held on D2C platforms.
The market has grown significantly over the last decade,
with total AUA having more than trebled from £0.3 trillion
in 2012. The advised and D2C segments of the market
have both grown at similar rates during that period, driven
by long-term structural growth drivers and an overriding
theme of individuals taking greater personal responsibility
for their financial future.
AJ Bell is one of only a few platforms operating at scale in
both the advised and D2C market segments. Our dual-
channel business model ensures that we are positioned
to capture assets from the whole addressable market,
irrespective of whether they are self-managed or using
the support of a financial adviser. This maximises our
opportunity to capture an increasing share of the assets
flowing into the platform market, driving further market
share gains over the long term.
~£3tn
Total addressable market
~£2tn
Off platform
A significant
opportunity
~£1tn
Currently held
on platforms
Advised ~£0.7tn
D2C ~£0.3tn
Addressable market UK platform market
A fast-growing platform market
£bn
Advised AUA D2C AUA
14%
CAGR
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
308
214
363
247
434
302
473
329
570
400
693
488
716
492
763
530
800
554
983
666
94
117
132
145
170
205
224
233
246
317
The long-term drivers that are shaping our industry
and driving new growth opportunities.
Demographics
The UK’s ageing population
and increased life expectancy
have led to an increase in state
retirement age, causing people
wishing to retire earlier to be
increasingly reliant on their
private pensions and savings.
This is driving people to be
more actively engaged with
their savings and investments
from an earlier age.
Government policy
There is an increasing
requirement for individuals
to take greater personal
responsibility for their
retirement provision,
evidenced by the UK
Government’s policies
in relation to pension
freedoms, auto-enrolment
and tax-efficient savings and
investments.
Technology
Technological innovation has
made the investment platform
market more accessible to
a broader range of retail
investors who are increasingly
looking for simple, intuitive
products to help them achieve
their long-term financial goals.
Financial
There is a growing awareness
of the UK savings gap, being
the difference between the
level of current savings and
that necessary to provide a
reasonable standard of living
in retirement, and the impact
of the shift away from defined
benefit to defined contribution
pension schemes.
UK state pension
age is due to reach
67 by 2028
The workplace
pension participation
rate in the UK has
increased from 47%
to 79% since 2012
Structural shift
from non-platform
providers to platforms
There are over
27million members
of private sector DC
pensions in the UK
Long-term structural growth drivers
AJ Bell D2C market share by AUA
%
2012
1.3
2013
1.5
2014
1.8
2015
2.3
2016
2.8
2017
3.2
2018
3.9
2019
4.8
2020
5.5
2021
6.2
AJ Bell advised market share by AUA
%
2012
3.9
2013
4.4
2014
4.3
2015
4.5
2016
4.7
2017
5.0
2018
6.1
2019
6.4
2020
6.5
2021
6.9
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16 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 17
Market overview
Market trends that are likely
to affect our business
How we are responding
Relevance to strategy
Key trends
Key
Strong employer
brand and culture
Excellent customer
experience
Financial security and
regulatory compliance
Sustainable
growth
Scalable technology
solutions
We respond to market trends that
impact our business, ensuring we
remain well-positioned to
continue capturing growth
opportunities.
3 21
Economic uncertainty, high
inflation, rising cost of living
Evolving competitive
landscape
Changing customer
expectations
During FY22 the macroeconomic environment has become
increasingly uncertain, leading to rising interest rates and
cost-of-living pressures on many households. This has been
exacerbated by the ongoing conflict in Ukraine.
This is inevitably putting pressure on individuals, presenting a
short-term headwind for inflows into the platform market as
people prioritise essential expenditure over their longer-term
investments.
Interest rates have risen quickly to counter rising inflation.
As a result, asset values have been impacted as stock markets
have fallen, whilst returns on cash have improved.
The platform market is an attractive market supported by long-term
structural growth drivers. Leading platforms can attract and retain
customers with high lifetime values, driving significant recurring
revenues. Serving these customers via a scalable platform can
deliver attractive profit margins, once sufficient scale is reached.
These characteristics have attracted significant capital into the market,
driving a continual evolution in the competitive landscape. In recent
years, several new competitors have emerged, particularly in the
D2C market, all addressing the market differently with innovative
new propositions.
This has resulted in differentiated approaches across the market to
pricing models, service offering, functionality, customer experience,
and the level of brand and marketing activity.
Over time investment platforms have evolved to meet the needs
of a wider range of customers as technology has enabled greater
accessibility to the financial markets.
There has been a significant increase in the number of first-time or
inexperienced investors entering the market in recent years, driving
different expectations of what platforms should offer.
Customer expectations continue to change, particularly as younger
investors enter the market. The ability to manage accounts via a
user-friendly smartphone app is increasingly important, whilst
different cohorts of customers are attracted to specific pricing
models such as commission-free or fixed price models.
Advised customers tend to be wealthier than D2C customers,
with our average advised customer portfolio being £308k
compared to £69k in the D2C market. As a result, the pressure
on household finances is likely to be felt more acutely by D2C
customers, with the advised market already showing signs of
being more resilient. Our dual-channel model ensures that we
are well positioned to continue delivering net inflows across the
platform, despite any short-term weakness in the D2C market.
Although there may be pressure on new contributions,
consolidation of existing wealth continues to be a key driver of
inflows to our platform. This has been a significant contributor
to new business for many years as customers and advisers
consolidate pensions and other investments held across multiple
providers into one place. This activity is expected to continue
driving strong inflows and is not dependent on new contributions,
so is less impacted by the uncertain market backdrop.
With the inflationary environment driving higher interest rates,
our diversified revenue model has benefited from improving
revenue margins over the course of FY22. We are committed
to sharing efficiency gains with our customers and earlier
this year we made several reductions to our platform charges
across both our advised and D2C propositions, delivering total
annualised savings to our customers of around £5 million.
With our employees also facing rising living costs, we undertook
a detailed review of pay and benefits over the summer.
We have made several enhancements for FY23, focused on
providing both short and long-term benefits to our people.
Our investment in this area represents an annualised increase
of over 10% in total staff costs, including an average pay
increase of 7%, increased employer pension contributions, and
the introduction of an annual free share award worth £2,000
for all employees outside of the senior management team,
ensuring all our people share in our future success. More details
can be found in our Responsible business report on page 40.
We continually monitor the competitive landscape to ensure we keep
up with the pace of change and that our propositions remain at the
forefront of the market.
We are a trusted provider offering an easy-to-use platform, which
offers broad functionality and award-winning service at a highly
competitive price. This combination has driven strong growth in
customers and AUA over many years, and our scale ensures we
have a profitable and sustainable business model.
The challenging market backdrop has made it far more difficult for
newer entrants to achieve the scale necessary to achieve profitability,
and business models are under pressure, evidenced by cutbacks in
competitor recruitment and marketing activity.
By contrast, we have continued to perform very strongly and increased
our market share in the year. From a position of financial strength, we
are investing in our brand, our propositions and our people to support
our long-term growth ambitions.
In April, we launched Dodl, a new commission-free investment
app for retail investors. This simplified proposition sits alongside
our full-service AJ Bell proposition and increases our footprint in the
D2C market. We are also developing a simplified proposition for the
advised market called Touch, which will similarly increase our
footprint in the advised market alongside AJ Bell Investcentre.
We recently retired the Youinvest brand from our full-service
D2C proposition and are investing in the AJ Bell brand to improve
awareness with potential customers.
These ongoing investments strengthen our competitive position
and support our ambition to continue capturing market share.
We continue to enhance our platform to support all our customers
on their investment journey. Alongside the full range of accounts
offered on our platform, we provide help to customers by offering
educational content, a favourite funds list, ready-made portfolios
and AJ Bell investment solutions.
The breadth of our award-winning propositions ensures we cater
for a wide range of customer requirements, from experienced
investors through to first timers. In FY22 our platform attracted
over 57,000 net new customers, £5.8 billion of net inflows, and
had a customer retention rate in excess of 95%.
Our new simplified propositions, Dodl and Touch, will broaden
our reach to a new generation of investors across both the D2C
and advised segments. Dodl is aimed at younger, less experienced
investors. It offers a simplified investment range and is amongst
the best value investment platforms in the market. Touch is a
digital custody platform launching in 2023 that lets advisers
deliver a streamlined advice service entirely through their client’s
smartphone. Both new propositions utilise the latest smartphone
technology and have been designed to meet the evolving needs
of customers as we look ahead over the next few years.
Our heritage in the pensions market means that many customers
choose to consolidate their pensions with AJ Bell. Historically,
this process has been reliant on the customer to locate their old
pensions and initiate the transfers from previous providers. Having
identified an opportunity to make this process easier, we started
beta-testing a new pension finding service in July, simplifying
the pension consolidation journey for our customers.
Link to strategy Link to strategy Link to strategy
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18 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 19
Business model
Serving the needs of our
customers by making
investing easier
We provide an award-winning platform
operating in both the advised and
D2C markets.
Our two full-service propositions, AJ Bell
Investcentre, an adviser-led investment
platform, and AJ Bell, a D2C investment
platform, give access to a wide range of
tax wrappers, savings and investments.
These are complemented by our new
simplified propositions, Touch and Dodl.
Driven by our revenue model
Our revenue model includes a mix of fixed
fees, ad valorem and transactional charges
which provide a balance of inflation
protection and resilience in the face of
economic and capital market fluctuations.
A significant portion of our revenues are
recurring, in the form of charges levied
on an annual or other recurring basis.
We have high levels of online customer
servicing, straight through processing and
automation. This enables us to reduce the
marginal cost of adding new customers
and assets to the platform.
Resources and inputs
What we do
A culture
that places
our customers
at the heart
of everything
we do
A culture
that places
our customers
at the heart
A culture
that places
our customers
at the heart
of everything
A culture
that places
our customers
at the heart
of everything
we do
of everything
we do
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Creating value for all
Brand and reputation
With over 27 years of experience,
we have built a trusted brand
through our high-quality service
and platform propositions. We
raise brand awareness through
a combination of sponsorship,
PR, social media and referrals.
A well-invested
technology infrastructure
We operate a hybrid technology
model whereby our platform user
interfaces are developed in-house,
whilst our core back-office systems
are outsourced to industry expert
software providers. This model
provides a number of benefits,
including the ability to build
adaptable, easy-to-use interfaces
and reduces the cost of regulatory
compliance.
People and culture
Our success is built on delivering
a high-quality service through the
skills and passion of our people.
Financial strength
We are a materially debt-free
business which holds sufficient
funds to more than meet our
regulatory capital requirements and
for supporting ongoing investment
in the business.
…for our customers and their advisers
A strong, secure and trusted platform which enables
them to manage their long-term savings with easy-to-
use products at a low cost, whether directly or with the
help of a financial adviser.
£69.2bn
Assets under administration
95.5%
Customer retention rate
…for our people
Our learning and development framework ensures we
support and develop our staff to allow them to fulfil
their potential and progress their careers. We reward
our staff through our competitive pay and benefits
package.
3-star
engagement
Best Companies survey accreditation
…for our shareholders
Our high customer retention rates and diversified
revenue model combine to yield predictable and
sustainable revenue streams from the business,
which quickly convert into cash.
This supports our progressive dividend policy
whilst enabling us to invest in future growth.
7.37p
Total ordinary dividend per share
…for our other stakeholders
We have a strong social conscience and support our
local community with a variety of charitable initiatives.
£299,000
Charitable donations
Underpinned by factors that determine our long-term growth:
Market trends and
opportunities
See page 16
Stakeholders
See page 26
Risk management
See page 58
Governance
See page 70
The value we create
How we measure value creation...
Strategic report
Governance
Financial statements
Other information
20 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 21
Leaders in our market
Strategy in action
Scalable
technology
solutions
Sustainable
growth
Excellent customer
experience
What this meansProgress in 2022Future focusLinks
Financial security
and regulatory
compliance
Strong employer
brand and culture
We will grow both customer numbers
and AUA in a sustainable and cost-
effective manner.
We help people to invest but will not
provide personal recommendations.
We will continue to develop our
customer propositions, with a focus
on ease of use, service and price.
We will deliver scalable technology
solutions that are easy to use for both
customers and colleagues, appropriate
to their needs and adaptable for future
change. The security of our technology
is of paramount importance.
We will preserve our financial security,
and our regulatory and reputational
standing. We will treat all stakeholders
fairly.
We will develop and support our talent
to help them achieve their potential.
We will strive to ensure our staff are
actively engaged. Our strong employer
brand and culture will enable us to
attract and retain quality staff.
Our new pension
finding service
Most adults have jobs
with multiple employers
throughout their career, and
subsequently accumulate a
number of different pension
pots. These can be difficult to
manage and old pensions
may be hard to trace.
We have completed the first
phase of our pension finding
service rollout. This service
is aimed at simplifying the
pension consolidation journey
for our customers. We will find
their previous pensions free of
charge, enabling customers to
combine their pensions into
their AJ Bell pension in just
a few quick and simple steps,
meaning low costs and
more control.
• Strong organic growth in customer
numbers (up 16%) across our
advised and D2C platform
propositions.
• Delivered platform net AUA inflows
of £5.8 billion.
• AJ Bell Investments AUM increased
by 27% to £2.8 billion.
• Rebranded AJ Bell Youinvest to
AJ Bell to improve the effectiveness
of marketing activity.
• Excellent customer retention rate
of 95.5%.
• Reduced several charges across
our Investcentre and AJ Bell
propositions.
• Launch of Dodl, our new low-cost
investment app for the D2C market.
• Development of Touch, expanding
our offering for advisers.
• Continued investment in our hybrid
cloud-based technology framework
to ensure our platform is operationally
resilient.
• Expansion of the Technology Team to
facilitate the ongoing development and
investment in infrastructure for our new
simplified platform propositions.
• Revenue increased by 12% to
£163.8million and PBT increased
by 6% to £58.4 million.
• Maintained a strong regulatory capital
surplus throughout the year.
• Continued our progressive dividend
policy, with a total ordinary dividend
for the year of 7.37p per share.
• Achieved a three-star accreditation
in the Best Companies survey for
the fifth consecutive year.
• Strengthened our pay and benefits
package for all employees effective
from 1 October 2022, including the
introduction of a new annual free
share award scheme.
• To grow the platform business by
increasing brand awareness and
implementing a cost-effective
distribution strategy.
• To further improve the customer
journey to ensure we are the easiest
platform to use, considering the
evolving needs of our customers.
• To continue to develop our range
of simple investment solutions.
• To continue to develop the investment
platform to ensure it is scalable,
adaptable, resilient and secure, whilst
implementing solutions to deliver
operational efficiencies in the business.
• To deliver financial growth to facilitate
a progressive dividend policy whilst
managing the capital base, ensuring
sufficient reserves for regulatory
requirements and investing in the
business.
• To continue to focus on staff
engagement and development,
promoting our culture whilst
enhancing our employer brand.
Launch of Dodl
It is estimated that 8.6 million
adults in the UK hold more
than £10,000 of investible
assets in cash. Our research
suggests that many of these
people don’t know where
to start investing and are
deterred by too much
choice and complexity.
In April, we launched Dodl.
Its ease of use, simplified
investment range and low
charges make it an ideal
solution for this type
of customer.
Principal risks
1 2 3
KPIs
• AUA
• Number of retail customers
Principal risks
1 2
KPIs
• Customer retention rate
Principal risks
1 2 3
KPIs
• PBT margin
Principal risks
1 2 3
KPIs
• Revenue
• Revenue per £AUA
• PBT
• Diluted EPS
Principal risks
1 2
Key
1
Strategic risk
2
Operational risk
3
Financial risk
Strategic report
Governance
Financial statements
Other information
22 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 23
Key performance indicators
How we performed
We use selected key performance indicators (KPIs) to monitor progress against
our strategy.
These are the primary KPIs which we use to measure strategic progress. Our KPIs are reviewed annually in relation to the strategic
objectives of the Company through our business planning process and have been linked to the relevant strategic drivers.
Why it is important
The number of retail customers is the number that have
at least one funded account with an AJ Bell product at
30 September 2022.
The number of retail customers can be used as a measurement
to determine the success of our propositions, customer
service and marketing.
Number of retail customers
20202019 2021 2022
232,066
295,305
382,754
440,589
Why it is important
Revenue per £AUA is the total revenue generated during the
year expressed as a percentage of the average AUA in the year.
Revenue per £AUA provides a simple measurement to facilitate
comparison of our charges with our competitors’.
Revenue per £AUA1
bps
20202019 2021 2022
21.9
23.9
22.6
22.2
Why it is important
Our revenue is the total income generated by the Group’s
activities, comprising recurring ad valorem, recurring fixed
and transactional revenue.
Revenue provides a measurement of the financial growth
of the Group.
Why it is important
AUA is the value of assets for which AJ Bell provides either
an administration, custodian or transactional service.
AUA is a measurement of the growth of the business and is
the primary driver of ad valorem revenue, which is the largest
component of Group revenue.
AUA1
£bn
20202019 2021 2022
52.3
56.5
69.2
72.8
Revenue
£m
20202019 2021 2022
104.9
126.7
163.8
145.8
1. Our KPIs include alternative performance measures (APMs). APMs are not defined by International Financial Reporting Standards (IFRS) and should be considered together with
the Group’s IFRS measurements of performance. We believe APMs assist in providing greater insight into the underlying performance of the Group and enhance comparability
of information between reporting periods. For definitions, see page 178.
Link to strategy
Movement
2021 to 2022
+0.4bps
Link to strategy
Movement
2021 to 2022
-5%
Link to strategy
Movement
2021 to 2022
+15%
Link to strategy
Movement
2021 to 2022
+12%
Why it is important
PBT is the profit generated by the Group before Corporation
Tax is paid.
PBT is a measurement of the financial performance of the
Group. Profits can be used to strengthen the capital base,
invest within the business or be returned to investors.
Why it is important
PBT margin is calculated as PBT divided by total revenue.
PBT margin is a measurement of the efficiency of the Group’s
business model in converting revenue into profits.
Why it is important
The customer retention rate is the average number of funded
platform customers during the financial year that remain
funded at 30 September 2022.
Customer retention is a measurement of customer
satisfaction.
Why it is important
Diluted EPS represents profit after tax divided by the weighted
average number of shares and unexercised options in issue
during the period.
EPS provides a measurement of profit per share to determine
the value created for shareholders.
PBT
£m
20202019 2021 2022
37.7
48.6
58.4
55.1
Customer retention rate
%
20202019 2021 2022
95.4
95.5
95.5
95.0
PBT margin
%
20202019 2021 2022
35.9
38.4
35.6
37.8
Diluted EPS
p
20202019 2021 2022
7.47
9.47
11.35
10.67
Link to strategy
Movement
2021 to 2022
+0.5ppts
Link to strategy
Movement
2021 to 2022
+6%
Link to strategy
Movement
2021 to 2022
+6%
Link to strategy
Movement
2021 to 2022
-2.2ppts
Key
Strong employer
brand and culture
Excellent customer
experience
Financial security and
regulatory compliance
Sustainable
growth
Scalable technology
solutions
Strategic report
Governance
Financial statements
Other information
24 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 25
Our customers and their advisers Our people
Why do we
engage?
What are their
needs and material
interests?
Outcomes and
highlights
How have we engaged and considered their
needs and material interests?
Other stakeholdersOur shareholders
Stakeholder engagement
Engaging with
our stakeholders
We believe effective stakeholder engagement is a key element in driving a successful,
sustainable business, built for the long term.
We proactively engage with and listen to our stakeholders to understand what is important to them. By understanding our stakeholders,
we can factor into boardroom discussions the potential impact of our decisions on each stakeholder group and consider their needs and
interests. The table sets out who our key stakeholders are, the key reasons we engage with them, the areas they have a material interest
in and a summary of how we engaged in the year when considering what is most likely to promote the success of the Company.
Our Section 172 statement for the year ended 30 September 2022 is on pages 28 and 29 and demonstrates how our stakeholders
influenced some of the principal decisions by the Board during FY22.
Our customers include retail investors, financial
advisers and wealth management companies.
Our success is dependent on our ability to
understand our customers’ needs and develop
appropriate products to meet those needs.
Our people are at the heart of our success. Our success is
built on delivering a high-quality service through the skills
and passion of our people who bring our values to life
across the business.
Our shareholders include both institutional and retail
investors, including AJ Bell customers and employees.
Delivering on our long-term strategic objectives is dependent
on our shareholders’ support.
Other stakeholders represent the local communities in
which we operate, as well as the wider environment, our
suppliers and our regulators. As a socially responsible
business, we believe we have a responsibility to our local
communities, wider society and our suppliers. We operate
in a highly regulated environment and engage with our
regulators constructively.
An investment platform for our customers and
advisers that:
• is secure, reliable, and easy-to-use;
• provides a high-quality service and is low cost; and
• helps them meet their long-term financial objectives.
A working environment for our people that:
• facilitates their engagement at all levels;
• provides them with development and progression
opportunities;
• promotes their physical and mental wellbeing;
• promotes diversity and inclusion;
• rewards them appropriately; and
• encourages flexible working practices.
Our shareholders want to invest in a business that:
• delivers on its investment case; and
• provides long-term sustainable returns.
Our other stakeholders want us to:
• act as a responsible corporate citizen in all respects; and
• conduct our business with integrity.
Customer services and websites
Our advised and D2C teams have ongoing engagement
with our customers and their advisers through telephone
contacts, meetings, organised events and forums,
newsletters and written communications.
Our proposition websites are also an important medium
to communicate with our customers and their advisers
and obtain feedback on our products and services. Our
Investcentre website provides the tools for our advisers
to help manage their retail customers’ portfolios, whilst
our AJ Bell site assists customers at all stages of their
investment cycle by providing guidance and solutions
through our AJ Bell funds, ready-made portfolios and
favourite funds.
Surveys
Customer and adviser surveys are conducted on an
annual basis with the results analysed and reviewed at
Board level. Specific user groups also perform beta-
testing to provide further insight and feedback for us.
This engagement and feedback informs the way in which
we can best serve our customers and their advisers, both
now and in the future.
Surveys, staff communications and feedback
We have an open, collaborative and inclusive management
structure and engage regularly with our staff. We do this in a
number of ways including our annual staff survey, the appraisal
process, our intranet site, Company presentations, leadership
lunches and our wellbeing programme.
Our CEO hosts regular ‘town hall’ talks for all our staff and
provides an opportunity for staff to ask questions. In addition,
we have regular email updates on the business from the CEO.
We also take feedback from our talent development,
apprenticeship and training courses and as a result look to
improve future training and development programmes.
We have a designated Non-Executive Director, Helena
Morrissey, who chairs our EVF. The forum meets every two
months and has discussed a variety of themes raised by staff,
including diversity and inclusion, culture, communication,
career development, pay and benefits, the cost of living and
charitable activity.
Company share scheme
We continue to encourage employee share ownership through
our BAYE scheme (see page 160) to engage our workforce in
the performance of the Company and to align employee and
shareholder interests. We also launched a new annual free share
scheme for all employees from FY23 onwards.
Ongoing investor relations programme
Through our investor relations programme, which includes regular
trading updates, management roadshows, investor and analyst
meetings, attendance at investor conferences, and our AGM, we
ensure that shareholder views are brought into the boardroom and
considered in our decision making.
We host a Q&A webinar for retail investors following the publication
of our annual results and regularly meet with investors throughout
the year. In October 2022, we hosted an investor site visit in which
our CEO, MD of D2C and Investments and MD of Advised presented
an update on our strategy and hosted a Q&A. It also gave investors
and analysts a chance to see our Manchester head office and meet
our management team.
All members of the Board attend our AGM, which provides
an opportunity for shareholders to ask questions and vote on
resolutions.
We consulted with over 85% of our institutional shareholders in
relation to our new Remuneration Policy, giving our shareholders an
opportunity to provide feedback on our proposals and engage with
the development of the new Policy.
Corporate broker updates
Our corporate broker and sell-side analysts also provide us with
valuable feedback and market insight. Our corporate broker delivers
updates on market dynamics and representatives are regularly
invited to attend Board meetings.
Engaging with our suppliers
We continue to maintain and develop our business relationships,
inviting key suppliers to present to our Board and Executive
Committee. In addition to our normal due diligence processes,
we ensure members of the management team have regular
feedback sessions with representatives from our key suppliers.
We ensure our payment terms are fair and in compliance with
payment practices.
Engaging with our regulators
We regularly engage with the FCA and DWP on consultation
papers and industry issues. In addition, we actively seek to lobby
via public consultation and with policymakers where we see
unfairness or unnecessary complexity. We have continued to
engage with the regulator this year, including on our views of
the Consumer Duty and Pensions Dashboards.
We engage with regulators in an open and collaborative way.
Our Compliance Team is primarily responsible for ensuring our
regulatory compliance in all respects.
Engaging with our communities and wider society
We have a strong social conscience and look to support the
communities in which we operate as well as encouraging
our staff to give something back through charitable and
volunteering activities. We have a strong history of engaging
with our communities through a variety of activities, donations
and promoting volunteering days.
We are mindful of our impact on the environment and
recognise our responsibility to conserve and protect the
environment as far as possible across the business.
• Hosted a range of events for advisers including
Investival and our ‘On the Road’ seminars.
• Launched Dodl, our simplified D2C proposition.
• Continued development of Touch.
• Reduced several charges across our Investcentre
and AJ Bell propositions.
• 3-star Best Companies survey accreditation.
• Improved our staff pay and benefits package.
• 22 new apprentices taken on this year.
• Launched a new annual free share scheme for all employees
from FY23 onwards.
• Reported quarterly on our performance.
• 6% increase in ordinary dividends.
• All resolutions passed at the AGM with a majority of more than 85%.
• Hosted an investor site visit in October 2022.
• Enhanced the post-employment shareholding guideline for
Executive Directors.
• 30-day payment terms.
• £299,000 of charitable donations.
• Preparation for the launch of the AJ Bell Futures Foundation
in FY23.
• Published our first TCFD report.
Strategic report
Governance
Financial statements
Other information
26 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 27
Section 172 of the Companies Act 2006
(s172) requires Directors to act in the
way they consider, in good faith, would
be most likely to promote the success
of the Company for the benefit of its
shareholders as a whole and, in doing so,
have regard (amongst other matters) to:
a. the likely consequences of any decisions
in the long term;
b. the interests of the Company’s employees;
c. the need to foster the Company’s
business relationships with suppliers,
customers and others;
d. the impact of the Company’s operations
on the community and environment;
e. the desirability of the Company
maintaining a reputation for high
standards of business conduct; and
f. the need to act fairly between
shareholders and the Company.
We set out some examples of how the
Board has had regard to the duties under
s172 when considering specific matters,
and how it has considered the interests of
our key stakeholders in those decisions.
Further detail on how the Board operates,
including the matters it discussed and
debated in the year, having regard to
its s172 duties, are contained within the
Corporate Governance Report on pages
78 to 85.
The Board seeks to understand and
carefully consider each of our key
stakeholders’ interests, priorities and views.
The Board recognises that each decision
will have a different impact and relevance
to each key stakeholder, and so having a
good understanding of their priorities is
important. Where stakeholder priorities
conflict, the members of the Board exercise
independent judgement when balancing
those competing interests in order to
determine what it considers to be the most
likely outcome to promote the long-term
sustainable success of the Company.
Although the Board engages directly with
some stakeholders, engagement also takes
place at different levels within the business.
The output from engagement below Board
level is reported back to the Board and/or
Board Committees and helps to inform both
Board and other business-level decisions.
Further information about how we engage
with our stakeholders and their needs can
be found on pages 26 and 27.
Section 172 statement
Principal Board
decisions
CEO succession
16 June 2022 announcement
On 16 June we announced the
appointment of Michael Summersgill
as successor to Andy Bell as CEO from
1 October 2022. This was the result of
long-term succession planning over a
number of years, during which Michael’s
role within the business was evolved
and developed to enable him to gain the
requisite knowledge and experience.
During the same succession planning
process we considered whether Andy
should remain with the business after
stepping down as CEO and, if so, in
what capacity. On 16 June we therefore
announced Andy’s intended future role as
a non-independent Non-Executive Deputy
Chair. In making these announcements the
Board took account of:
Shareholders, Customers and People
We believe that these stakeholders benefit
from the long-term succession planning
process by having a new CEO with
significant knowledge of our business
and the market in which we operate.
We also believed these stakeholders
would benefit from the Board having
access to Andy’s deep experience and
knowledge of the wider investment
platform market. They would also benefit
from there being a Non-Executive
Director who was a major shareholder
and could provide a shareholder
perspective on key issues. We were also
mindful of the need to ensure equal
treatment of shareholders.
Regulator
We believe that the appointment of a CEO
with Michael’s knowledge, experience
and character aligns with the expectations
of the FCA, which was subsequently
confirmed through FCA approval of his
SMF 1 application.
Whilst we considered at a high level the
view of the FCA and included the FCA in
our post-announcement communications
plan, we did not engage with the FCA
before the decision was made.
This was because as a Board we were not
aware of the FCA’s view about the risk to
effective Board governance that would
arise if a founder CEO with a significant
shareholding remained on a board after
stepping down as CEO. We also took
account of the fact that the role did
not require regulatory approval and of
precedents of former CEOs remaining on
a board in similar circumstances at other
financial services businesses.
27 September 2022 announcement
We announced on 27 September that the
Board accepted Andy’s decision to step
down from the Board, but that he would
remain with the business in a consultancy
role. In addition Andy would have the right
to nominate a Non-Executive Director.
In making this announcement, the Board
took account of:
Shareholders, Customers and People
Again, we believed these stakeholders
would benefit from the business still
having access to Andy’s deep experience
and knowledge of the wider investment
platform market via his consultancy role.
In addition, that having a Non-Executive
Director who was a representative of
a major shareholder would provide a
shareholder perspective on key issues.
Again, we were also mindful of the
need to ensure equal treatment of
shareholders.
Regulator
On reflection the Board accepted that
we should have engaged with the FCA
before we made the original decision, as
if we had done so we would have been
aware of their views beforehand. Whilst
ultimately it remained a decision for the
Board to make, after taking account of the
FCA’s views, the Board considered that
the change in approach was in the best
interests of shareholders as a whole as
well as stakeholders generally.
Response to macroeconomic
conditions
The current economic headwinds had both
positive and negative impacts on our business
and our stakeholders during the year. In particular,
the increase in interest earned on customer cash
balances, although partially offset by lower levels
of transactional revenues, resulted in increased
revenue. As a consequence, the Board and wider
group had to decide how the benefits of that
increased revenue should be shared between
shareholders and other stakeholder groups.
In making those decisions the following factors were considered:
Shareholders
The medium to longer-term benefit for shareholders of additional
investment in the AJ Bell brand, and the expansion of our
marketing activity, so we continue to benefit from the long-term
structural drivers of growth in the UK investment platform market.
People
In order to support our people and address industrywide
recruitment and retention issues, we reviewed and enhanced pay
and benefits. This resulted in the doubling of our bonus pool for
staff below management level, increased pension contributions
and an award of free shares for all of our eligible people, in
addition to an inflation-related salary increase.
Customers
We reviewed our charges generally, both direct and indirect, and
implemented a number of targeted changes for the benefit of our
customers, with a view to helping to maintain our competitive
edge and ease the impact of current market conditions on
customers.
Our community
We established our new charitable framework, the ‘AJ Bell
Futures Foundation’, to establish more deep-rooted, long-term
partnerships in our communities and committed to contribute
0.5% of our profits each year for distribution to chosen charitable
partner organisations.
Environment, Social and
Governance (ESG)
Although the nature of our business model is not such that it has
a significant impact on the environment, the Board and wider
group is mindful of the importance of businesses supporting the
response to climate change and mitigating the harmful effects
for society as a whole and creating a more sustainable economy.
When considering our approach to ESG, the Board took
account of:
Shareholders
The benefits of maintaining a strong reputation for being a
socially responsible business and the potential efficiency gains
from the adoption of more environmentally-friendly business
practices.
People
That operating our business in a socially responsible way would
enable us to attract and retain a diverse and engaged workforce
that delivers a high quality of service to customers and advisers.
Customers
That facilitating ESG-related investments will not only be
beneficial for society in terms of raising finance for ESG friendly
initiatives, but will also help to attract and retain customers and
meet changing customer needs.
Our Regulator
The need to meet the FCA’s growing expectations of firms in
the financial services sector in relation to ESG in order to help
support the transition to a more sustainable future.
Our Community
The benefits of strengthening our links with local schools,
universities and other educational establishments to help
develop the next generation of talent, as well as supporting
those in need in our local community.
Further information about the ESG initiatives undertaken during
the year can be found on pages 32 to 53.
Strategic report
Governance
Financial statements
Other information
28 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 29
We make investing easier
Age: 27 years old
Mission: To pay for a mortgage
Cameron wants to invest enough money to pay for a
mortgage whilst also achieving capital growth. He holds
a Lifetime ISA, as well as a stocks and shares ISA, SIPP
and Dealing Account with AJ Bell, with a range of
investments held across each of these. When investing,
Cameron puts an emphasis on an easy-to-use platform
with low charges.
Helping
invest – in the
way he wants
How we help Cameron
to invest
Ease of use
Cameron finds our direct to
consumer platform easy to use.
He primarily uses our mobile app
and finds it a useful space for
consolidating his personal finances,
being able to view and manage all
of the accounts he holds with us in
one place.
Investment choice
Cameron believes that we support
him to achieve his goals by offering
a wide range of investment options,
including the ability to invest in US
shares, whilst also ensuring that our
platform charges remain low.
Initially attracted by our recognisable
brand, Cameron moved his
investments to AJ Bell and has
developed trust in the excellent
customer service that we provide,
whilst helping him to realise his
investment ambitions.
Cameron is a real AJ Bell customer
sharing his honest opinions.
See more at ajbell.co.uk
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30 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 31
Responsible business
Committed to
responsibility
We are committed to conducting our business
responsibly. Our purpose is underpinned by a set of
guiding principles that define the way we do business.
Our dedication to be ‘principled’ means we do the right
thing, creating a culture where responsible decision
making is at the heart of everything we do.
We are driven by our purpose; we
help people to invest, and our product
propositions help to address the growing
societal need for individuals to take
personal responsibility for their financial
future by enabling people to take control
of their own investments, be that directly
or with the help of a financial adviser.
We seek to understand the social and
environmental factors which impact our
stakeholders most and to respond in a
way that creates long-term sustainable
value for all our stakeholders. During the
year we have made strong progress on
embedding ESG into our business strategy
and defined a set of metrics to measure
performance against our four responsible
business pillars: responsible propositions,
responsible employer, supporting our
local communities and environmental
awareness. Delivering against these
metrics will help to drive long-term
sustainable returns for our shareholders.
Alongside embedding our approach to
ESG, we have focused on several key
initiatives in 2022:
• Rolled out a comprehensive new pay
and benefits package for our people,
ensuring we remain an attractive
employer and support our committed
workforce in a challenging economic
environment.
• Introduced a new diversity and inclusion
framework as part of our commitment
to measure and drive improvements in
the diversity of our workforce.
• Established the AJ Bell Futures
Foundation, a new charitable
framework aimed at developing more
deep-rooted, long-term partnerships
in our communities.
• Published our TCFD report, enabling us
to better understand the climate-related
risks and opportunities for our business.
We are pleased by the significant
progress we have made in these areas but
acknowledge the need for continuous
improvement and have set several ESG-
related objectives for the year ahead. The
focus will be on the implementation of our
new frameworks, as well as undertaking an
operational net-zero target setting project.
“ Growing our business
responsibly, and doing the
right thing, are embedded
in our culture and how we
operate. I am proud to be
leading our approach to
ESG as we continue to
make progress in the areas
that matter most to our
stakeholders, as evidenced
by the retention of our
AA MSCI ESG rating.”
Peter Birch
CFO
In this section
Responsible p36
propositions
Responsible p39
employer
Supporting our p44
local communities
Environmental p46
awareness
Our approach to
responsible business
We behave in a responsible manner with a
focus on our propositions, our people, our
communities and the environment. We
believe this is important for the long-term
sustainability of our business.
The Board is responsible for the conduct
of AJ Bell’s business and the development
of its strategy, as well as promoting the
long-term sustainable success of the
business. This includes how we embed
our approach to behaving responsibly
across the business and promote a healthy
corporateculture.
Board of AJ Bell plc
The Board is the decision-making body relating to ESG matters, taking ultimate responsibility and providing oversight
of managements actions. The Board reviews a bi-annual update on our responsible business strategy.
The Board provides oversight and elected
Peter Birch, Chief Financial Officer,
as the Executive Director responsible for
our approach to responsible business.
Individual objectives have been assigned to
Executive Committee members and a
cross-functional ESG working group exists
for the coordination of day-to-day activities.
This structure allows us to fully embed ESG
across our existing business strategy. A new
NED ESG forum enables the Board to provide
more focused input into specific areas.
In 2022, the Board reviewed two bi-annual
ESG updates. In addition, specific papers
were presented to the Board regarding
TCFD, our D&I Framework and the staff
benefits review. Details of the oversight
provided by the Board sub-committees is
disclosed in the Governance section of this
Annual Report.
How we govern our responsible business strategy
Audit
Committee
The Committee is
responsible for reviewing
ESG-related financial
information and
disclosures.
Remuneration
Committee
The Committee oversees
that remuneration
policy and practices are
designed to support our
strategy and promote
long-term sustainable
success.
Risk & Compliance
Committee
The Committee is
responsible for ensuring
ESG-related risks are
effectively embedded
in risk management
frameworks and risk
reporting.
ESG working group
Executive responsibility
Our cross-functional ESG working group is responsible for the co-ordination of day-to-day activities, ensuring we deliver
on our objectives, and for the consolidation of our responsible business approach. ESG-related information is reviewed
by the working group before being presented to the Board, its sub-committees or the NED ESG Forum.
The CFO has the delegated authority from the Board to manage our responsible business strategy and is accountable
for its delivery. Executive Committee members are allocated specific ESG-related objectives in their business areas,
aligned to our strategy.
ESG Forum
The NED forum
performs reviews
and deep dives into
specific ESG topics and
reviews ESG objectives
for management.
The forum provides
recommendations
to the Board.
We administer £69 billion of assets
for our customers’ financial futures.
In the year our customers withdrew
over £880 million of pension funds
for their retirement and over 1,300
customers used their Lifetime ISAs
towards purchasing a first home.
The use by AJ Bell plc of any MSCI ESG research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a
sponsorship, endorsement, recommendation, or promotion of AJ Bell plc by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided
‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI.
Strategic report
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32 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 33
7
Our responsible business pillars:
Responsible business
Who it impacts
Customers and their advisers,
wider society, shareholders
Who it impacts
Employees, shareholders
Who it impacts
Local communities, shareholders
Who it impacts
Customers and their advisers,
wider society, shareholders
Our aim is to make investing easier and
empower people to invest for their
financial future.
Pivotal to fulfilling our role in society
is offering propositions which enable
more people to invest.
Our people are at the heart of
our success.
Our success is built on delivering a
high-quality service through the skills
and passion of our people who bring
our values to life across the business.
We have a strong social conscience
and are committed to making
a positive contribution to the
communities in which we operate.
We recognise the importance of
societal action to reduce global
emissions and are committed to
playing our part.
Trustpilot score
4.6-star
Best Companies score
3-star
Percentage of staff female
39%
Percentage of staff ethnic minorities
16%
Staff with AJ Bell share interests
52%
Charitable donations
£299,000
Hours volunteered
456 hours
Operational emissions per FTE
(Scope 1 and 2)
0.34 tonnes
Operational emissions per customer
(Scope 1, 2 and 3)
0.024 tonnes
Total operational emissions
(Scope 1, 2 and 3)
10,476 tonnes
We offer products and services aligned
to our core purpose – we help people
to invest. We do this in a way that helps
our customers to achieve their financial
goals, whether self-directed or with
the support of an adviser. We also
provide options for customers to invest
responsibly on our platform and are
responsible stewards of the investments
we manage on our customers’ behalf.
We will develop and support our people
to help them achieve their potential. We
will strive to ensure our staff are actively
engaged. Our strong employer brand and
culture will enable us to attract and retain
a diverse and talented workforce.
We are active members of our local
communities. We are committed
to having a positive impact through
engagement and participation whilst
ensuring we operate in a fair and
transparent manner.
We seek to minimise waste and our
impact on the environment. We assess
the impact that climate change could
have on our business and respond to
those risks and opportunities.
• Developed our simplified
propositions, Dodl and Touch,
broadening the reach of our
platform propositions.
• Launched our Money Matters
campaign, aiming to reduce the
gender investment gap.
• Enhanced our pay and benefits
package to reward our committed
workforce.
• Introduced a new framework to
measure diversity and inclusion.
• Achieved our highest ever Best
Companies survey score.
• Established the AJ Bell Futures
Foundation to develop more deep-
rooted, long-term partnerships in
our communities.
• Published our first TCFD report
including the calculation of our
Scope 3 emissions.
• Launch of Touch, helping advisers to
serve a wider range of clients.
• Embedment and further development
of our D&I framework.
• Talent development and succession
planning.
• Enhanced employer brand activity
and recruitment.
• Launch and embed the AJ Bell
Futures Foundation.
• Set operational net-zero targets.
• Build on our first TCFD report
to further comply with the
recommended disclosures.
Responsible
propositions
Responsible
employer
Supporting our
local communities
Why it is importantStrategy Metrics2022 highlights2023 priorities
Environmental
awareness
Strong employer
brand and culture
Sustainable
growth
Scalable technology
solutions
Excellent customer
experience
Financial security and
regulatory compliance
Alignment to UN SDGs
There are 17 United Nations
Sustainable Development Goals
(UN SDGs) that form a shared global
agenda to achieve a better and more
sustainable future for all.
We support the intention of the UN
SDGs and are undertaking a review
to establish the goals on which our
responsible business strategy has
the greatest impact.
Underpinning our
Group strategy
Our responsible business pillars
are embedded in, and underpin,
our Group strategic drivers.
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34 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 35
Responsible business
Responsible propositions
Our focus on helping
people to invest guides
our product philosophy;
ensuring we offer
accessible investing
solutions designed to
help our customers to
achieve their long-term
financial goals.
We report our approach to offering responsible propositions in three
strands: accessibility, product offering, and customer security.
Accessible solutions
We believe in making investing accessible. Our low-cost, easy-to-use propositions
cater for a broad range of investors. We produce content to educate more people about
investing.
Product offering
Our high-quality propositions offer products with a long-term focus. We provide
solutions to facilitate sustainable investing and are responsible stewards of the
investments we manage on our customers’ behalf.
Customer security
We protect our customers’ data through robust information security control.
We campaign on behalf of our customers where we see unfairness and overcomplexity
in regulations.
Accessible solutions
Widening our reach
At AJ Bell, we believe in making investing
accessible, whether investing directly
or with the help of a financial adviser,
irrespective of age, wealth and investment
approach. Our aim is to broaden our
customer reach and promote a better
understanding and awareness of
investment choices that ultimately deliver
good outcomes for our customers. Our
latest national TV advertising campaign
‘investing for all’ reflects this belief and we
continue to invest in our brand as part of
raising awareness of investing and how
we can help people to invest.
Our new simplified propositions, Dodl and
Touch will help to broaden our reach to a
new generation of investors across both
the D2C and advised segments.
Sustainability
ratings
Customers can
view Morningstar’s
Sustainability Rating
when researching funds
on our platform. This
rating enables investors
to evaluate funds based
on the sustainability
profile of their underlying
holdings.
Favourite
funds filter
Customers can filter our
Favourite funds list to
view only funds which
have a focus on
responsible investment
or sustainability.
AJ Bell
Responsible
Growth fund
We offer a well-diversified
fund favouring
companies with strong
ESG credentials. The fund
provides a low-cost,
easy-to-understand
responsible investing
option for both our
advised and D2C
customers.
Responsible
Managed
Portfolio Service
This provides financial
advisers with a highly
competitive ESG solution
for their clients. We offer
six responsible portfolios,
offering varying degrees
of risk for clients who
want to achieve long-
term capital growth
through ethical investing.
Facilitating responsible investment
The increased prevalence of ESG factors has elevated the level of interest and customer demand for responsible investment options.
We have several features that support customers to invest responsibly through our platform propositions.
Dodl is aimed at younger, less-experienced
investors, offering a simplified investment
range and is amongst the best-value
investment platforms in the market. Touch,
due to launch in 2023, is a mobile-focused
platform service that will broaden our
offering to financial advisers and help
them serve a wider base of clients.
Our research shows that, on average,
women in the UK have half the level of
savings and investments than men do,
a statistic that we want to help change.
The launch of AJ Bell Money Matters
in November 2021 has seen us roll
out a range of initiatives focused on
encouraging women to engage with
investing, in order to help close the gender
investment gap. This includes dedicated
website content, a regular podcast,
monthly newsletters, webinars, live
events and social media interaction.
Products and services
Our platform product philosophy
We provide mainstream products that we
believe will help our customers manage
their investments for the long term.
Our core products are SIPPs, ISAs and
Dealing Accounts. SIPPs and ISAs enable
customers to invest for the long term in a
government-approved, tax-advantageous
way and we also offer variations of these
products, such as the Lifetime ISA and
junior products, ensuring that we cater for
a wide range of customer requirements.
We want to help our customers to achieve
their financial goals. Our platform is open
architecture in nature with investment
solutions from market-leading providers
and our own AJ Bell Funds and MPS, which
cater for a wide range of risk appetites.
Through our products, customers can buy,
sell and hold a broad range of investments
including shares, collective investments
and other instruments traded on the major
stock exchanges around the world.
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36 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 37
Integration of ESG into our investment
management
We integrate stewardship considerations
throughout our investment management
processes in various ways, both in our
dedicated set of responsible portfolios,
which are managed with an ESG mandate,
and in our standard range of portfolios.
The investment policy statements for all
of our discretionary mandates contain a
dedicated section detailing how, and the
extent to which, stewardship and ESG
considerations should be factored into
our investment management activities.
This allows us to deliver for our customers
by acting as responsible stewards of
the investments that we manage on
their behalf.
For our responsible range of managed
portfolios, we operate within a consistent
framework to ensure that ESG credentials
are embedded. Where possible, we invest
in Exchange Traded Funds (ETFs) that track
an MSCI Socially Responsible Index (SRI),
which gives a wide range of norms and
values-based screens and exclusions. This
ensures that we target companies with
higher ESG rankings to invest in, whilst
seeking to minimise ESG controversy. A
series of exclusions removes companies
from certain industries, such as tobacco,
controversial weapons, and adult
entertainment. Then, a ‘best-in-class’
ranking system means that, for the
remaining companies, ESG credentials
are factored into relative index weights,
alongside market capitalisation. This multi-
layered approach ensures that customers
can feel confident that ESG principles are
consistently being considered within the
investment process.
In our standard range of portfolios, we will
prioritise more responsible funds where
it is the better choice, based on our usual
selection criteria, relative to standard
options in the market. Before inclusion in
any of our portfolios, a key component
of investment analysis is the robustness
and sustainability of the management
team and the strength of their governance
process. It is our policy to only invest
in products offered by managers who
comply with the principles outlined in the
UK Stewardship Code, or who can provide
a robust explanation as to why they do
not comply. It is important that consumers
can trust sustainable investment products
and we welcome regulation aimed at
clamping down on unsubstantiated
sustainability-related claims. We regularly
review our product literature to ensure
it is transparent and we are closely
monitoring the FCA’s proposals which
include sustainable investment labels, new
disclosure requirements and restrictions
on the use of sustainability-related terms
in product naming and marketing.
Customer security
Information security
We hold significant amounts of data
relating to our customers, products, and
business. We recognise that protecting
this information is critical to the success
of our business and the safeguarding of
our customers. We adopt the principle
of defence in depth to provide multiple
layers of protection for critical information
and systems; this ensures that there are
multiple controls and processes ensuring
protection is both robust and resilient.
Our security processes are aligned with
industry best practice including ISO
27001 and the US National Institute of
Standards and Technology Cyber Security
Framework.
Information and Cyber Security threats
are continually evolving. To enable our
security teams to stay up to date we
leverage external threat intelligence
to understand who might be targeting
the Company and our customers. This
capability assesses the techniques and
tactics used by attackers and helps ensure
our controls are appropriate. We combine
this capability with regular collaboration
and sharing with industry groups and
regulators to understand the threats
across the sector. To ensure our security
teams’ skills remain current with attacker
techniques, we invest in regular training
and development for staff working towards
industry recognised qualifications.
We recognise that technology enabled
crime can happen at any time of day
and as such operates 24/7 monitoring
provided by a Security Operations Centre.
This capability monitors our systems
and controls for any anomalies or
alerts and ensures they are immediately
investigated by security experts. Our
products and platforms have security
‘baked in’ by virtue of a Secure Software
Development Lifecycle. This ensures that
security is considered as part of every
stage of technology deployment, from
design and procurement through to
implementation and maintenance. Our
systems are regularly tested by accredited
third-party Ethical Hackers who undertake
Penetration Testing exercises to ensure
our systems are resistant to attack. This,
combined with a process of continuous
review and testing, ensures that our
controls are always improving to enhance
the security of our critical systems
and data.
We recognise that our staff are our most
valuable asset when it comes to protecting
critical information and systems. All staff
undergo security training, and we provide
regular advice and guidance to staff via all
staff ‘town hall’ talks and intranet blogs.
Regular phishing testing is conducted to
ensure our staff not only know how to
identify an attack, but also respond in a
timely and effective manner. A positive
security control is encouraged from the
top of the organisation, starting with
the Board to every member of staff. We
encourage open and active dialogue with
security from all areas of the business to
ensure our controls remain effective and
enhance the safety of our customers
and data.
Campaigning on behalf of retail investors
We actively seek to lobby the Government
and regulators via public consultation
and with policymakers where we see
unfairness or unnecessary complexity.
Our focus is always on campaigning for
simplicity and good customer outcomes.
During the year we have consulted with
the regulator on the FCA’s new Consumer
Duty and Pensions Dashboards; further
information has been included in our
CEO review on page 14.
Responsible business
Tax transparency
We are committed to conducting
our tax operations in a clear and
transparent manner, both in paying
and collecting taxes. We aim to
comply with all tax legislation,
including reporting, filing and
payment obligations.
Responsible employer
Our people are at the heart
of our continued growth and
success. We take pride in their
career development, and we
support and empower them
to drive the business forward.
We focus on creating a highly collaborative
culture where people feel motivated,
valued and supported. Our guiding
principles and simple purpose drive
responsible behaviour and ensure that
staff are fully engaged with our strategy
and goals.
Employee engagement
Our staff engagement framework focuses
on the eight measures used within the
Best Companies survey. Best Companies
is an independent workplace engagement
specialist that works with organisations like
ours to measure, improve and recognise
workplace engagement and compile the
‘Best Companies to Work For’ list.
We were delighted to make it into the
top 25 of the 100 Best Companies list
and maintain our position in the top
five financial services companies in the
UK, keeping our status as a three-star
company, the highest star accreditation
Best Companies award. This is our
fifth consecutive year in the top 100
Best Companies to work for: a great
achievement and testament to our
ongoing commitment to invest in our
people and to the positive culture we
have built.
Our strong results were our best to date
and showed improvements across all
categories this year. We were particularly
pleased to once again outperform the
average three-star companies score
with regards to employee wellbeing,
highlighting the strength of support
we provide for our staff.
We recognise the importance of a highly
engaged workforce and look to continually
evolve our approach.
3-star accreditation for
five consecutive years
Overall engagement
86%
response rate
(FY21: 91%)
Employee wellbeing
5.95
5.55
(AJ Bell FY21: 5.79)
0 7
3-star companies
AJ Bell
2022
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38 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 39
Embedding hybrid working
On 1 January 2022 we introduced our
new hybrid working policy for staff. The
policy was shaped by our ‘future of work’
project which we set up to find the right
post-pandemic operating model for our
business, when working arrangements
were no longer impacted by COVID-
related restrictions.
The policy provides our staff with a blend
of working at home and working in the
office, in a way that balances the needs of
the business, their teams and themselves,
as well as ensuring we retain our unique
AJ Bell culture.
Employee Voice Forum
As the business continues to grow it’s
important that the Board engages with
colleagues regularly. Helena Morrissey was
nominated as our director responsible for
employee engagement with effect from
the 2022 AGM and building on the success
of the existing EVF, Helena relaunched
the forum in 2022 to help open a more
frequent dialogue between staff and
the Board.
The forum meets every two months
and has discussed a variety of themes
raised by staff, including diversity and
inclusion, culture, communication, career
development, pay and benefits, the cost
of living and charitable activity.
The forum provided input to the pay
and benefits review and enhancements
to the effectiveness of our staff intranet
communications platform. The AJ Bell
Exchange, our staff intranet, continues
to be a valuable way to communicate
with our staff, via daily business updates,
staff feedback surveys and social news.
Following suggestions by the forum, staff
can now personalise content they want
to see.
Staff events
Social activities form an important part of
our culture, so it was pleasing to return
to our programme of social activities and
in-person events during the year to further
enhance engagement. This included the
return of monthly socials and our summer
party to great success. Our leadership
lunches have continued to be popular,
providing an opportunity to learn more
about our senior management team
and their areas of the business. We also
continued our ‘town hall’ talks hosted
twice-yearly by our CEO.
Talent management
The quality of our people is essential to
drive the business forward and help us
deliver further growth over the long term.
Our aim, therefore, is to attract and retain
talent across the business and provide
them with opportunities for personal
growth that will help us to deliver our
goals and them to fulfil their potential.
We believe it is important for all our
people to be given the opportunity to
enhance and broaden their skills. We
actively encourage our staff to invest in
their personal growth, career, and future
with AJ Bell through taking ownership
of their own personal and professional
development. Our in-house Learning
and Development Team also provides
extensive training and support to enable
our staff to realise their potential.
Building a robust talent pipeline for the
future is key to delivering our growth
strategy.
Responsible business
Strengthening our pay and
benefits package
A full review of our pay and benefits
offer was undertaken this year,
against a backdrop of the rising
cost of living and the external ‘war
for talent’. Staff were engaged in
the process to understand what is
most important to them, with the
key themes that emerged relating
to planning for their financial future
alongside wellbeing and work-life
balance.
We were pleased to introduce several
enhancements to our package,
effective from 1 October 2022:
These changes ensure we reward
our committed workforce and
remain an attractive employer in
a competitive market. Employee
share ownership is embedded in our
culture with 52% of our workforce
owning shares or share options as at
30 September 2022. We are pleased
to be introducing a new permanent
scheme which will mean our
workforce continue to share in the
long-term success of the Company.
We introduced a new health
cash plan, supporting our
people with everyday essential
health-care costs.
A number of wellbeing
initiatives including increased
holiday entitlements and
enhanced paternity pay.
We introduced a new annual
free share award for all
employees through our Buy
As You Earn scheme with
awards worth up to £2,000
issued every year, vesting over
a three-year period.
We revised staff salaries,
awarding an average pay
increase of over 7%.
We increased our matched
employer pension
contribution levels.
2
1
3
4
5
Talent programmes
Our HR and Learning and Development
Teams work closely with our people
throughout the business, helping them
to progress both professionally and
personally at every stage of their career.
Our apprenticeship employer provider
status enables us to achieve this, by
delivering a more bespoke, high-quality
programme in-house by our qualified
Learning and Development Team. This
status is recognised by the Chartered
Management Institute, Education Skills
Fund Agency and Ofsted.
Our Talent Development Programme
looks to develop staff identified as being
potential future leaders and managers
at AJ Bell. It enables those successfully
completing the programme to obtain an
approved management qualification and
the opportunity to put the skills they have
learned into practice to help further their
career. We also run a Senior Management
Talent Development Pathway which is
specifically tailored to develop those
high performing employees who wish to
progress to Head of Department, Director
and Executive level roles across the
business.
We understand the importance of having
robust and diverse succession plans in
place and have enhanced our activity in
this area to ensure that we understand
the wider potential of all our talent across
the business. Our Senior Management
Talent Development Pathway has proved
successful in supporting the development
and progression of a number of individuals
across the business, with promotions to
Head of Department or Director achieved.
We remain immensely proud of the
talented people who work for us, and
we are committed to developing and
supporting them to achieve their potential.
We were delighted therefore that 189 of
our people were promoted internally last
year, as well as 25 who secured internal
secondments. We wish them all the best as
they continue to grow and progress their
career with us.
Internships
The six-week Investments internship
is a great way for candidates to boost
their career prospects after university,
college or school. This year we welcomed
six interns to the business and asked
them to analyse investment portfolios
in the context of adviser and customer
behaviour.
They were tasked with understanding the
dynamics of the Managed Portfolio market
and how retail customers think about
investing in retirement. Working as a team,
they were required to source, collate,
analyse and report on a series of data
sources, providing a report and making
a presentation to the Investments Team
within AJ Bell.
Employer brand: AJ Bell #techHub
Our Technology Services campaign was centred on
the creation of our #techHub employer brand and
ran from December 2021 to April 2022. It garnered
1.58 million impressions and the campaign has
increased the awareness of AJ Bell as a tech
employer. More people are now ‘warm’ to the brand
which helps to make our roles more attractive in a
competitive market.
Our technology reputation was further enhanced
when our Chief Technology Officer presented
at the international Atlassian Teams conference,
sharing the technology journey AJ Bell has been
on and giving our brand a truly global reach.
Atlassian Teams is an annual tech forum attended
by thousands of people from across 150 countries.
To be asked to present at this event was recognition
of the strength of our brand and helps put AJ Bell
Tech on a global stage with some of the best and
biggest Tech companies in the business.
Apprenticeships
We continue to strengthen our
award-winning apprenticeships
that offer staff the chance to gain
valuable experience in a fast-
growing company, whilst also
working towards a professional or
academic qualification. A total of
22 apprentices joined the business
in 2022 – our largest ever intake. It
means that since launch six years
ago 74 new apprentices have taken
part in AJ Bell’s core Investment
Operations Specialist and Digital
Apprenticeship programmes.
With our Investment Operations
Specialist apprenticeship programme
learners gain a wide understanding
of the business by rotating around
teams in our Operations and
Customer Services Departments
over the course of their programme.
They also study for the Chartered
Institute of Securities & Investments’
Investment Operations Certificate.
Our Digital Apprenticeship
Programme sees learners working in
Technology Services. Over the course
of their four-year programme they
also study at Manchester Metropolitan
University for a Digital Technology
Solutions BSc with Honours.
Strategic report
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Other information
40 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 41
Demographic diversity
Our framework aims to recognise
and acknowledge demographic
diversity to maximise the benefits of a
demographically diverse workforce. We
seek to achieve this by focusing on both
gender and ethnic diversity in our senior
management team and wider workforce,
with the target that our workforce
demographic is representative of the
society in which we operate.
We have set a number of five-year desired
outcomes and interim milestones to
measure progress against this target.
The ethnic diversity of our wider workforce
is representative of the society we operate
in, and our percentage of employees from
ethnic minorities is slightly higher than the
UK average. We appreciate we have more
progress to make with the diversity of our
senior management population and are
looking to address this through activities
including targeted recruitment, talent
programmes and succession planning.
Our most recent gender pay report, which
we publish annually, details our approach
to supporting a diverse and inclusive
workplace.
We are pleased that our mean and
median figures both improved in our most
recent report, reflecting our continued
commitment to gender-inclusive
recruitment practices and our efforts to
promote women into more senior roles
and reward accordingly.
Our mean bonus figure also improved,
indicating the progress we are making
in addressing the gender profile of our
workforce, which in common with
most financial service companies has
traditionally seen a higher number of men
in senior roles than women.
We remain confident that men and women
are paid equally for doing equivalent jobs
across our business and we are pleased to
see the continued progress we are making.
Our recruitment is actively seeking to
address the traditional imbalance of men
working in financial services as well as in
technology roles with targeted campaigns
for women, including the use of gender
decoders in adverts, and we are proud
to have recruited a growing number of
female tech apprentices into the business.
The development of our AJ Bell Tech
employer brand campaign helps to ensure
we can appeal to a diverse external
technology community, and to promote
tech careers at AJ Bell to young people
and under-represented communities.
These steps, together with other initiatives
such as ensuring a balance of women
and ethnically diverse participants on
our internal development programmes
for Team Leaders, Managers and Senior
Managers, and providing opportunities for
coaching and mentoring, mean we can be
confident that we are continuing to build
a strong diverse talent pipeline for more
senior roles in the future.
Responsible business
Total number of employees
1
1,173
(2021: 1,065)
Diversity and inclusion
At AJ Bell, we value diversity and
believe in building a culture that
attracts, values and retains people
from all backgrounds, regardless of
age, caring responsibilities, disability,
ethnicity, gender, religion or sexual
orientation. We strive to promote an
inclusive workforce where our people
feel valued, respected as individuals,
and empowered to flourish in their
chosen career path.
Our commitment to diversity and
inclusion is a continuous process.
With the support of our chair, Helena
Morrissey, who brings with her a
wealth of experience in campaigning
for diversity, we have developed a new
diversity and inclusion framework to
better understand diversity in the context
of our business and the wider industry.
Objectives
Demographic
diversity
Our workforce
is diverse and
represents the
society it serves.
Cognitive
diversity
We recognise,
encourage and
acknowledge
diverse views and
perspectives.
Inclusive
practices
and policies
Our people policies and practices
ensure we are an inclusive employer
that values and enables diversity.
Inclusive
leadership
and behaviour
Our primary focus has been on senior
management and the talent pipeline,
although we are also looking more broadly
at the wider workforce. The framework
centres around four key components,
with three overarching objectives.
We will measure and report progress
against each of our objectives to ensure
we have a suitably diverse workforce and
truly inclusive culture.
1. Additional employee data is provided within note 7
which shows the average position during the year.
2. Other senior management is defined as an employee
who has responsibility for planning, direction or controlling
the activities of the Group, or a strategically significant
part of the Group, other than the Board of Directors.
3. Ethnicity data has not been disclosed by 21% of employees.
4. Gender benchmark data is as per the UK (2021) census.
Ethnicity data is as per the UK (2011) census, as the 2021
ethnicity data has not yet been published by the ONS.
Ethnicity
Board of Directors
Other senior management2
Total employees3
67% (6) 33% (3)
61% (721) 39% (452)
UK benchmark4
UK benchmark4
49% 51%
86% (19) 14% (3)
100% (9)
84% (779) 16% (152)
86% 14%
91% (20) 9%(2)
Board of Directors
Other senior management2
Total employees3
Gender
Male
Female
White
All other
ethnic groups
Our workforce as at
30 September 2022
Cognitive diversity
The framework also focuses on cognitive
diversity; diversity of thought, with the aim
to maximise the benefits that a cognitively
diverse leadership team brings. We believe
that diversity of thought can increase
team performance, bringing together
different perspectives to improve the way
that challenges and opportunities are
addressed.
Our approach to cognitive diversity
reflects external research which suggests
two components that underpin the
potential for and realisation of diversity
of thought:
• Group composition: the inherent
potential of individual group members
to think differently from each other,
which may be based on experiences,
beliefs and the way they prefer to
address problems.
• Group culture: the attitudes, practices
and group dynamics that influence
whether individual group members
are open to unreservedly sharing their
thoughts and whether they actively
attend to the perspectives of others.
During the year, we provided all managers
with training to raise awareness and
understanding of cognitive diversity,
utilising the DiSC assessment model. We
are also working with external providers to
develop a cognitive diversity assessment
and measurement process that will be
used to monitor future progress.
Inclusive practices and policies
We are committed to having fair policies
and practices in place that value a diverse
workforce and enable it to thrive.
We are focused on ensuring diversity
is reflected on our talent programmes,
succession plans and promotions, and
where there are any gaps we will take
proactive steps to address these. We
also ensure that diversity and inclusion is
embedded across our existing HR policies,
including the Diversity and Inclusion Policy
contained within our Employee Handbook.
To monitor the effectiveness and
implementation of these policies, we
review a range of data including external
advocacy scores, employee engagement
scores and feedback from our EVF.
Inclusive leadership and behaviours
We recognise the importance of
demonstrating inclusive behaviours from
the top down to strengthen our inclusive
culture, ensuring that senior management
are strong advocates of the framework.
We achieve this by providing training to
managers to ensure that they understand
the benefits of having an inclusive culture
where diversity is valued and enabled, as
well as setting appropriate objectives for all
managers, principally focused on driving
positive behaviours.
Promoting health and
wellbeing
We were delighted to be short-listed for
a Best Companies Wellbeing Award this
year, a reflection of our commitment to
support our employees with their physical,
mental and financial health and wellbeing.
We place a great deal of importance on
the health and wellbeing of our staff,
investing in a wide range of support that
we continually review.
We provide free flu jabs for staff and an on-
site AJ Bell gym at our Manchester office
with Personal Trainers who run daily group
classes. Staff in our London and Bristol
offices are provided with free local gym
membership. Over 400 staff are registered
on our gym app and we have doubled our
active members in the year. In addition
to daily classes, our on-site Personal
Trainers provide a range of services
including free private health checks for
staff and numerous fitness-based initiatives
throughout the year focused on providing
nutritional and exercise-based education.
Olympic gold medallist Georgia Taylor-
Brown visited our office in October 2021,
giving staff the opportunity to hear first-
hand about her experiences as an elite
athlete as well as the chance to join her in
our on-site gym for an exercise class. Our
ongoing sponsorship of the AJ Bell World
Triathlon Series Leeds and the AJ Bell Tour
of Britain also gave our staff the chance to
get involved in these events.
Our dedicated team of Wellbeing
Ambassadors is available to support
colleagues that are experiencing mental
health issues and delivers regular
workshops to all staff, focusing on
mental health in the workplace. This is
further complemented by our Employee
Assistance Programme, which gives our
people access to independent confidential
advice and support should they need it.
Following staff feedback, we also hosted
events focused on financial wellbeing,
including a budgeting and financial
wellbeing webinar, delivered by Money
Charity, providing an opportunity for
staff to learn about financial planning.
We also hosted several mortgage lunch
and learn sessions.
Anti-bribery and corruption
We are committed to maintaining high
legal, ethical and moral standards. This
is evidenced by our guiding principles,
which define our business and inform
everything we do. We conduct all
our business in an honest and ethical
manner, and we have zero-tolerance of
bribery and other corrupt activities. We
are committed to acting professionally,
fairly and with integrity in all business
dealings and relationships.
AJ Bell maintains a number of policies and
procedures to help guard against bribery
and corruption. This includes an anti-
bribery and corruption policy, and policies
and procedures on whistleblowing, fraud
and anti-money laundering, market abuse
and gifts and hospitality.
All policy and guidance statements are
available on our intranet and are updated
periodically. Staff are also required to
undertake mandatory training, including
regular refresher training, to raise
staff awareness and ensure they fully
understand what is required of them.
Human rights and
modern slavery
AJ Bell has an important role to play in
supporting human rights and we have
policies and governance processes in
place to mitigate risks.
We have a zero-tolerance approach to
slavery and human trafficking of any
kind, and we are committed to acting
ethically and with integrity in all our
business dealings and relationships.
We implement and enforce effective
systems and controls to ensure modern
slavery is not taking place. This approach
applies to our own business, all persons
working for us or on our behalf in any
capacity, and to all our supply chains.
In accordance with the Modern Slavery
Act 2015 we publish our Modern Slavery
statement on our website, and this sets
out the steps that we have taken and
our ongoing commitment to this
important topic.
As part of our zero-tolerance approach,
and to increase awareness of modern
slavery and human trafficking, our Risk
and Compliance, HR and Procurement
staff are required to complete
mandatory training. All other members
of staff have the opportunity to enrol on
the training voluntarily.
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42 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 43
Responsible business
Supporting our local communities
We ensure that our
communities share in our
business success and the
passion of our people.
At AJ Bell we have a strong social
conscience and encourage our staff to
give something back through charitable
and voluntary activities. We are proud of
the great work they do to give back to
our local communities and support them
through both paid time off for volunteering
and our matched fundraising programme.
In February, as part of our Money Matters
campaign, we joined forces with Smart
Works, a UK registered charity that exists
to give women the confidence they need
to secure employment and change the
trajectory of their lives. Smart Works has
helped over 20,000 women and our
partnership has one goal, to help more
women achieve financial security.
Staff took part in a 500-mile cycling
challenge in March, coinciding with
International Women’s Day, to fundraise
for Smart Works. 15 staff made up three
teams to take on the challenge, cycling a
total of 1,436 miles in just one week. Staff
also got the opportunity to take part in
volunteering at the charity’s London and
Manchester centres. This gave our people
the chance to see the Smart Works service
in action first-hand and help support
those in need. In addition to Smart Works,
our staff continued to use paid time off
to volunteer at a range of local charities
including Cash for Kids, FareShare and City
of Trees, as well running internal events to
raise funds to support a variety of charities.
In June, we celebrated Pride in AJ Bell,
alongside Pride Month. We partnered with
the LGBT Foundation to organise several
events and educational sessions across a
month-long campaign, to both raise funds
and continue to highlight the importance
of a highly inclusive culture that embraces
diversity in all its forms.
We also continued to support our people
to give blood. Donated blood is a lifeline
in an emergency and for people who need
long-term treatments.
AJ Bell Trust
This year, the Group made its final annual
donation to the AJ Bell Trust of £298,000.
From 1 October 2022, the AJ Bell Trust
and its activities are distinct from the
charitable and community work of AJ Bell.
The AJ Bell Trust is a registered charity of
which Andy Bell and his wife Tracey Bell
are trustees, together with two further
independent trustees. The aim of the
Trust is to help disadvantaged people to
advance in life, with a particular focus on
young people. It makes donations to a
range of national and local causes, and
also funds its own charitable initiatives.
The main focus of the Trust during the year
has been on its new partnership to support
Stop.Breathe.Think. in the North West,
which offers free and confidential mental
health support to young people aged 21
or under around the UK.
A corporate social responsibility initiative
was introduced in 2019 with the intention
of giving an additional contribution to
the Trust through the donation of share
options should a number of stretching
targets be met by the Group. As at the year
end, the performance condition targets
for the first tranche of the initiative were
not met (see note 24 of the Financial
Statements for further information). As
previously reported, the maximum award
in respect of the year ended 30 September
2022 was 831,256 share options with an
exercise price of £4.20. At the time the
scheme was set up, it was estimated that
the maximum award over the three years
would be worth circa £10 million. Andy
made a commitment when the scheme
was established that if the targets were
not met, he would ensure the AJ Bell Trust
did not lose out. As a result, Andy will
make a charitable donation in the form of
a transfer of AJ Bell shares for a value of
circa one-third of the £10 million. This will
have a huge impact on the charities which
the Trust supports.
Charitable donations
£299,000
(FY21: £272,000)
Volunteered hours
456
(FY21: 231 hours)
Established the
University of Salford partnership
We continued to build our partnership with the University of Salford,
supporting students completing an undergraduate computing
degree. We provided real-world challenges for the university’s annual
‘HackCamp’, a module where students collaborate to solve issues
experienced in business.
We also once again sponsored the ‘AJ Bell Technology Award’,
awarded to the best performing students across the university’s
computing degrees. The winners of the awards were invited to our
Manchester office to meet our Technology Team and see first-hand
the crucial role technology plays in our business. We are proud
to sponsor these awards and to help build the next generation of
technology talent in our local community.
We have also been delighted to welcome a number of the university’s
students to AJ Bell as new employees this year.
AJ Bell Futures Foundation
IntoUniversity supports young people from the most persistently
disadvantaged towns and cities in the UK, to build their capabilities
and access the opportunities that can better their lives and help
them contribute the fullness of their talents to wider society.
Each year, each IntoUniversity centre supports at least 1,000
students aged 7-18, to help achieve their full potential regardless
of their background or circumstance.
Our commitment
AJ Bell plc is committed to provide 0.5%
of its PBT to the Foundation each year, to
be distributed to selected charities and
organisations that meet the objectives above.
Smart Works exists to give women the
confidence they need to reach their full
potential, secure employment, and change
the trajectory of their lives. In the last year,
Smart Works has helped over 5,000 women.
Each woman is dressed for interview during an appointment with
a Smart Works stylist and put through a workshop to help enhance
skills for interview. 93% of clients leave feeling more confident about
succeeding in their interview and 72% go on to get the job.
Introducing our partner charities
To select our first principal partner charities, we evaluated a number
of potential organisations against the objectives and mission of the
Foundation and sought input from our staff on which ones we
should support.
We are pleased to be building on our existing relationship with Smart
Works through the Foundation, as well as supporting the fantastic
IntoUniversity to help young people realise their ambitions.
Building futures in our community
To develop more deep-rooted, long-
term partnerships in our communities,
we have established the AJ Bell
Futures Foundation.
Mission
The core aim of the Foundation is to help
people into a position where they can invest
in their futures. Our activities will focus
on supporting people who have faced
significant life challenges to give them
opportunities to improve their life chances
and find a path to financial security.
We will work with charitable organisations
to empower people to take control of their
future, through initiatives focused on self-
advancement.
This supports the growing societal need for
individuals to take personal responsibility for
their financial future and is aligned to our
purpose: we help people to invest.
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44 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 45
Responsible business
Environmental awareness
At AJ Bell we recognise the
importance of societal action to
reduce global emissions and are
committed to playing our part.
This year, we have produced our first set
of TCFD aligned disclosures which has
helped us to better understand the risks
and opportunities that climate change
poses to our business, as well as a more
in-depth understanding of the impact we
have on the environment, including our
Scope 3 emissions.
The impact of our operations on the
environment is relatively small. We
continued to seek to minimise waste
and our impact on the environment as
far as we can through sensible policies
and initiatives and have committed to
undertake a project to set operational net-
zero aligned targets in 2023.
In relation to our execution-only platform,
our role is restricted to making different
investment options and information
available to customers, with the ultimate
decision on responsible investing being in
the hands of the customer. In relation to
our AJ Bell Funds and MPS portfolios our
role is similarly to respond to customer
appetite whilst providing the option for
them to prioritise responsible investing.
Environmental initiatives
We continue to keep energy efficiency
across our offices under review, from
lighting and water usage to investing in
more efficient IT equipment and the use
of video conferencing facilities.
We implemented our new hybrid working
model in the year. This model has reduced
our total CO2e emissions, as a result of
reduced employee commuting and office
capacity requirements, whilst also taking
into account the emissions generated by
employees working from home.
Throughout the business we recycle 100%
of our confidential waste. In addition, none
of the waste from our Manchester head
office goes to landfill, with waste sorted
off-site in a waste recovery facility to
be recycled or used to create refuse-
derived fuel.
We continue to make progress on our aim
to reduce paper usage across our offices.
Over the past few years we have reviewed
the use of paper across our offices and
have made several improvements to our
own processes to reduce the reliance on
paper, including our communications with
customers and documentation associated
with our advised platform. This year we
completed our first paperless SIPP annual
statement process, making statements
more easily accessible to customers.
Our local environment
We ran several initiatives focused on
improving our local environment, giving
our staff the chance to make a difference
to the communities in which they live.
This year we launched a new partnership
with City of Trees, a charity that plants
trees and restores woodlands in Greater
Manchester. Our donation allowed for 500
trees to be planted by the charity and our
staff were involved in multiple volunteering
days which included a range of activities
from tree planting to woodland
management.
Throughout May, our staff took to the
streets and joined the #BigBagChallenge
with Keep Britain Tidy, collecting 35 bags
of litter around our local area.
To help reduce electronic waste and
support the education of local children,
our Technology Team refurbish and
donate many of our old laptops and
desktops to local primary schools and
community organisations.
Carbon offsetting
We recognise that there is more that we
can do to reduce our residual emissions.
Alongside the adoption of initiatives to
reduce our carbon emissions, we have
again partnered with Carbon Footprint
Limited to invest in overseas projects and
offset our Scope 1 and 2 carbon emissions
for 2021. We have chosen to support a
wind power project in Tamil Nadu, India.
The purpose of the project is to generate
a clean form of electricity in a country
where the electricity grid is dominated
by fossil-fuel-based power plants.
Through supporting this project, we have
consequently obtained carbon neutral
status for the third consecutive year.
The Task Force on Climate-related
Financial Disclosures (TCFD)
Our approach
Climate change is one of the most
significant global challenges we face
today. It is a critical issue impacting all our
stakeholders and wider society. At AJ Bell
we recognise the importance of societal
action to reduce global emissions and
are committed to playing our part in the
transition to a lower-carbon economy.
We are pleased to present our first report
on climate-related disclosures, aligned
to the TCFD Recommendations and
Recommended Disclosures. During the
year, we have focused on embedding
the recommendations into our internal
governance, risk and reporting processes.
We have increased our understanding of
the climate-related risks and opportunities
which could impact our business and
stakeholders, as well as making significant
progress in measuring our Scope 3
emissions to better understand the
impact we have on the environment.
Risk
management
Strategy
Governance
Metrics and
targets
We recognise the need for continuous
improvement: whilst we have made good
progress in the year, we know more
work is needed to build on what we have
done so far to ensure we effectively
integrate climate considerations into how
we operate. We highlight in this report
some areas where we want to make
further progress, and where more work
is required to fully comply with the TCFD
Recommendations and Recommended
Disclosures.
The report is structured around the
four pillars of the TCFD framework:
governance, strategy, risk management,
and metrics and targets. Our disclosures
have also been informed by the
accompanying financial sector guidance as
well as the TCFD’s other relevant guidance
materials.
Climate-related data and
methodological
challenges
We have used climate-related data
to monitor our exposure to identified
climate-related risks and measure
the climate-related metrics included
within this report. This data has been
supplied by multiple third-party
providers as detailed in the report,
and we have placed reliance on the
accuracy of the data provided.
We have experienced that there
are currently gaps relating to the
availability of data, and lack of
industry alignment on scenario
analysis and Scope 3 emission
calculation methodologies, and
expect future iterations of this
report to build on our experience
to strengthen metrics and
methodologies.
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46 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 47
Responsible business
GovernanceStrategyMetrics and targets Risk management
TCFD recommendation Status
Disclose the organisation’s governance around climate-related risks and opportunities.
a) Describe the Board’s oversight of climate-related
risks and opportunities.
We have reported how the Board and its Committees oversee our
climate-related risks and opportunities on page 49.
b) Describe management’s role in assessing and
managing climate-related risks and opportunities.
We have reported management’s roles and responsibilities in
assessing and managing climate-related risks on page 49.
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses,
strategy and financial planning where such information is material.
a) Describe the climate-related risks and
opportunities the organisation has identified over
the short, medium, and long term.
We have disclosed the climate-related risks identified over the short,
medium, and long term on pages 49 and 50.
b) Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning.
We have detailed the financial impact and our strategic response for
each risk identified on page 50.
c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or lower
scenario.
We have performed initial scenario analysis over our identified risks,
details of which have been disclosed on page 50. During our first year
the focus has been on qualitative analysis, which we will further build
on in future TCFD reports to include quantitative analysis.
Disclose how the organisation identifies, assesses, and manages climate-related risks.
a) Describe the organisation’s processes for
identifying and assessing climate-related risks.
Our approach to the identification, assessment and management of
climate-related risks is integrated into our Group Risk Management
Framework, further details of which are disclosed in our Risk
Management report on pages 58 to 61.
b) Describe the organisation’s processes for
managing climate-related risks.
The Board agreed to the addition of an ESG risk appetite category and
statement as disclosed on page 61. Climate-related risks, controls and
Key Risk Indicators (KRIs) are mapped to the ESG risk appetite category
and reviewed at the ESG working group, Risk Management Forum,
Executive Risk Committee and Risk and Compliance Committee.
c) Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management.
We have recognised an ESG-related principal risk and uncertainty,
which includes climate-related risks. Further information is provided
on page 65.
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such
information is material.
a) Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in
line with its strategy and risk management process.
We split our metrics by the impact of our operations and the impact
of our investments. We have reported the metrics on pages 51 to 53.
b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas emissions, and the
related risks.
We have disclosed our Operational Scope 1, 2 and 3 emissions on
page 51.
We have disclosed our AJ Bell Investments Scope 3 emissions for our
Funds on page 53 and will seek to expand this to include our MPS
portfolios in FY23 which has not been disclosed this year due to a lack
of data availability.
c) Describe the targets used by the organisation to
manage climate-related risks and opportunities
and performance against targets.
Our focus in FY22 has been on establishing our baseline Scope 3
emissions. In FY23, we will undertake a project to set operational
net-zero aligned targets and expect to comply with the recommended
disclosures in our second TCFD report.
TCFD compliance statement
As required by paragraph 8(a) of Listing Rule 9.8.6R, we set out in the table below our statement of compliance with the TCFD
Recommendations and Recommended Disclosures.
Where disclosures have been partially or fully omitted, we have detailed the reasons for not including such disclosures, the steps we are taking
in order to be able to make those disclosures in the future, and the timeframe within which we expect to be able to make those disclosures.
Key: Disclosure level
Full Partial Omitted
Governance
Board oversight of climate-related risks and opportunities
The Board is responsible for the conduct of our business and the development of its strategy, as well as promoting the long-term
sustainable success of the business, this includes our strategy relating to climate-related risks and opportunities.
The Board has delegated specific powers, duties and decision-making responsibilities to its five main committees as set out in our
Corporate Governance Report on pages 82 and 83. The Risk and Compliance Committee and Audit Committee have oversight
responsibility for aspects of our approach to managing climate-related risks and opportunities, as set out below.
Board Committee Responsibility Activity in FY22
AJ Bell plc Board
The Board is responsible for the conduct of our
business and the development of its strategy, as well
as promoting the long-term sustainable success of
the business. This includes our strategy relating to
climate-related risks and opportunities.
• Reviewed and approved the Group’s approach to TCFD compliance.
• Reviewed bi-annual management progress updates on our Responsible
business strategy including TCFD.
Risk and
Compliance
Committee
The Committee is responsible for ensuring
that climate risk is effectively embedded in risk
management frameworks and risk reporting and
understanding how climate change poses a threat
to the organisation.
• Reviewed and approved the ESG risk appetite category.
• Review of progress embedding TCFD requirements.
• Review of climate-related risk assessments and scenario analysis.
Audit Committee
The Committee is responsible for scrutinising
climate-related financial information and disclosures,
applying the same process and quality assurance
methods as for financial information.
• Reviewed the approach and methodology applied in the calculation
of the Group’s Scope 3 emissions.
• Reviewed the Group’s first TCFD disclosures.
Further information on the activities of the Board
and its Committees during the year is provided in the
Governance section of this report from pages 68 to 129.
Climate governance is captured in our Responsible
Business governance framework, as detailed on page 33.
Management’s role in assessing and managing climate-related risks and opportunities
The CFO has the delegated authority from the Board to manage our ESG strategy, including our climate-related risks and opportunities.
The CFO is supported by our cross-functional ESG working group for the consolidation of our approach and co-ordination of day-to-
day activities.
In addition to review from the ESG working group, the identified climate-related risks and opportunities were governed in line with our
Risk Management Framework, which included review and challenge of climate-related risk assessments and scenario analysis by the Risk
Management Forum and Executive Risk Committee ahead of being presented to the Risk and Compliance Committee.
Relevant processes and responsibilities are embedded into our Finance, Risk and Operational functions.
Strategy
Climate-related risks and opportunities
To ensure our strategy adequately responds to climate-related risks and opportunities, we have performed an assessment of our exposure
to a range of climate-related risks and opportunities, including both the physical and transitional risks of climate change.
Physical risks are caused by changes in the climate and can be event driven (acute) through the increased frequency and severity of
extreme weather events such as hurricanes or floods, or result from longer-term shifts in climate patterns (chronic) such as rising sea
levels or chronic heat waves.
Transitional risks are caused by the adjustment towards a net-zero economy, which will involve significant changes to policy, technology,
law and investor and consumer attitudes.
We assessed the risks and opportunities over the short term (five years), medium term (10 years) and long term (30 years).
To help inform the assessment of the identified climate-related risks and opportunities, we have considered their potential impacts under
different transition pathways using climate scenario analysis. These scenarios are not predictions of climate-related outcomes but are
used as hypothetical scenarios to aid our understanding of the impact that climate change could have on our business.
We selected three scenarios based on those constructed by the Network for Greening the Financial System (NGFS). Many central banks,
including the Bank of England, carry out assessments based on NGFS scenarios. We have intentionally selected three contrasting
scenarios; one representing a smooth and orderly transition, one involving heightened transition risks due to a disorderly transition,
and a third which incorporates more extreme physical risks due to a lack of climate-related policy.
Our climate scenario analysis has been primarily qualitative in nature. We view this as an iterative process and will look to build on our
assessment in future years so that it can further inform our strategy and risk assessment.
Strategic report
Governance
Financial statements
Other information
48 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 49
Responsible business
Scenario Temperature rise Description
Net Zero 2050
1.4°C An ambitious scenario which limits global warming to 1.4°C. Climate policies are assumed to be introduced early
on, gradually becoming more stringent.
Delayed Transition
1.6°C This scenario assumes global emissions do not decrease until 2030. Climate policies are delayed leading to
higher transition and physical risks than Net Zero 2050.
Current Policies
3°C+ A scenario of low ambition assuming only those climate policies currently implemented are made. Transition
risks are not as high as a disorderly transition but there are severe physical risks.
We have summarised each of the climate-related risks identified below, including the potential impact of these risks and our strategic
response.
Our responses to the risks identified also present opportunities for the business. For example, by offering responsible investment
solutions to our customers, we can reduce the risk of falling asset values impacting our revenue whilst also providing an opportunity
to capitalise on changing consumer demand for these solutions.
Key
Unlikely Possible Likely
Risk Definition Potential impact
Probability
Strategic response
Short
term
Medium
term
Long
term
Reputational
(Transition)
The risk that customers
are unhappy with the
level of responsible
investment options
available on our platform,
or the accuracy and
completeness of product
information.
The risk that customers
or stakeholders perceive
that our response
to climate change is
inadequate.
Customers direct capital
to alternative platforms.
We experience reduced
customer demand for our
responsible products and
potential litigation action.
1.4°C
1.6°C
3°C+
• We provide a wide range of sustainable
investment options on our platform,
including in our managed investment
solutions.
• We review our AJ Bell Investments
responsible product literature to ensure
it is accurate and transparent.
• We are closely following regulatory
developments regarding the FCA’s
Sustainability Disclosure Requirements.
• We embedded the TCFD recommendations,
published our first TCFD report and are
undertaking an operational net-zero
target setting project in 2023.
Market
(Transition
and physical)
The risk that climate
change or the transition
to a lower-carbon
economy negatively
impacts the global
economy, and therefore
the value of assets on our
platform and in our range
of managed investment
solutions.
Assets with exposure
to climate-related risks
could face reductions
in value, impacting
customer returns and
our fee revenues.
1.4°C
1.6°C
3°C+
• We offer a diverse range of investments
on our open-architecture platform,
allowing our customers to diversify and
respond to changing climate-related risks.
• We provide Morningstar’s Sustainability
Rating for funds available on our platform
and continue to review how we can make
climate-related information available.
• AJ Bell Investments offers responsible
investment solutions with an ESG specific
mandate.
Policy,
legal and
regulatory
(Transition)
The risk that there
is a need to comply
with increasing legal,
regulatory, and disclosure
obligations.
Increased cost to the
business to meet the
requirements and/or
restrictions to product
offerings.
1.4°C
1.6°C
3°C+
• Our Risk and Compliance function
conducts regular horizon scanning and
reviews regulatory publications on an
ongoing basis.
• We seek to comply with all climate-related
regulatory requirements.
Chronic
(Physical)
The risk of longer-term
changes in climate
patterns such as flooding,
extreme weather and
higher temperatures
impacting our operations.
Increased cost to the
business due to risk of
flooding at our offices
or reduced employee
productivity.
1.4°C
1.6°C
3°C+
• Our hybrid working model provides
operational resilience to the potential
impact of flooding at our offices.
Metrics and targets
Our climate-related metrics focus on the impact our business activities have on the environment. We measure and report our impact in
two distinct categories:
1. The impact of our operations: this is the direct and indirect impact we have on the environment from our operations. We measure
and report our key metrics being our Scope 1, 2 and 3 greenhouse gas emissions, excluding category 15 investments and our carbon
intensity metrics per customer and employee.
2. The impact of our investments: this is the impact we have on the environment through our AJ Bell Investments discretionary
managed investment solutions. We measure and report the carbon footprint and weighted average carbon intensity (WACI) of our
discretionary AUM.
The impact of our operations
As a financial services business, our direct operational environmental impact is primarily from the emissions generated in running our
three offices in Manchester, London and Bristol, and the indirect emissions generated in our supply chain.
We look to reduce waste where possible and minimise the environmental impact of our business and activities as far as we can through
sensible policies and initiatives.
We have previously reported our Scope 1 and 2 emissions, being the direct emissions from the combustion of fuel in our office and
the indirect emissions produced via the electricity we consume. This year, to gain a better understanding of our total impact on the
environment we have also quantified our Scope 3 emissions, which include all other indirect emissions that occur in our value chain.
Our operational CO
2
e emissions
Emissions 2022 2021
Scope 1 and 2 Tonnes of CO
2
e
Scope 1 237 286
Scope 2 (location based) 128 142
Total Scope 1 and 2 365 428
Scope 3 Tonnes of CO
2
e
1. Purchased good and services 8,722
Data not
available for
2021
2. Capital goods 666
3. Fuel and energy-related activities 74
5. Waste generated in operations 2
6. Business travel 100
7. Employee commuting & working from home 547
Total Scope 3 10,111
Total Scope 1, 2 and 3 10,476
Intensity per FTE (Scope 1 and 2) 0.34 0.40
Intensity per customer (Scope 1,2 and 3) 0.024 n/a
Energy usage kWh
Energy consumption in the UK 1,588,747 2,104,758
Strategic report
Governance
Financial statements
Other information
50 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 51
Target setting: An update on our approach to net-zero
We are committed to playing our part in a transition to a net-zero economy, aligned to the UK Government’s commitment to net-
zero by 2050.
The impact of our operations
Our focus in FY22 has been on establishing our baseline Scope 3 emissions. In FY23, we will undertake a project to set operational
net-zero aligned targets, developing a robust transition plan for our operations and associated short-term carbon reduction targets.
We will look to align this to the Science Based Targets initiative where practical.
The impact of our investments
We will continue to monitor the development of net-zero standards for Financial Institutions, which currently lacks industry alignment.
Methodology and boundary
The Greenhouse Gas (GHG) reporting period is aligned to the financial reporting year. The methodology used to calculate emissions
is based on the financial consolidation approach, as defined in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting
Standard (Revised Edition).
The Group’s carbon footprint was calculated using an operational control approach. Under this approach, all entities and associated
assets over which the Group has 100% operational control are included under the organisation’s Scope 1 and 2 emission categories.
All other entities, over which the Group does not have 100% operational control, such as third-party processing sites and data centres,
are included in the organisation’s Scope 3 emissions along with all other indirect emissions associated with the organisation.
We have chosen to report our operational Scope 1 and 2 emissions per FTE as our intensity measure, in line with prior periods. In
addition, we have reported our operational Scope 1, 2 and 3 emissions intensity per customer, we have used this measure as our
purchased goods and services represent over 80% of our total emissions and are primarily driven by serving the needs of our customers.
We have calculated our footprint using primary energy use data, where available, and converted this using the official UK Government
conversion factors. For Scope 3 purchased goods and services, and capital goods, an Environmentally Extended Input Output database
methodology was used to calculate the GHG footprint across total spend in the year. For employee commuting and working from home,
we collected data from staff on their home working and travel arrangements and have combined this with publicly available data to
estimate the emissions. We expect the accuracy of our footprint will get better each year as we revisit and refine the methodology and
underlying dataset.
Critical to good reporting is a well-defined reporting boundary which is consistently applied year on year. We have worked with
environmental consultants, Avieco, to draw the boundary for our operational GHG emissions reporting.
We considered the following Scope 3 categories to be out of the boundary of our reporting:
• 4. Upstream transportation and distribution – included in category 1, purchased goods and services.
• 8. Upstream leased assets – our leases consist of our offices and some computer and office equipment. The emissions generated
from the use of these assets are included within our Scope 1 and 2 emissions.
• 9 – 14. Downstream categories – we do not produce and distribute physical goods or operate any franchises.
• 15. Investments – we have reported the impact of our discretionary managed investment solutions in the impact of our investments.
Reviewing our impact
We were pleased to see a reduction in Scope 1 emissions in the year. Following a peak in gas consumption in FY21, we reviewed our
energy consumption across our offices which enabled us to reduce the combustion of gas during off-peak office hours. We continually
review electricity efficiency of appliances across the business and also saw a reduction in Scope 2 emissions.
The most significant driver of our Scope 3 emissions relates to the goods and services purchased in our supply chain. We are reviewing
how we can seek to reduce these emissions in the future, relative to the number of customers we serve, through proactive engagement
with our supply chain.
The impact of our investments
We utilise the WACI and Carbon footprint as the key metrics for measuring the impact of our AJ Bell Investments Funds on the
environment. We use these metrics as they represent our portfolio’s exposure to carbon-intensive companies.
WACI provides information on the level of Scope 1 and 2 emissions within our Funds per million $ of revenue that is generated by the
underlying entities.
Carbon footprint represents the share of Scope 1 and 2 emissions generated by underlying holdings per million $ that is invested in
our Funds.
Methodology and boundary
We have defined our methodology in line with the Partnership for Carbon Accounting Financials (PCAF), the global emissions standard
for the financial industry as recommended by the TCFD supplemental guidance for asset managers.
Access to reliable climate-related data covering all underlying holdings is an industry-wide challenge. The fact that our AUM are invested
in exchange-traded funds creates an additional layer of complexity. In calculating our footprint and WACI, we currently have some data
gaps, such as relating to fixed income investments, and therefore have reported a coverage percentage which represents the proportion
of total assets within our Funds for which we have sourced the required data, and which are therefore included within our calculation.
We will seek to build on this first calculation in future years to increase this coverage percentage as we refine our methodology and
access to data.
We have placed reliance on the accuracy of data provided by MSCI for the purposes of the calculation. MSCI collect reported Scope
1 and 2 emissions, and where not reported have methodologies in place to estimate those emissions. For our portfolio, 75% used
reported emissions and 25% of holdings used MSCI estimates. Due to the volume of data, it is not practical to undertake an independent
verification of this data.
Responsible business
Our investments’ CO
2
e emissions
Product
Carbon
footprint WACI Coverage
Tonnes of
CO
2
e per $m
AUM
Tonnes of
CO
2
e per $m
revenue
%
Total AUM
AJ Bell Funds 114 194 68%
Non-financial information statement
We aim to comply with all areas of the Non-Financial Reporting requirements contained within sections 414C and 414B of the
Companies Act 2006. Information regarding non-financial matters is included throughout our Strategic Report and the following
table summarises the policies and outcomes together with references to where further information can be found.
Reporting requirement Some of our relevant policies and standards Where to read more in this report about our impact Pages
Environmental matters
• Environmental Policy Environmental awareness 46-53
Employees
• Employee Handbook
• Health and Safety Policy
• Diversity and Inclusion Policy
• Recruitment and Selection Policy
• Whistleblowing Policy
• Safeguarding Policy
Responsible employer 39-43
Social
• Treating Customers Fairly
• CSR Policy
Supporting our local communities 44-45
Human rights
• Human Rights Policy
• Modern Slavery Statement
Human rights and modern slavery 43
Anti-corruption
and anti-bribery
• Anti-Bribery and Corruption Policy
• Anti-Money Laundering Policy
• Gifts and Hospitality Policy
• Market Abuse Policy
Anti-bribery and corruption 43
Additional information Where to read more in this report Pages
Business model
Our business model 20-21
Principal risks and how they are managed
Principal risks and uncertainties 62-66
Non-Financial KPIs
Key performance indicators 24-25
The calculation is based on our asset allocation as at 30 September 2022.
Our calculation has focused on our AJ Bell Funds, however AJ Bell Investments also offers discretionary portfolio management services
through the Managed Portfolio Service proposition, which are not included in these calculations. The MPS consists of multi-asset
portfolios which invest in products that collectively hold thousands of underlying holdings. This can present practical challenges in
aggregating these underlying investments to portfolio level.
Some MPS ranges carry inherent differences to the AJ Bell Funds, such as a focus on actively researched or ethical investments, which
may contribute to variations in WACI and carbon footprint metrics. However, the MPS portfolios are constructed using the same
overarching strategic asset allocation framework used by the AJ Bell Funds. In future years we will seek to widen the scope of these
downstream emission calculations.
Strategic report
Governance
Financial statements
Other information
52 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 53
Financial review
Another year
of growth
Overview
During a year in which macroeconomic
uncertainty impacted market values and
investor confidence, our dual-channel
business model and diversified revenue
streams have combined to enable us to
deliver another year of sustainable growth.
At the same time, we have been able to
position ourselves to take advantage of
the future growth opportunity by reducing
certain charges to customers, developing
our simplified propositions, and investing
in our brand.
Our platform business delivered strong
net AUA inflows of £5.8 billion (FY21:
£7.0billion) and customer growth of 16%
in a challenging operating environment.
Our ability to continue to grow at a good
rate in these circumstances is testament
to the quality of our propositions.
We achieved another strong set of
financial results with revenue increasing by
12% to £163.8 million (FY21: £145.8 million)
and PBT up 6% to £58.4 million (FY21:
55.1million). The nature of our business
model means we continue to thrive in
different macroeconomic conditions,
enabling us to invest in delivering on our
significant growth opportunity whilst
providing strong returns for shareholders.
“ The advantages of our dual-channel model and
diversified revenue streams continue to help us
deliver strong returns for shareholders whilst
simultaneously investing to deliver on our
significant growth opportunity.
In an uncertain market environment, we achieved
another excellent set of financial results with
revenue increasing by 12% to £163.8 million
and PBT up 6% to £58.4 million.”
Peter Birch
CFO
Revenue
£163.8m
+12%
PBT
£58.4m
+6%
Business performance
Customers
Customer numbers increased by 57,835 during the year to a total of 440,589 (FY21: 382,754). This growth has been driven by our
platform propositions, with our advised and D2C propositions delivering growth of 15% and 16% respectively. In addition, our platform
customer retention rate remained high at 95.5% (FY21: 95.0%).
Year ended
30 September
2022
No.
Year ended
30 September
2021
No.
Advised platform 145,371 126,920
D2C platform 280,281 241,045
Total platform 425,652 367,965
Non-platform 14,937 14,789
Total 440,589 382,754
Assets under administration
Year ended 30 September 2022
Advised platform
£bn
D2C platform
£bn
Total platform
£bn
Non-platform
£bn
Total
£bn
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
Year ended 30 September 2021
Advised platform
£bn
D2C platform
£bn
Total platform
£bn
Non-platform
£bn
Total
£bn
As at 1 October 2020 36.3 13.4 49.7 6.8 56.5
Inflows 6.3 4.6 10.9 0.2 11.1
Outflows (2.5) (1.4) (3.9) (0.8) (4.7)
Net inflows/(outflows) 3.8 3.2 7.0 (0.6) 6.4
Market and other movements 5.7 2.9 8.6 1.3 9.9
As at 30 September 2021 45.8 19.5 65.3 7.5 72.8
We continued to see strong AUA inflows, driven by our platform propositions. Gross inflows in the year were £10.3 billion (FY21: £11.1 billion).
Total advised platform inflows were £6.2 billion (FY21: £6.3 billion). Our existing customer base continued to invest at a similar rate to the
prior year, whilst average inflows from new customers were lower, impacted by a reduction in defined benefit pension inflows which are
typically higher in value.
Total D2C platform inflows were £3.9 billion (FY21: £4.6 billion). Whilst the rate of new customer growth slowed in the face of market
headwinds, we continued to attract good quality business with increased average inflows per new customer.
Outflows increased by £1.8 billion to £6.5 billion (FY21: £4.7 billion). Non-platform outflows of £2.2 billion reflect the final outflows in
relation to the previously announced closure of our institutional stockbroking service. Outflows were also impacted by an exceptional
bulk annuity purchase by an adviser firm which resulted in a one-off outflow of £0.2 billion from both advised platform AUA and AJ Bell
Investments AUM.
The uncertainty across global markets driven by high inflation, geopolitical uncertainty and the rising cost-of-living contributed to a
£7.4 billion adverse market movement on asset values. This compares to favourable market movements of £9.9 billion last year, resulting
in AUA closing down 5% at £69.2 billion (FY21: £72.8 billion).
Strategic report
Governance
Financial statements
Other information
54 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 55
Assets under management
Our award-winning investment solutions continue to perform strongly and are highly valued by financial advisers, their clients and
our retail customers. This is evidenced by strong underlying net inflows of £1.05 billion, an increase of 14% versus the prior year
(FY21: £0.92 billion). Total AUM closed at £2.8 billion (FY21: £2.2 billion), representing a 27% increase in the year.
Year ended
30 September
2022
£bn
Year ended
30 September
2021
£bn
Advised 1.7 1.3
D2C 1.0 0.8
Non-platform 0.1 0.1
Total 2.8 2.2
Financial performance
Revenue
Year ended
30 September
2022
£000
Year ended
30 September
2021
£000
Recurring fixed 29,787 28,598
Recurring ad valorem 102,184 77,955
Transactional 31,876 39,273
Total 163,847 145,826
Revenue increased by 12% to £163.8 million (FY21: £145.8 million).
Revenue from recurring fixed fees increased by 4% to £29.8 million (FY21: £28.6 million), primarily due to higher pension administration
revenue from our advised platform customers.
Recurring ad valorem revenue grew by 31% to £102.2 million (FY21: £78.0 million). The key drivers of this growth were higher average
platform AUA compared to the prior year, and an increase in the average interest rate earned on customer cash balances, as the Bank of
England base rate increased from 0.10% to 2.25% over the year.
Revenue from transactional fees decreased by 19% to £31.9 million (FY21: £39.3 million). This decrease was due to lower dealing activity
levels in the current year, impacted by lower investor confidence, and compares to the significantly elevated levels of activity seen in the
first half of the prior year.
Our overall revenue margin increased by 0.4bps to 22.6bps (FY21: 22.2bps), reflecting the higher average interest rate earned on cash,
partially offset by the reduced dealing activity.
Administrative expenses
Year ended
30 September
2022
£000
Year ended
30 September
2021
£000
Distribution 14,998 11,095
Technology 32,706 25,765
Operational and support 57,162 53,115
Total 104,866 89,975
Administrative expenses increased by 17% to £104.9 million (FY21: £90.0 million).
Distribution costs increased by 35% to £15.0 million (FY21: £11.1 million) as we continued to invest in our brand to help deliver long-term
growth. We increased D2C marketing activity over a range of channels in the year, including for the launch of our new Dodl proposition.
In February we launched a new national TV advertising campaign whilst once again sponsoring events such as the AJ Bell Tour of Britain
and AJ Bell World Triathlon Leeds. The year-on-year increase is also partly reflective of lower than planned spend in the prior year when
both advertising and sponsorship opportunities were impacted by COVID-19 restrictions.
Technology costs increased by 27% to £32.7 million (FY21: £25.8 million). This increase was driven by an increase in headcount and our
investment in the scalability and resilience of our platform, to support our continued growth, alongside the development of our new
propositions, Dodl and Touch.
Financial review
Operational and support costs increased by 8% to £57.2 million (FY21: £53.1 million) as the business continued to scale efficiently. The
higher costs were driven by an increase in the average number of employees to support our continued growth, as well the acceleration
of share-based payment charges relating to Andy Bell and Charles Galbraith’s Executive Incentive Plan (EIP) awards, following their
departure from the business as good leavers at the end of September 2022. These increased costs were partially offset by expenses
relating to the reduced customer dealing activity during the year.
Profitability and earnings
PBT increased by 6% to £58.4 million (FY21: £55.1 million) whilst PBT margin decreased to 35.6% (FY21: 37.8%). The lower margin versus
the prior year reflects our planned investment in brand and technology to drive long-term growth.
The effective rate of tax for the year was 20.0% (FY21: 20.4%), slightly higher than the standard rate of UK Corporation Tax of 19.0%,
as a result of disallowable charges relating to the Touch earn-out arrangement.
Basic earnings per share rose by 6% to 11.39p (FY21: 10.71p) 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 6% to 11.35p (FY21: 10.67p).
Financial position
The Group’s balance sheet remains strong, with net assets totalling £133.4 million (FY21: £130.7 million) as at 30 September 2022 and
a return on assets of 35% (FY21: 34%).
Financial resources and regulatory capital position
Our financial resources are kept under continual review, incorporating comprehensive stress and scenario testing which is formally
reviewed and agreed at least annually.
Year ended
30 September
2022
£000
Year ended
30 September
2021
£000
Total shareholder funds 133,394 130,708
Less: unregulated business capital (3,718) (4,722)
Regulatory Group shareholder funds 129,676 125,986
Less: foreseeable dividends (18,843) (38,912)
Less: non-qualifying assets (14,233) (11,469)
Total qualifying capital resources 96,600 75,605
Less: capital requirement (49,252) (40,525)
Surplus capital 47,348 35,080
% of capital resource requirement held 196% 187%
We have continued to maintain a healthy surplus over our regulatory capital requirement throughout the year. The Investment Firm
Prudential Regime (IFPR) came into effect on 1 January 2022, focusing prudential requirements on the potential harm the firm itself can
pose to consumers and markets whilst introducing a basic liquidity requirement for all investment firms.
We held a significant surplus over our basic liquid asset requirement during the year. Our year-end balance sheet included cash balances
of £84.0 million (FY21: £94.0 million), with the reduction reflecting the higher dividends returned to shareholders in the year following
the declaration of a special dividend in 2021. We operate a highly cash-generative business, with a short working-capital cycle that
ensures profits are quickly converted into cash. We generated cash from operations of £57.2 million in the year at a cash conversion rate
of 97%.
Dividend
As noted in the CEO’s review on page 11, we adopt a progressive dividend policy and the Board has recommended a final dividend of
4.59p per share (FY21: 4.50p per share), resulting in a total ordinary dividend of 7.37p (FY21: 6.96p) and equating to a dividend pay-out
ratio of 65% of statutory profit after tax.
Peter Birch
Chief Financial Officer
30 November 2022
Strategic report
Governance
Financial statements
Other information
56 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 57
Risk management
Managing risks
effectively
The Group operates the following governance structure which incorporates a three lines of defence
approach to managing risks across the Group.
Risk management framework
Board of AJ Bell plc
Risk and Compliance Committee of AJ Bell plc
Executive Risk Committee
Risk Management Forum
1st line of defence
Policies and procedures,
Quality Audit (QA) function
2nd line of defence
In-house assurance function
3rd line of defence
Independent assurance
protections
Audit Committee of AJ Bell plc
QA, Risk Register, Risk
Identification, Risk Event
Reporting, Team Meetings,
Monthly Risk Forums
AJ Bell plc
Management policies,
procedures and limits
Risk and Compliance function Internal Audit
Principal components of AJ Bell combined assurance framework
The Board is ultimately responsible for the Group’s risk
management framework, but has delegated certain
responsibilities to the Risk and Compliance Committee
(R&CC), a sub-committee of the Board.
Risk process streams
Risk appetite
The Group defines its risk appetite as
representing the amount and type of risk
it is prepared to take in the context of
its business model and in the course of
achieving its strategic objectives.
The Group takes a measured and balanced
approach to determining where to pursue
risk in return for value, in accordance with
the Group’s capability and capacity to
identify, report and manage risks.
The Group expresses its risk appetite using
the definitions below:
Appetite Definition
Open
Risk
Appetite
Willing to undertake activities
which may contribute to a
higher degree of residual risk,
where the Group has the
capability and capacity to
manage the risk, in pursuit of
a high degree of reward and
value for money aligned with
strategic and commercial
objectives.
Cautious
Risk
Appetite
A degree of risk is tolerated in
selecting which activities to
undertake to achieve key
deliverables or initiatives,
however only where the
inherent risk is deemed
measurable and controllable
to a large extent.
Averse
Risk
Appetite
Avoidance of risk and
uncertainty in achievement
of key deliverables or initiatives
is paramount, or activities
undertaken will only be those
considered to carry a very low
level of residual risk.
The objective of the Group’s risk appetite
framework is to ensure that the Board and
senior management are properly engaged
in agreeing and monitoring the Group’s
appetite for risk and setting acceptable
boundaries for business activities and
behaviours. The Group’s high-level risk
appetite statement provides a means of
expressing senior management’s attitude
to risk (a top-down process) which can
then be communicated throughout the
Group as part of promoting a risk aware
culture (a bottom-up process). This in turn
forms the basis of a framework for risk
decision making and for the allocation of
risk management resources, tolerances
and capital where applicable.
Risk process
streams
Risk Appetite
Framework
Setting of objectives, budgets,
targets and tolerances
Capital Planning
Processes
Capital Allocation
Capital Management
Business
Planning
Processes
Targets and
tolerances
Risk
Management
Framework
Control Environment
Assurance
Framework
Risk appetite is integrated into the business via the Group’s business planning, capital
planning and the risk management framework. These enable the Board to set the
overarching parameters for the Group’s risk appetite and to monitor their performance.
The process streams are illustrated below:
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58 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 59
Risk appetite categories and risk appetite statements
The Group’s risk management framework is based on a defined set of risk appetite categories. These are the high-level enterprise-wide
risk categories the Group manages. Each risk appetite category has a defined risk appetite statement.
Risk Appetite Category Appetite Risk Appetite Statement
Strategic, Business
or Market
Open (Strategic and Business)/
Cautious (Market)
The Group is Open to strategic and business risk within agreed tolerances in
the pursuit of its strategic goals. The Group monitors and responds to any
changes in the regulatory environment that may impact its strategy. The Group
adopts a Cautious and controlled approach to managing its market risk.
Financial
Averse The Group has an Averse risk appetite for financial loss caused by an
ineffective internal financial control environment.
Capital
Cautious The Group adopts a Cautious and controlled approach to managing its capital
risk. The Group’s risk appetite is to maintain its capital resources in excess of
the Group’s capital resource requirement.
Credit
Cautious The Group adopts a Cautious and controlled approach to take credit risk in
the pursuit of revenue or profit.
Liquidity
Cautious The Group adopts a Cautious and controlled approach to managing its liquidity
risk. The Group’s liquidity risk appetite is to maintain its liquidity resources in
excess of its liquidity resource requirement.
Operational Risk
(Overall)
Cautious The Group adopts a Cautious approach to operational risks in the pursuit of
its strategic goals, in order to minimise service disruption within agreed and
measurable limits, deliver fair outcomes for customers and protect the
brand’s reputation.
Regulatory,
Compliance
& Legal
Averse The Group has an Averse risk appetite for material breaches of regulations or
law. It seeks to remain compliant with relevant regulatory and legislative
requirements, to maintain an open and transparent regulatory relationship
and to avoid adverse impact on its reputation.
Conduct/Consumer
Outcomes
Averse The Group has an Averse risk appetite for poor customer outcomes and seeks
to act at all times in the customer’s interests.
Third-Party
Management
Cautious The Group has a Cautious risk appetite for third-party management. The Group
seeks to prevent customer harm as a result of poor service from third-party
suppliers or as a result of poorly managed third-party contracts.
Change
Cautious The Group has a Cautious risk appetite relating to the timing of the delivery of
Group improvement change.
Technology
Open (Improvements)
/Averse (Incidents)
The Group has an Open risk appetite for improving its technology capabilities
but has robust measures in place to prevent customer-visible technology
incidents or incidents which cause delays for customers, breach our own
internal standards or cause complaints. The Group has an Averse risk appetite
for ageing technology that is unreliable, not secure, is resource-intensive
to maintain and does not perform efficiently.
Risk management
Risk Appetite Category Appetite Risk Appetite Statement
Financial Crime
Averse The Group has an Averse risk appetite for financial crime activities. The Group
is committed to fulfilling the legal and regulatory obligations with respect of
financial crime risk through a risk-based approach to deter, detect, prevent
and report: money laundering; terrorist financing; bribery; corruption; fraud;
the facilitation of tax evasion; modern slavery; and human trafficking.
Process
Cautious The Group has a Cautious risk appetite relating to manual processes whilst
looking to minimise these through deploying appropriate controls and by
further automation.
People
Averse The Group has an Averse risk appetite for non-compliance with any of its
people policies and procedures.
Operational
Resilience
Averse The Group has an Averse risk appetite for operational resilience disruptions
which cause intolerable harm to customers by ensuring that services are
stable and resilient and operate to high levels of performance.
Environmental,
Social, Governance
(ESG)
Cautious The Group has a Cautious risk appetite for ESG risks as an outcome of its
chosen business activities and strategy. The Group aims to manage ESG risks
effectively and to promote the success of the Company for the benefit of its
members as a whole.
Information Security
& Data
Averse The Group has an Averse risk appetite for causing customer detriment as a
result of information security incidents. The Group has an Averse risk appetite
for data breaches which are likely to result in a high risk of adversely affecting
individuals’ rights and freedoms.
Monitoring of risk appetite
The Group adopts both a quantitative and qualitative approach
to measuring risks against its risk appetite. Where the Group
has assessed that it faces a significant individual risk, it seeks to
set appropriate individual quantitative tolerance levels. In cases
where such risks have crystallised materially in the past, the Group
performs a review of the amount and distribution of past losses,
or uses other techniques, and sets an appropriate tolerance level
in the context of the overall risk appetite. In order to monitor
whether the risk appetite categories remain within risk appetite,
KRIs are mapped to the risk appetite categories with tolerances
aligned to risk appetite. The Risk Team collates the underlying
KRIs mapped to the risk appetite categories and highlights any
breaches of tolerances to the CRO and through onwards reporting
to RMF, ERC, R&CC, ExCo and Board.
Amendments to risk appetite statements
The risk appetite statements are reviewed by RMF, ERC and
R&CC and approved by the Board on an annual basis in line with
the Internal Capital Adequacy and Risk Assessment (ICARA) and
the Group Business Planning Process (BPP). Accordingly, the
risk appetite is reviewed and updated in line with the Group’s
evolving strategy, operating model, financial capacity, business
opportunities, regulatory constraints and any other internal or
external factors.
Risk identification and assessment of risks
The Group adopts a top-down and a bottom-up approach to the
identification of risks. The ExCo and the Board have identified
the Principal Risks & Uncertainties (PR&U) that could impact the
ability of the business to meet its strategic objectives, and these
are reviewed, along with the Group’s risk appetite statements
and supporting KRIs on an annual basis by the Risk governance
committees and Board. Any amendments to risk appetite
categories, PR&U, and underlying KRIs and tolerances outside of
the annual review cycle, require approval by the R&CC. In addition,
the Group maintains the Group risk register of bottom-up risks.
Risk reporting
High-level risk reporting is included in the Group’s CRO report
which is circulated to ERC and R&CC. This includes details of
underlying KRIs mapped to the risk appetite categories and the
PR&U, a summary of all the Group’s risks and controls, breaches,
risk events and emerging risks. Similar, lower-level risk reporting
is produced and reviewed at RMF and the relevant lower-level
risk forums.
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60 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 61
Principal risks and uncertainties
The Board is committed to a continual process of improving and embedding
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 short or longer term.
The Group has reviewed the impact of the war on Ukraine and concluded that whilst the level of inherent risk for some of the Group’s
principal risks and uncertainties has increased, e.g., information security/cyber-attacks, the Group’s controls continue to mitigate this
increase in risk. The Group will continue to monitor and respond to any new developments from the war in Ukraine that may impact
the Group.
The principal risks and uncertainties facing the Group are detailed below, along with potential impacts and mitigating actions.
Risk Potential impact Mitigations
1. Strategic risk
Competitor or
market risk
The risk that the Group
fails to remain competitive
in its peer group, due to
lack of innovative products
and services, increased
competitor activity,
regulatory expectations, and
lack of marketing focus and
spend to keep pace with
competitors.
• Loss of competitive
advantage, such that AUA
and customer number
targets are adversely
impacted. This would
have a negative impact on
profitability.
• Reputational damage as a
result of underperformance
and/or regulatory scrutiny.
The Group regularly reviews its products against competitors, in relation to
pricing, functionality and service, and actively seeks to make enhancements
where necessary to maintain or improve its competitive position in line with the
Group’s strategic objectives.
The Group remains closely aligned with trade and industry bodies, and other
policy makers across our market. The use of ongoing competitor analysis
provides insight and an opportunity to adapt strategic direction in response
to market conditions.
2. Operational risk
Regulatory,
compliance
and legal risk
The risk that the Group fails
to comply with regulatory
and legal standards.
• Regulatory censure and/or
fines, including fines from
the FCA and ICO.
• Related negative publicity
could reduce customer
confidence and affect
ability to generate new
inflows.
• Poor conduct could
have a negative impact
on customer outcomes,
impacting the Group’s
ability to achieve strategic
objectives.
The Group maintains a strong compliance culture geared towards positive
customer outcomes and regulatory compliance.
The Group performs regular horizon scanning to ensure all regulatory change is
detected and highlighted to the Group for consideration.
The Group maintains an open dialogue with the FCA 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 through providing comprehensive training.
Where appropriate, the Compliance Monitoring Team conducts reviews to
ensure a high standard of compliance has been embedded into the business.
Risk Potential impact Mitigations
2. Operational risk continued
Information
security
and data risk
The risk of a vulnerability in
the Group’s infrastructure
being exploited or user
misuse that causes harm to
service, data and/or an asset
causing material business
impact.
Data risk is defined as the
risk of the Group failing
to effectively govern,
manage and control its data
(including data processed
by third-party suppliers).
• Related negative publicity
could damage customer
and market confidence in
the business, affecting our
ability to attract and retain
customers.
• Information security
breaches could adversely
impact individuals’ data
rights and freedoms and
could result in fines/
censure from regulators,
such as the ICO and FCA.
The Group continually reviews its cyber security position to ensure that it
protects the confidentiality, integrity and availability of its network and the data
that it holds.
A defence in depth approach is in place with firewalls, web gateway, email
gateway and anti-virus amongst the technologies 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.
The Group monitors the adequacy of its data governance framework via the
Data Steering Group.
Fraud and financial
crime risk
The risk of failure to protect
the Group and its customers
from all aspects of fraud and
financial crime (anti-money
laundering and counter
terrorist financing, market
abuse, fraud, cyber-crime
and the facilitation of
tax evasion).
• The Group may be
adversely affected,
including regulatory
censure or enforcement, if
we fail to mitigate the risk
of being used to facilitate
any form of financial crime.
This includes money
laundering and counter
terrorist financing, market
abuse, fraud, cyber-crime
and the facilitation of
tax evasion.
• Potential customer
detriment as customers are
at risk of losing funds or
personal data, which can
subject them to further loss
via other organisations.
• Fraudulent activity leading
to identity fraud and/or loss
of customer holdings to
fraudulent activity.
Extensive controls are in place to minimise the risk of financial crime. Policies
and procedures include: mandatory financial crime training in anti-money
laundering and counter terrorist financing, fraud, market abuse and the Criminal
Finances Act for all employees to aid the detection, prevention and reporting
of financial crime. The Group has an extensive recruitment process in place to
screen 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 IT
failure risk
The risk that a third-party
provider materially fails
to deliver the contracted
services.
• Loss of service from a
third-party technology
provider could have
a negative impact on
customer outcomes due
to website unavailability,
delays in receiving
and/or processing
customer transactions or
interruptions to settlement
and reconciliation
processes.
• Financial impact through
increased operational
losses.
• Regulatory fine and/or
censure.
To mitigate the risk posed by third-party software suppliers, the Group conducts
onboarding due diligence and monitors performance against documented
service standards to ensure their continued commitment to service, financial
stability and viability. Performance metrics are discussed monthly with
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
IT suppliers and on-site audits are also undertaken.
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62 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 63
Risk Potential impact Mitigations
2. Operational risk continued
IT system
performance,
capacity and
resilience risk
The risk that the design,
implementation and
management of applications,
infrastructure and services
fail to meet current
and future business
requirements.
• The reliance on evolving
technology remains
crucial to the Group’s
effort to develop its
services and enhance
products. Prolonged
underinvestment in
technology will affect
our ability to serve our
customers and meet
their needs.
• Failing to deliver and
manage a fit-for-purpose
technology platform could
have an adverse impact on
customer outcomes and
affect our ability to attract
new customers.
• IT failures may lead to
financial or regulatory
penalties, and reputational
damage.
The Group continues to implement a programme of increasing annual
investment in the technology platform. This is informed by recommendations
that result from regular architectural reviews of applications and of the
underpinning infrastructure and services.
Daily monitoring routines provide oversight of 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 risk that the Group
does not have an adequate
operational resilience
framework to prevent, adapt
to, respond to, recover from
and learn from operational
disruptions.
• Failure to maintain or
quickly recover operations
could lead to intolerable
harm to customers and
the Group.
• Operational resilience
disruptions may lead to
financial or regulatory
penalties, and reputational
damage.
The Group has developed a comprehensive operational resilience framework,
under the direction of the Operational Resilience Forum, a sub-committee of
the Operational Committee.
The Group implemented the operational resilience regulatory requirements set
out in the FCA policy statement (PS) 21/3 in March 2022, which are:
• Identify important business services.
• Undertake core mapping.
• Set impact tolerances.
• Undertake scenario testing.
• Board sign-off on a self-assessment.
Operational
capability risk
The risk that, due to
unexpectedly high volumes
and or levels of change
activity, the Group is unable
to process work within
agreed service levels and/or
to an acceptable quality for
a sustained period.
• A decline in the quality of
work will have a financial
impact through increased
operational losses.
• Unexpectedly high
volumes coupled with staff
recruitment and retention
issues could lead to poor
customer outcomes and
reputational damage.
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.
There is an ongoing programme to train staff on multiple operational functions.
Diversifying the workforce enables the business to deploy staff when high
work volumes are experienced. Causes of increased volumes of work, for
example competitor behaviour, are closely monitored in order to plan resource
effectively.
Financial control
environment risk
The risk that the financial
control environment is
weak. This includes the
risk of loss to the business,
or its customers, because
of either the actions of an
associated third-party or the
misconduct of an employee.
• Reputational damage
with regulators, leading
to increased capital
requirement.
• Potential customer
detriment resulting from
inadequate protection of
customer assets.
• Increased expenditure
in order to compensate
customers for losses
incurred.
The Group’s financial control and fraud prevention policies and procedures are
designed to ensure that the risk of fraudulent access to customer or corporate
accounts is minimised.
Anti-fraud training is provided to all members of staff who act as first line of
defence to facilitate early detection of potentially fraudulent activity.
Strong technology controls are in place to identify potential money laundering
activity or market abuse.
Principal risks and uncertainties
Risk Potential impact Mitigations
2. Operational risk continued
Retail conflicts/
conduct risk
The risk that the fair
treatment of customers is
not central to the Group’s
corporate culture.
• Poor conduct could
have a negative effect on
customer outcomes.
• Reputational damage
resulting from poor levels
of customer service.
• Additional regulatory
scrutiny and financial loss.
The Group’s customer focus is founded on our guiding principles, which
drive the culture of the business and ensure customers remain at the heart of
everything we do. Training on the importance and awareness of the delivery
of good customer outcomes is provided to all staff on a regular basis.
The Group continues to focus on enhancements to its risk management
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 business is currently implementing the requirements of the FCA’s new
Consumer Duty, which further evidences how customers are at the centre of
the business.
ESG risk
The risk that environmental,
social and governance
factors could negatively
impact the Group, its
customers, investors and
the wider community.
• Environmental, physical
and transition risks
resulting from climate
change, which may
impact the Group and our
customers’ assets.
• Social risks, including
employee wellbeing and
diversity and inclusion.
• Governance risks, including
the risks related to the
Group’s governance
structures being
ineffective, which could
manifest in governance-
related reputational and
conduct risks.
The Group has established an ESG Working Group to manage all ESG-related
matters, including people and social-related matters, as well as the Group’s
Task Force for Climate-related Financial Disclosures (TCFD). ESG-related
strategic objectives are incorporated in the Group’s BPP process.
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 has reviewed and strengthened its governance framework during
FY22, with a refreshed governance framework.
People risk
The risk that the Group fails
to attract, retain, develop
and motivate employees
who are aligned to the
Group’s Guiding Principles.
• Difficulties in recruiting the
right people to work for
the Group.
• Existing employees who
aren’t motivated, don’t
perform well and may leave
the Group.
• Talented employees who
are not appropriately
developed and/or have
limited opportunities to
progress are likely to leave
the Group.
The Group has improved its recruitment processes to attract the best people
possible to join the Group.
The Group undertakes a staff engagement survey at least annually and uses this
feedback to address any areas for improvement to ensure staff engagement
remains high.
The Group conducts regular reviews of its employee benefits package to ensure
it is competitive.
The Group operates a talent development programme.
Investment risk
Risk of failures surrounding
the investment activities
carried out by AJ Bell
Investments (AJBI). The
risks specific to the AJBI
entity include operational,
reputational and
conduct risks.
• Outflows or loss of assets
under management as a
result of underperformance
or reputational damage.
• Compensation required to
cover operational losses,
such as trading errors.
• Potential customer
detriment resulting from
inadequate governance
arrangements.
The Group maintains robust Investment Governance arrangements for decision-
making in relation to the AJBI products and services. The performance of AJBI
products and services are monitored on an ongoing basis for alignment with
customer expectations and mandates, including through dedicated committees
and by the independent 2nd line of defence Investment Risk function.
Operational risks are reviewed and monitored through AJBI’s Department Risk
Committee. Any trading undertaken on the AJ Bell Funds is subject to a number
of internal controls to minimise the risk of any operational losses.
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64 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 65
Risk Potential impact Mitigations
3. Financial risk
Economic and
capital markets
fluctuation risk
The risk that a significant and
prolonged capital market or
economic downturn has an
adverse effect on customer
confidence, asset values and
interest rates.
• Adverse effect on customer
transactional activity or ad
valorem fees generated
from assets under
administration from which
the Group derives revenue.
Sensitivities for interest rate
and market movements
are shown in note 25 to
the consolidated financial
statements.
The Group’s products are targeted at UK residents. We do not do business
in any other countries and have relatively few customers outside the UK.
However, in the event that the economy falls back into a prolonged recession,
this may impact contribution levels and confidence generally 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.
Counterparty
credit risk
The risk of potential
failure of clients, market
counterparties or banks
used by the Group to fulfil
contractual obligations.
• Unintended market
exposure.
• Customer detriment.
• Increased future capital
requirements.
The Group’s credit risk extends principally to its financial assets, cash balances
held with banks and trade and other receivables. The Group carries out initial
and ongoing due diligence on the market counterparties and banks that it uses,
and 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 risk that the Group
suffers significant settlement
default or otherwise suffers
major liquidity problems or
issues of liquidity deficiency
which severely impact on
the Group’s reputation in
the markets.
The risk that the Group does
not have available readily-
realisable financial resources
to enable it to meet its
obligations as they fall due
or can only secure such
resources at excessive cost.
• Reputational damage.
• Potential customer
detriment.
• Financial loss.
• Unable to meet obligations
as they fall due.
The Group has robust systems and controls and monitors all legal entities to
ensure they have sufficient funds to meet their liabilities as they fall due.
The Group continues to monitor trade settlement on both an intra-day and
daily basis.
The Group continues to be a highly cash-generative business and maintains
sufficient cash alongside standby banking facilities to fund its foreseeable
trading requirements.
Principal risks and uncertainties 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 2026. 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 on pages 62
to 66. 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.
Further Bank of England base rate interest
rises are expected to combat the high
levels of inflation in the UK, during the
period of the financial forecasts it is
assumed that the Bank of England base
interest rate continues to increase and
peaks during FY23, before falling back to
2.50% in FY25. 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 (Economic and capital
markets fluctuation risk) – a significant
reduction in equity market values,
based on the 2008-09 global financial
crisis. Asset values fall by 40% in year1,
recovering to 20% below the level they
were prior to the fall in year 2, and
remain flat in years 3 and 4.
2) Macroeconomic (Economic and capital
markets fluctuation 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 (IT system performance,
capacity and resilience risk, Third-party
IT failure 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
1 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 3.
The Strategic report was approved by the Board of Directors and signed on its behalf by:
Michael Summersgill
Chief Executive Officer
30 November 2022
The Board would consider raising prices as
a possible management action that could
be taken in the event that the modelled
scenarios crystallise. The Board considers
this approach reasonable in light of the
industry-wide impact of the scenario, and
the firm’s profitability and price positioning
relative to its competitors.
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 30September 2022 Annual Report
and withthe 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 2022. 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 2026.
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66 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 67
70 Chair’s introduction
72 Board of directors
76 Executive Committee
78 Corporate Governance report
86 Nomination Committee report
90 Audit Committee report
96 Risk and Compliance Committee report
100 Directors’ Remuneration report
126 Directors’ report
129 Statement of Directors’ responsibilities
Governance
Strategic report
Governance
Financial statements
Other information
68 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 69
Chair’s introduction
Our people
Following the lifting of the COVID restrictions, we were able to
engage with our people once more during the year. This has
provided us, and in particular the new Board members who
joined during 2021, with invaluable insights into the operation
and culture of the business.
As part of that process, we reinvigorated our Employee Voice
Forum in order to reinforce our positive culture and make it
more inclusive. This included, with effect from May, increasing
the number of meetings to six a year, inviting individuals to put
themselves forward as participants, expanding the number of
participants to 20, each of whom will serve an initial 12 months’
term, and the forum selecting future discussion topics. I chair
the Employee Voice Forum meetings in my capacity as our
nominated employee engagement director, and am supported
by two other Non-Executive Directors, Margaret Hassall and
Simon Turner, who also attend meetings. Topics discussed
during the year included diversity and inclusion, pay and benefits,
improving communications in the hybrid working environment,
charitable initiatives to support those in our community who
have been hardest hit by the cost of living crisis and learning and
development. Following the meetings feedback was provided to
the Board and ExCo. Details of any actions agreed to address the
matters discussed are relayed to attendees at the next meeting of
the forum, as well as to our wider workforce via our staff intranet.
The members of the Board and senior management team also
attended two Talent Management networking events during the
year at which a number of our people presented details of their
roles in the business.
Mindful of the impact of the cost of living pressures on our people
and the increase in the level of staff turnover in the current
labour market on our business, we initiated a full pay and benefits
review during the year with a view to addressing both issues.
This required us to consider the impact of our staff pay and
benefits strategy on each of our different stakeholders. Further
details of our considerations are set out on page 29.
I am also pleased to be able to report that we retained our 3-star
Best Companies rating.
Further details of all of the above are set out on pages 39 to 43.
Our customers
We made a number of targeted pricing changes across our
platform propositions during the year, to reduce the cost to our
customers and maintain our competitive position. Further details
of how we did that are set out on pages 12 and 13.
We also expanded our product range with the successful launch
of Dodl, our new app-only, simplified, low-cost investment
proposition for D2C customers. This forms a key part of our
ongoing growth strategy and is aimed at attracting the next
generation of D2C customers, as well as current investors who are
looking for simpler investment options. This reflected our focus
on meeting the changing needs of one of our key stakeholders.
The Board also agreed with Andy that he will have the right to
nominate a Non-Executive Director to represent his interests
whilst he remains a significant shareholder.
As a consequence of the Board not being able to agree our
preferred role for Andy with the FCA, I considered it the right
thing for me to step aside once a successor has been found, so a
new Chair can take the Board forward. I did so with great regret,
as I was looking forward to continuing to work with Michael and
the wider AJ Bell team in the role of Chair. I will remain with the
business in a consultancy role after I step down, when I will be
focusing on Money Matters, AJ Bell’s initiative to encourage more
women to think about investing, and also advising the Company
on its diversity and inclusion strategy.
In addition, we were also pleased to announce the external
recruitment of Peter Birch as our new CFO, who joined the
Board with effect from 1 July. Peter brings with him a wealth of
experience from his time at Deloitte LLP, where he was a financial
services audit and assurance partner. I would like to take this
opportunity to formally welcome Peter to the Board.
Following those changes, the Board comprised myself as
Chair, four independent Non-Executive Directors and three
Executive Directors, so we still have a clear majority of
independent Directors. This also means that we have 37.5%
female representation on the Board (33% at 30 September
2022), which remains in line with the Hampton-Alexander
Review recommendation. We are mindful that it is below the
FCA requirement for at least 40% of the Board to be women,
which applies to us for the first time during the current financial
period. As a Board we also remain conscious of the benefits
that wider diversity brings and that we do not have a member
who is ethnically diverse, as required to meet the Parker Review
recommendation for all FTSE 250 companies by the end of 2024.
Further details of the action being taken to address those issues
are set out in the Nomination Committee report on pages 86
to 89.
During 2021 we made a number of changes to our governance
structure at Board level with a view to ensuring that the right
level of work was delegated to each Committee, so the Board
could focus on key strategic issues. Following my appointment
as Chair, I have built on those changes by making a number
of further refinements, the purpose of which was to put more
daylight between the responsibilities of the Board and executive
management, and this included streamlining our annual business
planning process. At executive level, led by the incoming CEO,
Michael Summersgill, we have made a number of changes to our
corporate governance structure. They included the replacement
of our EMB, which had been enlarged the previous year, with
an Executive Committee, and the establishment of a number of
new sub-committees. The intention is to further strengthen our
corporate governance framework by introducing an additional
level of challenge and oversight at executive level. Further details
of those changes are set out on pages 82 and 83.
At executive level, we were also pleased to announce the internal
promotion of Kevin Doran to the role of Managing Director of our
D2C proposition with effect from 1 October 2022 in succession
to Charles Galbraith, who stepped down at the end of September
2022. Kevin, who has been with us for five years as the Managing
Director of our Investments proposition, has in-depth knowledge
of our D2C proposition, so was ideally placed to take on that role.
I would like to take this opportunity to thank Charles for the major
contribution which he made during his time with the business and
to congratulate Kevin on his promotion.
Risk management and controls
Following a review of our internal audit function, we concluded
that we were reaching the point where the size of the business
was such that a fully outsourced service would no longer be
appropriate. As a consequence, we approved the move to a co-
sourced internal audit model during FY23 and have since recruited
a Head of Internal Audit, who joined the business on 21 November
2022. Further details are set out in the Audit Committee report on
pages 90 to 95.
Cyber security was also a key area of focus during the year with
both the Board and Risk and Compliance Committee receiving
updates on information security and cyber risk and consideration
of how the business would respond to a cyber-attack. Further
details are set out in the Risk and Compliance Committee report
on pages 96 to 99.
Environmental, social and governance (ESG)
Another key area of focus during the year was the further
embedment of ESG into our wider business strategy, with ESG
at Board level now being led by our new CFO, Peter Birch. For
the first time during 2022 we set ESG objectives for our senior
management team and established both an ESG working group
and Non-Executive Director ESG forum. The role of the former
being to ensure our ESG-related strategic objectives are delivered
and that ESG was fully embedded in our 2023 business planning
process, and that of the latter being to facilitate more hands on
Non-Executive Director oversight.
The ESG working group has considered our approach to setting
net-zero aligned targets, with a view to developing a plan for
transitioning our operations and setting associated short-term
carbon reduction targets during FY23.
Other activities in this area during the year included the
establishment of new Charity and Diversity and Inclusion
frameworks. We are, however, conscious of the need for us to
do more in regards to diversity, including the cognitive aspects,
so this will be an area of focus during the current financial year.
For details on the outcome of the above work, and the ESG
activities that we undertook during the year, please refer to
pages 32 to 53 of the Strategic Report.
Conclusion
I would like to thank all of our people for their hard work and the
contribution they have made during the year, which has enabled
us to continue to provide a high level of service to our customers
and their advisers for the benefit of all of our stakeholders in what
have been challenging macroeconomic times.
I would also like to take this opportunity to thank Andy for the
immense contribution he has made during his 27 years with the
business and look forward to his ongoing contribution in his new
role as a consultant.
Further details of how the Board has discharged its corporate
governance responsibilities during the year are set out elsewhere
in this report.
Baroness Helena Morrissey DBE
Chair
30 November 2022
Dear shareholder
I am pleased to introduce our Corporate Governance report,
which gives an overview of the governance structure and the
oversight maintained by the Board during the financial year
which ended on 30 September 2022.
Board, Committee and ExCo changes
The main change at Board level during the year was the
announcement that Andy Bell, our CEO and a co-founder of the
business, would step down as CEO and be replaced by Michael
Summersgill, our Deputy CEO, with effect from 1 October 2022.
I would like to take this opportunity to congratulate Michael, who
has been a leading member of the executive team for a number of
years, on his appointment. As a Board we believe him to be ideally
placed to lead the executive team as they continue to drive the
growth of the business.
The Board was keen for Andy to remain involved after he stepped
down as CEO, so the business and its stakeholders could continue
to benefit from his extensive knowledge and experience of the
platform market. As initially announced, our preferred option was
for Andy to remain on the Board in a non-executive role. However,
after subsequent discussions with the FCA about the need for
a clear distinction between the executive and non-executive
roles in a regulated firm and the perceived risk to effective Board
governance if a founder CEO with a significant shareholding
remained on the Board after stepping down as CEO, Andy decided
to also step down as a Director. During those discussions, the FCA
indicated that their stance was no reflection on the fitness and
propriety of the Company or Andy. We are pleased that Andy is still
remaining with the business in a consultancy role, under which he
will focus on helping to build the AJ Bell brand and continue to
support AJ Bell’s campaigning efforts on behalf of retail investors
and financial advisers.
“ This has been a year of challenge and
change as we continue to build out
our corporate governance structure
to support the ongoing growth of
the business.”
Baroness Helena Morrissey DBE
Chair
Strategic report
Governance
Financial statements
Other information
70 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 71
Board of directors
Leading by
example
Board changes in 2022
With effect from the 2022 AGM, Baroness
Helena Morrissey was appointed Chair
of the Board, Evelyn Bourke as Senior
Independent Director, and Margaret
Hassall as Chair of the Remuneration
Committee. In addition, Les Platts and
Laura Carstensen stepped down from
their roles on the Board at the AGM.
On 1 October 2021, Michael Summersgill
was appointed Deputy Chief Executive
Officer and Chief Financial Officer,
and Roger Stott was appointed Chief
Operating Officer. We were also delighted
to welcome Peter Birch as Chief Financial
Officer on 1 July 2022, joining us from
Deloitte LLP.
Michael was subsequently appointed as
Chief Executive Officer on 1 October
2022, following Andy Bell stepping
down on 30 September 2022. Andy
will continue to work with the business
in a consultancy role.
N
Nomination Committee
A
Audit Committee
D
Disclosure Committee
R
Remuneration Committee
C
Risk and Compliance Committee
Committee Chair
Baroness Helena Morrissey
DBE
Chair
Appointed: July 2021
Skills and expertise:
Helena is currently a director of Diversity
Project (IM) CIC, a charitable cross-
company initiative which champions a
more inclusive culture within the savings
and investment profession.
In her non-executive career to date Helena
was previously Lead Non-Executive
Director for the Foreign, Commonwealth
and Development Office, reporting to the
Foreign Secretary and a Non-Executive
Director at St James’s Place plc.
Previously Helena during her executive
career was Head of Personal Investing at
Legal & General Investment Management
and prior to that was Chief Executive at
Newton Investment Management for
15 years.
In 2010 Helena founded the 30% Club
and has played a leading role in improving
diversity on the boards of ‘UK plc’.
Other appointments:
• Member of the House of Lords
• Chair of Diversity Project (IM) CIC
• McKinsey Investment Office
• Eton College Fellow and Chair of the
investment committee
• The Lady Garden charity Trustee
N
C
Michael Summersgill
Chief Executive Officer
Appointed: October 2022
Skills and expertise:
Michael has played an integral role in AJ
Bell’s successful growth since joining the
Board in 2011. He brings clear strategic
leadership and has a deep understanding
of the Company’s business model and
operations.
Michael joined AJ Bell in 2007 and
was appointed as CFO in 2011. His role
broadened from 2014 onwards, when
he began to take on responsibility for
the Group’s operational functions. In
his time as CFO Michael led a number
of key change initiatives, helping to
develop AJ Bell into one of the UK’s
leading investment platform businesses.
Michael became Deputy CEO in 2021, a
role in which he focused on developing
the Group’s strategy and organisational
structure. He was appointed as CEO in
October 2022.
Michael studied Economics at the
University of Sheffield, completed the
Transition to General Management
programme at INSEAD and is a Fellow
of the Association of Chartered Certified
Accountants.
D
Roger Stott
Chief Operating Officer
Appointed: October 2021
Skills and expertise:
Roger joined AJ Bell in July 2008, having
qualified as a Chartered Accountant with
KPMG in 1990 and then moved on to hold
a number of senior in-house finance roles.
Roger has extensive experience within
the financial services sector as a result of
having specialised in retail stockbroking for
over 20 years with a number of firms.
During his time at AJ Bell he has held
a wide range of roles, including Group
Finance Director and Chief Risk Officer.
He was appointed to his current role as
Chief Operating Officer in October 2021.
This includes responsibility for maintaining
the excellence and resilience of AJ Bell’s
operations incorporating Customer
Services, Operations and HR together
with delivery of related key projects and
resolution of technical issues in support
of the Group’s strategy.
He is also responsible for the management
of AJ Bell’s white label third-party SIPP
relationships.
He brings an in-depth knowledge of the
financial and operational activities of the
business and its risk management and
related governance practices.
D
Peter Birch
Chief Financial Officer
Appointed: July 2022
Skills and expertise:
As Chief Financial Officer, Peter
has responsibility for the financial
management of the business and for
leading engagement with the Group’s
key shareholders.
Peter joined AJ Bell in July 2022 from
Deloitte LLP (“Deloitte”) where he was
a financial services audit and assurance
partner. Peter joined Deloitte in 1999 and
qualified as a chartered accountant in
2002. He became a partner in 2011 and
was the lead audit partner for several large
listed financial services organisations. He
also led Deloitte’s financial services audit
and assurance practice in the regions from
2017 to 2021.
Peter studied History at the University of
Durham and is a Fellow of the Institute
of Chartered Accountants of England
and Wales.
Strategic report
Governance
Financial statements
Other information
72 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 73
Eamonn Flanagan
Non-Executive Director
Appointed: March 2018
Skills and expertise:
Eamonn is a Fellow of the Institute and
Faculty of Actuaries, having qualified
at Royal Insurance before moving to a
leading investment bank where he was
latterly appointed Director and Head of
European Insurance. He then co-founded
Shore Capital Markets, a well-respected
investment bank, where he was appointed
as Director.
As an analyst, Eamonn gained
considerable experience analysing
the business and financial models of
companies across financial services.
This period provided Eamonn with the
opportunity to observe how financial
services companies responded to changes
in regulation, market conditions and
strategic focus whilst also delivering
strong customer outcomes.
This experience has proven to be
invaluable in his role as Non-Executive
Director of AJ Bell, since he joined the
Board in March 2018, and in his roles as
Chair of both the Audit Committee and
the Disclosure Committee.
Other appointments:
• Non-Executive Director of Randall
& Quilter Insurance Holdings Ltd
• Non-Executive Director of Chesnara plc,
Movestic Livforsakring AB and Non-
Executive Chair of Movestic Kapital AB
A
D
R
N
Evelyn Bourke
Non-Executive Director and Senior
Independent Director
Appointed: July 2021
Skills and expertise:
Evelyn is a Fellow of the Institute and
Faculty of Actuaries and has an MBA from
London Business School. Before beginning
her non-executive career, Evelyn was
Bupa’s Group Chief Executive Officer
from 2016 to 2020, having been the
Chief Financial Officer of Bupa since 2012.
Evelyn has held several other previous
senior roles, including Chief Commercial
Officer at Friends Life UK’s Heritage
division and Chief Financial Officer
at Friends Provident.
Other appointments:
• Non-Executive Director of Marks and
Spencer Group, and Chair of the Audit
Committee
• Non-Executive Director of Bank of
Ireland Group plc, and Chair of Audit
Committee
• Non-Executive Director of Admiral
Group plc, and Chair of Remuneration
Committee
• Trustee of The Ireland Fund of
Great Britain
A
C
N
Board of directors
Simon Turner
Non-Executive Director
Appointed: July 2014
Skills and expertise:
Simon has impressive broad experience,
initially as a senior executive and,
subsequently, for 18 years as a
Non-Executive Director.
In his executive career, Simon was the
Managing Director of Philips Consumer
Electronics in the UK and group Managing
Director at Dixons Retail for over ten years
with wide responsibility in the UK and
Europe. These roles have given him strong
insights into process change resulting in,
not just lower costs, but a much-improved
customer experience, and given him a
passion for improving customer service.
As a Non-Executive Director, he has
previously served on the boards of
Yorkshire Building Society, where he
chaired the Remuneration Committee, and
Allied Irish Bank UK, where he was Deputy
Chair of the Risk Committee. Simon also
served on the Audit Committee of both
boards. This gave him strong insights
into all governance issues within the
financial services sector. Although not a
risk specialist by training, Simon has strong
insights into risk and risk governance.
He has also served on the boards of
several international internet businesses
which has added to his knowledge of
both online and traditional marketing and
customer communications.
This, combined with his extensive
management experience, means that
Simon contributes widely to AJ Bell, with
a particular focus on digital marketing,
IT change and strategy.
Other appointments:
• Trustee of Cambridge Dial A Ride Ltd
R
C
Margaret Hassall
Non-Executive Director
Appointed: September 2021
Skills and expertise:
Margaret is an experienced Non-Executive
Director in the financial services industry
and brings a broad range of experience
developed across different industry
sectors, including financial services,
manufacturing and utilities.
Margaret spent seven years working
for Deloitte as a consultant and led the
financial services consulting business
for Charteris.
Margaret has also been engaged as Chief
Operations Officer or Chief Information
Officer for divisions within some of the
world’s largest banks, including Bank of
America Merrill Lynch, Barclays and Royal
Bank of Scotland, and is a former Non-
Executive Director of FTSE 250 listed
One Saving Bank (OSB) plc and AIM
listed Nucleus Financial Group plc.
Other appointments:
• Non-Executive Director of Tandem Bank
Limited and Tandem Money Limited
• Non-Executive Director of Phoenix life
companies
A
N
R
Andy Bell
Consultant
Chief Executive Officer until
30 September 2022
Skills and expertise:
Andy co-founded AJ Bell in 1995, after
spending a number of years working
within the financial services sector. Having
graduated from Nottingham University
in 1987 with a first-class degree in
Mathematics, he qualified as a Fellow of
the Institute of Actuaries in 1993 and has
built AJ Bell into one of the UK’s largest
online investment platforms.
Andy’s early career shaped his thinking
about the importance of developing
propositions that truly meet customer
needs, spending much of his time working
closely with customers and their financial
advisers.
Andy stepped down as Chief Executive
Officer on 30 September 2022 and has
moved into the role of Consultant. In his
new role he will continue to be actively
involved in evaluating future market
developments, lobbying and promoting
the AJ Bell brand.
A defining feature of Andy’s tenure as
Chief Executive Officer was a focus on
ensuring that AJ Bell’s primary purpose,
vision and culture were engrained in the
business. Andy believes that a strong and
effective governance framework is one
of the most important foundations on
which to successfully grow a business. This
approach to governance has stood the test
of time as AJ Bell has grown from being
a small enterprise to a FTSE 250 listed
company.
Andy wrote The DIY Investor, which is now
in its third edition, and set up a charitable
trust, the AJ Bell Trust, in 2011.
N
Nomination Committee
A
Audit Committee
D
Disclosure Committee
R
Remuneration Committee
C
Risk and Compliance Committee
Committee Chair
Strategic report
Governance
Financial statements
Other information
74 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 75
If approved, EMT images to be cut out, colour balanced and
added to similar backgrounds as per previous 2 spreads.
Billy Mackay
Managing Director, Advised
Billy worked for another major platform
provider before joining AJ Bell in June
2008. He has been involved in financial
services for over 35 years in a variety of
marketing and distribution roles. Billy
is responsible for AJ Bell Investcentre’s
development roadmap, marketing,
distribution, and adviser service
proposition and for the development and
distribution of AJ Bell Custody Solutions.
He is also responsible for AJ Bell’s
Platinum SIPP and SSAS products.
A great believer in lifelong learning he is
always looking for new ways to challenge
our strategy and approach to the
distribution of our advised propositions.
He has also led the development and
evolution of our industry leading adviser
conference and seminar framework.
With more than 25 years' of investment
platform experience, he brings a deep
understanding of the UK advised platform
market and plays a key hands-on role in
developing and maintaining key adviser
relationships.
Kevin Doran
Managing Director, Direct to Consumer
and AJ Bell Investments
With over 20 years’ experience in the
investment industry, Kevin has spent
the majority of his career in the private
banking and asset management sectors,
undertaking roles in fund management
and product development before being
appointed as Chief Investment Officer at
a large UK private bank and then Head of
Strategy & Research for a major European
investment bank.
Joining AJ Bell in 2017, Kevin took on
the role as Managing Director at AJ Bell
Investments, leading the team responsible
for the asset management proposition and
working closely with both of the Group’s
platform propositions in the process,
including as project sponsor for the launch
of Dodl.
In 2022, Kevin was appointed Managing
Director of the D2C operations at AJ Bell,
including AJ Bell Media. Citing access to
capital markets as the greatest source of
social mobility after education, he has a
passion and desire to help people invest.
Mo Tagari
Chief Technology Officer
Mo has 20 years of global industry
experience, predominantly within large
investment banks in London, Mumbai,
Hong Kong and Singapore.
Mo brings hands-on and in-depth
technical experience within the financial
services sector including building and
sustaining large, global, diverse teams
driving digital, engineering and cultural
transformation across multiple business
lines.
Mo started his career in Cambridge at
EMBL-EBI, leveraging his BSc in Genetics
and MSc in Software Engineering. Mo
moved into financial services in 2004
at Morgan Stanley London, building out
platforms for a global operations user
base within Prime Brokerage which led
to opportunities in Mumbai and Hong
Kong where he built out and managed
the Securities Lending platform. He
subsequently moved to Singapore as
the APAC Head of Equity Finance and
Synthetics IT at Barclays Capital, before
returning to Hong Kong as the Head
of APAC Prime Brokerage Technology.
Immediately prior to joining AJ Bell,
Mo served as Asia CTO for Wealth
Management at JP Morgan Hong Kong.
Executive Committee
The management expertise and experience of each of the members of the
Executive Committee, other than the Chief Executive Officer, Chief Financial
Officer and Chief Operating Officer, is set out below:
Executive Committee changes in 2022
Billy Mackay, Liz Carrington and Kevin Doran were all appointed to the Executive
Committee on 1 October 2021.
Charles Galbraith stepped down from his role as Managing Director, Direct to
Consumer on 30 September 2022. Kevin Doran subsequently became Managing
Director, Direct to Consumer and AJ Bell Investments on 1 October 2022.
Liz Carrington
HR Director
Liz is a senior HR professional with over 20
years of generalist HR experience working
within the financial services sector.
Liz is responsible for the development
and delivery of the HR strategy covering
the full employee lifecycle including
recruitment and selection, performance
and management, pay and benefits,
employee engagement and retention
and employer brand and culture.
Liz supports the Remuneration Committee
in ensuring that wider workforce
remuneration and related policies are
aligned with our culture and that these
are taken into account when determining
executive remuneration.
Having worked at AJ Bell for over 20 years
within HR, Liz has been instrumental in the
development and implementation of all HR
policies and practices. These have evolved
over time to support the Company’s
culture and to help strengthen levels of
staff engagement whilst also ensuring
compliance with current employment
law and governance requirements.
Liz has been the internal HR lead for a
number of significant business projects,
including supporting with the Company’s
IPO project and the development of a
new remuneration policy for executives,
in compliance with the Corporate
Governance Code.
Karen Goodman
Chief Risk Officer
Karen is an experienced financial services
leader, with diverse and varied experience
of establishing and developing second and
third line of defence activities.
Karen’s comprehensive knowledge of the
financial services regulatory environment
was initially gained through Financial
Services Authority roles in conduct risk,
retail banking related thematic projects,
and the relationship supervision of a
portfolio of investment management firms.
This was then complemented by time
spent leading a regulatory assurance
team at PwC in Manchester, where
she supported organisations to mature
and develop their compliance and risk
capabilities.
More recently, Karen has spent five years at
Yorkshire Building Society, initially as Head
of the Compliance Monitoring function
and then as Director of Compliance,
roles which included holding the money
laundering reporting and data protection
officer responsibilities.
Karen is focused on engaging and
influencing key stakeholders, to maintain a
customer centric outlook which provides
the best outcomes for both customers and
the business
Christopher Bruce Robinson
Group Legal Services Director and
Company Secretary
Bruce joined AJ Bell in October 2012
as Group Legal Services Director and
Company Secretary, having previously
acted as one of AJ Bell’s external legal
advisers for around 10 years. Before joining
AJ Bell, Bruce spent 20 years in private
practice as a corporate and commercial
lawyer, initially with Mace & Jones, and
then following their merger in 2011,
with Weightmans LLP.
Bruce specialised in private company
mergers and acquisitions, group
reorganisations, joint ventures, share
option schemes and shareholder,
investment and collaboration agreements.
During his time in private practice Bruce
developed a broad range of corporate and
commercial legal knowledge, including
company law and constitutions, as well
as specific knowledge of the corporate
and commercial aspects of the AJ Bell
business. This included advising on the
reorganisation of the business which
resulted in the establishment of what is
now AJ Bell plc as the holding company
of the Group in 2004, the acquisition of
AJ Bell Securities Limited in 2007 and the
establishment of the Group’s initial share
incentive schemes.
Whilst at AJ Bell he has developed a more
in-depth knowledge of the business,
including its internal corporate governance
structures, so is well placed to advise the
Board on governance related matters.
Strategic report
Governance
Financial statements
Other information
76 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 77
Corporate Governance report
Board leadership and Company purpose
An effective Board
The role of the Board is to provide effective and entrepreneurial
leadership of the Group for the purposes of promoting long-term
sustainable success, generating value for shareholders
and contributing to wider society.
The Board is responsible for leading and controlling the Group
and has overall authority for the management and conduct of
AJ Bell’s business, strategy and development. The Board is also
responsible for ensuring the maintenance of a robust system
of internal controls and risk management (including financial,
operational and compliance controls) and for reviewing the overall
effectiveness of the systems in place, as well as for the approval of
any changes to the capital, corporate and management structure
of the Group. The Board is collectively responsible to shareholders
for protecting their interests and promoting the long-term
sustainable success of the business.
At the heart of our business is a clear and succinct purpose:
we help people to invest. We want to make investing as easy
as possible for our customers and their advisers to enable
our customers to realise their financial goals. The underlying
values of our business are set out in our guiding principles,
which inform everything we do. Our strategic drivers are the
critical components that determine the success of our strategy.
They are: sustainable growth, excellent customer experience,
scalable technology solutions, financial security and regulatory
compliance, and strong employer brand and culture. Our purpose,
guiding principles and strategy all define and shape our culture.
The Board reviews strategy annually during a dedicated business
planning process with a view to promoting the long-term success
of the Group. This year we made a number of changes to our
business planning process to delineate more clearly between the
roles of the Board and the executive management team, which
resulted in a more focused but streamlined process. During the
course of the business planning process, the Board reviewed
our purpose and guiding principles in order to satisfy itself that
they remain aligned with our culture and our stakeholders to
ensure they remained current and relevant to our business. The
conclusion reached was that no material changes should be made
this year.
To monitor our culture on an ongoing basis, we introduced
a culture dashboard in 2020, which identified the core
characteristics of our culture and created a benchmark for the
purpose of enabling the Board to monitor future changes. The
dashboard, which was presented to the Board twice this year, was
further refined during the year. This included the incorporation
of metrics for monitoring the impact on our culture of hybrid
working, Trustpilot scores and feedback from customers,
additional assurance measures and changing the comparators
for our employer advocacy metric to competitors in the local
recruitment market.
The Board oversees the setting of objectives for the members of
the ExCo which are aligned with the Group’s high-level strategy
and long-term vision and monitors progress with their delivery
at Board meetings during the course of the year. This year for the
first time we set ESG-related objectives.
There are certain powers and financial limits sitting alongside
those powers, which are reserved to the Board because their
exercise is considered to be of overriding importance and
significance to the Group. Those reserved powers, details of
which are set out on the website at ajbell.co.uk, are reviewed
each year by the Board. No changes were made to the reserved
powers this year.
Although a wide range of the Board’s powers and authorities are
delegated to the CEO, the Board retains ultimate responsibility and
authority for their exercise. Each member of the Board acts in a
way which they consider to be in the best long-term interests of
the Group and in compliance with their duties under sections
170 to 177 of the Companies Act 2006.
All of the members of the Board are expected to attend all
meetings of the Board, the Board Committees on which they
serve and the AGM, either in person or remotely. If any member
of the Board is not able to attend a meeting, they are given
the opportunity to provide feedback on the matters under
consideration via the chair of the relevant body in advance of
the meeting. They are also expected to devote such time to the
affairs of the Group as is necessary to enable them to perform
their duties as Directors. The Company Secretary attends all
meetings as secretary to the Board. Other members of the senior
management team, external advisers and industry experts are
also invited to attend Board meetings to present items of business
and provide insights into strategic issues and relationships. This
also affords the Board the opportunity to both give and receive
stakeholder feedback directly.
The Board had nine scheduled meetings this year, plus two
dedicated business planning meetings. The Board arranges
additional meetings as and when required, which resulted in
seven more meetings being held this year to consider additional
business, including CEO succession. For further details, of the
role of the Board in the approval of the CEO succession planning
process, please refer to pages 86 and 87.
This year we made a number of changes to the way in which the
Board operates in order to delineate more clearly between the
roles of the Board and the executive management team. This
included the reallocation of certain activities between the Board
and the ExCo and a corresponding reduction in the number of
scheduled Board meetings to six for the current financial period.
This year, following the end of COVID-related restrictions, the
Chair and the Non-Executive Directors could again spend time
on-site meeting with management and other employees. This
included the reinvigoration of our Employee Voice Forum,
attending two knowledge sharing/networking events, our
annual managers’ day, lunchtime briefings and other staff social
events and sitting in on some day-to-day business meetings.
These activities provide the Board with valuable insights into
the operation and culture of the business and this has a positive
impact on the quality of discussions at Board meetings and
decision-making generally.
Compliance with the UK
Corporate Governance Code
I am pleased to report that, having considered the
provisions of the UK Corporate Governance Code 2018 (the
‘UK Code’), the Board is satisfied that we have complied with
the UK Code throughout the financial period which ended
on 30 September 2022, except as a consequence of my
predecessor, Les Platts, having remained in office for more
than nine years from the date of first appointment to the
Board until he stepped down at the 2022 AGM. Since that
time, we have been fully compliant.
The UK Corporate Governance Code 2018 is available on
the Financial Reporting Council website at frc.org.uk. Details
of how we have applied the main principles of the UK Code
and further information can be found as follows.
Board leadership and
Company purpose
Information on the Company’s Board and Senior
Leadership Team, an overview of the work
undertaken to promote the long-term success of
the Company and how the Board has considered
stakeholders’ interests.
For more see pages 78 to 81
Division of responsibilities
Information on the governance framework of
the Group.
For more see pages 82 to 83
Composition, succession
and evaluation
Overview of the composition of the Board and
evaluation process together with the report from
the Nomination Committee on its work during the
year on Board and Senior Executive composition
and succession planning.
For more see page 84
Audit, risk and internal control
Overview of the framework for oversight of the
Group’s financial reporting and risk management
and internal controls together with the reports from
the Audit Committee and Risk and Compliance
Committee on the work undertaken during the year.
For more see page 85
Remuneration
Report from the Remuneration Committee on
overseeing the Group’s remuneration policies and
practices, performance outcomes and Annual
Report on Remuneration.
For more see page 85
Member Role
Eligible
meetings
Attended
meetings
Helena Morrissey Chair 16 16
Evelyn Bourke Senior Independent
Director
16 16
Eamonn Flanagan Non-Executive Director 16 15
Margaret Hassall Non-Executive Director 16 16
Simon Turner Non-Executive Director 16 15
Andy Bell Chief Executive Officer 16 15
Michael Summersgill Deputy Chief Executive
Officer
16 16
Roger Stott Chief Operating Officer 16 16
Peter Birch
1
Chief Financial Officer 6 6
Les Platts
2
Chair 6 5
Laura Carstensen
2
Senior Independent
Director
6 6
1. Peter Birch joined the Board on 1 July 2022.
2. Les Platts and Laura Carstensen both stepped down from the Board at the conclusion
of the 2022 AGM on 26 January 2022.
All other significant commitments and potential conflicts of
interest which a Director may have are required to be disclosed
both before appointment and on an ongoing basis, and
arrangements are put in place, as and when it is considered
appropriate, to manage conflicts, including any which result from
significant shareholdings. Any additional external appointments
require prior approval. During the year the Nomination Committee
approved new external non-executive appointments for Eamonn
Flanagan (one), Evelyn Bourke (one) and Helena Morrissey (two)
none of which were considered to be significant in terms of
commitment or shareholding. Helena Morrissey also stepped
down from one other role during the year.
Except as stated in note 28 of this report, no Director has, or has
had, any material interest in any contract or arrangement with the
Group during the year.
The Group maintains what the Board considers to be appropriate
insurance cover in respect of legal action against the Directors.
The Board has delegated responsibility for the oversight of
whistleblowing to the Risk and Compliance Committee, with
the Chair of the committee, Simon Turner, being our designated
whistleblowing director. Details of the related oversight
arrangements are set out in the Committee’s report on page 98.
The Group’s anti-bribery and corruption and modern slavery
policies were both reviewed during the year.
Strategic report
Governance
Financial statements
Other information
78 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 79
Relations with stakeholders
Our business strategy document, which is reviewed by the
Board each year as part of the annual business planning
process, identifies our key stakeholders with whom the business
endeavours to engage so the Board is aware of their views and can
take them into account as part of its decision-making processes.
The Board recognises the importance and benefits of engaging
with shareholders and other stakeholders and has a strong history
of doing so. This year, following the ending of COVID-related
restrictions, the Board has once again been able to engage with its
stakeholders in more traditional ways. Our key stakeholders and
the principal engagement activities undertaken by, or on behalf of,
the Board during the year are set out within the Strategic report on
pages 26 to 27.
Workforce engagement
We reinvigorated our Employee Voice Forum during the year in
order to reinforce our positive culture and make it more inclusive.
The forum, which is chaired by our Chair, Helena Morrissey, in
her capacity as our nominated employee engagement director,
now meets six times a year, with 20 participants and the forum
selecting the discussion topics. Topics discussed during the year
included diversity and inclusion, pay and benefits, improving
communications in the hybrid working environment, charitable
initiatives to support those in our community who have been
hardest hit by the cost-of-living crisis and learning
and development.
Corporate Governance report
Following the meetings feedback was provided to the Board and
ExCo. Details of any action agreed to be taken to address the
matters discussed being relayed to attendees at the next meeting
of the forum, as well as regular updates to our wider workforce
via our staff intranet.
As well as the Employee Voice Forum, the Board and ExCo also
engaged with the wider workforce during the year via existing
channels, including our CEO’s bi-annual ’town hall’ talks which
were presented by video, and regular business email updates, our
annual managers’ day, leadership videos posted on our intranet
and informal open forums, such as hybrid lunch briefings with
other members of our senior management team. As referenced
above, two knowledge sharing and networking events were held
during the year, at which a number of our people made back-to-
back five minute presentations to the Board and ExCo on their
roles within the business. Once again, this proved to be a valuable
engagement event which the Board and ExCo will continue to
build on next year.
Whistleblowing arrangements are in place to enable our staff
to raise concerns in confidence. As reported on page 79, the
Risk and Compliance Committee monitors the operation of the
whistleblowing arrangements, with the ability to escalate matters
to the Board if considered necessary. The Board reviews the
operation and effectiveness of these arrangements annually.
Relations with shareholders
The Board is committed to proactive and constructive
engagement with the Company’s investors and is keen to ensure
that the views of shareholders are understood. The Board was
pleased this year to once again be able to welcome shareholders
in person to the 2022 AGM, as the AGM provides the Board
with an opportunity to communicate directly with, and answer
questions from, both retail and institutional shareholders.
In addition to announcing regular trading updates to the market,
the Company has a comprehensive investor relations programme
which is focused on ensuring that the market, including sell-side
analysts, investors and proxy voting advisers, understand the
Company’s investment case, strategy and performance.
The CEO and Deputy CEO, supported by the Investor Relations
Director, met with analysts and investors throughout the year,
both in person and virtually, and presentations and recorded
videos were made available via our website, particularly following
the publication of the Company’s interim and full year results.
The Chair and other Non-Executive Directors were also available
to meet with shareholders as required.
Feedback is sought directly from analysts and investors after all
meetings. This feedback is shared with the Board on a regular
basis and is supplemented by frequent updates from our corporate
broker, Numis Securities Limited (Numis). This provides the Board
with insights into current market perceptions of the business and
wider platform market. Numis also shares its views with the Board
on share price performance, recent trading activity and changes
to the composition of the shareholder register.
An overview of our investor relations programme is detailed
below. As noted, in addition to the formal IR programme,
the management team engages with analysts and investors
throughout the course of the year.
The Company’s website has a dedicated investor relations section
which includes details of AJ Bell’s investment case, along with
the Annual Report and Accounts, historical financial reports and
presentations, regulatory announcements, financial calendar,
analyst consensus and other important shareholder information.
• Full-year trading update announced.
• Chair and Chair Designate meeting with key
institutional shareholders.
• Annual results announced.
• CEO and Deputy CEO annual results Q&A video
on website.
• Investor roadshow and analyst presentations, both
in-person and virtually.
• Annual Report published.
• Q1 trading update announced.
• Engagement with shareholders and proxy advisers
prior to AGM.
• Physical AGM with shareholders attending in person
and being able to ask questions remotely in advance
and directly during the meeting.
• Post-AGM engagement with institutional
shareholders.
• Q2 trading update announced.
• Interim results announced.
• Investor roadshow and analyst presentations,
both in-person and virtually.
• CEO and Deputy CEO interim results Q&A video
on website.
• Shareholder engagement following the
announcement.
• Q3 trading update announced.
• Consultation with shareholders about proposed
amendments to the director’s remuneration policy.
Q3 Q2 Q1
Calendar of events in FY22
Key Board activities
Strategy
• Oversight of annual business planning process.
• Approval of the strategy for FY23.
• Consideration of current and future technology
initiatives.
• Review and approval of the product propositions
for AJ Bell.
• Analysis of recent developments in the advised and
D2C platform markets and oversight of the launch
of Dodl.
Risk management
• Approval of the Group’s risk framework and appetite.
• Review and approval of the Group Risk
Management Policy.
• Challenge and approval of the Group’s ICARA.
• Receipt and review of CASS reports.
• Training provided by external firms on corporate
governance, the macroeconomic outlook,
cybersecurity and takeover code compliance.
• Oversight of compliance with the FCA’s
new operational resilience requirements by
31 March 2022.
• Initial consideration of the new Consumer Duty.
Performance
• Approval of final and interim dividend payments in
accordance with the Group’s dividend policy.
• Review and approval of revisions to the Group’s
financial controls policy.
• Review of the information provided in the monthly
business review report in order to place greater
emphasis on the information required by the Board.
• Oversight of financial performance against the
budget and market expectations.
• Quarterly reviews of performance against forecast.
Culture and Governance
• CEO succession.
• Delegation of additional responsibilities to the
Board’s Committees and embedment of the
changes made in their membership in 2021.
• Oversight of the implementation of the actions
from the 2021 external Board evaluation.
• Internal 2022 evaluation of the Board and its
Committees.
• Engagement with staff via our Employee Voice
Forum and employee survey.
• Bi-annual review and refinement of our culture
dashboard.
• Annual review of our diversity policy.
• Annual review of anti-bribery and corruption policy
and modern slavery statement.
Our stakeholder groups
The Board has identified four key stakeholder groups:
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Strategic report
Governance
Financial statements
Other information
80 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 81
Division of responsibilities
There is a clear division of responsibilities between the Chair,
Helena Morrissey, who was considered to be independent
upon appointment, and the CEO. This is set out in writing in the
respective terms of reference for the Chair and CEO which have
been approved and are reviewed annually by the Board.
At the year end, after Andy Bell had stepped down, the Board
comprised the Chair, three Executive Directors and four Non-
Executive Directors. A formal review of the independence of the
four Non-Executive Directors was undertaken during the year,
which in each case considered relevant issues, including the
number and nature of their other appointments, any potential
conflicts of interest which they had identified and, if applicable,
their length of service. Their individual circumstances were also
assessed against independence criteria, including those set out
in the UK Code. The outcome of the review was that they were
all considered to be independent in character and judgement. As
a consequence, the Board continued to satisfy the requirement
for at least half of the members, excluding the Chair, to be Non-
Executive Directors whom the Board considers to be independent.
As discussed within the Nomination Committee report, the
succession plans for the CEO came to fruition during the year with
the appointment of an internal candidate, Michael Summersgill,
the Deputy CEO, as the successor to Andy Bell with effect from
1 October 2022.
Further details of the related decisions regarding Andy's future role
within the business are discussed within the Chair's introduction
on page 70 and our section 172 statement on pages 28 and 29.
The Board believes the structure of the Board was appropriate
before the aforementioned changes and remains so after them
and that no single individual or group dominates the decision-
making process.
The Board is satisfied that the Chair and each of the Non-
Executive Directors devote sufficient time to their duties.
The terms and conditions of appointment of the Chair and each
of the Non-Executive Directors are available for inspection during
normal business hours at the Company’s registered office and at
the AGM for 15 minutes before and during the meeting.
Board Committees
The Board has five main committees: the Nomination Committee,
Remuneration Committee, Audit Committee, Risk and Compliance
Committee and the Disclosure Committee. The terms of
reference for each committee are available on the Group’s
website at ajbell.co.uk.
In addition, the Board established a Non-Executive Directors’
ESG forum during the year. The role of the forum is to provide
insights and make recommendations to the Board on ESG strategy
generally and to the Audit Committee on ESG-related risks and
opportunities, including climate change, and also to undertake
periodic deep dives on ESG issues.
Details of the roles and responsibilities of the Committees,
other than the Disclosure Committee, are set out in the sections
following this report. The responsibilities of the Disclosure
Committee include the review and implementation, on an
ongoing basis, of the Group’s disclosure policy to ensure it
addresses our ongoing compliance with the Disclosure Guidance
and Transparency Rules, Listing Rules and Prospectus Rules and
the Market Abuse Regulation. It is also responsible for ensuring
that the disclosure policy is properly communicated within the
business. The Disclosure Committee meets as and when required.
The day-to-day management of the Group is delegated by the
Board to the CEO, who is supported by the ExCo, which he
chairs. The day-to-day management of operations is delegated
to the ExCo. The CEO and the ExCo exercise their respective
delegated responsibilities within the confines of the risk and control
framework set by the Board. We consider that this simplified
management structure more effectively enables the Board to
ensure that its governance responsibilities are properly discharged.
Peter Birch became a member of the ExCo when he joined the
business on 1 July 2022 and Andy Bell stepped down from ExCo
with effect from 30 September 2022 when Michael Summersgill
succeeded him as CEO. In addition, Charles Galbraith, our D2C
Managing Director, also stepped down from his role with effect
from 30 September 2022. Charles’ successor is an internal
candidate, Kevin Doran, AJ Bell Investments Managing Director.
Kevin has retained responsibility for that part of the business.
Corporate Governance report
Chief Executive Officer
Nomination
Committee
Chair:
Helena Morrissey
Audit Committee
Chair:
Eamonn Flanagan
Remuneration
Committee
Chair:
Margaret Hassall
Risk & Compliance
Committee
Chair: Simon Turner
Disclosure
Committee
Chair:
Eamonn Flanagan
Board
Proposition Committee
Finance & Treasury
Committee
Operational Committee Executive Risk Committee
Executive Committee (ExCo)
Board Committees framework
In his role as Deputy CEO, Michael Summersgill undertook a
review of the management structure of the business at executive
level during the year. This resulted in the Board approving the
implementation of a new Executive Committee structure with
effect from 1 September 2022. We consider this new executive
structure will enable the executive team to continue to operate in
a dynamic, efficient and effective way as the business continues
to grow, without it having any negative impact on the quality of
decision-making or reducing the level of challenge at executive level.
Following those changes, ExCo sub-delegates certain authorities
to the:
• Executive Risk Committee (ERC), which has oversight
responsibility for all the assurance functions within the Group,
including regulatory compliance and risk management, but
excluding external and internal audit;
• Proposition Committee, which has oversight responsibility
for the management and distribution of our D2C, advised and
investment products;
• Operational Committee, which has oversight responsibility for
operations and people, including service quality, resilience,
efficiency, staff engagement, talent management, employer
brand and culture;
• Finance & Treasury Committee, which has oversight
responsibility for financial management, forecasting, market
disclosures, capital and corporate liquidity management,
financial controls and the management of cash funds held on
behalf of customers.
Role of the Chair
The Chair is responsible for the leadership and overall effectiveness
of the Board. The Chair sets the agenda for each meeting of the
Board in conjunction with the Company Secretary, in line with the
annual worklist agreed by the Board. As reported above, we made a
number of changes to the way in which the Board operates this year
in order to delineate more clearly between the roles of the Board
and the executive management team. This resulted in a detailed
review of the scope of the worklist and the reallocation of certain
activities between the Board and the ExCo, including primary
responsibility for engagement with suppliers, a key part of one of
our stakeholder groups. The Chair manages the meeting timetable,
promotes open and effective discussion and challenge at meetings
and creates an environment in which all of the participants feel
comfortable. The Chair met regularly with the SID and Non-
Executive Directors and separately with the CEO outside of formal
meetings during the year.
Role of Executive Directors
The CEO, Andy Bell, was responsible for the leadership and
management of the business within the scope of the authorities
delegated to him by the Board. The CEO must exercise those
authorities to achieve the strategic objectives set by the Board,
implement Board decisions and ensure that the Group complies
with all of its regulatory and legal obligations. The CEO is also
responsible for communicating the views of the senior management
team on business issues to the non-executive members of the
Board. As reported elsewhere, Andy was succeeded as CEO by the
Deputy CEO, Michael Summersgill, with effect from 1 October 2022.
The role of the other Executive Directors who were members of the
Board during the year, the Deputy CEO, Michael Summersgill, the
CFO, Peter Birch, and COO, Roger Stott, was to add commercial
and internal perspectives to discussions at Board meetings and
to support the CEO in communicating the views of the senior
management team on business issues to the non-executive
members of the Board.
Role of Non-Executive Directors
The Non-Executive Directors, Evelyn Bourke, Eamonn Flanagan,
Margaret Hassall and Simon Turner help to set the strategy for
the business, offer specialist advice, constructively challenge
the Executive Directors and scrutinise the performance of the
ExCo in relation to the delivery of that strategy and the personal
objectives which are set for the individual members of the ExCo,
the implementation of Board decisions and compliance with the
Group’s regulatory and legal obligations.
Roles and responsibilities
Board support and the role of the Company Secretary
The Board and Board Committees receive accurate, clear and up-to-date information in sufficient time for them to review it before each meeting
and are provided with sufficient resources to discharge their respective duties. The Directors have access to independent professional advice at
the Group’s expense, as well as to the advice and services of the Company Secretary, Bruce Robinson, who is available to advise the Board on
corporate governance matters. The role of the Company Secretary is to ensure that all Board and Board Committee procedures are complied with
and to advise on corporate governance and related regulatory compliance. In addition, the Company Secretary is responsible for the provision of
legal advice and support to all of the members of the Board as and when required. The Company Secretary is also responsible for ensuring that
Board and Board Committee members receive clear and accurate information and papers in a timely manner and that the minutes of meetings
clearly record the discussions held and the reasons for decisions.
Role of the Senior Independent Director
The Senior Independent Director, Evelyn Bourke, provides
a sounding board for the Chair and, if necessary, acts as an
intermediary for the other Non-Executive Directors. The SID
is also available for communication with shareholders where
normal lines of communication via the Chair, CEO, CFO or
Investor Relations Director are not successful or where it is
considered more appropriate. The SID also leads the annual
appraisal of the Chair by the Non-Executive Directors. Evelyn
supported the Chair during the discussions which took place with
the FCA in the summer about our CEO succession process, which
are reported on page 70.
Strategic report
Governance
Financial statements
Other information
82 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 83
Corporate Governance report
Composition, succession and evaluation
Role of the Nomination Committee
The Board has established a Nomination Committee, which has
delegated responsibility for reviewing the leadership needs of the
business to ensure it can continue to succeed in the marketplace.
Further details of the work of the Committee are set out
on pages 86 to 89.
Succession planning
This falls within the scope of the responsibilities of the Nomination
Committee. This was a particularly busy year for the Committee
in light of the CEO succession process and planned future
Board changes. Further details of the work of the Committee
in that regard are set out on pages 86 and 87.
Length of service of the Chair and Non-Executive Directors
Under the provisions of the UK Code, the Chair should not remain
in post beyond nine years from the date of their first appointment
to the Board. That period can, however, be extended for a limited
time to facilitate effective succession and the development of a
diverse board, if the Chair was an existing Non-Executive Director
on appointment. Prior to the appointment of Helena Morrissey
as Chair with effect from the end of the 2022 AGM, and for the
succession-related reasons explained in previous reports, the
Group had not been compliant with that provision, but is now
compliant.
As explained in the Nomination Committee report on page 87,
Simon Turner, the Chair of our Risk and Compliance Committee,
will complete nine years in office on 1 July 2023, which is the
maximum permitted under the UK Code. Notwithstanding
that, the Board has asked Simon Turner to remain in office up
until the 2024 AGM in order to support the succession process
and handover of his role as chair of the Risk and Compliance
Committee. Simon has indicated his willingness to do so, if he is
re-elected by the shareholders at the 2023 AGM. This means that
the Group will not be compliant with the UK Code during that
extended period.
Evaluation of the performance of the Board and Directors
Following the externally facilitated review of the performance of
the Board which was undertaken last year, the Chair considered
having a further externally facilitated Board evaluation undertaken.
However, following discussions with other members of the Board,
the Chair concluded that it would not be appropriate for one to
be undertaken this year as the recent changes in the composition
of the Board and its Committees had not yet had time to become
embedded.
As a consequence, an internally led review of the Board and
each of its Committees was undertaken this year. This involved
the members and, where appropriate, other key individuals
involved in its workings, providing feedback to the chair of
the relevant governance body, either directly or online. The
chair then collated the feedback provided and presented their
findings to the relevant body and, where applicable, details of
any approved recommendations were shared with the Board.
Following discussion of the findings and recommendations, a
number of actions were agreed, the implementation of which will
be overseen by the chair of the relevant governance body. Further
details of the Board evaluation are set out in the Nomination
Committee report on page 89.
The Chair evaluated the performance of the Non-Executive
Directors. The Non-Executive Directors, led by the SID, evaluated
the performance of the Chair during the year.
Overall, the outcome of the reviews of the Board’s performance
and its Committees, with the exception of the Nomination
Committee, and the reviews of each Director’s individual
performance, was that the Board and its Committees operate
effectively and that each Director continues to contribute
effectively and demonstrate commitment to the role. In regard to
the Nomination Committee, details of the reason for it not having
been considered to have operated effectively and of the remedial
action which had already been taken are set out in the Nomination
Committee report on pages 86 to 89.
Board induction, training and development
All Directors undertake a comprehensive formal induction
programme when they are appointed to the Board, which involves
meetings with the Chair, Executive Directors and other members
of the senior management team, the provision of background
reading and access to our electronic meeting system in respect
of certain past Board and Committee meetings. The Nomination
Committee report on pages 86 to 89 provides further details
on the procedures for the appointment of new Directors and
succession planning.
All Directors are kept informed of changes in relevant legislation
and regulations and changing financial and commercial risks. If
considered appropriate, external advisers are engaged to provide
training for members of the Board. During the year, the Board
received external presentations on corporate governance, the
macroeconomic outlook, cybersecurity, and takeover code
compliance.
As part of their annual appraisal process, the personal and
professional development needs of the Executive Directors are
considered and agreed. During the annual appraisal process for
the Non-Executive Directors, the Chair reviews and agrees their
training and personal development requirements. Non-Executive
Directors are also encouraged to attend external seminars on
topics which they consider appropriate for their professional
development needs.
Re-election of Directors
All of the Directors are subject to annual re-election and intend to
submit themselves for re-election at the 2023 AGM.
B
oard composition
Chair 1
Executive Directors 3
Non-Executive Directors 4
Board tenure
0-4 years 6
5-8 years 1
9 years+ 1
N.B. the above details include Board changes after the 30 September 2022, up to the
date of signing.
Audit, risk and internal control
The statement of Directors’ responsibility for preparing the Annual
Report and Financial Statements is set out on page 129. Within
this, the Directors have included a statement that the Annual
Report and Financial Statements present a fair, balanced and
understandable assessment of the Group’s position and prospects.
The Board has established an Audit Committee, the role of which
is to assist the Board in fulfilling its oversight responsibilities
by reviewing and monitoring the integrity of the financial and
narrative statements and other financial information provided to
shareholders, the Group’s system of internal controls, the internal
and external audit process and auditors and the processes for
compliance with related laws, regulations and ethical codes of
practice. Further details of the work of the Committee are set out
on pages 90 to 95.
With the support of the Audit Committee, the Board has reviewed
the 2022 Annual Report and Financial Statements and considers
that, taken as a whole, they are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company’s position and performance, business model and
strategy.
Please see:
• details of the review work carried out by the Audit Committee in
relation to the 2022 Annual Report and Financial Statements on
pages 92 and 93 and;
• the description of the business model and strategy for delivering
the objectives of the Group on pages 20 to 23.
Viability statement
The Directors have assessed the viability of the Group over a
period that exceeds the 12 months required by the going concern
provision. Details of that assessment are set out on page 67.
Risk management and internal controls
In accordance with the UK Code, the Board is required to monitor
the Group’s risk management and internal control systems on an
ongoing basis and carry out a review of their effectiveness. Details
of the Group’s ongoing process for identifying, assessing and
managing the principal risks faced by the Group are contained in
the risk management section on pages 58 to 66, together with
details of those principal risks and their related mitigating factors.
Whilst the Board retains overall responsibility for the Group’s
risk management and internal control systems, it has delegated
oversight to the Audit and Risk and Compliance Committees.
The Risk and Compliance Committee assists the Board in fulfilling
its oversight responsibilities, by reviewing and monitoring the
Group’s attitude to and appetite for risk and its future risk strategy,
the Group’s risk management framework, how risk is reported
both internally and externally and the processes for compliance
with related laws, regulations and ethical codes of practice and
prevention of fraud. Further details of the work of the Committee
are set out on pages 96 to 99.
The Board confirms that, through the activities of the Risk and
Compliance Committee, a robust assessment of the principal risks
facing the Group, including those that would threaten its business
model, performance, solvency and liquidity has been carried out.
In accordance with the UK Code, the Board has also considered
the Group’s longer-term viability, which can be found within the
viability statement on page 67.
The Board has delegated responsibility for the annual review of
the Group’s internal control systems to the Audit Committee,
assisted by the Risk and Compliance Committee (responsible for
the Group’s risk management framework). Further details of the
review and monitoring procedures can be found within the Audit
Committee report on page 93.
In satisfying the requirements to ensure that the Group has
adequate risk management and internal control systems, the Audit
Committee has:
• monitored the Group’s internal control systems on an ongoing
basis; and
• reviewed an annual effectiveness assessment of the Group’s risk
management and internal control systems.
Remuneration
Role of the Remuneration Committee
The Board has established a Remuneration Committee, which has
delegated responsibility for determining the policy for executive
remuneration and setting remuneration for the Chair of the
Board, CEO, other Executive Directors, members of the senior
management team, individuals who are classed as being material
risk takers and certain risk and compliance staff. When doing so,
the Remuneration Committee takes account of wider workforce
remuneration and related policies and the alignment of incentives
and rewards with culture. Further details of the work of the
Committee are set out on pages 100 to 105 and page 115.
Remuneration policy
The executive remuneration policy is due to be put to a binding
shareholder vote at the Company’s next AGM in early 2023. A
summary of the policy and details of the remuneration packages
of individual Directors are set out on pages 106 to 114. During
the year no individual Director was involved in deciding their own
remuneration.
Annual General Meeting
The AGM will be held on 8 February 2023 at 12 noon at AJ Bell,
4 Exchange Quay, Salford Quays, Manchester M5 3EE. We are
planning to hold the 2023 AGM as an open meeting with all
shareholders being invited to attend in person or by proxy. Further
details about how shareholders can attend the AGM, ask questions
and vote by proxy will be set out in the notice of the 2023 AGM.
As an additional means of engagement with our shareholders, a
video covering the key points from our 2022 annual results will be
published on our website at ajbell.co.uk/group/investor-relations
on 1 December 2022. In the video Chief Executive Officer, Michael
Summersgill, and Chief Financial Officer, Peter Birch, discuss our
business performance and financial results for the year ended
30 September 2022, as well as the outlook for 2023.
Baroness Helena Morrissey DBE
Chair
30 November 2022
Strategic report
Governance
Financial statements
Other information
84 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 85
Nomination Committee report
Baroness Helena Morrissey DBE
Chair of the Nomination Committee
Roles and responsibilities
The Nomination Committee is responsible for reviewing the
leadership needs of the business to ensure it can continue to
succeed in the marketplace. This includes succession planning,
considering and making recommendations to the Board in
respect of appointments to the Board, the Board’s Committees,
ExCo and the chairmanship of the Board’s Committees. The
Committee is responsible for keeping the structure, size and
composition of the Board and those other governance bodies
under regular review, and for making recommendations to the
Board about any changes that are necessary, considering the
skills and expertise required to deliver the Group’s strategy. The
Committee is also responsible for overseeing the development
of a diverse pipeline for succession.
The Committee considers the current balance of skills,
knowledge and experience on the Board and ExCo and the
diversity needed when determining the capabilities and
time commitment required for any new role. Succession
plans for Executive and Non-Executive Directors and senior
management, in particular for the key roles of Chair of the
Board and CEO, are considered by the Committee.
The role and responsibilities of the Committee are set out in its
formal terms of reference, a copy of which can be viewed on
the Group’s website ajbell.co.uk.
Committee attendance
The Committee meets at least twice a year and may meet at
other times as agreed by the Chair or at the request of another
member of the Committee.
Member Position
Eligible
meetings
Attended
meetings
Helena Morrissey Chair from
26 January 2022
10 10
Evelyn Bourke
1
Senior Independent
Director
5 5
Eamonn Flanagan
2
Non-Executive
Director
1 1
Margaret Hassall
2
Non-Executive
Director
1 1
Les Platts
3
Chair up until
26 January 2022
5 5
Laura Carstensen
3
Non-Executive
Director
5 5
1. Appointed to the Committee on 1 February 2022.
2. Appointed to the Committee on 1 September 2022.
3. Stepped down from the Committee following the AGM on 26 January 2022.
Dear shareholder
As Chair of the Nomination Committee, I am pleased to present
the Committee’s report for the year ended 30 September 2022.
It has been a particularly busy year for the Committee, primarily
in relation to the Board and ExCo succession planning.
Not least, with the appointment of our Deputy CEO, Michael
Summersgill, as CEO in succession to Andy Bell, who stepped
down from the role and as a member of the Board on
30 September 2022. This being in addition to the appointment
of Peter Birch as CFO with effect from 1 July 2022, which was
reported on prospectively in last year’s report.
We also expanded the membership of the Committee with
the appointments of Eamonn Flanagan and Margaret Hassall
with effect from 1 September 2022 and reviewed our executive
governance structure below Board level.
Further information about the activities of the Nomination
Committee is set out below.
Membership
Appointments to the Committee are made by the Board on the
recommendation of the Committee. They are for a period of up
to three years, which may be extended for two further periods
of three years provided the majority of the Committee members
remain independent.
At year end the Committee comprised four independent Directors,
Helena Morrissey, the Chair, Evelyn Bourke, who became Senior
Independent Director on 1 February 2022 in succession to Laura
Carstensen, Eamonn Flanagan and Margaret Hassall, both of
whom are Non-Executive Directors.
The Company Secretary acts as secretary to the Committee.
The CEO, other members of the senior management team and
external advisers are invited to attend the Committee’s meetings
by the Chair, as and when considered appropriate.
An annual review is conducted of the time required for Non-
Executive Directors to fulfil their responsibilities and compliance
with any applicable FCA requirements in relation to their total
number of directorships.
Main activities during the financial year
CEO succession
Michael’s appointment as CEO was in line with the Board’s long-
established succession plan, with him first having been identified
as a potential successor to Andy Bell several years ago. He has
held a range of executive responsibilities across the business
since joining the Board in 2011. During his time with the business,
he has contributed significantly to the successful delivery of
the Company’s growth strategy, including playing a key role in
the Company’s successful listing on the LSE’s Main Market in
December 2018 and its life as a public company since that time.
A formal CEO succession plan for Michael was initiated by the
Committee in December 2020, and since that time he has worked
very closely with Andy, who supported him in his development to
ensure that he was ready to be considered as a suitable successor
at the appropriate time. This led to his appointment as Deputy
CEO last year as a precursor to his appointment as CEO with effect
from 1 October 2022.
The Committee met 10 times during the year and a summary of the work undertaken is presented below.
Activity Oct Nov* Dec* Mar May Jun Jul Sept
Board recruitment
Executive recruitment
Board and ExCo succession planning
Committee evaluation
Committee structures
*Two meetings were held in both November and December.
The Committee considered Michael to be uniquely qualified for
the role due to the combination of him having all of the essential
skillsets required and extensive knowledge of the business and
financial services sector from being a leading member of an
executive team that has successfully grown and diversified the
business. The members of the Committee also had the benefit
of seeing him perform certain aspects of the CEO role under
delegated authority from Andy whilst acting as Deputy CEO.
The Committee also considered the future role of Andy and
this concluded with a recommendation to the Board that he
be appointed as Non-Executive Deputy Chair.
Board recruitment
Chair
As a result of my decision to step down as Chair, we began the
recruitment process for my successor during September 2022.
That process is being led by Evelyn Bourke, our SID, with the
support of an external search consultancy, Warren Partners.
Warren Partners is an independent party with no other connection
with the Company or any individual director.
Non-Executive Director recruitment process
As we reported was the intention last year, we sought to address
the Parker Review recommendation for all FTSE 250 companies
to have a member who is ethnically diverse by the end of 2024
by recruiting an additional Non-Executive Director during the
year. Unfortunately that process did not bear fruit, so having
taken account of the lessons learned from it, we began a further
formal recruitment process in July. This time for two new Non-
Executive Directors, one with relevant technology and the other
risk and compliance experience. The intention being for the latter
to replace Simon Turner, the Chair of our Risk and Compliance
Committee, who will complete nine years in office on 1 July 2023.
The process is being led internally by Helena Morrissey, with the
support of Warren Partners.
As a consequence of the commencement of the recruitment
process for a new Chair, the Committee, on the advice of
Warren Partners, subsequently decided to pause the recruitment
process for the new Non-Executive Directors until such time
as the new Chair has been appointed. This was because the
Committee concluded that the Company would be better placed
to attract candidates for the roles at that time. In light of this, and
notwithstanding that it will not be in compliance with the UK
Code, the Board has asked Simon Turner to remain in office up
until the 2024 AGM in order to support the succession process
and handover of his role as Chair of the Risk and Compliance
Committee. Simon has indicated his willingness to do so, if he
is re-elected by the shareholders at the 2023 AGM.
Chief Financial Officer
With the appointment of Michael Summersgill as Deputy CEO
last year, who was the existing CFO, the Committee began an
external recruitment process for a new CFO to join the Board,
with the support of an external search consultancy, Ridgeway
Partners. Ridgeway Partners is an independent party with no
other connection with the Company or any individual director.
This culminated with the appointment of Peter Birch with effect
from 1 July 2022. The Committee had hoped that the recruitment
process would afford it an opportunity to improve diversity at both
Board and executive management level, but that did not turn out
to be the case. That was because ultimately all recruitments are
made on merit and Peter was considered to be far and away the
best candidate for the role.
Peter has extensive knowledge of the UK financial services sector,
including the investment platform market, and joined AJ Bell from
Deloitte LLP (Deloitte) where he was a financial services audit and
assurance partner. Peter joined Deloitte in 1999 and qualified as
a chartered accountant in 2002. He became a partner in 2011
and was the lead partner for Deloitte’s financial services audit
and assurance practice in the regions from 2017 to 2021. He has
significant experience of leading the audits of large listed financial
services organisations and had been the partner on Deloitte’s
assurance engagements with AJ Bell since 2015. Appropriate
arrangements have been put in place to govern any potential
conflicts of interest with Deloitte in their capacity as our
internal auditors.
ExCo succession planning
The Committee approved a new recruitment process for the
appointment of executives below Board level in December 2021.
That process involves the executive team initially considering the
suitability and readiness of any potential internal candidates under
the current succession plan for the role. If the outcome is that
it is a role which is considered to be more suited to an external
appointment, the executive team then consider whether external
consultancy support is required, before making recommendations
to the Committee.
That recruitment process was followed in relation to the
appointment of the successor for Charles Galbraith as
the D2C Managing Director, who retired from the role on
30 September 2022, after 15 years with the business. It resulted
in a recommendation, which the Committee accepted, for an
internal candidate to be appointed, because for a role of its nature
it was considered preferable for the individual appointed to have
specific AJ Bell product and business knowledge. Two high calibre
internal candidates were identified and following a competitive
process it was recommended to the Board that Kevin Doran, the
current Managing Director of AJ Bell Investments, be appointed
with effect from 1 October 2022. Kevin will also continue to
perform his AJ Bell Investments role.
Strategic report
Governance
Financial statements
Other information
86 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 87
Nomination Committee report
The Committee also reviewed and updated our existing Diversity
and Inclusion policy in order to ensure that it still reflected the
changing needs of the business. The changes which were made
extended the scope of the policy to make it more inclusive,
incorporate the wider business, and more clearly identify what the
business is doing to continue to improve diversity. It also resulted
in Michael Summersgill, who is now the CEO, being designated
as the Executive Director with responsibility for diversity, which
reflects the significance that the Board attaches to the matter. The
revised policy more clearly allocates responsibilities for diversity,
with the Committee having delegated responsibility from the
Board to lead the diversity agenda and set objectives, and Michael
having responsibility at executive level. Information on the gender
balance of those in senior management and their direct reports is
set out in the strategic report on page 42.
Re-election of Directors
The independence of all Non-Executive Directors is reviewed by
the Committee annually, with reference to their independence
of character and judgement and whether any circumstances or
relationships exist which could affect their judgement. Having
regard to all such considerations, the Board is of the view that they
each remain independent.
In regard to Simon Turner, who will have served on the Board for
nine years on 1 July 2023, which is the maximum term of office
permitted for a Non-Executive Director under the UK Code, for
the reasons explained previously the intention is for him to remain
in office up until the 2024 AGM.
Prior to recommending the reappointment of the serving
Directors to the Board, the Committee also considered the time
commitment required and whether each reappointment would
be in the best interests of the Company. Detailed consideration
was given to each Director’s contribution to the Board and, where
applicable, its Committees, together with the overall balance of
knowledge, skills, experience and diversity.
Following that review, the Committee was satisfied that the Board
continued to be effective and has therefore recommended the re-
election at the 2023 AGM of all of the members of the Board.
Composition of Board Committees and ExCo
Other than the changes which took place as a consequence of
Les Platts and Laura Carstensen stepping down from the Board
at the 2022 AGM, including the appointment of Evelyn Bourke as
SID and a member of the Committee and Margaret Hassall as the
Chair of the Remuneration Committee, the only other changes
which were made during the year were those in the membership
of the Committee that are referenced on page 86. They were
recommended for the purposes of providing more breadth of
experience and facilitating better communications between the
Committee and the other members of the Board.
One of the actions agreed by the Board in response to the
externally facilitated evaluation of the Board which was carried
out in 2021, involved changes in the structure of the ExCo, which
included the creation of a new sub-committee structure to
better support the ongoing growth of the business. During the
course of the year the Committee reviewed the details of the new
structure proposed by the then Deputy CEO, Michael Summersgill,
and recommended its approval by the Board. The Committee
considered the new structure would further strengthen the
existing governance structure by adding an additional layer
of executive challenge and oversight in certain areas. Further
details of the new structure are set out on pages 82 and 83.
Diversity
The Board believes it is important that both the Board and ExCo
are diverse in multiple dimensions. The Committee leads the
Board’s diversity and inclusion agenda and sets measurable
objectives for the Board and ExCo with the aim of continuously
improving diversity of thought and in turn, the quality of debate
and decision-making.
It is the Board’s policy for all appointments to be made on merit,
in the context of the skills, experience and knowledge which the
business requires to be effective. Selection processes take into
account the wider elements of diversity, with a view to ensuring
the composition of the Board and other governance bodies
is appropriately balanced to support the strategic direction
of the Group. As explained above, although diversity was a
key consideration in the CFO recruitment process, it was not
ultimately the determining factor.
The Board is fully committed to implementing the Parker Review
recommendation for all FTSE 250 companies to have at least one
Board member who is ethnically diverse in advance of the 2024
deadline and the FCA requirement for at least 40% of the Board to
be women. These have been, and will continue to be, important
factors which the Committee considers during the recruitment
process for the new Non-Executive Directors, and also that for
the new Chair.
Our increased focus on diversity and inclusion across the business
has resulted in the development of a new D&I framework, further
details of which are set out on pages 42 and 43. This framework
covers a range of desired outcomes for supporting diversity and
maintaining an inclusive culture. The Committee was particularly
interested in the focus under the framework on ensuring there is
a strong and diverse talent pipeline for executive succession.
Board and Committee evaluations
As an externally facilitated evaluation of the Board was carried out
last year in accordance with the UK Code requirement for a FTSE
350 company to have one at least every three years, the Board
evaluation process this year was internally led. This involved the
completion of a questionnaire agreed between the Chair and
the Company Secretary, which built upon the previous year’s
evaluation, focused on the core responsibilities of the Board and
sought feedback on recent changes. A summary of the feedback
was then presented to the Board and an action plan agreed.
This year’s Board evaluation also included a review of the process
for CEO succession and determining the future role of the former
CEO. This resulted in a number of initial actions being identified
and implemented, one of which was for a detailed review to
be undertaken in order to establish the lessons to be learned
for the future. That review is, upon the recommendation of the
Committee, being led by one of the members of the Committee,
Margaret Hassall. A summary of the feedback will be presented
to the Board with a view to an implementation plan being put in
place for any further actions which are considered necessary.
In regard to the main recommendations identified in the externally
facilitated review of the Board which was carried out last year, the
Board has directly overseen the implementation of the related
actions and the Audit Committee engaged Deloitte to monitor
and report on their implementation. This identified that 30 out
of the 31 actions agreed by the Board had been satisfactorily
implemented by the year end, and that the remaining action had
not yet fallen due.
The performance of the Chair was reviewed by the Board led by
the SID. The SID took input from the members of the Board on
the performance of the Chair and shared the feedback received
with the Chair. The SID was able to confirm that the Chair
remained effective and continued to demonstrate the right level of
commitment, and it was appropriate for her to serve as Chair until
her successor is appointed.
As the Committee only had two members at the time the
evaluation of its own performance was carried out, it was not
considered appropriate for a formal questionnaire approach to be
taken. It was instead agreed that the members would exchange
views on the performance of the Committee and the Chair would
record their findings. This process concluded that the Committee
had not operated effectively, primarily because the membership
had been too narrow. This matter was addressed during the year
by the appointments of Eamonn Flanagan and Margaret Hassall
with effect from 1 September 2022.
Nomination Committee priorities for 2022/23
Our key priorities for next year will include the appointment of
the new Chair, two new independent Non-Executive Directors
and overseeing the successful embedment of the recent changes
in the composition of the Board and our Executive Committee
structure. This will be in addition to the regular cycle of matters
that the Committee considers each year and the continuing focus
at senior management level on the development of a diverse
talent pipeline.
The actions which were implemented during the
year included:
1
horizon scanning being scheduled as a standing agenda
item at Board meetings in relation to both risk and non-risk
related matters in order to provide an opportunity for Board
members to raise potential issues and concerns;
2
reviews being undertaken of the annual Board calendar and
work planner, which resulted in a reduction in the number
of main Board meetings and the reallocation of certain
responsibilities to free up Board time for strategic and other
key issues. This included the delegation of responsibility for
ordinary course engagement with key suppliers to the ExCo;
3
as the COVID-related restrictions fell away, the
recommencement of the engagement of the Board with
our people via a programme of events outside of formal
meetings, including social events, staff presentations and
office visits, including the reinvigoration of our Employee
Voice Forum;
4
the delegation of additional responsibilities to the
Board’s Committees, including the responsibilities of the
Remuneration Committee being expanded to cover wider
employee-related issues, including diversity below senior
management level, and initial consideration of culture,
diversity and inclusion, and those of the Committee being
expanded to include leading the diversity agenda and setting
related objectives;
5
the restructuring of the ExCo in order to put in place an
executive management structure which would support the
ongoing growth of the business;
6
a review of the existing outsourcing arrangements for the
internal audit function, which resulted in the decision to
move to a co-sourced arrangement, which is reported on
page 94;
7
the arrangement of regular informal Non-Executive Director
only meetings; and
8
as the COVID-related restrictions fell away, the
recommencement of the engagement with other
stakeholders, including key institutional shareholders, in
order to obtain insights on their view of our governance and
the way the business operates.
Board gender diversity
Male 5
Female 3
Other senior management
gender diversity
Male 19
Female 3
Signed on behalf of the Nomination Committee:
Baroness Helena Morrissey DBE
Chair of the Nomination Committee
30 November 2022
Strategic report
Governance
Financial statements
Other information
88 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 89
NovemberDecemberMarch*September May
Audit Committee report
Eamonn Flanagan
Chair of the Audit Committee
Roles and responsibilities
The role of the Committee is to assist the Board in fulfilling its
oversight responsibilities by reviewing and monitoring the:
• integrity of the Group’s financial and narrative statements and
other financial information provided to shareholders;
• Group’s systems of internal controls;
• Group’s internal and external audit processes and auditors;
and
• Group’s processes for compliance with laws, regulations and
ethical codes of practice.
Full terms of reference for the Committee are reviewed annually
and are available on the Group’s website: ajbell.co.uk.
The Committee members receive regular training regarding
matters relevant to their role and responsibilities.
Committee attendance
The Committee meets at least four times a year at appropriate
intervals in the financial reporting and audit cycle and otherwise
as required. The Committee comprises independent Non-
Executive Directors.
Member Position
Eligible
meetings
Attended
meetings
Eamonn Flanagan Chair 66
Evelyn Bourke Senior Independent
Director
66
Margaret Hassall Non-Executive
Director
65
Laura Carstensen
1
Senior Independent
Director
22
1. Laura Carstensen stepped down from the Committee following the AGM
on 26 January 2022.
Dear shareholder
As Chair of the Audit Committee, I am pleased to present the
Committee’s report for the year ended 30 September 2022.
The report provides insight into our work over the year, and details
how we have discharged the responsibilities delegated to us by
the Board.
During 2022 the Committee continued to focus on its key
responsibilities of assisting the Board in monitoring the
preparation of the Group’s financial reporting statements, the
effectiveness of the internal controls and providing oversight
and governance around the integrity of the Group’s external and
internal audit processes, including assessing the independence
and objectivity of the external auditors.
Over the past few years, the Group has increased in scale and
complexity. With this in mind, in 2022 the Committee, with the
approval of the Board, decided to move to a co-sourced internal
audit model. This entails developing an in-house internal audit
function whilst still retaining the services of Deloitte.
By having a co-sourced function we will benefit from our own
internal audit team with business knowledge, whilst continuing
to leverage the wide expertise and depth of resource that we
currently receive from Deloitte. This decision reflects our focus
on continual improvement of the quality of our audit functions
and we anticipate further evolution of this approach in the
coming years.
To this end, I am pleased to announce the appointment of Paul
Sleney to the newly established role of Head of Internal Audit.
Paul brings a wealth of experience from across financial services
and enhances the diversity of thought and opinions available to
the Committee. Following her retirement from the Board in 2022,
I would also like to thank Laura Carstensen for her insightful
contributions to the Committee over the years.
Further information on the activities of the Audit Committee is
provided below.
Membership
Membership of the Committee is reviewed annually by the Chair
of the Committee as part of its annual performance evaluation.
Recommendations for new appointments are considered with the
Nomination Committee, prior to Board approval.
The Board is satisfied that the Chair of the Committee has recent
and relevant financial experience and the Committee as a whole
has competence relevant to the business sector in which the
Group operates. Biographical information on each member is set
out on pages 72 to 75.
The Company Secretary is secretary to the Committee. The
Deputy Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Chief Risk Officer, Finance Director and other
senior members of the Finance Team and Legal Counsel are
routinely invited to attend Committee meetings. The external
auditor and internal auditor attended all meetings during the year.
The Chair has regular meetings with the Chief Financial Officer,
external audit partner and internal audit partner to discuss key
audit-related topics ahead of each Committee meeting. In
addition, the Committee also meets privately with the external
audit partner and Deloitte, the internal auditor, at least once a year.
Main activities during the financial year
The Committee has an annual cycle of work to ensure that all responsibilities are met over a calendar year. The Committee met six times
during the year. The list below summarises the key items considered by the Committee during the year ended 30 September 2022.
Financial reporting
• Review and approval of Annual Report and
Accounts
• Assessment of Annual Report and Accounts
being fair, balanced and understandable
• Statement of viability and going concern
• Review of investor presentation
• Review of results announcement
• Consideration of regulatory developments
External auditor
• Year end external auditor findings report and
audit opinion
• Review and approval of management
representation letter
• Confirmation of external auditor
independence
Internal audit and controls
• Draft internal audit plan for 2022
• Internal audit update, report and heat map
Governance
• Meeting with external auditor without
Executive Directors
• Meeting with internal auditor without
Executive Directors
• Annual meeting with CRO without Executive
Directors
• Recommendation to Board on external
auditor reappointment
• Review of Committee annual agenda
Financial reporting
• Review of the limited assurance and
reasonable assurance reports in relation
to CASS
External auditor
• CASS findings report and opinion
Internal audit and controls
• Approval of internal audit plan for 2022
Financial reporting
• Review of reporting timeline for 2022
• Consideration of regulatory developments
External auditor
• Review of terms of engagement and fee
proposal
• Scope of the interim review
• Evaluation of external auditor effectiveness
and rigour survey
• Confirmation of external auditor
independence
Internal audit and controls
• Annual Report and conclusions for 2021
• Internal audit update
• Proposal and approval for introduction
of a co-sourcing internal audit function
from FY23
Financial reporting
• Review and approval of interim report
• Going concern assessment
• Review of investor presentation
• Review of results announcement
• Consideration of regulatory developments
External auditor
• Interim review findings and review opinion
• Review and approval of management
representation letter
• Proposed audit plan for the year end
• Confirmation of external auditor
independence
Internal audit and controls
• Internal audit update
• Co-sourcing internal audit function update
Financial reporting
• Review of key judgements and estimates
for year end
• Review of draft Audit Committee report for
year end
• Consideration of regulatory developments
External auditor
• Approval of terms of engagement and
audit fee
• External audit update
• FRC review update
• Confirmation of external auditor
independence
Internal audit and controls
• Annual assessment of internal controls
• Evaluation of internal auditor effectiveness
• Alignment of internal audit reporting year
Governance
• Annual Committee evaluation
• Annual review of Committee terms of
reference
• Annual review of non-audit services policy
• Review of FRC Quality Inspection Report
21/22
*Two meetings were held in March.
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90 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 91
Financial reporting
Financial statements
One of the core responsibilities of the Committee is to ensure the integrity of the Group’s financial reporting which includes overseeing
the effectiveness of the financial control environment.
During the financial year, the Committee:
• reviewed the Interim and Annual Report and Financial Statements, and the results announcements and recommended approval by
the Board;
• reviewed the clarity and completeness of financial reporting disclosures;
• reviewed reports from management, considered all significant financial reporting judgements for the financial statements and
reviewed any related disclosures;
• assessed the application and appropriateness of significant accounting policies in the year; and
• reviewed the Group’s going concern assumptions and viability statement.
Accounting judgements and significant issues
The Committee assessed and challenged the appropriateness of the judgements and estimates applied by management in the
preparation of the Interim and Annual Report and Financial Statements. As part of its review, the Committee considered the following.
Area for consideration Committee review and conclusion
Intangible assets and
impairment
The Committee reviewed management’s paper to support the carrying amount of intangible assets
held by the Group. The review is supported by Board-approved forecasts and the sensitivities applied
concluded that no impairment was required. The Committee was satisfied with the conclusions.
Goodwill and Cash Generating
Units (CGUs)
The Committee considered the impairment review carried out by management. This included
assumptions on the underlying calculation of the value-in-use of the CGU tested for impairment.
The underlying cash flow assumptions are supported by Board approved forecasts. The main
assumptions, discount rate and sensitivities are included within note 13 of the Financial Statements.
The Committee was comfortable with the assumptions and judgements made, concluding that the
carrying value of goodwill within the Financial Statements is appropriate.
Deferred tax asset
The Committee reviewed the approach to the recognition of deferred tax assets, with particular
reference to the impact of the share incentive schemes. No concerns were raised and the
recognition and disclosure appears appropriate.
Share-based payments
The Committee reviewed the key assumptions used for the valuation of options granted under the
Company’s share-based incentive schemes, with particular reference to the earn-out arrangement
for Touch. The basis of accounting and disclosures made were also considered appropriate and
consistent with the external auditor’s findings. The Committee was satisfied that the assumptions
used, including the performance period over which fair values are recognised were appropriate.
Provisions
The Committee reviewed management’s paper presenting the assumptions and calculation
methodologies applied in determining provisions. In addition to considering the appropriate
application of IFRS and the recognition principles, the Committee was satisfied that the procedures
performed by management to estimate and quantify provisions were sufficiently robust.
TCFD climate risk reporting
The Committee reviewed management’s methodology and boundary setting for the Scope 3
emissions calculation and were comfortable that the assumptions and judgements made were
appropriate.
The Committee reviewed the Group’s first TCFD climate risk disclosure responsibilities as part of its
review of the Annual Report process for FY22. This review ensured that the reporting met the key
statutory and regulatory obligations with clear ‘comply or explain’ disclosure.
These areas have been discussed with the external auditor to ensure that the Group makes appropriate judgements and provides the
required level of disclosure. Following consideration of the above, the Committee concluded that there are no items that should be
classified as significant or critical judgements in the context of the 2022 Annual Report and Financial Statements.
Audit Committee report
Going concern and viability
The Committee reviewed a detailed paper presented by
management setting out the assumptions underlying the going
concern assessment and viability statements. The paper covered
the Group’s expected future profitability, capital position and
liquidity. The Committee also considered additional stress test
scenarios covering a significant reduction in equity market values,
a reduction in interest income and an idiosyncratic stress relating
to a scenario whereby prolonged IT issues cause a reduction in
customer numbers. The Committee also considered management
actions that could be taken in the event that the modelled
scenarios crystallise.
The Committee recommended to the Board that it was
appropriate for the Group to adopt the going concern basis
of accounting in preparing the Annual Report and Financial
Statements for the year ended 30 September 2022 and that based
on current information they could make the viability statement on
page 67.
Fair, balanced and understandable assessment
At the request of the Board, the Committee considered whether
the 2022 Annual Report and Financial Statements, taken as a
whole, are fair, balanced and understandable and provide the
information necessary for shareholders and other stakeholders to
assess the Group’s position and performance, business model
and strategy.
The Committee considered the procedures around the preparation,
review and challenge of the Annual Report and Financial
Statements; the information and reporting it received from
management and the external auditor; and the discussions that
took place during the year. The Committee also considered the
narrative sections of the reports to ensure there was consistency in
the information reported, that appropriate weight had been given
to both positive and negative aspects of business performance and
that key messages had been presented coherently.
Following its review, the Committee is satisfied that the
Annual Report and Financial Statements are fair, balanced
and understandable and provide the information necessary
for shareholders and other stakeholders to assess the Group’s
position and performance and has advised the Board accordingly.
The Directors’ statement on a fair, balanced and understandable
Annual Report and Financial Statements is set out on page 129.
CASS
The Committee reviewed the reasonable assurance reports and
limited assurance reports in relation to CASS for all regulated
entities within the Group. The Committee also challenged
management as required on the content and procedures
surrounding those reports.
Internal controls
Together with the Risk and Compliance Committee, the Audit
Committee is responsible for monitoring and reviewing the
effectiveness of the Group’s internal control and risk management
systems. The Group’s systems of internal control and risk
management are designed to identify, evaluate and manage rather
than eliminate the risk of not achieving business objectives and
can only provide reasonable and not absolute assurance against
material misstatement or loss.
Through monitoring the effectiveness of its internal controls, the
Committee is able to maintain a good understanding of business
performance, key judgemental areas and management’s decision-
making processes.
During the financial year the Committee:
• reviewed the adequacy and effectiveness of the Group’s internal
controls and internal control systems;
• reviewed the adequacy and effectiveness of financial reporting;
• considered and approved the internal audit plan for the year;
• considered reports from the internal auditor, challenged the
robustness of findings and agreed actions;
• monitored progress in management’s responsiveness to
resolving audit issues raised;
• assessed the effectiveness of the internal auditor; and
• reviewed and approved the internal controls and risk
management statements in the Annual Report and Financial
Statements.
The internal control systems have been continually monitored
during the COVID-19 pandemic. Whilst the level of inherent
risk for some of the Group’s principal risks and uncertainties
has increased, the Group’s internal controls have continued to
mitigate this increase in risk.
The Committee is satisfied that the Group had appropriate
procedures in place throughout the year and to the date
of signing, which accord with the FRC guidance on risk
management, internal control and related financial and business
reporting. The Board’s statement on internal control and risk
management can be found on page 85.
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Other information
92 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 93
Internal audit
The provision of internal audit services is outsourced to
Deloitte LLP.
The internal audit plan for the upcoming year is approved
annually in advance by the Committee. A rolling three-year plan is
maintained to ensure all critical areas of the business are covered
over this period. This is overlaid by a risk assessment to determine
the prioritisation of the internal audit plan for the coming year.
From FY23 the internal audit reporting cycle will be aligned to that
of the Group’s financial year following consideration and approval
by the Committee.
The Committee reviews all internal audit reports in order to assess
the effectiveness of mitigating controls and proposed actions
by management to address any issues found. The Committee
ensures that all management actions arising are tracked to
completion.
During the year, four reviews were undertaken by internal audit
in line with the approved audit plan. These covered areas such as
Financial Crime, Vulnerable Customers, Investment Risk Oversight
and Operational Resilience framework and Governance.
The Committee met with Deloitte without management present
and with management without Deloitte present. There were no
significant issues raised during these meetings.
Last year we confirmed our intention to review the provision of
internal audit services. Following a rigorous review process the
Committee approved the proposed move to a co-sourced internal
audit function during FY23 and a formal recruitment process
commenced in May 2022 for a Head of Internal Audit. I am
pleased to report that we successfully completed this process and
have appointed a new Head of Internal Audit, Paul Sleney, who
joined us during November.
The Committee will oversee the transition to a co-sourced
internal audit model, ensuring that all planned audits are
delivered effectively with minimal disruption to the business.
External audit
Tenure
This is BDO’s third year as the Group’s external auditor following a
formal tender process during 2019 and subsequent appointment
at the 2020 AGM. Neil Fung-On has fulfilled the role of lead audit
partner for a third year.
The Committee confirms that the Group has complied with the
requirements of the Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities) Order 2014
for the financial year under review. Under these requirements
a tender for the external audit must be undertaken no later
than 2030.
Oversight of external audit
The Committee oversees the relationship with and work
undertaken by the external auditor, BDO. The Committee’s
responsibilities include making a recommendation on the
appointment, reappointment and removal of the external auditor
and overseeing their effectiveness and independence. The
Committee assesses the qualifications, expertise, resources and
independence of the external auditor and the effectiveness of
the audit process.
During the year the Committee approved the audit plan, the
proposed audit fee and terms of engagement for 2022. The
Committee also reviewed and challenged reports from BDO
which outlined its risk assessments and audit plans, together
with audit findings and management responses.
The Chair of the Committee has regular contact with the external
audit partner outside of Committee meetings and without the
management of the business present.
The Committee considered the effectiveness of the audit
process and the external auditor’s performance as part of an
annual performance review. Feedback was sought from both
Committee members and key internal stakeholders and focused
on the quality and experience of the audit partner and key audit
team, quality of the audit delivery and the extent and nature of
challenge demonstrated by BDO in its work and interactions with
management.
During the year the FRC Audit Quality Review (AQR) team have
been undertaking a review of the audit performed by BDO
LLP of the Group’s financial statements for the year ended 30
September 2021. The aim of the reviews is to promote continuous
improvement in audit quality and identify key issues for firms to
improve audit quality. Although the review is not yet finalised, and
bearing in mind the timing of the current year's audit, BDO have
kept the Audit Committee informed of areas where enhancements
and/or changes to the audit approach would improve the quality
of the FY22 audit. Having considered the areas identified and
changes made to the audit strategy and approach, the Audit
Committee concluded that it was satisfied with the response from
the external auditor, the audit was effective and that none of the
matters raised brought into question the integrity of the prior year
financial statements. Once the final report has been received from
the AQR, the Audit Committee will discuss any further actions
with BDO.
Following the above review and the annual evaluation, the
Committee recommended to the Board a proposal for
reappointment of BDO as external auditor at the next AGM.
Audit Committee report
Non-audit fees
The Committee reviewed and approved the non-audit services
policy for the year. The policy is reviewed annually by the
Committee to safeguard the ongoing independence of the
external auditor and ensure compliance with the FRC’s
Ethical Standard.
The Committee recognise that there are often advantages in
using the external auditor to provide certain non-audit services
due to their knowledge of the business. In the event that BDO is
engaged to provide non-audit services, procedures are in place to
ensure that the provision of any such services does not impair the
external auditor’s independence and objectivity.
Prior to undertaking any non-audit service, external auditor
independence is considered together with the nature of the
services and fee levels relative to the audit. The approval of
the Committee must be obtained before the external auditor
is engaged to provide any permitted non-audit services. For
permitted non-audit services that are considered not to be
material, the Committee has pre-approved the use of the external
auditor for cumulative amounts totalling less than £25,000 on
the approval of the Chief Financial Officer and the Chair of the
Committee.
Fees for non-audit services paid to the external auditor should not,
in aggregate, exceed 70% or more of the average audit fees for the
preceding three years. This cap will become effective for the year
commencing 1 October 2022 at which point the current external
auditors will have been engaged for the previous three years.
As part of the planning, half-year and full-year processes, the
Committee also received and reviewed an analysis of all non-audit
work provided by BDO in addition to the results of BDO’s own
independence confirmation checks.
During 2022, the external auditor undertook non-audit work in
relation to other assurance services for the review of the interim
results, CASS audit and profit verification work and was paid a total
fee of £137,000 (2021: £100,000). Analysis of the fees paid to BDO
during the current and prior year can be found in note 6 to the
financial statements.
The Committee is satisfied that the external auditor’s independence
has not been impaired by their provision of non-audit services.
Committee evaluation
The Committee monitored the implementation of the
recommendations made following the external evaluation of the
Board and its Committees in the prior year, details of which can be
found on page 89. The Committee also conducted its own annual
effectiveness review in September 2022, which confirmed the
Committee is operating effectively.
Audit Committee priorities for 2022/23
As well as considering the standing items of business, the
Committee will focus on the following key areas during the
forthcoming year:
• embedding the new co-sourced Internal Audit function
during FY23 and induction of responsibilities to the Head of
Internal Audit;
• overseeing the alignment of the Internal Audit reporting cycle to
that of the Group’s financial year;
• evolution of the disclosures and targets for the Group’s ESG
strategy, including TCFD targets;
• considering the impact and timing of the BEIS Audit Reform
and any other regulatory changes or implications, including any
future reporting of the effectiveness of internal controls; and
• overseeing the development of an Audit and Assurance policy.
Signed on behalf of the Audit Committee:
Eamonn Flanagan
Chair of the Audit Committee
30 November 2022
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Financial statements
Other information
94 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 95
NovemberMarchMaySeptember
July
Risk and Compliance
Committee report
Simon Turner
Chair of the Risk and Compliance Committee
Roles and responsibilities
The role of the Committee is to assist the Board in fulfilling its
oversight responsibilities by reviewing and monitoring:
• the Group’s attitude to and appetite for risk and its future risk
strategy;
• the Group’s risk management framework;
• how risk is reported both internally and externally; and
• the processes for compliance with laws, regulations and
ethical codes of practice and prevention of financial crime.
The role and responsibilities of the Committee are set out in
formal terms of reference, a copy of which can be viewed on
the Group’s website ajbell.co.uk.
More detail on the Group’s approach to managing risk is
detailed in the risk management framework section of the
Strategic Report.
Committee attendance
The Committee meets at least four times a year and may
meet at other times as agreed by the Chair or as requested by
another member of the Committee. The Committee comprises
independent Non-Executive Directors.
Member Position
Eligible
meetings
Attended
meetings
Simon Turner Chair 55
Helena Morrissey Non-Executive
Director (Chair)
55
Evelyn Bourke Senior Independent
Director
55
Les Platts
1
Non-Executive
Director
(Chair up until
26 January 2022)
11
1. Stepped down from the Committee following the AGM on 26 January 2022.
Dear shareholder
As Chair of the Risk and Compliance Committee, I am pleased to
present the Committee’s report for the year ended 30 September
2022.
During the year, the Committee considered a wide range of
existing and emerging risk and compliance matters. Key areas of
focus included:
• operational resilience, including the implementation of
regulatory operational resilience requirements and the Group’s
resilience to cyber attacks;
• overseeing the effectiveness of the Group’s Risk Management
Policy, including the Group’s risk appetite categories, principal
risks and uncertainties (PR&U) and key risk indicators (KRIs) and
tolerances;
• risk assessments on the impact of the Russian invasion of
Ukraine and any potential impact on the Group and the
potential risks arising from hybrid working, post the COVID
pandemic;
• Internal Capital and Risk Assessment (ICARA) and the potential
impacts of severe economic scenarios on the Group’s business
model and strategy;
• progress with embedding the Group’s environmental, social and
governance (ESG) and Task Force for Climate-related Financial
Disclosures (TCFD) frameworks;
• conduct and customer outcomes, including reviewing an
implementation plan for the new Consumer Duty;
• whistleblowing across the Group;
• financial crime prevention, including overseeing the
effectiveness of anti-money laundering controls; and
• regulatory horizon scanning for matters impacting the platform
sector and asset management sector.
The Committee receives regular training from subject matter
experts; this year it has received cyber security, ICARA and
Consumer Duty training, in order to ensure its knowledge of these
areas is appropriate.
The Committee concluded that the Group continues to have
strong discipline in the management of both emerging and
existing risks. The Committee’s work continues to help support
the Group in reviewing the amount and type of risk it is prepared
to take or hold in the context of its business model and in the
course of achieving its strategic objectives.
Further information on the activities of the Committee is
provided below.
Membership
Membership of the Committee is reviewed annually by the Chair
of the Committee as part of its annual performance evaluation.
Recommendations for new appointments are considered with the
Nomination Committee, prior to Board approval.
The Company Secretary is the secretary to the Committee.
The Deputy Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Chief Risk Officer, Finance Director, Head of
Risk and other members of the senior management team are
routinely invited to attend Committee meetings.
Risk management framework
• Review and approval of risk appetite
categories and statements
• Review and approval of the annual risk and
compliance plan
• Review of risks that have crystallised during
the previous financial year
• Conduct and customer outcomes
Operational resilience
• Operational resilience update
Risk reporting
• Review of the CRO report
• Review and approval of the KRIs linked to risk
appetite categories and PR&U
• Review of conduct risk reporting
• Review of information security reporting
• Review of financial crime reporting
Combined assurance model
• Review of assurance
Whistleblowing
• Review and approval of the annual
whistleblowing report
Client money and assets
• Review of the client money and assets
report
Cyber security
• Cyber security deep dive, including threat
testing from third-party cyber security
company
ICAAP
• Review of ICAAP document, including
liquidity risk assessments, recovery planning
and the wind-down plan
Regulatory items
• Review of risk sections in Annual Report
Operational resilience
• Operational resilience update,
including review of self-assessment for
implementation of operational resilience
regulatory requirements set out in the FCA
policy statement (PS) 21/3
Risk reporting
• Review of the CRO report
• Review of conduct risk reporting
• Review of information security reporting
Client money and assets
• Review of the client money and assets report
Risk assessment
• Review of risk assessment on the impact
of the Russian invasion of Ukraine and any
potential impact on the Group
ESG and TCFD
• Review of progress with embedding the
Group’s ESG and TCFD frameworks
Money laundering
• Review of annual report by the Money
Laundering Reporting Officer
Data protection
• Review of annual report by the Data
Protection Officer
ICARA
• Review of process and timetable for the
ICARA
Risk management framework
• Review and approval of Group Risk
Management Policy
• Review and approval of risk and compliance
target operating model
Operational resilience
• Operational resilience update
Risk reporting
• Review of the CRO report
• Review of KRIs linked to risk appetite
categories and PR&U
• Review of conduct risk reporting
• Review of information security reporting
• Review of financial crime reporting
Combined assurance model
• Review of assurance
Client money and assets
• Review of the client money and assets
report
ICARA
• Training on ICARA
Regulatory items
• Review of risk sections in half-year report
• Review of training on the new Consumer
Duty
ICARA
• Review and challenge of material harms
and stress testing
Regulatory items
• Regulatory horizon scanning
Risk management framework
• Review and approval of the annual risk and
compliance plan
Operational resilience
• Operational resilience progress update
• Disaster recovery update
Risk reporting
• Review of the CRO report
• Review of KRIs linked to risk appetite
categories and PR&U
• Review of conduct risk reporting
• Review of information security reporting
• Review of financial crime reporting
Combined assurance model
• Review of assurance
Client money and assets
• Review of the client money and assets report
Risk assessment
• Review of the updated risk assessment on the
impact of the Russian invasion of Ukraine and
any potential impact on the Group
• Review of people risk and the impact of hybrid
working
ESG and TCFD
• Review of climate risk stress testing
ICARA
• Review and approval of material harms and
stress testing
Regulatory items
• Review of risk sections in Annual Report
• Review of the new Consumer Duty
implementation plan
• Regulatory horizon scanning
Review risks inherent in executive
strategic objectives
• Review of risks inherent in executive
objectives and in the criteria for executive
variable remuneration
Committee evaluation
• Review of committee evaluation
Main activities during the financial year
The Committee has an annual cycle of work to ensure that all responsibilities are met over a financial year. The Committee met
five times during the year, the list below summarises the main activities considered by the Committee during the year ended
30 September 2022.
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Other information
96 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 97
Key areas of focus
Risk management framework
The Chief Risk Officer (CRO) provided her annual assessment
of risk and compliance in September 2022 and confirmed good
progress had been made with the delivery of both the risk and
compliance plans over the previous financial year. The Committee
approved the annual risk and compliance plans in September
2022. The Committee reviewed and approved the target operating
model for the Risk and Compliance Teams to ensure they are
suitably equipped to deliver on current and future priorities.
The Committee conducted its annual review of the Group Risk
Management Policy in May 2022 and approved the Policy with
minor amendments.
The risk appetite categories and the PR&U are reviewed annually
after the Board strategy and budget have been approved and the
appropriate KRIs and tolerances are then set. The associated KRIs
and tolerances are monitored at each Committee meeting.
Operational resilience
The Group implemented the operational resilience requirements
set out in FCA policy statement 21/3 (building operational
resilience) in March 2022 and the Committee tracked progress
in meeting these requirements, as well as initiatives to further
improve the Group’s operational resilience.
Risk reporting
Risk reporting is included in the Group’s quarterly CRO report.
This includes details of underlying KRIs mapped to the risk
appetite categories and the PR&U, a summary of all the Group’s
risks and controls, breaches, risk events and emerging risks.
Whistleblowing
The Group promotes a culture of openness with its employees
and where there are concerns, encourages them to utilise the
various means available to speak-up. The Group recognises that
employees may not feel comfortable reporting their concerns
through an internal channel and therefore provides access to an
external whistleblowing service. A formal whistleblowing policy is
in place which is reviewed annually by the Committee alongside
the annual whistleblowing report for consideration.
The Chair of the Committee has been appointed as the
whistleblowing champion and will be responsible for overseeing
the integrity and effectiveness of the regime.
Risk and Compliance
Committee report
Combined Assurance Model
The purpose of the Combined Assurance Model (CAM) is to
monitor the consistency of approach, completeness of coverage
and coordination of activities of the Risk, Compliance and Internal
Audit functions. All of the Group’s risks and controls are recorded
in the Group’s risk register. Each business area is responsible
for performing a Risk and Control Self-Assessment (RCSA),
reviewing this assessment on an ongoing basis and providing
an annual RCSA attestation. Depending on this assessment,
the business area will determine whether action is required to
improve the controls to ensure the relevant risk is brought back
or remains within appetite. The second (Risk and Compliance)
and third (Internal Audit) lines of defence then coordinate their
assurance activities across the key areas of risk across the Group.
The assurance output has been reviewed by the Committee, in
conjunction with the Audit Committee, over the course of the
financial year. The annual risk and compliance plans are reviewed
and approved taking into consideration the findings from
the CAM.
Client money and assets
The Committee reviews a quarterly client money and assets
(CASS) report, which includes progress on the Group’s CASS
automation and process simplification, which is looking to
improve the Group’s CASS processes.
Cyber security
The Committee monitors the Group’s defences against cyber
threats. The Committee has reviewed information from our
internal subject matter experts on key cyber threats and the
strength of our corresponding key controls. The Committee has
also sought out assurance and cyber security threat testing from
third-party cyber security companies to ensure the Group’s cyber
defences are working appropriately.
Risk assessment
The Committee has reviewed risk assessments on the impact
of the Russian invasion of Ukraine and any potential impact on
the Group. The Group has not been materially impacted (UK-
centric business model serving primarily UK customers, with no
commercial interests in either Russia or Ukraine). The Committee
has also reviewed a risk assessment on people risk and the impact
of hybrid working, post the COVID pandemic.
ESG and TCFD
The Committee has reviewed progress with embedding the
Group’s ESG and TCFD frameworks, with a particular focus on
the impact of climate-related risks on the Group.
Money laundering
The Committee received and reviewed its annual report from the
Money Laundering Reporting Officer (MLRO) in March 2022 which
confirmed the Group’s anti-money laundering and fraud controls
are adequate. The Group is devoting additional resource to further
improve its control environment. The Committee monitors the
effectiveness of the Group’s anti-money laundering and fraud
systems and controls as part of its quarterly risk reporting.
Data protection
The Committee received and reviewed the annual report from
the Data Protection Officer (DPO) in March 2022. A Data Steering
Forum has been established to oversee the ongoing maturity of
the data protection and privacy framework.
ICAAP/ICARA
The Committee reviewed the ICAAP (under the old prudential
regime for investment firms) in November 2021 and has also
reviewed the ICARA (new prudential regime for investment firms).
The Group has conducted ICARA scenario workshops with subject
matter experts from across the Group to assess the material
harms that the Group and its customers may be exposed to. A
Committee meeting was convened in July to review and challenge
the output, with the revised output being subject to further review
and challenge by the Committee in September. The Committee
has also reviewed stress testing, recovery planning and wind-
down planning assessments.
Regulatory items
The Committee has reviewed key regulatory initiatives, such as the
new Consumer Duty and the FCA Business Plan to ensure that the
FCA’s key priorities are aligned with the Group’s key priorities.
Risks inherent in the executive’s strategic objectives
Having reviewed the risks inherent in executive objectives and in
the criteria for executive variable remuneration, the Committee
concluded that the executive strategic objectives were not
designed to encourage excessive risk taking.
Committee evaluation
The Committee conducted its own annual effectiveness review
in September 2022, which confirmed the Committee is operating
effectively.
Risk and Compliance Committee priorities for
2022/23
The Committee will continue to focus on any emerging risks that
may materialise. Areas of focus over the next financial year are
likely to be the implementation of the Consumer Duty and further
embedding of TCFD requirements.
Signed on behalf of the Risk and Compliance Committee:
Simon Turner
Chair of the Risk and Compliance Committee
30 November 2022
Strategic report
Governance
Financial statements
Other information
98 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 99
Directors’ Remuneration report
Annual statement by the Chair of the Remuneration Committee
Margaret Hassall
Remuneration Committee Chair
Review of Remuneration Policy and Reward
Principles
When our current Policy was established at IPO (with c. 97% votes
in favour at the 2020 AGM), the majority of AJ Bell’s executive
team had significant shareholdings in the Company together
with average tenure of more than 11 years at the Company. The
positioning of executive pays at or below the lower end of the
market range, in part, reflected this context and the value of
the equity held at IPO by the executive team. Since then, the
business has grown significantly and there have been various
changes in the composition and membership of both our Board
and executive management team. This has highlighted that the
positioning of the packages for our Executive Directors have fallen
behind the market. In a competitive talent market, talent attraction
and retention in key areas of the business, ensuring that our
remuneration and benefits offering remains competitive, and that
we are seen as an employer of choice, have continued to be core
priorities.
Against this backdrop, we have undertaken a comprehensive
review of our reward principles which we apply throughout
the Company. The proposed changes to the Policy are aligned
with these refreshed reward principles and ensure that the
remuneration framework:
• is aligned to our culture and promotes sustainable long-term
value creation;
• is more market competitive and supports the retention and
attraction of our leadership talent; and
• delivers greater reward for more stretching performance aligned
with our growth ambition.
We have also taken into account best practice developments,
regulatory changes including the impact of the IFPR, and the
wider stakeholder context.
Business and remuneration context
Since our IPO in December 2018, we have operated a single
incentive plan, the EIP, which was considered to be appropriate
given the nature of our business model where a high proportion
of operating profit is converted into cash in the year that it is
generated.
The performance measures set for the EIP awards are divided
between a balanced scorecard of financial and non-financial
measures linked to the KPIs and strategy of the business, with the
primary focus being on the drivers of long-term value, such as
growth in AUA, customer numbers and retention rates.
Performance is assessed over a single financial period but with the
deferral of the vesting of a significant proportion of the awards
(60% in the case of Executive Directors). The balanced scorecard
and deferred awards promote and reward long-term sustainable
Group performance. The intrinsic nature of the metrics included in
the balanced scorecard promotes behaviours supportive of long-
term goals and a sustainable, successful business. Furthermore,
deferred awards are also subject to a robust performance
underpin which is linked to the underlying performance of the
Group, risk management, conduct and compliance which is
assessed over the three-year deferral period.
Under the EIP no cash bonuses are paid. Instead, both annual and
deferred awards are delivered in shares, thus aligning shareholder
and Director interests. EIP awards are granted at the start of the
financial year and the number of shares subject to the EIP awards
is determined based on the share price at the date of grant.
This means that Executives are exposed to the impact of any
subsequent movement in the share price over the performance
period, upwards or downwards.
Committee attendance
The Company Secretary is secretary to the Committee. The Chief
Executive Officer, Chief Financial Officer, HR Director and our
external advisers, Deloitte, are also routinely invited to attend
Committee meetings. No Director was present during the meeting
where their own remuneration was discussed.
Member Position
Eligible
meetings
Attended
meetings
Margaret Hassall
1
Chair 4 4
Eamonn Flanagan Non-Executive
Director
4 4
Simon Turner Non-Executive
Director
4 4
Laura Carstensen
2
Chair 1 1
1. Margaret Hassall was appointed Chair of the committee on 26 January 2022.
2. Laura Carstensen stepped down from the committee on 26 January 2022.
We consider that this, together with our clear and robust
framework for setting targets and for measuring and assessing
performance objectively, ensure we reward Executives
appropriately for both their own contribution and the
performance of the Group. The Committee retains discretion
to override mechanical assessment ratings if they consider
them to have resulted in inappropriate award outcomes and
has, on occasion, exercised such discretion. When exercising its
discretion, the Committee takes into account a report from the
Chief Risk Officer on whether it has been identified that any undue
risk has been taken to achieve objectives.
Performance graph and historical Chief Executive Officer
Remuneration outcomes on page 123 demonstrate that the EIP
has been successful in rewarding long-term sustainable Company
performance. The Committee considers that it is appropriate to
retain the EIP structure for the Executive Directors and executive
management team. However, we are proposing to increase the EIP
opportunities on a phased basis as set out below. The proposed
increases reflect the increase in the size and complexity of the
business since IPO and the changes in our Board composition
over the last year.
• Since our IPO, our market capitalisation has increased from
c. £650 million to c. £1.2 billion (based on three months’
average market capitalisation to 30 September 2022).
• Our continued organic growth since December 2018 has seen
our customer numbers increase by 111% to 440,589, assets
under administration increase by 55% to £69.2 billion, and assets
under management increase by 10x to reach £2.8 billion.
AJ Bell is a high-performing business, and we believe that
increasing the remuneration packages of our Executives to deliver
greater reward for more stretching performance is necessary to
help us retain our leadership talent. We are proposing to move the
Executive remuneration packages to a more competitive level in a
balanced and prudent way which is consistent with the refreshed
reward principles set out above.
Board and senior management changes
As announced on 16 June 2022, Michael Summersgill will succeed
Andy Bell as CEO. The FCA has approved Michael Summersgill
under the Senior Managers & Certification Regime (SMCR) to
take on the role of CEO with effect from 1 October 2022.
Michael’s appointment as CEO is in line with the Board’s long-
established succession plan, having been identified as a potential
successor to Andy several years ago. Since his appointment as
Deputy CEO last year, Michael has worked very closely with Andy
to ensure a smooth transition when he assumes the role of CEO.
His proposed remuneration package, with effect from 1 October
2022 is set out on page 104.
Our new CFO, Peter Birch, joined the business on 1 July 2022.
We are delighted to have secured someone of Peter’s talent and
experience. He has extensive knowledge of the UK financial
services sector, including the investment platform market. His
remuneration package on appointment is outlined the following
table. Details of his remuneration package with effect from
1 October 2022 are set out on page 104. Although we did not
seek to match the quantum of his previous package, his package
was determined by the need to attract the right calibre of external
candidate and took into account market benchmarks based on
companies of a similar size and complexity to AJ Bell.
Base salary
£310,000 (Note: no increase proposed with
effect from 1 October 2022).
Although higher than Michael Summersgill’s
FY21 salary of £225,500 when he held the
position of CFO, as part of the CFO recruitment
process during 2021, it was determined that
the base salary level previously paid to Michael
was insufficient to attract a candidate of Peter’s
experience and calibre, and would have been
a significant pay cut for Peter.
Peter’s base salary is positioned at the lower
end of the market range.
Pension/cash
in lieu
For FY22:
In line with auto-enrolment requirements
EIP
For FY22 (pro-rated to reflect proportion
of FY22 since Peter joined the business):
Target opportunity: 125% of salary
Maximum opportunity: 187.5% of salary
Given Peter Birch joined the business on 1 July
2022, the pro-rated FY22 EIP award, to reflect
the three months Peter was employed during
FY22, will be added to the FY23 EIP award. This
award will be granted as part of the FY23 EIP
award. Further details are set out below.
As announced on 27 September 2022, Andy Bell stepped down
from the Board with effect from 30 September 2022 but will
continue to work with the business in a consultancy role.
AJ Bell Business Solutions Limited, a wholly owned subsidiary
of AJ Bell plc, entered into a consultancy agreement with Blythe
Business Services Ltd (BBSL), a company associated with Andy, on
1 October 2022. Under the terms of the Consultancy Agreement,
BBSL will be paid an annual fee of £150,000 for procuring the
services of Andy for not less than 48 full days a year. The term of
the Consultancy Agreement began on 1 October 2022 and can
be terminated by either party on not less than one month's notice
expiring at any time after 30 September 2023.
Andy will retain his deferred awards under the EIP which will
continue to be released following the end of a deferral period
subject to the satisfaction of the performance underpin. The
holding period and post-employment shareholding guidelines
will also continue to apply.
Proposed changes to the Remuneration Policy
To achieve our strategic growth ambitions, we will need
to continue to attract and retain the appropriate calibre of
Executives and ensure their strong alignment with the interests
of our shareholders. In this context, and taking into account the
current lower quartile positioning of the base salary and total
remuneration of our Executive Directors, the Committee proposes
the following changes to the EIP. These changes are aligned to
long-term value creation and reflect the increase in the size and
complexity of the business since IPO.
To deliver greater reward for more stretching performance
aligned with our growth ambition and having regard to the
competitiveness of our current scheme, we are proposing to
increase the EIP opportunities on a phased basis as set out
overleaf. The modest increases proposed for FY23 only apply
to the CEO and COO and are within the current Policy limits.
The Remuneration Committee strongly believe in maintaining
an appropriate differential between the EIP opportunity for the
CEO and other Executive Directors to appropriately recognise
the scope of the responsibilities of the role.
Dear shareholder
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the year ended 30 September 2022;
my first report as Chair of the Remuneration Committee. I would
like to take this opportunity to thank Laura Carstensen for her
dedicated contribution and service as the previous Chair of the
Committee.
The report is divided into two sections; the Directors’
Remuneration Policy, followed by the Annual Report on
Remuneration. The Policy sets out our forward-looking policy
for Directors’ remuneration and is a replacement for the Policy
approved at the 2020 AGM. The Annual Report on Remuneration
provides details of the amounts earned in respect of the
2022 financial year and how the new Policy, if approved by
shareholders, will be implemented in the 2023 financial year.
The new Policy and the Directors’ Remuneration Report will
be subject to a binding vote and advisory vote respectively, at
the 2023 AGM. Shareholder approval is also being sought for
amendments to the EIP to reflect the proposed changes to the
Policy and for a new Senior Manager Incentive Plan (SMIP) as
described on page 105.
We have again delivered a strong financial performance, despite
a challenging market; this is in part due to increased customer
numbers and growth of AUA whilst investing in our brand,
technology and propositions.
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100 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 101
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Annual statement by the Chair of the Remuneration Committee
Other minor changes to the Policy will address developments
since the current Policy was approved. These include:
• additional flexibility within the Policy to allow at least 50%
of the EIP opportunity from FY23 onwards to be based on
financial and/or growth measures and/or a relative performance
measure;
• the ability to pay dividend equivalents on deferred shares will
be introduced on EIP deferred awards granted from FY24; this
change reflects market and best practice. Earning dividend
equivalents over the deferral period aligns the link to continued
returns to shareholders. Dividend equivalents will only accrue
on deferred shares over the deferral period and will normally be
settled in shares, with cash settlement only to be applied where
the circumstances make that appropriate – for example where
there is a regulatory restriction on the delivery of shares, or in
respect of the tax liability arising in relation to the award; and
• taking into account the fact the shareholding guideline (350%
for the CEO and 300% for other Executive Directors) is at
the upper end of market practice, additional flexibility will
be included in the new Policy to allow vested awards which
have not been released to count towards the guideline. We
have enhanced the post-employment shareholding guideline
such that Executive Directors will be required to retain shares
of value equal to the shareholder guideline (or value of their
shareholding at cessation if lower) for 24 months post cessation
of employment.
As set out overleaf the Committee has also worked with the
Executives to develop policies to increase share ownership
throughout the organisation given long-term value creation
is central to our strategic business model.
Impact of changes on total compensation
The Committee is mindful of the impact of the proposed increases
on the value of the total remuneration package. The changes
outlined above are still considered to be modest considering
maximum compensation levels relative to the market.
Compared to FTSE 250 companies with a market capitalisation
of £800 million to £2,500 million the total remuneration for our
Executive Directors is positioned at or below lower quartile. The
Committee intends to keep this under review in future years to
ensure we can continue to attract and retain the calibre and
experience of individuals needed to deliver the Group’s growth
ambitions.
The reduction in the on-target vesting level from 67% to 50% of
maximum from FY24 broadly maintains the current on-target
value of the annual and deferred award as a percentage of salary.
The increase from FY24 is therefore being delivered for above
on-target performance. As noted above we also recognise that
increasing the level of competitiveness in the Executive Directors’
remuneration packages will require the continued delivery of
AJ Bell’s strategic objectives, coupled with stretching targets
for EIP awards.
The Committee believe that the above changes are consistent
with our aim to reward appropriately strong long-term performance
and are, therefore, in the best interest of the Company’s
shareholders. AJ Bell is a high-performing business and we believe
that increasing the remuneration packages of our top Executives is
necessary to help us retain our leadership talent.
EIP outcomes for FY22
Our financial results for the year ended 30 September 2022
demonstrate strong growth over the past 12 months. This growth
has been driven by strong net AUA inflows and a 15% increase in
customer numbers in the year.
We achieved strong growth in revenue during the year, up 12% to
£163.8 million, and we are pleased to report an increase in PBT to
£58.4 million, representing a 6% year-on-year growth rate.
In determining Directors’ pay for the year, the Committee
considered the results of the key performance measures, external
market conditions and an assessment of the movements in share
price seen over the period. Based on this, the extent to which
awards under the EIP vested has been confirmed; Andy Bell's
awards as CEO vested at 67%, Michael Summersgill's awards as
Deputy CEO at 72% and Roger Stott's awards as COO at 72%.
The Committee did not apply any discretion to the formulaic
outcomes. Further details of the outcomes can be found on
pages 118 to 120 of the Annual Report on Remuneration.
The Committee is satisfied that our Executive Directors have
continued to deliver tangible and substantial benefits for the
business and our shareholders and have delivered strong
performance against stretching targets, as our results attest.
Alignment with wider workforce
The Committee reviews information on wider workforce
remuneration, provided by the Human Resources team, who
are responsible for completing the annual pay review and a
performance review process. Executive remuneration and other
employees’ salaries are reviewed following the same process
and include both fixed and performance-related elements.
This includes benchmarking against similar organisations and
considers factors such as local recruitment conditions. During
the year 97% of the wider workforce below Board and ExCo level
received a bonus award.
We conducted a wide-ranging staff benefits review alongside
our annual pay review process, which started much earlier in the
year than previously in recognition of the challenging external
labour market conditions experienced from early 2022. For our
pay review process, early base pay awards were made in April
2022 to over 30% of staff, primarily where we had increased our
benchmark levels for some of our administrative and technology
roles. A further year end process was completed capturing all
eligible staff for pay awards effective from 1 October 2022.
The outcome of our combined pay and benefits review was
an incremental spend of just over 10% of total staff costs.
To ensure we targeted those areas most important to our staff
for our benefits review, we sought their feedback from the outset
through a staff benefits questionnaire. The feedback highlighted
that benefits associated with health and wellbeing, and saving for
the future were most valued. Share ownership in particular was
also rated highly as a benefit. Consequently, we will be making a
number of significant enhancements to our benefits offering for
FY23 which include an increase in pension contribution levels,
annual free shares awards up to £2,000 to all staff through our
HMRC approved Buy As You Earn (BAYE) share plan and the
introduction of a Health Cash Plan to further support
staff wellbeing.
We have operated a BAYE scheme for all staff since our IPO in
2018 (at which point a free share award to all staff was made).
All staff have since been able to participate in the scheme, under
which they can, within HMRC approved limits, buy shares in the
company out of pre-income tax and national insurance pay.
During the year 52% of our workforce participated in the plan.
In addition, from October 2022, we will be introducing an annual
free share award for all staff, based on company performance.
This further supports our reward principle to enable the wider
workforce to share the growth in value of the Company through
equity participation, aids staff retention and helps align the
interests of our wider workforce with those of our shareholders.
Helena Morrissey was nominated as our employee engagement
director with effect from the 2022 AGM and building on the
success of the existing Employee Voice Forum (EVF), Helena
relaunched the EVF in 2022 to help open a more frequent
dialogue between staff and the Board.
The forum meets every two months and has discussed a variety
of themes raised by staff, including diversity and inclusion, culture,
communication, career development, charitable activity and pay
and benefits.
We also continue to survey staff through the Best Companies
engagement survey. This covers a number of key areas including
pay and benefits. As staff are able to give anonymous feedback
through the survey this ensures that it is as open and honest as
possible. This feedback has been used to support the decisions
made in respect of pay and benefits, and in addition, we also
surveyed staff separately this year in relation to our FY23 pay
and benefits review to ensure that we were targeting those areas
which were considered most important to our staff.
Gender pay
Our pay data that we were required to publish in 2022 dates back
to April 2021. This shows slight improvements in both our mean
and median pay gap compared to the previous year, with our
median at 11.7%. Since then we have continued to make progress
in supporting a diverse and inclusive workplace. For example,
we are actively seeking to address the traditional imbalance of
men working in tech roles with targeted recruitment campaigns
for women, including the use of gender decoders in adverts,
and we are proud to have recruited a growing number of female
tech apprentices. We recognise the value diversity brings to
our business and have developed a new diversity and inclusion
framework to help drive our ambitions and enables us to track
progress. We are confident that these steps, together with other
initiatives such as ensuring a balance of female participants on our
internal development programmes for Team Leaders, Managers
and Senior Managers, and providing opportunities for coaching
and mentoring of female staff, means that we are continuing to
build a strong female talent pipeline for more senior roles in
the future.
The Group’s gender pay gap report can be found at ajbell.co.uk.
CEO pay ratio
The median ratio for the CEO’s salary and total remuneration
compared to our employees was 19:1 and 37:1 respectively and
further details can be found on page 124 of the Annual Report on
Remuneration. A significant proportion of the CEO’s pay is in the
form of variable pay through the EIP. CEO pay will therefore vary
year-on-year based on Company and share price performance,
as will the CEO to all-employee pay ratio.
FY22 - Current FY23 – within current policy limits FY24
CEO
Target: 125% of salary
Max: 187.5% of salary
Target: 133% of salary
Max: 200% of salary
Target: 135% of salary
Max: 270% of salary
Deputy
CEO
Target: 100% of salary
Max: 150% of salary
N/A N/A
CFO
Target: 125% of salary
Max: 187.5% of salary
Target: No change
Max: No change
Target: No change
Max: 250% of salary
COO
Target: 100% of salary
Max: 150% of salary
Target: 125% of salary
Max: 187.5% of salary
Target: No change
Max: 250% of salary
Notes
In line with current Policy, up
to 67% of the maximum award
granted may vest for delivering
appropriately stretching on-
target performance.
Proportion of the EIP award
deferred: 60% of the award in
line with the current Policy.
An increase in the stretch of targets at maximum, to ensure we are
only paying more for delivery of more stretching performance.
A reduction in the on-target opportunity from 67% of maximum to
50% of maximum in line with best practice and ISS guidelines.
Proportion of the EIP award deferred 60% of the award in line with
the current policy. This will continue to provide a further safeguard
against the increased maximum opportunity encouraging risk
taking outside the Company’s risk appetite.
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102 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 103
Directors’ Remuneration report
Annual statement by the Chair of the Remuneration Committee
Looking forward to 2022/23
Base salaries: The average base salary increase for the wider workforce for 2022/23 is just over 7%. As outlined above, in addition to the
annual pay review process, we also conducted a wide-ranging staff benefits review which resulted in an incremental spend of just over
10% for 2023. Proportionately lower increases have been awarded for our Executive Directors as set out below:
Base salary effective
1 October 2022
%
Change
Market positioning compared to FTSE 250 companies
with a market capitalisation of £800m to £2.5bn
Michael Summersgill (CEO) £500,000 0.28% (compared
to former CEO)
Lower quartile
Peter Birch (CFO) £310,000 N/A Below lower quartile
Roger Stott (COO) £291,500 6% Below lower quartile
Pension: Pension / cash in lieu of pension may be provided for Executive Directors up to the rate available to the wider workforce.
(currently 5%).
EIP: As set out below, the modest increases proposed for FY23 only apply to the CEO and COO and are within the current Policy limits.
Given Peter Birch joined the business on 1 July 2022 the pro-rated FY22 EIP award, to reflect the three months Peter was employed
during FY22, will be added to the FY23 EIP award. This award will be granted as part of the FY23 EIP award and will be subject to the same
performance targets as the FY23 EIP award. Further details are set out below.
To recognise Roger’s strong performance in his role during FY22 he has received a 6% increase in base salary, although still below the
average increase for the wider workforce.
FY23 – within current policy limits
Michael Summersgill (CEO) Target: 133% of salary
Max: 200% of salary
Peter Birch (CFO) Target: 125% of salary
Max: 187.5% of salary
Roger Stott (COO) Target: 125% of salary
Max: 187.5% of salary
As part of the implementation of the new Policy for FY23, we have reviewed the inclusion of environmental, social and governance (ESG)
related metrics in the EIP. In setting the performance measures and targets for FY23 we have also been mindful of the Consumer Duty
rules and need to ensure our reward policies and practices appropriately reflect our focus on ensuring good customer outcomes.
Further details are set out below.
Both the annual and deferred awards will be assessed against a balanced scorecard of financial and non-financial measures, linked to the
KPIs and strategy of the business, over the financial year ending 30 September 2023 as set out below:
Finance and Assurance Growth Our customers Our technology Our people Individual measures
Revenue
PBT
Diluted EPS
Total customers
Total AUA
Brand awareness
Customer retention
rates
PBT margin Staff engagement Including but not
limited to Consmer
Duty, culture, diversity
and inclusion,
progressing our
ESG agenda
Weighting:
CEO: 35%
CFO: 35%
COO: 35%
Weighting:
CEO: 25%
CFO: 25%
COO: 15%
Weighting:
CEO: 15%
CFO: 15%
COO: 25%
Weighting:
CEO: 5%
CFO: 5%
COO: 0%
Weighting:
CEO: 5%
CFO: 5%
COO: 10%
Weighting:
CEO: 15%
CFO: 15%
COO: 15%
Our primary focus for next year is also on attracting and retaining diverse talent in key areas of the business, ensuring that our
remuneration and benefits offering remain competitive and that we are an employer of choice. We will also continue to monitor
remuneration developments, particularly in light of the IFPR.
Chair and Non-Executive Directors
We have reviewed our Board Chair fee level which was previously
set at £180,000. This fee has been increased to £190,800 with
effect from 1 October 2022. This still positions us at the lower end
of the market compared to FTSE 250 companies of a similar size.
Under delegated authority from the Board, the Executive Directors
and Chair have reviewed fees for the other Non-Executive
Directors. The outcome was that Non-Executive Directors’ fees
were increased from £50,000 to £53,000 with the additional
fee in respect of acting as a Committee Chair and for the Senior
Independent Director remaining at £10,000. The primary reason
for the review of Non-Executive Director fees is in relation to the
recruitment of new Non-Executive Directors to the Board, taking
into account the complexity and time commitment expected of
their role.
As announced on 27 September, Helena Morrissey informed
the Board of her intention to step down from the Board once
a suitable replacement as Chair has been found (see page
8). We have started our search for a new Chair following this
announcement and are also looking for additional Non-Executive
Directors to further strengthen the Board this year, particularly
as Simon Turner will have served on the Board for nine years in
July 2023.
We are aware that our current fee levels are at the lower end of the
market range, particularly considering the regulated environment
in which we operate. We have also received feedback from our
independent recruitment consultancy firm that our current fee
levels may not be competitive enough to attract the right calibre
of candidate. As a result, we will be conducting a further review
of these in the coming months.
Share Plan proposals at the AGM
As referred to above, at the 2023 AGM shareholders will also be
asked to approve amendments to the EIP and the introduction of
a new SMIP.
The proposed amendments to the EIP are to reflect the new Policy
(for example reflecting the higher EIP opportunity which will apply
from FY24, and the ability to award dividend equivalents) and the
intended operation of the EIP. The Notice of AGM will include a
summary of the proposed changes.
The SMIP is a new share plan designed for Senior Managers below
Executive level under which both cash bonus and share-based
awards may be made, with the share aspects substantially based
on the EIP. Awards will not be granted under the SMIP to Executive
Directors. The principal terms of the SMIP will be summarised in
the Notice of AGM.
Shareholder views
The Committee is grateful to shareholders for their high level
of support for our Directors’ Remuneration Report for the years
ended 30 September 2020 and 30 September 2021, with over
99% and 91% of votes in favour respectively. These high levels
of support reflect our responsible approach to Executive pay, an
approach that will be continued under the proposed new Policy.
I would also like to thank shareholders and investor bodies
for their constructive input and engagement in relation to
developing the new Policy. As we considered our proposals for
the new Policy, the Committee had the opportunity to consult
with institutional shareholders representing more than 85%
of the shares in the Company. We have tried to incorporate as
much investor feedback as possible whilst balancing different
stakeholder views. In particular, as noted above, the Committee
has decided to enhance the post-employment shareholding
guideline such that Executive Directors will be required to retain
shares of value equal to the shareholder guideline (or value
of their shareholding at cessation if lower) for 24 months post
cessation of employment.
We believe that the current Policy operated as intended and
consider that the remuneration received by the Executive
Directors in respect of the 2022 financial year was appropriate,
taking into account Group and personal performance, and the
experience of shareholders and employees. I welcome feedback
at any point in time from our entire shareholder base regarding
our Policy and its application, and I hope that we will earn your
support at the forthcoming AGM.
Yours sincerely
Margaret Hassall
Chair of the Remuneration Committee
30 November 2022
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Other information
104 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 105
Directors’ Remuneration report
Directors’ Remuneration Policy (2022)
Introduction
The Group’s proposed new Directors’ Remuneration Policy
(the Policy) is set out on pages 106 to 114.
The Policy has been determined by the Company’s Remuneration
Committee (the Committee). The Policy is aligned with our
refreshed reward principles, set out below, which apply
throughout the Group.
Alignment with
our culture
and growth
strategy
• Aligned with our purpose, principles and
strategy promoting our culture and long-term
sustainable value creation.
• Executives and wider workforce to share the
growth in value of the Company through equity
participation.
Supporting
talent
attraction and
retention
• Market competitive base salaries and benefits
which reflect the size and complexity of the
business and the calibre and experience of
individuals in each role.
• To recognise and reward strong performance
and individual contribution, with an appropriate
proportion of package linked to financial and
non-financial performance.
Simple and
transparent
• Approach to reward that is well understood.
• A single incentive plan (EIP) for Executive
Directors and Executive Committee which is
designed to promote long-term sustainable
value creation.
Good
governance
and risk
management
• Following good corporative governance and
regulatory requirements.
• In line with the Company’s risk appetite and
risk management framework.
The approach taken by the Committee to the determination of
the new Policy and the differences between the new Policy and
the policy approved by shareholders at the 2020 AGM (the 2020
Policy) are described in the statement from the Remuneration
Committee Chair on pages 100 to 105.
Alignment with the UK Corporate
Governance Code
In determining our Policy the Committee addressed the following
six principles, as set out in the UK Corporate Governance Code:
Clarity
The Remuneration Policy has been designed with
a clear and robust framework for setting targets
and for measuring and assessing performance
objectively, aligned to our business model/cycle,
to ensure we reward executives appropriately for
both their own contribution and the performance
of the Group.
Our Policy clearly aligns the interests of the
Executive Directors, senior management and
employees with those of shareholders and wider
stakeholders, as well as our purpose, guiding
principles and strategy.
Simplicity
We operate a single incentive plan – the EIP,
which is designed to promote and reward long-
term sustainable Group performance.
Risk
Our approach aims to ensure that remuneration
and incentives adhere to the principles of good
corporate governance and the FCA Remuneration
Code, and support good risk management
practice.
Malus and clawback provisions apply to executive
rewards. Deferred awards are also subject to a
performance underpin which is linked to the
underlying performance of the Group, risk
management, conduct and compliance over
the three-year deferral period.
The Committee retains discretion to override
mechanical assessment ratings to take account
of any concerns over risk management.
Predictability
All executives are set clear financial and non-
financial targets at the start of the year with
minimum, target and maximum thresholds
set as shown in our remuneration report.
All EIP awards are delivered in shares with awards
granted at the start of the financial year based on
the share price at the date of grant.
Proportionality
Executives are assessed against financial and non-
financial objectives, which are based on long-
term sustainable performance.
The Committee retains the discretion to override
mechanical assessment ratings, if they consider
them to have resulted in inappropriate award
outcomes.
Alignment to
culture
50% of executive awards are based on non-
financial performance objectives aligned with our
purpose, principles and strategy, including those
specifically related to our culture such as staff
engagement.
The Policy
This part of the Directors’ Remuneration Report sets out the Group’s Directors’ Remuneration Policy (the Policy), which, subject to
shareholder approval at the 2023 AGM, will take binding effect from the close of that meeting.
Policy for Executive Directors
Component Purpose and link to strategy Operation Maximum opportunity Performance measures
Base salary
Core element of
fixed remuneration
reflecting the
individual’s role and
experience.
The Committee ordinarily
reviews base salaries annually
taking into account a number of
factors including (but not limited
to) the value of the individual to
the business, the scope of their
role, their skills, experience and
performance.
The Committee also takes into
consideration:
• pay and conditions of the
workforce generally; and
• Group profitability and
prevailing economic
conditions.
Whilst the Committee
does not set a maximum
permissible base salary, it
does have regard to relevant
comparators in approving
salary levels. Increases will not
normally exceed the range of
salary increases awarded (in
percentage of salary terms) to
other employees of the Group.
However, higher increases
may be awarded in appropriate
circumstances, such as:
• on promotion or in the event
of an increase in scope
of the individual’s role or
responsibilities;
• where an individual has been
appointed to the Board at
a lower than typical market
salary to allow for growth in
the role, in which case larger
increases may be awarded to
move salary positioning to
a typical market level as the
individual gains experience;
• change in size and/or
complexity of the Group; and/
or
• significant market movement.
Increases may be implemented
over such time period as the
Committee deems appropriate.
While no performance
conditions apply to
fixed remuneration, an
individual’s performance
in role is taken into
account in determining
any salary increase.
Benefits
To provide fixed
remuneration on a
market competitive
basis to enable the
retention of Executives
to deliver the
Company’s strategy.
Benefits include medical cover
for the Executive Director and
their spouse and dependent
children and life assurance
scheme.
Other benefits may be
provided based on individual
circumstances, which may
include company car or
allowance, relocation costs
or allowances, travel and
accommodation expenses.
Reimbursed expenses may
include a gross-up to reflect
any tax or social security due in
respect of the reimbursement.
The Committee has not set
a maximum on the level of
benefits Executive Directors may
receive. The value is set at a level
which the Committee considers
to be appropriate taking into
account the nature and location
of the role and individual
circumstances.
Not applicable.
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Other information
106 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 107
Directors’ Remuneration report
Directors’ Remuneration Policy (2022)
Component Purpose and link to strategy Operation Maximum opportunity Performance measures
Retirement
benefits
To provide a
competitive means
of saving to deliver
appropriate income in
retirement.
An Executive Director may
receive a salary supplement
in lieu of some or all of the
contributions that would
otherwise be made to a pension
scheme.
Subject to any agreed salary
sacrifice, the Company may
make a contribution to a defined
contribution scheme or a
personal pension.
The maximum value of any
employer pension contributions
(or cash in lieu of a pension
contribution) for Executive
Directors will be aligned to the
rate available to the majority of
the wider workforce.
In addition, Executive Directors
may be permitted to sacrifice
other elements of remuneration
and receive an equivalent
contribution to a pension
scheme.
Not applicable.
EIP
To reward
achievement of the
Group’s business plan,
key performance
indicators and the
personal contribution
of the Executive
Directors.
Aligns the interests of
Executive Directors
with those of
shareholders and
rewards long-term
stewardship of the
Company.
The EIP is a combined annual
and long-term incentive plan
under which both annual awards
and deferred awards may be
granted, referred to together
as ‘Awards’.
Awards may be granted in the
form of conditional awards of
shares or nil (or nominal) cost
options.
Awards may be settled, in whole
or in part, in cash or granted
as a right to receive a cash
amount calculated by reference
to a number of notional
shares, although, for Executive
Directors, the Committee would
only do so where the particular
circumstances made this the
appropriate course of action
(for example where a regulatory
reason prevented the delivery
of shares).
For the 2023 financial year, there
is no change to the maximum
opportunity from the 2020
Policy. An Executive Director will
not normally be granted Awards
under the EIP in respect of this
financial year over shares with a
market value in excess of 200%
of base salary. In exceptional
circumstances this may be
increased to 250% of base salary.
For the 2024 financial year
onwards, an Executive Director
would not normally be granted
Awards under the EIP in respect
of any financial year over shares
with a market value in excess of
270% of base salary.
The market value of shares
subject to an Award will
normally be based on the
five-day average share price
immediately preceding the date
of grant, unless the Committee
determines otherwise.
Performance measures
include a range of
financial and non-
financial factors to
encourage long-term
value creation for
shareholders.
Awards will be assessed
against a combination
of financial, non-
financial/strategic and
individual measures,
usually measured over
a one-year period.
At least 50% of the EIP
opportunity is based on
financial and/or growth
measures and/or a
relative performance
measure.
Vesting will be
determined between
0% and 100%
depending upon
the Committee’s
assessment of the
extent to which the
measure has been
achieved.
Component Purpose and link to strategy Operation Maximum opportunity Performance measures
EIP cont.
Delivery in shares
with a performance
underpin and the
ability to apply malus
adjustments and
clawback further
supports longer-
term alignment with
shareholders’ interests.
Following the end of the
performance period, the Board
will determine the extent
to which the performance
condition has been satisfied
and whether it is appropriate
to adjust the extent to which
the Awards will be released to
take account of the underlying
performance of the Company
and any other factors the Board
considers relevant.
A deferred award will normally be
released (so that the participant
is entitled to acquire shares
subject to it) following the end of
a deferral period starting on the
date on which the performance
condition is assessed and ending
in the fourth year after the start
of the performance period.
Deferred awards will also be
subject to a holding period
which shall normally end in the
fifth year after the start of the
performance period.
During the holding period, the
participant may not normally
deal with shares acquired
pursuant to the award other than
to satisfy a tax liability relating to
the award or with the permission
of the Board.
An annual award will normally be
released (so that the participant is
entitled to acquire shares subject
to it) on the first dealing day
following the assessment of the
performance condition.
The number of shares subject
to an annual award (i.e. not
including the deferred award
element) granted to an Executive
Director in any financial year
may not exceed 40% of the
aggregate number of shares
over which they are granted
Awards in respect of that
financial year.
For the 2023 financial
year, there is no change
to the on-target
opportunity from the
2020 Policy. Up to 67%
of the maximum award
granted may vest at the
end of the performance
period for delivering
appropriately stretching
on-target performance.
For the 2024 financial
year onwards, up to 50%
of the maximum award
granted may vest at the
end of the performance
period for delivering
appropriately stretching
on-target performance.
Deferred awards will be
subject to performance
underpins linked to the
underlying performance
of the Group, risk
management, conduct
and compliance over
the deferral period. The
underpin performance
conditions applicable
to a deferred award
will be disclosed in the
Directors’ Remuneration
Report.
All-employee
share plans
The Buy As You
Earn (BAYE) scheme
creates staff alignment
with the Group and
provides a sense of
ownership. Executive
Directors may
participate in the
BAYE scheme and/or
in any such other all
employee share plan
as may be introduced
from time to time.
The Executive Directors may
participate in all sections of
the BAYE scheme, being the
partnership and matching
section and the free share
section.
Any other all employee share
plan would be operated
for Executive Directors in
accordance with its rules and
on the same basis as for other
qualifying employees.
The limits on participation under
the BAYE scheme will be those
set in accordance with the
applicable tax legislation from
time to time.
The limit on participation and
other relevant terms of any other
all-employee share plan would
be determined in accordance
with the plan rules (and, where
relevant, applicable legislation)
and would be the same for the
Executive Directors as for other
relevant employees.
Not subject to
performance conditions
in line with typical
market practice.
Policy for Executive Directors continued
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Other information
108 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 109
Directors’ Remuneration report
Directors’ Remuneration Policy (2022)
Policy for the remuneration of employees more generally
In line with our reward principles which apply throughout the Group we aim to:
• provide market competitive base salaries and benefits which reflect the size and complexity of the business and the calibre and
experience of individuals in each role;
• provide a remuneration package that is competitive and which is appropriate to promote the long-term success of the Company;
• recognise and reward strong performance and individual contribution, with an appropriate proportion of package linked to financial
and non-financial performance; and
• enable Executives and the wider workforce to share the growth in value of the Company through equity participation.
We have also committed to paying all our employees no less than the Real Living Wage.
In respect of the Executive Directors, a greater proportion of the remuneration package is ‘at risk’ and determined by reference to
performance conditions.
Illustrations of application of the Remuneration Policy
The following charts provide an illustration, for each of the Executive Directors, of the application of the Policy in the year ending
in September 2023. The charts show the split of remuneration between fixed pay (that is base salary, benefits, employer pension
contributions/salary supplement), EIP pay on the basis of minimum remuneration, remuneration receivable for performance in line with
AJ Bell’s expectations and maximum remuneration.
Peter Birch
Illustrations of Remuneration Policy
£m
Minimum
performance
Performance
in line with
expectations
Maximum Maximum with
50% share
appreciation
Michael Summersgill
Illustrations of Remuneration Policy
£m
0
0.5
1.0
1.5
2.0
0
0.5
1.0
1.5
2.0
0
0.5
1.0
1.5
2.0
Minimum
performance
Base salary, benefits and pension
EIP – Annual Award EIP – Deferred Award
Performance
in line with
expectations
Maximum Maximum with
50% share
appreciation
Roger Stott
Illustrations of Remuneration Policy
£m
Minimum
performance
Performance
in line with
expectations
Maximum Maximum with
50% share
appreciation
In illustrating the potential reward, the following assumptions have been made.
Fixed pay
Base salary (being the latest known salary as at 1 October 2022) and benefits disclosed in the single figure table on page 116 for the 2022
financial year. For our CFO, Peter Birch, the benefits figure disclosed on page 116 for the 2022 financial year has been annualised.
Executive Incentive Plan
Minimum performance
No payout
Performance in line with
expectations
On-target vesting of the annual and deferred elements of the EIP based on an on-target EIP award of
133% of salary for the CEO and 125% of salary for the CFO and COO
Maximum performance
Maximum vesting of the annual and deferred elements of the EIP based on a maximum EIP award of
200% of salary for the CEO and 187.5% of salary for the CFO and COO
Maximum performance
with share price
appreciation of 50%
Maximum vesting of the EIP with additional 50% share price growth appreciation on the deferred award.
Policy for Non-Executive Directors
Purpose and link to strategy Operation Opportunity
To provide fees within a
market competitive range
reflecting the individual,
responsibilities of the role
and the expected time
commitment.
To reimburse where
appropriate out-of-
pocket expenses which
are relevant to the
requirements of the role.
The fees of the Chair are determined by the Committee and
the fees of the Non-Executive Directors are determined by
the Board.
Non-Executive Directors are not eligible to participate in
any of the Company’s share schemes, incentive schemes or
pension schemes.
Non-Executive Directors (including the Chair) may claim
expenses in line with the Company’s expenses policy for
out-of-pocket expenses incurred in the fulfilment of their
responsibilities. Reimbursed expenses may include a gross-
up to reflect any tax or social security due in respect of the
reimbursement.
The Chair and Non-Executive Directors may also be eligible
to receive benefits such as the use of secretarial support,
assistance with the preparation of tax returns, or other benefits
that may be appropriate in performance of their duties.
Fees are set taking into account the responsibilities of the role
and expected time commitment.
Non-Executive Directors are paid a basic fee with additional
fees paid for the chairing of Committees. An additional fee is
also paid for the role of Senior Independent Director and may
be paid for other responsibilities or time commitments.
Basic fees are subject to the aggregate limit set in accordance
with the Company’s Articles of Association.
Where benefits are provided to Non-Executive Directors they
will be provided at a level considered to be appropriate taking
into account the individual circumstances.
Dividend equivalents
For deferred awards granted in respect of the 2024 financial
year onwards, additional shares may be delivered in respect of
shares subject to deferred awards to reflect the value of dividends
paid during the deferral period. This payment may assume that
dividends had been reinvested in shares on a cumulative basis.
Recovery provisions (malus and clawback)
Malus and clawback provisions may be applied in the event of:
• participation in or responsibility for conduct resulting in
significant loss to a Group company;
• failure to meet appropriate standards of fairness and propriety
including fraud, material dishonesty or material wrongdoing;
• bringing the Company into material disrepute;
• breaches of the employment contract that give potentially fair
reason for dismissal;
• discovery of an event, post-cessation of employment, that
would have prevented the release or grant of an award had the
Company been aware of the event;
• error in determining an award or assessing the performance
condition;
• material misstatement in financial information that was taken
into account when determining an award or assessing the
performance condition; and
• material failure of risk management.
In the case of annual awards, malus and clawback provisions may be
applied up to the fourth anniversary of the end of the performance
period and in the case of deferred awards up to the end of the
holding period. If the relevant award has been released or exercised,
the clawed back amount may be recovered from the recipient.
Explanation of performance metrics
Performance is measured against a balanced scorecard to support
the Company’s strategy.
The targets are set by reference to long-term strategic objectives.
Deferred awards are subject to performance underpins that are
designed to protect shareholder value and which are aligned to
appropriate long-term behaviours including risk management,
conduct and compliance. The Committee will consider the
underlying performance of the Group over the deferral period
(which may be on a relative and/or absolute basis).
The Committee may vary or substitute any performance measure
or underpin if an event occurs which causes it to determine that
it would be appropriate to do so (including taking account of
acquisitions or divestments, a change in strategy or a change in
prevailing market conditions), provided that any such variation
or substitution is fair and reasonable and (at the discretion of
the Committee) the change would not make the measure less
demanding than the original measure would have been but for
the event in question. If the Committee were to make such a
variation, an explanation would be given in the next Directors’
Remuneration Report.
Operation of share plans
The Committee may amend the terms of awards and options
under the Company’s share plans in accordance with the plan
rules in the event of a variation of the Company’s share capital or
a demerger, special dividend or other similar event or otherwise
in accordance with the rules of those plans. The Committee may
operate any such plan in accordance with its rules.
Shareholding guidelines
To align the interests of the Executive Directors with those of
shareholders, the Committee has adopted formal shareholding
guidelines. Executive Directors are expected to retain all shares
acquired through the EIP deferred awards (after sales to cover
tax and any exercise price) until such time as their holding has a
value equal to 350% of salary in the case of the CEO and 300% of
salary in the case of other Executive Directors. Shares subject to
EIP awards which have vested but have not been released (that is
which are in a deferral period) or which have been released but
have not been exercised count towards the guidelines on a net
of assumed tax basis.
The Committee has also adopted a formal post-cessation
shareholding requirement. This requires that for 24 months
following cessation, an Executive Director must retain such of
their ‘relevant’ shares as have a value (as at cessation) equal to
their shareholding guideline. If the Executive Director holds less
than the required number of ‘relevant’ shares at any time they
must retain the ‘relevant’ shares they hold.
Shares which the Executive Director has purchased or which were
held at the date of admission to the London Stock Exchange are
not ‘relevant’ shares for these purposes. The Committee retains
the discretion to vary the post-cessation shareholder requirement
in appropriate circumstances and will continue to review the
requirement in light of developing market practice.
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Financial statements
Other information
110 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 111
Directors’ Remuneration report
Directors’ Remuneration Policy (2022)
Policy on payments for loss of office
The following table summarises the Company’s policy on the determination of payments for loss of office by Executive Directors.
Provision Treatment
Fixed
remuneration
Salary/fees, benefits and any pension will be paid to the date of termination.
Payments in lieu
of notice
Where a payment in lieu of notice is made, this will include salary, benefits and any pension (or a cash equivalent)
until the end of the notice period that would otherwise have applied.
Alternatively, the Company may continue to provide the relevant benefits. Unless the Committee determines
otherwise, amounts will be paid in equal monthly instalments. Mitigation will usually apply.
Executive
Incentive Plan
If an Executive Director leaves during the first six months of the performance period, that Award will lapse.
If an Executive Director leaves more than six months after the start of the performance period but before the end of
the performance period:
• as a consequence of death, ill health, injury, disability or for any other reason at the Committee’s discretion (a
‘Good Leaver’), annual awards and deferred awards made in respect of that period will be apportioned on a
time basis and will usually be released at the normal release date to the extent that the performance conditions
and underpin conditions are satisfied. The Committee may reduce or increase the extent to which an award
is released to take account of the underlying financial performance of the Company and other factors the
Committee considers relevant.
• other than as a Good Leaver, the award will lapse.
If an Executive Director leaves after the end of the performance period but before the normal release date:
• as a Good Leaver, annual awards and deferred awards will usually be released at the normal release date to the
extent that the performance conditions and underpin conditions are satisfied. The Committee may reduce or
increase the extent to which an award is released to take account of the underlying financial performance of the
Company and other factors the Committee considers relevant.
• other than as a Good Leaver, awards will only be released at the normal release date to the extent that the
performance conditions and underpin conditions are satisfied and only in respect of such shares as determined by
the Committee in its absolute discretion.
Other payments
The Committee reserves the right to make additional exit payments where such payments are made in good
faith in discharge of an existing legal obligation (or by way of damages for breach of such obligation) or by way
of settlement or compromise of any claim arising in connection with the termination of a Director’s office or
employment. Payments may include, but are not limited to, the amount of any fees for outplacement assistance
and/or the Director’s legal and/or professional advice fees in connection with their cessation of office or
employment and payments in respect of accrued but untaken holiday.
Where a ‘buyout’ or other award is made in connection with recruitment, the leaver provisions would be determined
at the time of the award.
Payments may be made under the Company’s all employee share plans which are governed by HMRC tax-
advantaged plan rules and which cover certain leaver provisions. There is no discretionary treatment of leavers
under these plans.
Change of control
In the event of a change of control during the performance period applying to an EIP award, the number of shares
which will be capable of release will be calculated by reference to the proportion of the performance period that has
elapsed and the extent to which the performance condition has been met or is expected to be met. The Committee
has the discretion to reduce or increase the extent to which an award is released to take account of the underlying
financial performance of the Company and any other factors the Committee considers relevant.
In the event of a change of control after the end of the performance period, awards will become capable of release
(in respect of the number of shares determined by reference to the satisfaction of the performance condition).
Alternatively, the Committee may permit awards to be exchanged for an award of shares in a different company
(including the acquiring company).
Awards under the Company’s all employee share plans which are governed by HMRC tax-advantaged plan rules may
vest in the event of a change of controls. There is no discretionary treatment of leavers under these plans.
Non-Executive Directors are not entitled to compensation for termination of their appointment.
Recruitment remuneration policy
When recruiting a new Executive Director, the Committee will
typically align the remuneration package with the above Policy.
When determining appropriate remuneration arrangements, the
Committee may include other elements of pay which it considers
are appropriate. However, this discretion is capped and is subject
to the limits referred to below.
Base salary will be set at a level appropriate to the role and the
experience of the Executive Director being appointed. This may
include agreement on future increases up to market rate, in line
with increased experience and/or responsibilities, subject to good
performance, where it is considered appropriate. Pension will be
provided in line with the above Policy.
The Committee will not offer non-performance related incentive
payments (such as a ‘guaranteed sign-on bonus’, for example).
Other elements may be included in the following circumstances:
• an interim appointment being made to fill an Executive Director
role on a short-term basis;
• if exceptional circumstances require that the Chair or a
Non-Executive Director takes on an executive function on
a short-term basis;
• if an Executive Director is recruited at a time in the year when
it would be inappropriate to provide an incentive for that year
as there would not be sufficient time to assess performance.
Subject to the limit on variable remuneration set out below, the
quantum in respect of the months employed during the year
may be transferred to the subsequent year so that reward is
provided on a fair and appropriate basis;
• if a Director is required to relocate in order to take up the
position, it is the Company’s policy to allow reasonable
relocation, travel and subsistence payments. Any such
payments will be at the discretion of the Committee.
The Committee may also alter the performance measures,
performance period, vesting period and holding period of the
EIP, if the Committee determines that the circumstances of the
recruitment merit such alteration. The rationale will be clearly
explained in the next Directors’ Remuneration Report.
The maximum level of variable remuneration which may be
granted (excluding ‘buyout’ awards as referred to below) is
270% of salary.
The Committee may make payments or awards in respect of hiring
an employee to ‘buyout’ remuneration arrangements forfeited
in connection with leaving a previous employer. In doing so, the
Committee will take account of relevant factors including any
performance conditions attached to the forfeited arrangements
and the time over which they would have vested. The Committee
will generally seek to structure ‘buyout’ awards or payments on
a comparable basis to the remuneration arrangements forfeited.
Any such payments or awards are excluded from the maximum
level of variable remuneration referred to above. ‘Buyout’ awards
will ordinarily be granted on the basis that they are subject to
forfeiture or ‘clawback’ in the event of departure within 12 months
of joining AJ Bell, although the Committee will retain discretion
not to apply forfeiture or clawback in appropriate circumstances.
Any share awards referred to in this section will be granted as far
as possible under the EIP. If necessary, and subject to the limits
referred to above, recruitment awards may be granted outside of
these plans as permitted under the Listing Rules which allow for
the grant of awards to facilitate, in unusual circumstances, the
recruitment of an Executive Director.
Where a position is filled internally, any ongoing remuneration
obligations or outstanding variable pay elements shall be allowed
to continue in accordance with their terms.
Fees payable to a newly appointed Chairman or Non-Executive
Director will be in line with the policy in place at the time of the
appointment.
Policy on service contracts
Details of the Executive Directors’ service contracts and
Non-Executive Directors’ letters of appointments are set
out on pages 122 and 123.
The Company’s policy is for service agreements with Executive
Directors to be capable of termination by either the Company or
the Executive Director by the giving of six months’ notice.
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Financial statements
Other information
112 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 113
JulySeptember NovemberApril
Directors’ Remuneration report
Directors’ Remuneration Policy (2022)
Annual Report on Remuneration
Reporting requirements
The Report reflects the reporting requirements on remuneration matters in accordance with the Companies Act 2006 and the Large
and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). The Report also meets the UK
Listing Authority’s Listing Rules and the Disclosure and Transparency Rules. The Report describes how the Board has complied with the
provisions set out in the UK Corporate Governance Code 2018 relating to remuneration matters.
Main activities during the financial year
The Committee has an annual cycle of work to ensure that all responsibilities are met over a calendar year. The Committee met four
times during the year; the list below summarises the key items considered by the Committee during the year ended 30 September 2022.
We have presented the Annual Report on Remuneration
(the ‘Report’) to set out how the Policy of the Company
has been applied in 2022 and how the Committee
intends to apply the Policy going forward. An advisory
shareholder resolution to approve this report will be
proposed at the AGM.
Assessment of remuneration
performance
• Review of financial and non-financial
performance ratings
• Review of CRO risk report
• Consideration of application of discretion
Wider workforce
• Update on FY21 wider workforce bonuses
• Review of CSOP discretionary awards
Directors’ Remuneration Report
• Review of FY21 Directors’ Remuneration
Report
Governance
• Update on shareholdings against guidelines
• Market developments update
Assessment of remuneration
performance
• EIP interim performance assessment
Remuneration schemes
• Update on share schemes
Remuneration Policy
• Remuneration Policy review
• Internal audit on implementation of
Remuneration Policy
Governance
• Appointment of Remuneration Committee
consultants
• Review of approach to Material Risk Takers
regulation
Specific remuneration arrangements
• Review of Board executive pay structure
Remuneration Policy
• Remuneration Policy review
Wider workforce
• FY23 pay review
• Staff benefits review
• Gender pay gap review
Directors’ Remuneration Report
• Review of draft FY22 Directors’
Remuneration Report
Remuneration Policy
• Review of FY23 Remuneration Policy
Assessment of remuneration performance
• Update on FY22 financial and non-financial
performance
• Review of proposed objectives for FY23
Governance
• Annual Committee evaluation
• Annual review of Committee terms of
reference
• Annual review of Committee meeting cycle
For more information on the Committee’s Terms of Reference visit ajbell.co.uk.
Advice to the Committee
In relation to its consideration of Directors’ remuneration during the year, the Committee has received advice from:
• The Chair, Chief Executive Officer, Chief Financial Officer, HR Director and Company Secretary; and
• Deloitte LLP (Deloitte).
Deloitte is retained to provide independent and objective advice to the Committee as required. Deloitte is a member of the
Remuneration Consultants Group and, as such, voluntarily operated under the Code of Conduct in relation to executive remuneration
consulting in the UK. Deloitte has provided advice covering annual remuneration report and policy disclosures, market practice and
corporate governance updates. Fees for providing remuneration advice to the Committee were £38,000 for the year ended
30 September 2022. The Committee assesses from time to time whether this appointment remains appropriate or should be
put out to tender and takes into account the Remuneration Consultants Group Code of Conduct when considering this.
Consideration of employment conditions
elsewhere in the Group
The Committee is updated on a regular basis on the structure
and quantum of the all-employee remuneration framework as
well as throughout the year being informed about the context,
challenges and opportunities relating to the remuneration of
the wider workforce to enable the Committee to consider the
broader employee context when making Executive remuneration
decisions.
The Chief Executive Officer determines the salary increases and
bonuses for all employees, other than the Executive Directors,
the Executive Committee, Company Secretary and Material Risk
Takers whom are subject to the approval of the Committee. The
Group is committed to offering a market competitive reward
package for all employees. The Chief Executive Officer discusses
the increase in payroll cost and the total amount to be paid in
bonuses with the Committee before implementing the salary
increases and bonuses.
The Committee spent considerable time in the second half of
the 2022 financial year formulating this Policy. The Committee
considers the pay and employment conditions of all other
employees when setting and implementing the Policy and the
level of salary increase for the wider workforce is taken into
account when determining any salary increase for Executive
Directors. Through our Employee Voice Forum, we have engaged
with staff on topics such as diversity & inclusion, culture and pay
and benefits. The Committee intends to engage further with the
workforce on this once the new Policy has been approved by
shareholders.
Consideration of shareholder views
The Remuneration Committee greatly values the continued
dialogue with shareholders and regularly engages with
shareholders and representative bodies to take their views
into account when setting and implementing the Company’s
remuneration policies. The Company engaged with shareholders
and their proxy advisers on the proposed new Policy. More detail
on the engagement with shareholders in 2022 can be found in
the Remuneration Committee Chair’s letter on page 105.
Legacy remuneration arrangements
The Committee reserves the right to make any remuneration
payments and/or payments for loss of office (including exercising
any discretions available to it in connection with such payments)
notwithstanding that they are not in line with the policy set out
above where the terms of the payment were agreed:
• before the policy came into effect (provided that, in the case of
any payment agreed after the Company’s 2020 AGM, they are in
line with the policy in place at the time the terms were agreed
or were otherwise approved by shareholders); or
• at a time when the relevant individual was not a Director of the
Company and, in the opinion of the Committee, the payment
was not in consideration for the individual becoming a Director
of the Company; and to satisfy contractual commitments under
legacy remuneration arrangements.
For these purposes, ‘payments’ includes the Committee satisfying
awards of variable remuneration and, in relation to an award over
shares, the terms of the payment are ‘agreed’ at the time the
award is granted.
Strategic report
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Other information
114 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 115
Committee evaluation
As indicated within the Corporate Governance report, the Remuneration Committee assessed its own effectiveness during the year.
This identified a small number of improvements which will be implemented during the forthcoming year. Overall, the Committee was
satisfied that it continues to operate effectively.
Implementation of the Remuneration Policy for 2021/22
The following table sets out total remuneration for each Director in respect of the year ending 30 September 2022.
Total single figure remuneration (Audited)
Executive Incentive Plan
(c)
£000
Year
Salary and
fees
(a)
£000
Benefits
(b)
£000
Annual
award
Deferred
award
Pension
(d)
£000
Total
remuneration
£ 000
Total fixed
remuneration
£ 000
Total variable
remuneration
£000
Executive Director
Andy Bell 2022 499 18 237 356 — 1,110 517 593
2021 482 18 277 414 — 1,191 500 691
Michael
Summersgill
2022 313 1 128 193 — 635 314 321
2021 226 1 102 152 — 481 227 254
Roger Stott
(From
1 October 2021)
2022 275 2 113 169 — 559 277 282
2021 — — — — — — — —
Peter Birch
(From
1 July 2022)
2022 78 — — — — 78 78 —
2021 — — — — — — — —
Non-Executive Directors
Helena
Morrissey
(From 1 July 2021)
2022 150 — — — — 150 150 —
2021 23 — — — — 23 23 —
Evelyn Bourke
(From 1 July 2021)
2022 57 — — — — 57 57 —
2021 13 — — — — 13 13 —
Eamonn
Flanagan
2022 60 — — — — 60 60 —
2021 53 — — — — 53 53 —
Margaret
Hassall
(From
1 September 2021)
2022 57 — — — — 57 57 —
2021 4 — — — — 4 4 —
Simon Turner 2022 60 — — — — 60 60 —
2021 53 — — — — 53 53 —
Les Platts
(Stepped down
26 January 2022)
2022 43 — — — — 43 43 —
2021 130 — — — — 130 130 —
Laura
Carstensen
(Stepped down
26 January 2022)
2022 20 — — — — 20 20 —
2021 53 — — — — 53 53 —
EIP options are granted at the start of the performance period and therefore executives are exposed to the impact of any subsequent
movement in the share price over the performance period. In the period between grant and vesting, the share price decreased from
375.6p to 354.8p and is therefore attributable to a c. 6% reduction in the award values.
Directors’ Remuneration report
Annual Report on Remuneration
The figures in the single figure tables above are derived from the following:
(a) Salary and
fees
The amount of salary/fees earned in respect of the year. A salary sacrifice pension arrangement is operated by the
Company. Directors’ salaries are shown gross of salary sacrifice pension contributions.
(b) Benefits
The benefits received by the Executive Directors comprise:
• private medical insurance; and
• life assurance is provided to the CEO.
(c) Executive
Incentive Plan
Annual award for FY22: the value of the annual award earned in respect of the financial year is based on the share
price at vesting of 354.8p. A description of performance against the measures which applied for the financial year is
provided on pages 118 and 119.
Deferred award for FY22: the value of the deferred award earned in respect of the financial year is based on the
share price at initial vesting of 354.8p. A description of performance against the measures which applied for the
financial year is provided on pages 118 and 119. Note: a deferred award will normally be released following the end
of a deferral period starting on the date on which the performance condition is assessed and ending in the fourth
year after the start of the performance period.
The values in the single figure of remuneration table are calculated in accordance with the applicable regulations
by reference to the share price at vesting. The values of the deferred awards are included in the FY22 table,
notwithstanding that the values will not be released to the Directors until the end of the deferral period. In the
period between grant and vesting, the share price decreased from 375.6p to 354.8p and is therefore attributable
to a c. 6% reduction in the award values.
The values for the FY21 annual and deferred awards were based on the share price at vesting of 422.2p.
(d) Pension
Excluding any pension contributions made in respect of an individual under the Company’s salary sacrifice
arrangement, none of the Directors received any other employer pension contributions in respect of the year.
Base salary and fees
The Executive Directors’ base salaries were reviewed in September 2022. In reviewing base salaries the Committee took into account the
new roles of the Executive Directors following the board restructure, as well as salaries paid elsewhere across the Group, relevant market
data and information on remuneration practices in peer companies.
Base salary as at
1 October 2022
Base salary as at
1 October 2021
%
Change
Andy Bell n/a £498,613 n/a
Michael Summersgill £500,000 £312,752 See below
Roger Stott £291,500 £275,000 6%
Peter Birch £310,000 n/a n/a
Salaries for FY23
As set out on page 8 Michael Summersgill succeeded Andy Bell as CEO on 1 October 2022 in line with the Board’s long-established
succession plan, and his salary on appointment was increased to £500,000 as a result. This is an increase of 0.28% compared to the
former CEO and, as set out on page 104 is positioned around lower quartile compared to the market data.
There is no base salary increase for Peter Birch as his base salary was agreed at £310,000 on his appointment in July 2022.
The COO’s salary increase was lower than the average 7% base salary increase for the wider workforce for 2022/23.
Strategic report
Governance
Financial statements
Other information
116 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 117
Details of Chair and Non-Executive Directors’ fees are detailed below.
Base fee as at
1 October
2022
Base fee as at
1 October
2021
Helena Morrissey (Chair) £190,800 £90,000
Evelyn Bourke £53,000 £50,000
Eamonn Flanagan £53,000 £50,000
Margaret Hassall £53,000 £50,000
Simon Turner £53,000 £50,000
Les Platts
1
N/A £130,000
Laura Carstensen
1
N/A £50,000
1. Les Platts and Laura Carstensen stepped down from the Board on 26 January 2022.
An additional fee of £10,000 is payable for each Non-Executive Director (excluding the Board Chair) in respect of acting as a
Committee Chair.
Helena Morrissey’s fee of £90,000 as at 1 October 2021 increased to £180,000 when appointed as Chair of the Board on
26 January 2022.
Executive Incentive Plan (EIP) (Audited)
For the financial year ended 30 September 2022, the maximum EIP awards granted to Andy Bell as CEO equated to 187.5% of base salary,
and 150% of base salary for Michael Summersgill as Deputy CEO and Roger Stott as COO.
Executive Director
Maximum
opportunity
On-target
opportunity Number of shares Face value at grant
1
Performance period
2
Andy Bell 187.5% of salary 125% of salary 99,722 Annual
149,584 Deferred
£373,958
£560,940
Financial year ended
30 September 2022
Michael Summersgill 150% of salary 100% of salary 50,040 Annual
75,060 Deferred
£187,650
£281,475
Financial year ended
30 September 2022
Roger Stott 150% of salary 100% of salary 44,000 Annual
66,000 Deferred
£165,000
£247,500
Financial year ended
30 September 2022
1. For these purposes, the face value of the award is calculated by multiplying the number of shares over which the award was granted by 375p, the five-day average share price
prior to grant date.
2. Each award was subject to performance conditions assessed over the financial year ended 30 September 2022 (as described further below). Deferred awards are also subject to
a performance underpin for a further three years (to 30 September 2025).
The EIP awards are made up of an annual award and deferred award (40% and 60% of the total number of shares respectively) both
granted as nominal cost options. Both the annual and deferred awards are assessed against a balanced scorecard of financial and non-
financial measures, linked to the KPIs and strategy of the business, over the financial year ending 30 September 2022 as set out below:
Finance and Assurance Growth Our customers Our technology Our people
Revenue
PBT
Diluted EPS
Total customers
Total AUA
Customer retention rates PBT margin Staff engagement
Weighting:
CEO: 50%
Deputy CEO: 50%
COO: 50%
Weighting:
CEO: 17.5%
Deputy CEO: 12.5%
COO: 12.5%
Weighting:
CEO: 17.5%
Deputy CEO: 15%
COO: 22.5%
Weighting:
CEO: 7.5%
Deputy CEO: 15%
COO: 5%
Weighting:
CEO: 7.5%
Deputy CEO: 7.5%
COO: 10%
Payout for performance between threshold and stretch is calculated on a stepped basis. The payout for each individual metric is 33% of
maximum at threshold, 67% of maximum at on-target performance and 100% of maximum at stretch. The resultant payout for each of
the five KPI areas is based on an assessment of each performance measure, in the round, and taking into account outperformance
above stretch.
Directors’ Remuneration report
Annual Report on Remuneration
Finance and Assurance
Threshold Target Stretch Actual
Revenue £141.1m £156.8m £172.5m £163.8m
Profit before tax £46.2m £51.3m £56.5m £58.4m
Diluted EPS 9.09p 10.10p 11.11p 11.35p
Commentary on achievements
The Committee noted strong revenue performance despite a challenging market, outperforming target by 4.5% due to increased
customer numbers and an increase in the average interest rate earned on customer cash balance. PBT and DEPS outperformed stretch
targets, primarily driven by the increase in revenue and strong profit margin performance.
Payout (as a % of the maximum): 91%
Growth
Threshold Target Stretch Actual
Total customers 465,923 517,692 569,461 440,589
Total AUA £73.7bn £81.8bn £90.0bn £69.2bn
Commentary on achievements
Target growth was set at 35% for total customers. Despite customer numbers increasing by 57,835 during the year, total customers for
the year fell short of the threshold target due to a challenging operating environment.
The committee noted that we continued to see strong underlying AUA inflows across both our advised and D2C platform propositions,
however the uncertainty across global markets contributed to a £7.4 billion adverse market movement on asset values, resulting in a 5%
reduction to total AUA in the year.
Payout (as a % of the maximum): 0%
Our customers
Threshold Target Stretch Actual
Combined AJBIC/AJ Bell customer % retention rate 84.6% 94.0% 100.0% 95.5%
Commentary on achievements
The customer retention rate of platform customers remained very high, exceeding target by 1.5%.
Payout (as a % of the maximum): 67%
Our technology
Threshold Target Stretch Actual
Profit margin 29.4% 32.7% 36.0% 35.6%
Commentary on achievements
The Committee noted above target performance with profit margin outperforming target 2.9ppts, due to increasing revenues whilst also
investing in our brand, technology and propositions to support the long-term growth of the business.
Payout (as a % of the maximum): 67%
Our people
Target Actual
Star rating from Best Companies survey results 3-star 3-star
Commentary on achievements
The staff engagement measure is based on a single target (that is either achieved or not), to achieve a 3-star Best Companies survey
rating. This is the highest engagement level achievable in the survey and the Committee noted that a 100% payout would only be
awarded in the case of exceptional performance, for example placing in the top 10 UK companies to work for.
We maintained a 3-star status in the Best Companies survey this year and therefore this target was met.
Payout (as a % of the maximum): 67%
Strategic report
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Financial statements
Other information
118 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 119
The Committee recognised the strong performance in the year whilst also investing for the future with the development of two new
simplified propositions.
In considering the extent to which the Executive Directors’ EIP awards vested, the Committee assessed achievement against the financial
and non-financial targets set alongside the findings of the CRO risk report, in which no adverse findings were reported. They also
considered relevant external market conditions.
Accordingly, the CEO’s, Deputy CEO’s and COO’s awards vested at 67%, 72% and 72% respectively, as regards both the annual and
deferred awards. Further detail is included in the table below. The Committee considers that the level of payout is reflective of the overall
performance of the Group in the year and is appropriate.
Granted
Vested and
released
Initially vested
and deferred Forfeited
CEO
Annual awards 99,722 66,813 — 32,909
Deferred awards 149,584 — 100,221 49,363
Deputy CEO
Annual awards 50,040 36,195 — 13,845
Deferred awards 75,060 — 54,293 20,767
COO
Annual awards 44,000 31,826 — 12,174
Deferred awards 66,000 — 47,740 18,260
The deferred awards are also subject to performance underpins for a further three years. The underpin conditions are set out below.
Underpin Measure Details
Grow shareholder value Measurement of the underlying
performance and strength of the
Company
No material deterioration in the underlying performance of the
Company which is significantly greater than any deterioration in
the performance of comparator listed financial services companies.
Risk, conduct and compliance Effective individual and
Company risk management
No material failure in risk management, conduct or compliance.
The participants are entitled to acquire shares following the assessment of the underpins but (other than as regards sales to cover tax
liabilities) participants are required to hold acquired shares (and to not dispose of shares) for a further 12 months.
EIP for FY23
In line with our policy limits, the maximum EIP awards granted as a percentage of base salary will be increased as follows:
FY22 FY23 – within current policy limits
CEO Target: 125% of salary
Max: 187.5% of salary
Target: 133% of salary
Max: 200% of salary
CFO Target: 125% of salary
Max: 187.5% of salary
Target: No change
Max: No change
COO Target: 100% of salary
Max: 150% of salary
Target: 125% of salary
Max: 187.5% of salary
Given Peter Birch joined the business on 1 July 2022 the pro-rated FY22 EIP award, to reflect the three months Peter was employed
during FY22, will be added to the FY23 EIP award. This award will be granted as part of the FY23 EIP award and will be subject to the
same performance targets as the FY23 EIP award.
As part of the implementation of the new Policy for FY23, we reviewed the inclusion of ESG related metrics in the EIP. In setting the
performance measures and targets for FY23 we have also been mindful of the Consumer Duty rules and need to ensure our reward
policies and practices appropriately reflect our focus on ensuring good customer outcomes.
Actual targets for FY23 have not been disclosed due to commercial sensitivity. However, the Committee intends to disclose the
performance targets and performance against them retrospectively in the 2023 Directors’ Remuneration Report, with the proposed
measures and respective weightings set out on page 104.
Directors’ Remuneration report
Annual Report on Remuneration
Payments made to former Directors and payments for loss of office during the year (Audited)
No payments for loss of office and no payments to any former Director of the Company were made in the year.
Statement of Directors’ shareholding and share interests (Audited)
The interests of the Directors and their connected persons in the Company’s ordinary shares as at 30 September 2022 (or date of
cessation) and 30 September 2021 were as follows:
30 September
2022
30 September
2021
Executive Directors
Andy Bell 93,870,739 93,471,016
Michael Summersgill 1,195,812 1,145,054
Roger Stott 210,872 198,567
Peter Birch 19,000 —
Non-Executive Directors
Helena Morrissey 2,490 —
Evelyn Bourke 85,297 33,000
Eamonn Flanagan 151,090 151,090
Margaret Hassall — —
Simon Turner 185,953 185,953
Les Platts 310,517
1
310,517
Laura Carstensen —
1
—
1. Les Platts and Laura Carstensen stepped down from the Board on 26 January 2022. Their shareholdings are shown at this date.
Since 30 September 2022 Roger Stott has acquired an interest in an additional 91 shares under the Company’s BAYE plan, via awards of
partnership shares which were made in accordance with the terms of an agreement which was put in place before the year-end. There
have been no other subsequent change in Directors’ shareholdings and share interests.
Executive Directors’ shareholding guidelines
The Committee has adopted a shareholding guideline for the Executive Directors, which requires a shareholding equivalent to 350% of
base salary for the Chief Executive Officer and 300% of base salary for the other Executive Directors as further described in the Directors’
Remuneration Policy. Both Andy Bell and Michael Summersgill have significantly exceeded this guideline at 30 September 2022, based
on the share price at the end of the financial year. Roger Stott and Peter Birch were appointed as Executive Directors during the year and
have built up a shareholding of 219% and 16% respectively. As set out in the Remuneration Policy, Executive Directors are expected to
retain half of all shares acquired through the EIP until the shareholding guideline is met.
As part of the new policy, the Committee is updating a post-cessation shareholder requirement to reflect best practice. This will require
Executive Directors to retain shares of value equal to the shareholder guideline (or value of their shareholding at cessation if lower)
for two years. Shares which the Executive Director has purchased or which were held at the date of admission to the London Stock
Exchange are not relevant shares for these purposes.
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Other information
120 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 121
Executive Directors’ interests under share schemes (Audited)
Awards under share plans:
Award date
As at
1 October
2021
Granted
during the
year
Forfeited
during the
year
Exercised
during the
year
As at 30
September
2022 Status
Andy Bell Deferred
award
18 Jan 19 214,804 — — — 214,804 Subject to
performance
underpins
Annual
award
12 Dec 19 71,181 — — 71,181 — Vested and
exercised
Deferred
award
12 Dec 19 106,772 — — — 106,772 Subject to
performance
underpins
Annual
award
10 Dec 20 65,491 — — 65,491 — Vested and
exercised
Deferred
award
10 Dec 20 98,237 — — — 98,237 Subject to
performance
underpins
Annual
award
9 Dec 21 — 99,722 32,909 — 66,813 Vested and
exercised
Deferred
award
9 Dec 21 — 149,584 49,363 — 100,221 Subject to
performance
underpins
Michael Summersgill Deferred
award
18 Jan 19 81,675 — — — 81,675 Subject to
performance
underpins
Annual
award
12 Dec 19 26,655 — — 26,665 — Vested and
exercised
Deferred
award
12 Dec 19 39,983 — — — 39,983 Subject to
performance
underpins
Annual
award
10 Dec 20 24,109 — — 24,109 — Vested and
exercised
Deferred
award
10 Dec 20 36,163 — — — 36,163 Subject to
performance
underpins
Annual
award
9 Dec 21 — 50,040 13,845 — 36,195 Vested and
exercised
Deferred
award
9 Dec 21 — 75,060 20,767 — 54,293 Subject to
performance
underpins
Roger Stott Annual
award
9 Dec 21 — 44,000 12,174 — 31,826 Vested and
exercised
Deferred
award
9 Dec 21 — 66,000 18,260 — 47,740 Subject to
performance
underpins
Current service contracts and terms of engagement
Executive Directors
The Executive Directors are employed under rolling service contracts that can be terminated by the Executive Director or the Company
with six months’ notice. These contracts were dated as follows:
Contract date
Andy Bell 1 November 2019
Michael Summersgill 1 November 2019
Roger Stott 1 November 2019
Peter Birch 1 July 2022
Directors’ Remuneration report
Annual Report on Remuneration
As announced on 27 September 2022, Andy Bell stepped down from the Board with effect from 30 September 2022 but will continue to
work with the business in a consultancy role. AJ Bell Business Solutions Limited, a wholly owned subsidiary of AJ Bell plc, entered into a
consultancy agreement with Blythe Business Services Ltd (BBSL), a company associated with Andy, on 1 October 2022. Under the terms
of the Consultancy Agreement, BBSL will be paid an annual fee of £150,000 for procuring the services of Andy for not less than 48 full
days a year. The term of the Consultancy Agreement began on 1 October 2022 and can be terminated by either party on not less than
one month's notice expiring at any time after 30 September 2023.
Andy will retain his deferred awards under the EIP which will continue to be released following the end of a deferral period subject to the
satisfaction of the performance underpin. The holding period and post-employment shareholding guidelines will also continue to apply.
Non-Executive Directors
The Non-Executive Directors do not have service agreements and are appointed subject to letters of appointment that can be terminated
with one month’s notice by either the Non-Executive Director or the Company. The letters of appointment are dated as follows:
Contract date
Helena Morrissey 1 July 2021
Evelyn Bourke 1 July 2021
Eamonn Flanagan 22 March 2018
Margaret Hassall 1 September 2021
Simon Turner 1 July 2014
Les Platts
1
15 September 2008
Laura Carstensen
1
29 March 2018
1. Les Platts and Laura Carstensen stepped down from the Board on 26 January 2022.
Performance graph and historical Chief Executive Officer remuneration outcomes
The graph below shows the total shareholder return (TSR) performance of the Company’s shares in comparison to the FTSE 250 for the
period from the date of admission, 12 December 2018 to 30 September 2022. The TSR performance of the FTSE 250 index has been
selected as it is considered the most appropriate comparator group to AJ Bell. For the purposes of the graph, TSR has been calculated
as the percentage change during the period in the market price of the shares, assuming that dividends are reinvested in shares on the
ex-dividend date. The graph shows the change in value, up to October 2022, of £100 invested in shares in the Company on the date of
admission compared with the change in value of £100 invested in the FTSE 250.
100
50
150
200
250
Total shareholder return for AJ Bell against the FTSE 250 index
AJ Bell
Total Shareholder Return (rebased to 100)
FTSE 250
Dec 18
Feb 19
Apr 19
Jun 19
Aug 19
Oct 19
Dec 19
Apr 20
Jun 20
Aug 20
Oct 20
Dec 20
Feb 20
Apr 21
Jun 21
Aug 21
Oct 21
Dec 21
Feb 21
Apr 22
Jun 22
Aug 22
Oct 22
Feb 22
Strategic report
Governance
Financial statements
Other information
122 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 123
Directors’ Remuneration report
Annual Report on Remuneration
CEO pay remuneration
The table below shows details of the total remuneration and EIP vesting (as a percentage of the maximum opportunity) for the Chief
Executive Officer.
Total single
figure
remuneration
£’000
Annual EIP
award (% of
maximum
opportunity)
Deferred EIP
award (% of
maximum
opportunity)
2022 1,110 67% 67%
2021 1,191 79% 79%
2020 1,297 79% 79%
2019 1,906 65% 65%
Directors' remuneration ratios and percentage change
The table below sets out in relation to salary/fees, taxable benefits and incentives, the percentage change in pay for the Directors
compared to the wider workforce from 2020, 2021 and 2022. The annual change in salary is based on the salary of employees (on a full-
time-equivalent basis) as at 30 September 2022, 30 September 2021 and 30 September 2020, and the annual change in bonus excludes
employees that are not eligible for a bonus. The average employee change has been calculated by reference to the mean change.
Roger Stott and Peter Birch were appointed during the year 30 September 2022, and accordingly, have been excluded from the table
below. Laura Carstensen and Les Platts stepped down from the Board on 26 January 2022 and have therefore also been excluded from
the table below.
2022 2021 2020
Salary/Fees Benefits
Annual
bonus Salary/Fees Benefits
Annual
bonus Salary/Fees Benefits
Annual
bonus
Andy Bell 3.4% 5.2% (16.6%)
2
0.0% 12.0% (15.7%)
2
2.5% (16.7%) (43.6%)
Michael Summersgill 27.9% (3.5%) 20.9% 0.0% 13.4% (17.7%)
2
2.5% (87.5%) (44.4%)
Helena Morrissey
1
40.0% n/a n/a n/a n/a n/a n/a n/a n/a
Evelyn Bourke
1
11.8% n/a n/a n/a n/a n/a n/a n/a n/a
Eamonn Flanagan 11.7% n/a n/a 13.2% n/a n/a 2.2% n/a n/a
Margaret Hassall
1
11.8% n/a n/a n/a n/a n/a n/a n/a n/a
Simon Turner 11.7% n/a n/a 13.2% n/a n/a 2.2% n/a n/a
Wider workforce 9.9% 6.9% 13.5% 3.3% 28.0% 11.1% 4.9% (56.0%) (8.3%)
1. Helena Morrissey, Evelyn Bourke and Margaret Hassall’s fees have been annualised for comparative purposes.
2. The reduction in the annual bonus for the CEO is based on the awards granted under the EIP which are subject to share price movements. For the FY22 awards, the share price
decreased from 375.6p to 354.8p in the period between the grant and vesting. For the FY21 awards, the share price decreased from 430.5p to 422.2p.
CEO pay ratio
The table below sets out the ratio at median (50th percentile), 25th and 75th quartile of the total remuneration received by the CEO
compared with the total remuneration received by employees (calculated on a full-time equivalent basis). The ratios have been
calculated in accordance with the Companies (Miscellaneous Reporting) Requirements 2018 (the Regulations).
Year Pay element Method
25th (Lower
quartile)
50th
(Median)
75th (Upper
quartile)
2022 Salary Option A 22:1 19:1 11:1
Total remuneration Option A 46:1 37:1 21:1
2021 Salary Option A 23:1 19:1 12:1
Total remuneration Option A 52:1 42:1 25:1
2020 Salary Option A 24:1 19:1 12:1
Total remuneration Option A 59:1 47:1 29:1
Remuneration figures used to calculate the above ratio:
Year Pay element CEO
25th (Lower
quartile)
50th
(Median)
75th (Upper
quartile)
2022 Salary £498,613 £22,171 £26,449 £44,964
Total remuneration £1,109,710 £24,331 £30,052 £51,731
2021 Salary £481,752 £21,188 £25,272 £40,716
Total remuneration £1,190,522 £22,823 £28,380 £46,996
2020 Salary £481,752 £20,349 £25,008 £38,568
Total remuneration £1,297,056 £22,026 £27,511 £44,197
The calculation methodology used to identify the employees at each quartile for 2022 and 2021 is Option A, as defined in the regulations.
We believe this is the most robust and accurate approach, and in line with shareholder expectations. The median, 25th and 75th percentile
colleagues were determined based on calculating total annual remuneration up to and including 30 September. Total full-time equivalent
remuneration for employees reflects all pay and benefits received by an individual in respect of the relevant year and has been calculated
in line with the methodology for the single figure of remuneration for the CEO, shown on page 116. Only employees that were employed
at the end of the financial year were included. Annual bonuses of employees are based on the expected pay-out. The reason for this is
that the annual bonus results had not been paid at the time of preparing the ratio calculations. The workforce comparison is based on
the payroll data for the financial year for all employees (including the CEO but excluding Non-Executive Directors).
A significant proportion of the CEO’s pay is in the form of variable pay through the EIP scheme. CEO pay will therefore vary year on year
based on Company and share price performance. The CEO to all-employee pay ratio will therefore also fluctuate taking this into account.
The Committee believes that the median pay is consistent with the pay, reward and progression policies for the UK employee population.
Distribution statement
The following table sets out the total remuneration for all employees and the total shareholder distributions:
2022
£’000
2021
£’000
%
change
Total remuneration for all employees
1
54,887 47,654 15%
Dividends and share buybacks
2
50,383 29,138 73%
1. Total remuneration for all employees represents the underlying staff cost for the Group.
2. Dividend and share buybacks represent the interim and final dividend paid on ordinary shares and shares repurchased from employees during the year.
Statement of voting at the AGM
Votes cast by proxy and at the meeting at the AGM held on 26 January 2022 in respect of the Directors’ Remuneration Report, and at the
AGM on 22 January 2020 in respect of the Directors’ Remuneration Policy, were as follows:
Resolution
Votes for
including
discretionary
votes % for
Votes
against % against
Total votes
cast excluding
votes withheld
Votes
withheld
Total votes
cast including
votes withheld
Approve Directors’
Remuneration Report 305,141,189 91.35 28,902,262 8.65 334,043,451 1,635,419 335,678,870
Approve Directors’
Remuneration Policy 213,832,758 96.98 6,665,486 3.02 220,498,244 113,805 220,612,049
Approval
This report was approved by the Board on 30 November 2022 and signed on its behalf by:
Margaret Hassall
Chair of the Remuneration Committee
30 November 2022
Strategic report
Governance
Financial statements
Other information
124 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 125
Directors' report
The Directors present their annual report
on the affairs of the Group, together with
the consolidated financial statements
and Auditor’s report, for the year ended
30 September 2022.
Additional disclosures
The Strategic report is a requirement of the UK Companies Act
2006 and can be found on pages 1 to 67 of this Annual Report.
The Company has chosen, in accordance with section 414C (11)
of the Companies Act 2006, to include details of the following
matter in its Strategic report that would otherwise be disclosed
in the Directors’ report.
Detail Page(s)
Likely future developments in the business 15
Financial instruments Note 25 to the
consolidated
financial statements
Research and development 56
Greenhouse gas emissions 46 to 53
Non-financial reporting 53
The Company is required to disclose certain information under
Listing Rule 9.8.4R in the Directors’ report or to advise where
such relevant information is contained. Information required to
be disclosed by the Listing Rules, and which is not included in the
Directors’ report, can be located as follows:
Listing Rule 9.8.4
Required Disclosure
Location in the Annual Report
and Financial Statements
(4) Details of any
long-term incentive
schemes
Directors’ Remuneration Report on
pages 108 and 109 and note 24 to the
consolidated financial statements
(12) Current year
dividend waiver
agreements
Note 11 to the consolidated financial
statements provides information on
employee benefit trusts that have
waived dividends
(13) Future dividend
waiver agreements
Note 11 to the consolidated financial
statements provides information on
employee benefit trusts that have
waived dividends
14) Information
regarding controlling
shareholder
A statement regarding the substantial
shareholdings is on page 127 of the
Directors’ report
Principal activity
Market of the London Stock Exchange.
Results and future performance
A review of the Group’s results and activities is covered within the
Strategic report on pages 1 to 67. This incorporates the Chair’s
statement and Chief Executive Officer’s review, which include an
indication of likely future developments.
Key performance indicators
Key performance indicators in relation to the Group’s activities are
continually reviewed by senior management and are presented on
pages 24 and 25.
Dividends
The Board recommends a final dividend of 4.59p per ordinary
share for the year ended 30 September 2022. This, together with
the interim dividend of 2.78p per ordinary share paid on 1 July
2022, makes a total dividend in respect of the financial year ended
30 September 2022 of 7.37p per ordinary share. The final dividend
proposed by the Directors will be subject to approval at the AGM
on 8 February 2023. If approved, the Company will pay a final
dividend on 17 February 2023 to shareholders on the register at
20 January 2023. The ex-dividend date will be 19 January 2023.
The AJ Bell Employee Benefit Trust has elected to waive all
dividends on shares held under the Trust relating to AJ Bell plc.
Further details can be found in note 11 to the financial statements.
Corporate governance
The Corporate Governance report is set out on pages 78 to 85.
The information in that section is incorporated into this Directors’
report by reference, is deemed to form part of this report and so
fulfils the requirements of the corporate governance statement for
the purposes of DTR 7.2.1.
A statement as to the Company’s compliance with the Code and
details of where the Code is publicly available can be found in the
Chair’s Introduction to Corporate Governance on page 70.
Section 172 statement
Details of how interests of stakeholders are considered in
the Board’s decision making can be found in the Section 172
statement on pages 28 to 29.
Articles of Association
The Articles of Association of the Company were adopted by
special resolution on 15 November 2018. Any amendments to
the Articles of Association may be made in accordance with
the provisions of the Companies Act 2006, by way of a special
resolution.
Directors
The Directors of the Group who were in office during the year
are disclosed on pages 72 to 75.
Under the Company’s Articles of Association all of the Directors
are required to retire from the Board at the AGM. Accordingly,
each of the Directors, being eligible, will offer themselves for
re-election by the members of the Company.
The service agreements of current Executive Directors and
the letters of appointment of the Non-Executive Directors are
available for inspection at the Company’s registered office.
Directors’ powers
Subject to company law and the Company’s Articles, the Directors
may exercise all of the powers of the Company and may delegate
their power and discretion to committees. The ExCo is responsible
for the day-to-day management of the Group. The Articles give
the Directors power to appoint and replace Directors.
Directors’ interests
Directors’ interests in the shares of AJ Bell plc are disclosed in the
Directors’ Remuneration Report on page 121.
During the period covered by this report, no Director had any
material interest in a contract to which the Company or any of its
subsidiary undertakings was a party (other than their own service
contract) that requires disclosure under the requirements of the
Companies Act 2006.
Directors’ indemnities
The Company has made qualifying third-party indemnity
provisions for the benefit of its Directors. These provisions were
for the purposes of section 234 of the Companies Act 2006 and
were in force throughout the financial year and remain so at the
date of this report.
Share capital
Details of the Company’s authorised and issued share capital,
together with details of the movements therein, are set out in
note 23 to the financial statements. This includes the rights and
obligations attaching to shares and restrictions on the transfer
of shares.
The Company has one class of ordinary share which carries no
right to fixed income. There are no specific restrictions on the
size of the holding nor on the transfer of shares, which are both
governed by the general provisions of the Articles and prevailing
legislation.
The Directors are not aware of any agreements between holders
of the Company’s shares that may result in restrictions on the
transfer of securities or on voting rights.
The AJ Bell Employee Benefit Trust was established in order to
provide benefits for the Group’s employees and former employees
and certain of their relatives. This includes acting as a vehicle for
the acquisition and holding of a pool of shares to satisfy share
awards under the Company’s employee share plans. During the
year, 318,601 EIP options were exercised and issued from the Trust
as discussed within note 23.
Authority to purchase its own shares
The Company is permitted pursuant to the terms of its Articles
of Association to purchase its own shares subject to shareholder
approval. The Company was granted authority at the 2022 AGM
to purchase its own shares up to an aggregate value of 10% of
the issued nominal capital. No shares were purchased under this
authority in the year to 30 September 2022 and up to the date of
this report. The authority will expire on the earlier of the end of
the next AGM and 28 February 2023.
Substantial shareholdings
As at 30 September 2022, the Company had been notified in
accordance with the DTR 5 of the following shareholdings.
Interested party Number
% of ordinary
shares
Andy Bell 93,870,739 22.83
Liontrust Investment Partners LLP 20,577,810 5.01
Fergus Lyons 13,762,236 3.35
Between 30 September 2022 and 30 November 2022 (the latest
practicable date for inclusion in this report), the Company was
notified that in accordance with FCA Disclosure and Transparency
Rule 5.1.2, that Liontrust Investment Partners LLP, on 28 November
2022, informed the Company that it had increased its holding to
10.377% of the Company’s issued share capital.
Capital management
The Investment Firms Prudential Regime (IFPR), a new prudential
regime for UK firms authorised under the Markets in Financial
Instruments Directive (MIFID), came into effect on 1 January 2022.
The Group is subject to the rules introduced by the Financial
Conduct Authority (FCA) through the publication of the Prudential
Sourcebook for MIFID Investment Firms (MIFIDPRU), which
replaces the CRD.
The Group has a consolidated regulatory capital requirement.
The capital held to meet this requirement comprises share capital,
share premium and retained earnings. The Directors ensure that
the level of capital held in the Group:
• meets the regulatory capital requirements;
• provides a strong base for ongoing trading activities; and
• is sufficient to support the Group’s long-term strategy.
The Group’s regulatory capital requirement and details can be
found under our MIFIDPRU Part Eight disclosures, which can
be found on the Group’s website at ajbell.co.uk. The Group
continues to hold a significant amount of capital above its
regulatory capital requirement.
Financial instruments and risk management
The risk management objectives and policies of the Group are set
out within note 25 of the financial statements.
Political and charitable contributions
During the year the Group made charitable donations of £299,000
(2021: £272,000). No political contributions were made by the
Group during the year (2021: £nil).
Strategic report
Governance
Financial statements
Other information
126 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 127
Directors' report
Market Abuse Regulation
The Company has its own internal dealing rules which apply to all
staff and which encompass the requirements of the Market Abuse
Regulation.
Going concern and Viability statement
The consolidated financial statements have been prepared on a
going concern basis. After making enquiries and considering the
Group’s financial position, its business model, strategy, financial
forecasts and regulatory capital together with its principal risks
and uncertainties, the Directors have a reasonable expectation
that the Group will be able to continue in operation and meet
its liabilities as they fall due for at least 12 months from the date
of signing this report. The going concern basis of preparation is
discussed within note 2.1 to the consolidated financial statements.
In accordance with provision 31 of the UK Corporate Governance
Code, the Directors have assessed the prospects of the Group
over a longer period than the 12 months required by the going
concern provision. Details of the assessment can be found on
page 67.
Events after reporting date
Details of significant events since the reporting date are contained
in note 29 to the financial statements.
Disclosure of information to auditor
Each of the persons who is a Director at the date of approval
of this Annual Report confirms that:
• so far as the Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
• the Director has taken all the steps that they ought to have
taken as a Director in order to make themselves aware of any
relevant audit information and to establish that the Company’s
auditor is aware of that information.
Auditor
Resolutions to reappoint BDO LLP as auditor of the Company and
to authorise the Audit Committee to determine its remuneration
will be proposed at the AGM to be held on 8 February 2023.
Annual General Meeting
The AGM will be held at 12 noon on 8 February 2023 and will
be held as a physical meeting as detailed in the Corporate
Governance report on page 85. Details of the resolutions to be
proposed at the AGM are set out in the separate circular which
has been sent to all shareholders and is available on the AJ Bell
website at ajbell.co.uk/group/investor-relations/agm.
Approved by the Board on 30 November 2022 and signed on its
behalf by:
Christopher Bruce Robinson
Company Secretary
4 Exchange Quay
Salford Quays
Manchester
M5 3EE
Corporate social responsibility
Information about the Group’s approach to the environment,
including details of our greenhouse gas emissions, is set out on
pages 46 to 53 of the Strategic report.
Disabled employees
We welcome applications from people with disabilities and we
make reasonable adjustments to the recruitment and selection
process for those who are interested in working for the Group. In
the event of employees becoming disabled, every effort is made
to ensure that their employment with the Group continues and
that the appropriate facilities and training are arranged. It is the
policy of the Group that the training, career development and
promotion of disabled persons must, as far as possible, be the
same as that of other employees.
Engagement with employees
The Group places considerable value on the involvement of its
employees and has continued to keep them informed on matters
affecting them as employees and on the various other factors
affecting the performance of the Group. This is achieved through
formal and informal meetings and internal publications. Employee
representatives are consulted regularly on a wide range of matters
affecting their current and future interests via AJ Bell’s Employee
Voice Forum which is chaired by Helena Morrissey. Employee
share schemes have been operated since June 2005. These
schemes have promoted wider employee involvement in the
Group. Further information on employee engagement is set
out on pages 39 to 43 of the Strategic report.
The Directors believe that the incentivisation of senior management
and key employees by equity participation is an important factor
in the continuing success of the Group. This policy aligns the
interests of management with those of the wider shareholder base.
Engagement with suppliers, customers and
other stakeholders
Details of how the Group engages with its key stakeholders,
including its shareholders, can be found on pages 26 and 27
of the Strategic report.
Internal control
The Board has overall responsibility for the maintenance of
the internal control system established by the Group and
places considerable reliance on a strong control environment.
However, such a system is designed to manage rather than
eliminate the risk of failure to achieve business objectives. It can
only provide reasonable and not absolute assurance against
material misstatement or loss. Compliance with internal control
procedures is monitored by the Directors through the Risk
and Compliance Committee and the Audit Committee, which
are responsible for overseeing the Group’s risk management,
compliance and internal audit functions.
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, is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Group’s position and performance, business model and strategy.
Approved by the Board on 30 November 2022 and signed on its
behalf by:
Christopher Bruce Robinson
Company Secretary
4 Exchange Quay
Salford Quays
Manchester
M5 3EE
Strategic report
Governance
Financial statements
Other information
128 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 129
132 Independent auditor’s report
to the members of AJ Bell plc
139 Consolidated income statement
140 Consolidated statement
of financial position
141 Consolidated statement
of changes in equity
142 Consolidated statement
of cash flows
143 Notes to the consolidated
financial statements
169 Company statement
of financial position
170 Company statement
of changes in equity
171 Notes to the Company
financial statements
Financial
statements
Strategic report
Governance
Financial statements
Other information
130 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 131
Independent auditor’s report to the members of AJ Bell plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state
of the Group’s and of the Parent Company’s affairs as at 30
September 2022 and of the Group’s profit for the year then
ended;
• the Group financial statements have been properly prepared
in accordance with UK adopted international accounting
standards;
• the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of AJ Bell Plc (the ‘Parent
Company’) and its subsidiaries (the ‘Group’) for the year ended
30 September 2022 which comprise the consolidated income
statement, the consolidated statement of financial position, the
consolidated statement of changes in equity, the consolidated
statement of cash flows, the notes to the consolidated financial
statements, the company statement of financial position, the
company statement of changes in equity and notes to the
company financial statements, including a summary of significant
accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law
and UK adopted international accounting standards. The financial
reporting framework that has been applied in the preparation
of the Parent Company financial statements is applicable law
and United Kingdom Accounting Standards, including Financial
Reporting Standard 101 Reduced Disclosure Framework (United
Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion. Our audit opinion is consistent with the additional report
to the audit committee.
Independence
Following the recommendation of the Audit Committee, we were
appointed by the Board of Directors in June 2019 to audit the
financial statements for the year ending 30 September 2020 and
subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is three
years, covering the years ending 30 September 2020 to
30 September 2022. We remain independent of the Group and
the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-
audit services prohibited by that standard were not provided to the
Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Group and the
Parent Company’s ability to continue to adopt the going concern
basis of accounting included:
• review of the prior year forecasts prepared by management
compared to current year actuals and consider the reason for
variations;
• review of the current year forecasts prepared by management
and challenge of the key inputs and assumptions such as
customer growth rate and retention included therein based on
our knowledge of the business and understanding of the risks
arising from the current economic environment; and
• understanding and review of the Group’s stress testing of
liquidity and regulatory capital, including challenging the
rationale behind the severity of the stress scenarios that were
used based on our understanding of the wider economic
environment in which the business is operating.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group and the Parent Company’s ability to continue as a going
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has
applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’
statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
Overview
Coverage
100% (2021: 100%) of Group profit before tax
100% (2021: 100%) of Group revenue
100% (2021: 100%) of Group total assets
2022 2021
Key audit matters
Existence and accuracy of revenue Y Y
Acquisition accounting – consideration amount and allocation
of consideration across the assets acquired N Y
Share based payments – post-acquisition earn-out Y Y
Acquisition accounting – consideration amount and allocation of consideration across the assets
acquired is no longer considered to be a key audit matter as there have been no acquisitions during 2022
Materiality
Group financial statements as a whole
£2.9m (2021: £2.7m) based on 5% (2021: 5%) of profit before tax.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override
of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material
misstatement.
The group engagement team carried out a full scope audit of all significant and non-significant components in the group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Strategic report
Governance
Financial statements
Other information
132 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 133
Independent auditor’s report to the members of AJ Bell plc
Key audit matter How the scope of our audit addressed the key audit matter
Existence and
accuracy of
revenue
Please refer to
accounting policies
in note 2.4 and
revenue breakdown
in note 5
There is a risk that revenue may be
misstated due to errors in system
calculations or manual processes.
The key risk in AJ Bell Securities
Limited and AJ Bell Management
Limited is that fees are not
calculated in line with agreements
in place. We therefore consider
the accuracy of revenue to be a
significant risk and a key
audit matter.
There are also various performance
incentive schemes in place that
mean that management may be
incentivised to overstate revenue.
We therefore consider the existence
of revenue to be a significant risk
and a key audit matter.
As disclosed in note 5 of the
financial statements, management
and the Board categorise revenue
into three sub categories:
• “recurring fixed”, which includes
the recurring administration fees;
• “recurring ad valorem”, which
includes custody fees, interest
income and investment
management fees; and
• “transactional”, which includes
dealing fees, FX fees and non
recurring administration fees.
For Dealing, Custody and FX fees, where revenue is calculated based on
transactions with and assets of customers, we gained an understanding of the
processes and controls, including IT controls around the end-to-end payment
process and evaluated the design effectiveness of key controls. This included
an assessment of the appropriateness of the configuration rules within the
system that were designed to ensure funds are appropriately allocated and
tagged to each individual customer and testing to check the configuration is
working appropriately.
Based on this assessment we used a combination of detailed testing and
controls based testing to gain assurance around the integrity of the system
configuration rules to check that fees were calculated accurately and in line
with agreements.
The key aspects of this testing are set out below:
• We tested the accuracy of revenue by performing a recalculation in total of
key income streams on a client-by-client basis, including dealing income, FX
income and custody income. This was then compared against the amounts
calculated by the system and recorded in the financial statements;
• We agreed a sample of dealing revenue items to the dealing instruction
received from the customer and to the deal confirmation received from
the market. For deals placed over the telephone we reviewed a sample
of telephone recordings to verify that the deal was placed in line with the
customer’s verbal instructions;
• We agreed a sample of client money and custody asset transactions in the
year to third party documentation to gain assurance over the allocation of
assets and transactions at an individual client level;
• We utilised IT procedures on the system’s audit log for the full year to gain
comfort that no inappropriate changes were made by privileged users to
assets or trades, by reviewing any instances of asset or trade amendments
made by privileged users and corroborating these to supporting evidence to
confirm they were appropriate changes being made;
• For a sample of Custody Solutions and Institutional customers, we checked
that their dealing and custody fees were being calculated in accordance with
the underlying agreements.
Our approach to the testing of pension administration fees was as follows:
Tests of detail included:
• Performed a recalculation of the recurring administration fees based on the
data extract from the system and compared this to the figures recognised
in the financial statements. We agreed a sample of items within the data to
supporting documentation in order to gain assurance over the existence and
accuracy of the data set;
• For a sample of the non-recurring administration fees, we agreed a sample
to customer instructions and checked that the associated fee was in line with
AJ Bell’s documented fee structure; and
• Performed a reconciliation of the pension administration fees recorded in
the client system to the banking reports for the 12 month period.
Key audit matter How the scope of our audit addressed the key audit matter
Existence and
accuracy of
revenue cont.
Please refer to
accounting policies
in note 2.4 and
revenue breakdown
in note 5
For interest income, we performed the following procedures:
• Verification that the deposited money per the internally maintained interest
income workings reconciled to the amount of deposited client money per
separately maintained internal records;
• Tested the controls around the external client money reconciliations; and
• Tested the controls around the external Self-Invested Personal Pension
(SIPP) money reconciliations and agreed client money and SIPP money
balances to external bank confirmations.
Tests of detail included:
• Agreed 100% of interest rates, deposit amounts and terms to independent
confirmations received directly from the bank, and to confirmations sent by
the banks to AJ Bell at the point the deposit was placed and;
• Recalculated the interest income to be recognised for the period for a
sample of deposits.
Key observations:
From testing we consider the existence and accuracy of revenue has been
appropriately addressed.
Share-based
payments –
post-acquisition
earn-out
Please refer to
accounting policy
2.5 and note 24
Given post-acquisition payments in
relation to the Adalpha acquisition
are in the form of shares and linked
to certain milestones being met over
a prolonged period of time, there is
judgement involved in determining
the share-based payment charge
for future periods based on the
probability of completion of
each milestone.
There is also an element of
judgement involved in determining
the appropriate amount of the
share-based payment charge
that should be treated as capital
expenditure.
Due to the judgements involved
we considered this to be a key
audit matter.
We have reviewed the calculation of the share-based payment charge
associated with the post-acquisition earn-out attributable to the Adalpha
acquisition which occurred in the prior year and are satisfied that it has been
calculated appropriately under IFRS 2 Share-based payments.
We have challenged management on the assumptions applied around
the number of shares that will vest through assessment of progress and
development made against the associated milestones.
We are satisfied that the assumptions are reasonable in the context of the
progress made against the associated milestones since acquisition.
We also performed a sensitivity analysis to assess the maximum impact
associated with any potential changes in the milestones.
We have tested the controls in place around the assessment of the split of
activities between capital and expense in nature and how this correlates to
the amount of share-based payment charge and other staff costs capitalised
compared to amounts recognised in the income statement.
We have also challenged the appropriateness of the capitalisation of these
amounts through agreement to underlying source documentation such as
payroll records and monthly employee capitalisation worksheets.
Key observations:
The judgements involved in the calculation of the overall share-based payment
charge appear reasonable based on the procedures performed.
Strategic report
Governance
Financial statements
Other information
134 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 135
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions
of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily
be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Group financial statements Parent company financial statements
2022
£m
2021
£m
2022
£k
2021
£k
Materiality
2.9 2.7 810 870
Basis for
determining
materiality
5% of profit before tax
on ordinary activities
before taxation.
5% of profit before tax
on ordinary activities
before taxation.
1.5% of total assets of the
parent company.
1.5% of total assets of the
parent company.
Rationale for
the benchmark
applied
Profit on ordinary activities
before taxation attributable
to shareholders has been
used as we consider this
to be the most significant
determinant of the Group’s
financial performance
used by shareholders and
other users of the financial
statements.
Profit on ordinary activities
before taxation attributable
to shareholders has been
used as we consider this
to be the most significant
determinant of the Group’s
financial performance
used by shareholders and
other users of the financial
statements.
Total assets is considered
the most relevant metric to
the users of the financial
statements given that the
company is parent entity
of the group and does not
earn any income other than
dividends from subsidiary
entities.
Total assets is considered
the most relevant metric to
the users of the financial
statements given that the
company is parent entity
of the group and does not
earn any income other than
dividends from subsidiary
entities.
Performance
materiality
2.175 2.0 607 653
Basis for
determining
performance
materiality
Performance materiality
was calculated using 75%
of overall materiality based
on our risk assessment
procedures and the
expectation of a low
level of misstatements.
Performance materiality
was calculated using 75%
of overall materiality based
on our risk assessment
procedures and the
expectation of a low
level of misstatements.
Performance materiality
was calculated using 75%
of overall materiality based
on our risk assessment
procedures and the
expectation of a low
level of misstatements.
Performance materiality
was calculated using 75%
of overall materiality based
on our risk assessment
procedures and the
expectation of a low
level of misstatements.
Component materiality
We set materiality for each component of the Group based on
a percentage of 75% of Group materiality dependent on the
size and our assessment of the risk of material misstatement of
that component. Component materiality was set at £2.175m
(2021: £2.0m). In the audit of each component, we further
applied performance materiality levels of 75% of the component
materiality to our testing to ensure that the risk of errors exceeding
component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to
them all individual audit differences in excess of £58K (2021:
£54K). We also agreed to report differences below this threshold
that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the
Annual Report and Financial Statements, other than the financial
statements and our auditor’s report thereon. Our opinion on
the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Independent auditor’s report to the members of AJ Bell plc
Corporate Governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the parent company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements and our knowledge obtained during the audit.
Going concern and
longer-term viability
• The Directors' statement with regards to the appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this
assessment covers and why the period is appropriate.
Other Code provisions
• Directors' statement on fair, balanced and understandable;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks;
• The section of the Annual Report that describes the review of effectiveness of risk management and
internal control systems; and
• The section describing the work of the Audit Committee.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies
Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the Directors’ report.
Directors’ remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Matters on which we are
required to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic
alternative but to do so.
Strategic report
Governance
Financial statements
Other information
136 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 137
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis
of these financial statements.
Extent to which the audit was capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
We gained an understanding of the legal and regulatory
framework applicable to the Group, components and the industry
in which it operates, and considered the risk of acts by the Group
and the components which were contrary to applicable laws and
regulations, including fraud through inquiries with management,
review of the Board and other committee minutes and our
knowledge brought forward from previous audits. These included
but were not limited to compliance with Companies Act 2006, the
relevant accounting standards, the Financial Conduct Authority’s
regulations and the Listing Rules as well as consideration of
required regulatory capital levels and whether there was a risk
that required capital levels might be breached in an extreme
downside scenario.
We focused on laws and regulations that could give rise to a
material misstatement in the financial statements. Our tests
included, but were not limited to:
• agreement of the financial statement disclosures to underlying
supporting documentation;
• enquiries of management and Those Charged With Governance
relating to the existence of any fraud, contingent liabilities and
non-compliance with laws and regulations;
• review of correspondence with the regulator;
• review of minutes of board meetings and other committee
meetings throughout the period until the date of our audit
report for discussions around potential irregularities throughout
the period and for instances of non-compliance with laws and
regulations and fraud; and
• obtaining an understanding of the control environment in
monitoring compliance with laws and regulations.
We considered which areas of the financial statements might
be most susceptible to fraud and irregularities and identified the
following areas:
• Existence and accuracy of revenue;
• Capitalisation of the share-based payment expense and other
staff costs attributable to the development of the Adalpha
platform proposition;
• Management override of controls.
Our tests included, but were not limited to:
• The procedures set out in the Key Audit Matters section above;
• In respect of the risk of management override of internal
controls, testing a sample of journals which met defined
fraud risk criteria by agreeing those journals to supporting
documentation and evaluating whether there was evidence
of bias by Directors that represented a risk of material
misstatement due to fraud.
The engagement team was deemed to collectively have the
appropriate competence and capabilities to identify or recognise
non-compliance with laws and regulations. We communicated
relevant identified laws and regulations and potential fraud
risks to all engagement team members and remained alert
to any indications of fraud or non-compliance with laws and
regulations throughout the audit. Our audit procedures were
designed to respond to risks of material misstatement in the
financial statements, recognising that the risk of not detecting a
material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we are to
become aware of it.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might
state to the Parent Company’s members those matters we
are required to state to them in an auditor’s 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 Parent
Company and the Parent Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Neil Fung-On
(Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
30 November 2022
BDO LLP is a limited liability partnership registered in
EnglandandWales (with registered number OC305127).
Independent auditor’s report to the members of AJ Bell plc Consolidated income statement
for the year ended 30 September 2022
Note
2022
£000
2021
£000
Revenue 5 1 63 , 8 47 14 5 , 8 2 6
Administrative expenses (1 04,866 ) (89,975 )
Operating profit 6 58, 981 5 5 , 8 51
Investment income 8 198 23
Finance costs 9 (76 8 ) (790 )
Profit before tax 5 8, 411 55,0 8 4
Tax expense 10 (11,672 ) (11, 26 2 )
Profit for the financial year attributable to:
Equity holders of the Parent Company 4 6 ,73 9 43,822
Earnings per share:
Basic (pence) 12 11 . 39 1 0.71
Diluted (pence) 12 11 . 35 10.67
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.
The notes on pages 143 to 168 form an integral part of these financial statements.
Strategic report
Governance
Financial statements
Other information
138 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 139
Consolidated statement of financial position
as at 30 September 2022
Note
2022
£000
2021
(Restated)
1
£000
Assets
Non-current assets
Goodwill 13 6,9 91 6,9 91
Other intangible assets 14 8,7 7 9 6 ,0 14
Property, plant and equipment 15 3,32 5 3 , 3 51
Right-of-use assets 16 12 ,273 13, 325
Deferred tax asset 18 610 940
Current assets
Trade and other receivables 19 49 ,436 3 7, 4 6 2
Current tax receivable 38 51
Cash and cash equivalents 20 8 4,03 0 9 4,0 0 8
Total assets 165, 4 8 2 162 ,14 2
Liabilities
Current liabilities
Trade and other payables 21 (15 ,6 0 4 ) (12 ,76 5 )
Lease liabilities 16 (1,56 6 ) (1 ,7 0 8 )
Provisions 22 (519 ) (1 ,5 26 )
(1 7, 6 8 9 ) (15,9 9 9 )
Non-current liabilities
Lease liabilities 16 (12 ,39 5 ) (13, 8 8 6 )
Provisions 22 (2,004 ) (1,5 49 )
(14 ,39 9 ) (15,435 )
Total liabilities (32 ,0 88 ) (31 ,4 3 4 )
Net assets 133,39 4 1 3 0 ,70 8
Equity
Share capital 23 51 51
Share premium 8, 93 0 8,65 8
Own shares (473 ) (74 0 )
Retained earnings 124, 886 1 2 2 ,7 3 9
Total equity 133,39 4 1 3 0,7 0 8
1. See note 2 for details of a change in accounting policy and the resulting restatement of prior year.
The financial statements were approved by the Board of Directors and authorised for issue on 30 November 2022 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 2022
Share capital
£000
Share
premium
£000
Retained
earnings
£000
Own shares
£000
Total equity
£000
Balance at 1 October 2021 51 8,658 122 ,739 (74 0 ) 1 3 0,7 0 8
Total comprehensive income for the year:
Profit for the year – – 4 6 ,73 9 – 4 6,7 39
Transactions with owners, recorded directly in equity:
Issue of shares – 272 – – 27 2
Dividends paid – – (50,3 83 ) – (50,383 )
Equity settled share-based payment transactions – – 6 ,162 – 6 ,16 2
Deferred tax effect of share-based payment transactions – – (275 ) – (275 )
Tax relief on exercise of share options – – 171 – 171
Share transfer relating to EIP (note 23) – – (267 ) 267 –
Total transactions with owners – 272 (4 4, 592 ) 267 (4 4 ,053 )
Balance at 30 September 2022 51 8, 93 0 124,886 (47 3 ) 133 ,39 4
Share capital
£000
Share
premium
£000
Retained
earnings
£000
Own shares
£000
Total equity
£000
Balance at 1 October 2020 51 8, 459 10 2 ,103 (1,147 ) 10 9, 4 6 6
Total comprehensive income for the year:
Profit for the year – – 43,822 – 43, 822
Transactions with owners, recorded directly in equity:
Issue of shares – 19 9 – – 19 9
Dividends paid – – (2 9,1 3 8 ) – (2 9,1 3 8 )
Equity settled share-based payment transactions – – 6,33 0 – 6,33 0
Deferred tax effect of share-based payment transactions – – (202 ) – (202 )
Tax relief on exercise of share options – – 231 – 2 31
Share transfer relating to EIP – – (110 ) 110 –
Share transfer relating to earn-out arrangement – – (2 97 ) 2 97 –
Total transactions with owners – 19 9 (2 3,18 6 ) 4 07 (2 2,5 80 )
Balance at 30 September 2021 51 8,65 8 1 2 2 ,7 39 (74 0 ) 1 3 0 ,70 8
The notes on pages 143 to 168 form an integral part of these financial statements. The notes on pages 143 to 168 form an integral part of these financial statements.
Strategic report
Governance
Financial statements
Other information
140 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 141
Consolidated statement of cash flows
for the year ended 30 September 2022
Note
2022
£000
2021
(Restated)
1
£000
Cash flows from operating activities
Profit for the financial year 4 6 ,73 9 43,822
Adjustments for:
Investment income (198 ) (23 )
Finance costs 76 8 790
Income tax expense 11 ,67 2 11, 26 2
Depreciation and amortisation 3,6 43 3,62 3
Share-based payment expense 24 4,7 2 8 4,9 52
Decrease in provisions and other payables (1 ,0 07 ) (69 )
Loss on disposal of property, plant and equipment 21 13
Profit on disposal of right-of-use assets – (3 )
Increase in trade and other receivables (1 1 , 9 74 ) (6, 88 9 )
Increase / (decrease) in trade and other payables 2,8 39 (1, 3 47 )
Cash generated from operations 5 7, 2 3 1 5 6 , 131
Income tax paid (11 ,4 33 ) (11,455 )
Interest expense paid – (1 )
Net cash flows from operating activities 45 ,7 98 4 4,6 75
Cash flows from investing activities
Purchase of other intangible assets 14 (2 ,3 65 ) (2,370 )
Purchase of property, plant and equipment 15 (1 ,014 ) (1 , 1 74 )
Acquisition of subsidiary, net of cash acquired – (2 ,5 61 )
Interest received 198 23
Net cash flows used in investing activities (3,181 ) (6,082 )
Cash flows from financing activities
Payments of principal in relation to lease liabilities 16 (1,716 ) (1 , 241 )
Payments of interest on lease liabilities 16 (76 8 ) (78 9 )
Proceeds from issue of share capital 23 272 199
Dividends paid 11 (50,3 83 ) (2 9, 13 8 )
Net cash flows used in financing activities (52 ,595 ) (3 0,9 69 )
Net (decrease) / increase in cash and cash equivalents (9,978 ) 7, 6 2 4
Cash and cash equivalents at beginning of year 20 94 ,0 08 86,38 4
Total cash and cash equivalents at end of year 20 8 4, 030 9 4,0 0 8
1. See note 2 for details of a change in accounting policy and the resulting restatement of prior year.
1 General information
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 4 Exchange Quay, Salford Quays,
of ownership is given in note 6 of the Company’s separate financial statements.
The consolidated financial statements were approved by the Board on 30 November 2022.
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.
Change in accounting policy
Due to a change in the Group's accounting policy to recognise electronic payments at the settlement date, rather than when they are
initiated, to more appropriately reflect the nature of these transactions, the comparative amounts have been restated.
The impact on the 30 September 2021 balance sheet is an increase to trade and other receivables of £3.1m and a decrease to cash and
cash equivalents of £3.1m. Net cash outflow from operating activities in 2021 has decreased by £3.1m. There is no impact on the income
statement, earnings per share or net assets.
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
IFRS 9, IAS 39, IFRS 7, IFRS 4
andIFRS 16
Interest Rate Benchmark Reform – Phase 2 (Amendments) 1 January 2021
IFRS 16 Covid-19-Related Rent Concessions beyond 30 June 2021
(Amendments)
1 April 2021
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.
Notes to the consolidated financial statements
for the year ended 30 September 2022
The notes on pages 143 to 168 form an integral part of these financial statements.
Strategic report
Governance
Financial statements
Other information
142 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 143
2 Significant accounting policies continued
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 on pages 1 to 67 and the Directors’ report on pages 126 to 128. 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 on page 67. 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
ittransfers 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
asthe 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.
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
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 comprise 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, 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.
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144 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 145
2 Significant accounting policies continued
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.
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
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.
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146 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 147
2 Significant accounting policies continued
2.15 Impairment of intangible assets (excluding goodwill), property, plant and equipment
andleased 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 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 external 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 as 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
thecash 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.
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
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 2022 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,
itiswritten off against the provision. Subsequent recoveries of amounts previously written off are credited against the provision.
Changesin 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 Group has an employee benefit trust, the AJ Bell Employee Benefit Trust, used for the granting of shares to certain employees.
AJBell plc is considered to be the sponsoring employer and so the assets and liabilities of the Trust are recognised as those of AJ Bell plc.
Shares of AJ Bell plc held by the Trust 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
ofassets and liabilities within the next financial year.
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148 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 149
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
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 on pages 139 and 140 respectively.
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:
2022
£000
2021
£000
Recurring fixed 29,787 28,598
Recurring ad valorem 102,184 7 7,955
Transactional 31,876 39,273
163,847 145,826
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 on page 165.
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
on pages 164 and 165.
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:
2022
£000
2021
£000
Amortisation of intangible assets 1,034 862
Depreciation of property, plant and equipment 1,019 1,071
Depreciation of right-of-use assets 1,590 1,690
Loss on the disposal of property, plant and equipment 21 13
Profit on the disposal of right-of-use assets – (3)
Auditor’s remuneration (see below) 496 368
Staff costs (note 7) 54,887 47,6 5 4
During the year there was no expenditure in relation to research and development expensed to the income statement (2021: £nil).
Auditor’s remuneration
The analysis of auditor’s remuneration is as follows:
2022
£000
2021
£000
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 155 116
Fees payable to the Company’s auditor for the audit of the Company’s subsidiaries’ accounts, pursuant to
legislation 204 151
Audit-related assurance services 89 62
Other assurance services 48 39
496 368
Of the above, audit-related services for the year totalled £473,000 (2021: £349,000).
7 Staff costs
The average monthly number of employees (including Executive Directors) of the Group was:
2022
No.
2021
No.
Operational and support 761 709
Technology 225 181
Distribution 109 99
1,095 989
Employee benefit expense for the Group during the year:
2022
£000
2021
£000
Wages and salaries 41,427 35,516
Social security costs 4,808 3,918
Retirement benefit costs 3,857 3,202
Termination benefits 67 66
Share-based payments (note 24) 4,728 4,952
54,887 47,65 4
In addition to the above, £1,315,000 staff costs and £1,434,000 share-based payment expenses (2021: £454,000 staff costs and
£1,378,000 share-based payment expenses) have been capitalised as an internally generated intangible asset (see note 14).
8 Investment income
2022
£000
2021
£000
Interest income on cash balances 198 23
9 Finance costs
2022
£000
2021
£000
Interest on lease liabilities 768 789
Interest on other financial liabilities – 1
768 790
10 Taxation
Tax charged in the income statement:
2022
£000
2021
£000
Current taxation
UK Corporation Tax 11,855 11,629
Adjustment to current tax in respect of prior periods (238) (11)
11,617 11,618
Deferred taxation
Origination and reversal of temporary differences 62 (328)
Adjustment to deferred tax in respect of prior periods 45 12
Effect of changes in tax rates (52) (40)
55 (356)
Total tax expense 11,672 11,262
Corporation Tax is calculated at 19% of the estimated assessable profit for the year to 30 September 2022 (2021: 19%).
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150 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 151
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
10 Taxation continued
In addition to the amount charged to the income statement, certain tax amounts have been credited directly to equity as follows:
2022
£000
2021
£000
Deferred tax relating to share-based payments (note 18) 275 202
Current tax relief on exercise of share options (171) (231)
104 (29)
The charge for the year can be reconciled to the profit per the income statement as follows:
2022
£000
2021
£000
Profit before tax 58,411 55,084
UK Corporation Tax at 19% (2021: 19%) 11,098 10,466
Effects of:
Expenses not deductible for tax purposes 669 709
Income not taxable in determining taxable profit (86) –
Amounts not recognised 236 126
Effect of rate changes to deferred tax (52) (40)
Adjustments to current and deferred tax in respect of prior periods (193) 1
11,672 11,262
Effective tax rate 20.0% 20.4%
Following the enactment of the Finance Act 2021 the standard UK Corporation Tax rate will remain at 19% before increasing to 25% from
1April 2023. Accordingly, the Group’s profits for this accounting year are taxed at 19%.
Deferred tax has been recognised at either 19% or 25% being the rate expected to be in force at the time of the reversal of the temporary
difference (2021: 19% or 25%). A deferred tax asset in respect of future share option deductions has been recognised based on the
Company’s share price at 30 September 2022.
11 Dividends
2022
£000
2021
£000
Amounts recognised as distributions to equity holders during the year:
Final dividend for the year ended 30 September 2021 of 4.50p (2020: 4.66p) per share 18,460 19,070
Special dividend for the year ended 30 September 2021 of 5.00p (2020: nil) per share 20,511 –
Interim dividend for the year ended 30 September 2022 of 2.78p (2021: 2.46p) per share 11,412 10,068
Total dividends paid on equity shares 50,383 29,138
Proposed final dividend for the year ended 30 September 2022 of 4.59p (2021: 4.50p) per share 18,843 18,471
Proposed special dividend for the year ended 30 September 2022 of nil (2021: 5.00p) per share – 20,523
A final dividend declared of 4.59p per share is payable on 17 February 2023 to shareholders on the register on 20 January 2023.
The ex-dividend date will be 19 January 2023. The final dividend is subject to approval by the shareholders at the Annual General
Meeting on 8 February 2023 and has not been included as a liability within these financial statements.
Dividends are payable on all ordinary shares as disclosed in note 23.
AJ Bell Employee Benefit Trust, which held 567,100 ordinary shares (2021: 885,701) in AJ Bell plc at 30 September 2022, has agreed to
waive all dividends. This represented 0.1% (2021: 0.2%) of the Company’s called-up share capital. The maximum amount held by the
Trust during the year was 885,701.
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 calculation of basic and diluted earnings per share is based on the following data:
2022
£000
2021
£000
Earnings
Earnings for the purposes of basic and diluted earnings per share being profit attributable to equity holders
ofthe Parent Company 46,739 43,822
2022
No.
2021
No.
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS in issue during the year 410,248,095 409,249,186
Effect of potentially dilutive share options 1,485,721 1,643,911
Weighted average number of ordinary shares for the purposes of fully diluted EPS 411,733,816 410,893,097
2022 2021
Earnings per share (EPS)
Basic (pence) 11.39 10.71
Diluted (pence) 11.35 10.67
13 Goodwill
2022
£000
2021
£000
Cost
At 1 October 7,103 3,772
Acquired through business combinations – 3,331
At 30 September 7,103 7,103
Impairment
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 three-year period representing the remaining useful economic life of
theasset.
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 20% (2021: 17%) has been used to assess the expected growth in revenue for the three-year forecast period. Thisis
based on a combination of historical and expected future performance;
• economies of scale are expected to be gained in the medium to long-term, although there are not expected to be any significant
changes to the nature of administrative expenses; and
• modest ongoing maintenance expenditure is required on the assets within the CGU in order to generate the expected level of
cashflows.
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 8.1% (2021: 14.52%).
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152 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 153
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
13 Goodwill continued
The pre-tax discount rate has been calculated using an independent external source, and decreased during the year due to a change
in methodology in the calculation of the Group’s weighted average cost of capital (WACC). 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 2022 goodwill is not impaired.
14 Other intangible assets
Key operating
system
£000
Contractual
customer
relationships
£000
Computer
software
and mobile
applications
£000
Total
£000
Cost
At 1 October 2020 8,707 2,135 5,385 16,227
Additions 1,832 – 1,916 3,748
Disposals – – (832) (832)
Arising on acquisition 1,142 – – 1,142
At 30 September 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
Amortisation
At 1 October 2020 6,854 2,135 5,252 14,241
Amortisation charge 337 – 525 862
Eliminated on disposal – – (832) (832)
At 30 September 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 7,52 8 – 5,159 12,687
Carrying amount
At 30 September 2022 6,902 – 1,877 8,779
At 30 September 2021 4,490 – 1,524 6,014
At 30 September 2020 1,853 – 133 1,986
Average remaining amortisation period 3 years 1 year
The amortisation charge above is included within administrative expenses in the income statement.
Additions include an amount of £3,556,000 relating to internally generated assets for the year ended 30 September 2022 (2021:
£2,289,000), of which £1,434,000 (2021: £1,378,000) relates to capitalised share-based payment expenses (see note 24).
The net carrying amount of key operating systems, and computer software and mobile applications include £5,724,000 and £nil
respectively (2021: £2,974,000 and £457,000), relating to assets in development which are currently not amortised.
At the year end, the Group had entered into contractual commitments for the acquisition of computer software amounting to £103,000
(2021: £nil).
The disposal of contractual customer relationships held at nil net book value relates to customer relationships acquired in 2007 and 2012
that no longer exist.
15 Property, plant and equipment
Leasehold
improvements
£000
Office
equipment
£000
Computer
equipment
£000
Total
£000
Cost
At 1 October 2020 2,144 942 4,709 7,795
Arising on acquisition – 11 52 63
Additions 48 27 1,099 1,174
Disposals – (26) (643) (669)
Transfers from right-of-use assets – – 393 393
At 30 September 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
Depreciation
At 1 October 2020 471 645 3,455 4,571
Arising on acquisition – 5 21 26
Charge for the year 184 169 718 1,071
Eliminated on disposal – (22) (634) (656)
Transfers from right-of-use assets – – 393 393
At 30 September 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
Carrying amount
At 30 September 2022 1,379 107 1,839 3,325
At 30 September 2021 1,537 157 1,657 3,351
At 30 September 2020 1,673 297 1,254 3,224
The depreciation charge above is included within administrative expenses in the income statement.
At the year end, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting
to£471,000 (2021: £nil).
Computer equipment includes assets under construction of £37,000 (2021: £71,000) which are currently not depreciated.
Strategic report
Governance
Financial statements
Other information
154 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 155
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
16 Leases
i) Right-of-use assets
Property
£000
Computer
and office
equipment
£000
Total
£000
Cost
At 1 October 2020 15,734 582 16,316
Additions 424 36 460
Disposals – (15) (15)
Effect of modification to leases – 42 42
Transfer to property, plant and equipment – (393) (393)
At 30 September 2021 16,158 252 16,410
Additions 538 – 538
At 30 September 2022 16,696 252 16,948
Depreciation
At 1 October 2020 1,455 339 1,794
Charge for the year 1,485 205 1,690
Eliminated on disposal – (6) (6)
Transfer to property, plant and equipment – (393) (393)
At 30 September 2021 2,940 145 3,085
Charge for the year 1,541 49 1,590
At 30 September 2022 4,481 194 4,675
Carrying amount
At 30 September 2022 12,215 58 12,273
At 30 September 2021 13,218 107 13,325
At 30 September 2020 14,279 243 14,522
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
tofifteen years and computer and office equipment for a period of one to six years.
Additions include £455,000 relating to the increase in the Group’s dilapidation provision (2021: £nil) (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
2022
£000
2021
£000
Current 1,566 1,708
Non-current 12,395 13,886
13,961 15,594
The undiscounted maturity analysis of lease liabilities is shown below:
2022
£000
2021
£000
Within one year 2,517 2,450
In the second to fifth years inclusive 8,579 8,333
After five years 7,533 8,678
Total minimum lease payments 18,629 19,461
The total lease interest expense for the year ended 30 September 2022 was £768,000 (2021: £789,000). Principal cash outflow for leases
accounted for under IFRS 16 for the year ended 30 September 2022 was £1,716,000 (2021: £1,241,000).
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
2022
£000
2021
£000
Deferred tax asset 906 1,139
Deferred tax liability (296) (199)
610 940
The movement on the deferred tax account and movement between deferred tax assets and liabilities is as follows:
Accelerated
capital
allowances
£000
Share-based
payments
£000
Short-term
timing
differences
£000
Losses
£000
Total
£000
At 1 October 2020 (47) 940 102 8 1,003
(Charge) / credit to the income statement 65 252 47 (8) 356
Charge to equity – (202) – – (202)
Acquired through business combination (217) – – – (217)
At 30 September 2021 (199) 990 149 – 940
(Charge) / credit to the income statement (97) 31 11 – (55)
Charge to equity – (275) – – (275)
At 30 September 2022 (296) 746 160 – 610
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 2022.
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 2022, deferred tax assets have not been recognised on trading losses of
£4,051,000 (2021: £2,809,000).
19 Trade and other receivables
2022
£000
2021
(Restated)
1
£000
Trade receivables 2,207 2,321
Prepayments 6,824 5,379
Accrued income 21,960 14,699
Other receivables 18,445 15,063
49,436 3 7,4 62
1. See note 2 for details of a change in accounting policy and the resulting restatement of prior year.
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 £984,000 (2021: £978,000) relating to contract assets, a movement of £6,000 (2021: £59,000) during
the year due to increased revenues.
Strategic report
Governance
Financial statements
Other information
156 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 157
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
19 Trade and other receivables continued
The ageing profile of trade receivables was as follows:
2022
£000
2021
£000
Current – not past due 747 882
Past due:
0 to 30 days 886 798
31 to 60 days 116 159
61 to 90 days 39 125
91 days and over 1,024 881
2,812 2,845
Provision for impairment (605) (524)
2,207 2,321
The movement in the provision for impairment of trade receivables is as follows:
2022
£000
2021
£000
Opening loss allowance as at 1 October 524 415
Loss allowance recognised 174 196
Receivables written off during the year as uncollectable (21) (58)
Unused amount reversed (72) (29)
Balance at end of year 605 524
In determining the recoverability of trade receivables, the Directors considered any change in the credit quality of the trade receivable
from the date credit was initially granted up to the reporting date.
20 Cash and cash equivalents
2022
£000
2021
(Restated)
1
£000
Group cash and cash equivalent balances 84,030 94,008
1. See note 2 for details of a change in accounting policy and the resulting restatement of prior year.
Cash and cash equivalents at 30 September 2022 and 30 September 2021 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
2022
£000
2021
£000
Trade payables 138 580
Social security and other taxes 2,151 2,111
Other payables 678 582
Accruals 10,428 7,473
Deferred income 2,209 2,019
15,604 12,765
Trade payables, accruals and deferred income principally comprise amounts outstanding for trade purposes and ongoing costs.
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 revenue 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 2022 is expected to be recognised as revenue in the coming year.
22 Provisions
Office
dilapidations
£000
Other
provisions
£000
Total
£000
At 1 October 2021 1,549 1,526 3,075
Additional provisions 455 – 455
Provisions used – (257) (257)
Unused provision reversed – (750) (750)
At 30 September 2022 2,004 519 2,523
Included in current liabilities – 519 519
Included in non-current liabilities 2,004 – 2,004
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 £455,000 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 and the costs associated with defending a legal case. The
provision relating to the operational tax dispute has been updated at 30 September 2022 to reflect the ongoing discussions with HMRC,
with full settlement of payments expected to be completed within the next 12 months.
23 Share capital
Issued, fully-called and paid:
2022
Number
2021
Number
2022
£
2021
£
Ordinary shares of 0.0125p each 411,091,634 410,491,708 51,386 51,311
All ordinary shares have full voting and dividend rights.
The following transactions have taken place during the year:
Transaction type Share class
Number
ofshares
Share
premium
£000
Exercise of CSOP options Ordinary shares of 0.0125p each 267,0 03 272
Exercise of EIP options Ordinary shares of 0.0125p each 176,949 –
Earn-out issue Ordinary shares of 0.0125p each 155,974 –
599,926 272
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
atgeneral meetings of the Company. They are entitled to share in the proceeds on the return of capital, or upon the winding up of
theCompany in proportion to the number of and amounts paid on shares held. The shares are non-redeemable.
Own shares
The Group has an employee benefit trust in order to acquire own shares in the Company to satisfy future share incentive plans.
Sharesheld by the Trust are held at £473,000 (2021: £740,000) being the price paid to repurchase, and the carrying value is shown
asareduction within shareholders’ equity.
During the year, 318,601 EIP options were exercised and issued from the AJ Bell Employee Benefit Trust.
The costs of operating the Trust are borne by the Group but are not material. The Trust waived the right to receive dividends on these shares.
Strategic report
Governance
Financial statements
Other information
158 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 159
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
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 £30,000. 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 £3,600 per employee in a tax year. During the year, no free shares have been
issued (2021: 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 £1,800 or, if lower, 10% of salary each year. The initial plan was an
accumulation plan where employees were required to save an amount of their gross salary for a 12 month period. The accumulation plan
ended on 6 December 2019 and employees still in the plan at that date were entitled to purchase shares using the funds saved based on
the IPO price of £1.60.
From January 2020, 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.
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.
Thefair value has been estimated using the Monte Carlo simulation model.
Earn-out arrangement
The acquisition of Adalpha in the previous year 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.
Theperformance condition included within the arrangement is not considered a market condition and therefore the expected vesting
will be reviewed at each reporting date.
Movements during the year
The tables below summarise the outstanding options for each share-based payment scheme.
CSOP
2022 2021
Number
Weighted
average
exercise price
£ Number
Weighted
average
exercise price
£
Outstanding at beginning of the year 1,015,763 3.23 1,003,968 1.90
Granted during the year 461,744 3.73 392,371 4.34
Forfeited during the year (108,611) 4.05 (57,198) 2.23
Exercised during the year (267,0 03) 1.02 (323,378) 0.61
Outstanding at the end of the year 1,101,893 3.90 1,015,763 3.23
Exercisable at the end of the year 31,462 1.04 10,000 0.52
The lowest exercise price for share options outstanding at the end of the period was 104p (2021: 52p) and the highest exercise price was
434p (2021: 434p). The weighted average remaining contractual life of share options outstanding at the end of the period was 8.3 years
(2021: 8.3 years).
OTB – Growth shares
2022 2021
Number
Weighted
average
exercise price
£ Number
Weighted
average
exercise price
£
Outstanding at beginning of the year 3,192,268 0.63 3,212,675 0.63
Vested (2,026,137) 0.63 (20,407) 0.63
Outstanding at the end of the year 1,166,131 0.63 3,192,268 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. During the year 2,026,137 ordinary shares under a call option agreement vested
and were released. 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 1.2 years (2021: 0.9 years).
BAYE – Free shares
2022
Number
2021
Number
Outstanding at beginning of the year 240,112 263,106
Forfeited during the year (4,680) (22,994)
Vested (235,432) –
Outstanding at the end of the year – 240,112
Free shares are issued to employees for free and therefore do not have an exercise price. During the year 235,432 free shares vested and
were released. There are no free shares outstanding at the end of the period.
Strategic report
Governance
Financial statements
Other information
160 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 161
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
24 Share-based payments continued
EIP
2022 2021
Number
Weighted
average
exercise price
£ Number
Weighted
average
exercise price
£
Outstanding at beginning of the year 1 ,4 87,31 3 0.000125 1,208,693 0.000125
Granted during the year 736,015 0.000125 580,146 0.000125
Exercised during the year (495,550) 0.000125 (130,695) 0.000125
Lapsed during the year (111,910) 0.000125 (145,632) 0.000125
Forfeited during the year – – (25,199) 0.000125
Outstanding during the year 1,615,868 0.000125 1, 4 87,313 0.000125
Exercisable at the end of the year 565,636 0.000125 191,509 0.000125
The weighted average remaining contractual life of EIP shares outstanding at the end of the period was 8 years (2021: 8.2 years).
CSR initiative
2022 2021
Number
Weighted
average
exercise price
£ Number
Weighted
average
exercise price
£
Outstanding at beginning of the year 2,493,766 4.01 2,493,766 4.01
Granted during the year – – – –
Forfeited during the year (831,256) 4.01 – –
Outstanding during the year 1,662,510 4.01 2,493,766 4.01
Exercisable at the end of the year – – – –
The weighted average remaining contractual life of CSR options outstanding at the end of the period was 7.2 years (2021: 8.2 years).
The first tranche of options were forfeited due to the DEPS for the year, 11.31, being below the lower DEPS target of 14.19 pence at the
end of the performance period.
Weighted average share price of options exercised
The weighted average share price of all options exercised during the year was £3.67 (2021: £4.32).
Earn-out arrangement
2022 2021
Number
Weighted
average share
price £ Number
Weighted
average share
price £
Shares granted during the year 155,974 3.15 353,032 4.25
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 09/12/2021 09/12/2021 09/12/2021
Number of shares under option 344,727 100,644 290,644
Fair value of share option from generally accepted business model (£) 3.76 3.62 3.56
Share price (£) 3.83 3.83 3.83
Exercise price of an option (£) 0.000125 0.000125 0.000125
Expected volatility 27.6 0 % 31.01% 31.01%
Expected dividend yield 1.82% 1.82% 1.82%
Risk-free interest rate 0.24% 0.50% 0.47%
Expected option life to exercise (months) 12 36 48
CSOP
Grant date 09/12/2021 10/01/2022 20/04/2022
Number of shares under option 443,766 7,936 10,042
Fair value of share option from generally accepted business model (£) 0.74 0.58 0.49
Share price (£) 3.83 3.68 2.91
Exercise price of an option (£) 3.75 3.78 2.98
Expected volatility 31.01% 27.6 5% 29.29%
Expected dividend yield 1.82% 1.89% 2.39%
Risk-free interest rate 0.50% 0.92% 1.62%
Expected option life to exercise (months) 36 36 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
andan 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 share-based payment expense of £4,728,000 (2021: £4,952,000), £1,840,000 (2021: £2,764,000)
of which relates to the earn-out arrangement.
The Group capitalised share-based payment costs of £1,434,000 (2021: £1,378,000).
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.
Strategic report
Governance
Financial statements
Other information
162 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 163
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
25 Financial instruments and risk management continued
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:
2022 2021 (Restated)
1
Amortised
cost
£000
Financial
liabilities
£000
Carrying
value
£000
Amortised
cost
£000
Financial
liabilities
£000
Carrying
value
£000
Financial assets
Trade receivables 2,207 – 2,207 2,321 – 2,321
Accrued income 21,960 – 21,960 14,699 – 14,699
Other receivables 18,445 – 18,445 15,063 – 15,063
Cash and cash equivalents 84,030 – 84,030 94,008 – 94,008
126,642 – 126,642 126,091 – 126,091
Financial liabilities
Trade and other payables – 10,598 10,598 – 8,095 8,095
Lease liabilities – 13,961 13,961 – 15,594 15,594
– 24,559 24,559 – 23,689 23,689
1. See note 2 for details of a change in accounting policy and the resulting restatement of prior year.
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:
2022
£000
2021
£000
+ 25bps (0.25%) 191 246
- 25bps (0.25%) (154) (23)
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 0.10% below and 0.60% above the prevailing base rate) and amounts paid away to customers.
The impact of a 25bps 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 25bps higher or lower than
theactual position at the time. We assume a minimum rate of return on call cash of 0bps.
2022
£000
2021
£000
+ 25bps (0.25%) 6,654 5,324
- 25bps (0.25%) (6,823) (4,901)
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.
2022
£000
2021
£000
+ 10% higher 5,846 4,850
- 10% lower (5,846) (4,850)
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, HSBC Global Asset
Management, NatWest Markets plc, Santander UK plc, Santander Financial Services 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.
Strategic report
Governance
Financial statements
Other information
164 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 165
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
25 Financial instruments and risk management continued
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
theyear.
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.
Due within
1 year
£000
1 to 5 years
£000
After 5 years
£000
Total
£000
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
2021
Trade and other payables 8,095 – – 8,095
Lease liabilities 2,450 8,333 8,678 19,461
10,545 8,333 8,678 27,55 6
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 £133,394,000 (2021: £130,708,000).
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
tobeheld 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 on page 57.
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:
Year Type
Number of
funds
Net AUM
of funds
£m
Annual
management
charge
£000
Management
charge
receivable at
30 September
£000
2022 OEIC 9 1,465.5 1,816 369
2021 OEIC 9 1,073.2 1,138 266
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 accrued income and trade 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
2022
1 October
2021
£000
Cash flows
£000
Change in
lease liability
£000
30 September
2022
£000
Lease liabilities 15,594 (1,716) 83 13,961
Total liabilities from financing activities 15,594 (1,716) 83 13,961
2021
1 October
2020
£000
Cash flows
£000
Change in
lease liability
£000
Additions
£000
Disposal
£000
30 September
2021
£000
Lease liabilities 16,345 (1,241) 42 460 (12) 15,594
Total liabilities from financing activities 16,345 (1,241) 42 460 (12) 15,594
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Governance
Financial statements
Other information
166 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 167
Notes to the consolidated financial statements continued
for the year ended 30 September 2022
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 as shown on pages 73 to 75 and the ExCo (previously EMB) as
shown on pages 76 and 77.
The remuneration expense of key management personnel is as follows:
2022
£000
2021
£000
Short-term employee benefits (excluding NI) 2,779 2,108
Retirement benefits 114 35
Share-based payment 2,389 1,256
5,282 3,399
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 on pages 116 to 120.
Dividends totalling £11,743,000 (2021: £6,766,000) 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 £772,000 (2021: £nil).
During the year Directors and their families received beneficial staff rates in relation to personal portfolios. The discount is not material
tothe Directors or to AJ Bell.
Other related party transactions
Charitable donations
During the year the Group made donations of £298,000 (2021: £272,000) 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 A J Bell, Mr M T Summersgill and Mr R Stott are directors and shareholders of both AJ Bell plc and EQ
Property Services Limited. Mr C Galbraith was a member of key management personnel in the year and shareholder of AJ Bell plc, and is
a director and shareholder of 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 £1,826,000 (2021: £1,825,000) per annum.
At the reporting date, there is no payable outstanding (2021: £nil) with EQ Property Services Limited.
Any amounts outstanding with related parties are unsecured and will be settled in cash. No guarantees have been given or received.
Noprovision 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.
Company statement of financial position
as at 30 September 2022
Note
2022
£000
2021
£000
Assets
Non-current assets
Investments 6 28,983 22,447
Current assets
Trade and other receivables – due within one year 7 2,804 2,477
Trade and other receivables – due after one year 7 7,027 5,241
Current tax asset 805 480
Cash and cash equivalents 15,502 27,92 9
26,138 36,127
Total assets 55,121 58,574
Liabilities
Current liabilities
Trade and other payables 8 (1,278) (477)
Total liabilities (1,278) (477)
Net assets 53,843 58,097
Equity
Share capital 10 51 51
Share premium 8,930 8,658
Own shares (473) (740)
Retained earnings 45,335 50,128
Total equity 53,843 58,097
The financial statements were approved by the Board of Directors and authorised for issue on 30 November 2022 and signed on its
behalf by:
Peter Birch
Chief Financial Officer
AJ Bell plc
Company registered number: 04503206
The notes on pages 171 to 175 form an integral part of these financial statements.
Strategic report
Governance
Financial statements
Other information
168 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 169
Share capital
£000
Share
premium
£000
Retained
earnings
£000
Own shares
£000
Total equity
£000
Balance at 1 October 2021 51 8,658 50,128 (740) 58,097
Total comprehensive income for the year:
Profit for the financial year – – 39,799 – 39,799
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 45,335 (473) 53,843
Share capital
£000
Share
premium
£000
Retained
earnings
£000
Own shares
£000
Total equity
£000
Balance at 1 October 2020 51 8,459 35,740 (1,147) 43,103
Total comprehensive income for the year:
Profit for the financial year – – 37,574 – 37,574
Transactions with owners, recorded directly in equity:
Issue of shares – 199 – – 199
Dividends paid – – (29,138) – (29,138)
Equity settled share-based payment transactions – – 6,330 – 6,330
Deferred tax effect of share-based payment transactions – – (202) – (202)
Tax relief on exercise of share options – – 231 – 231
Share transfer relating to EIP – – (110) 110 –
Share transfer relating to earn-out arrangement – – (297) 297 –
Total transactions with owners – 199 (23,186) 407 (22,580)
Balance at 30 September 2021 51 8,658 50,128 (740) 58,097
Company statement of changes in equity
for the year ended 30 September 2022
1 General information
The principal activity of AJ Bell plc (the ‘Company’) is that of a holding company.
The Company is a public limited company which is listed on the London Stock Exchange and incorporated in the United Kingdom
underthe Companies Act 2006 and is registered in England and Wales. The Company’s number is 04503206 and its registered office
is4Exchange Quay, Salford Quays, Manchester, M5 3EE.
2 Significant accounting policies
Basis of accounting
The financial statements are prepared on the historical cost basis and a going concern basis in accordance with the Companies Act
2006. These financial statements are presented in sterling, which is the currency of the primary economic environment in which the
Company operates, rounded to the nearest thousand.
The financial statements are prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101).
The Company has set out below where advantage of the FRS 101 disclosure exemptions have been taken. Shareholders were notified of,
and did not object to, the use of the disclosure exemptions.
Disclosure exemptions
The Company is included within the consolidated financial statements of AJ Bell plc, a company incorporated in the United Kingdom,
whose consolidated financial statements are publicly available. Consequently, the Company has, in compliance with FRS 101, taken
advantage of the exemption from preparing the following disclosures that would otherwise have been required under UK-adopted
international accounting standards:
• IAS 7 presentation of a cash flow statement;
• IAS 8 Disclosures in respect of new standards and interpretations that have been issued but which are not yet effective;
• IAS 24 Disclosure of key management personnel compensation and the disclosure of transactions with group companies;
• IFRS 7 Disclosure in respect of financial instruments, provided that the equivalent disclosures are included in the consolidated financial
statements of the group in which the entity is consolidated;
• IFRS 13 Fair Value Measurement paragraphs 91 to 99, provided that equivalent disclosures are included within the consolidated
financial statements of the group for which the entity is consolidated; and
• IFRS 2 Share-Based Payment paragraphs 45 and 46 to 52 provided that equivalent disclosures are included within the consolidated
financial statements of the group for which the entity is consolidated.
The accounting policies adopted are the same as those set out in note 2 of the Group financial statements, which have been applied
consistently apart from the following:
Investments
Investments in subsidiary undertakings are shown at cost less provision for impairment.
Financial instruments
The Company follows the accounting policy of the Group for financial instruments. In addition, the Company has balances with other
group companies. Amounts owed by group companies are financial assets and are recognised at amortised cost. Amounts owed to
group companies are financial liabilities.
Loans issued to group companies at below-market rates of interest are initially recognised at fair value, measured as the present value
ofloan repayments, with the below-market element recognised as an investment in subsidiary.
Notes to the Company financial statements
for the year ended 30 September 2022
The notes on pages 171 to 175 form an integral part of these financial statements.
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Governance
Financial statements
Other information
170 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 171
Notes to the Company financial statements continued
for the year ended 30 September 2022
3 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in note 2 of the consolidated financial statements,
theDirectors 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 Company’s historical experience and other relevant factors.
Actualresults 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.
The following judgements have been made by the Directors in applying the Company’s policies:
Investment in subsidiaries
At each reporting date, the Company assesses whether there are any indicators of impairment in its investment in subsidiaries. If any such
indicators exist, the investments recoverable amount is estimated. There are a number of estimates that management use to forecast the
expected future cash flows of the investments. The estimated recoverable amount of these balances is subjective due to the inherent
uncertainty in forecasting trading conditions and cash flows used in the budgets.
Key judgements and estimates in relation to the estimated recoverable amount of this investment include:
• cash flow forecasts based on anticipated future demand for the investment's products and services;
• budgeted future costs attributable to the supply of the investment's products and services; and
• the level of ongoing maintenance expenditure required by the Company’s assets in order to generate the expected level of cash flows.
Any share transactions undertaken in the past 12 months are considered when assessing the fair value of the investment.
Management has not identified any impairment indicators for its investment in subsidiaries at the reporting date.
4 Profit for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own income statement for the year.
The Company reported a profit of £39,799,000 for the year ended 30 September 2022 (2021: £37,574,000). This profit was generated
from the Company’s principal activity which is that of a holding company.
The auditor’s remuneration for the audit and other services is disclosed in note 6 of the consolidated financial statements.
5 Dividends
Details of dividends paid during the year are disclosed in note 11 of the consolidated financial statements.
6 Investments
2022
£000
2021
£000
Cost
At 1 October 26,247 19,005
Share-based payments 6,093 6,312
Below-market element of loans to subsidiaries 443 930
At 30 September 32,783 26,247
Accumulated impairment losses
At 1 October (3,800) (3,800)
Accumulated impairment losses at 30 September (3,800) (3,800)
Carrying value at 30 September 28,983 22,447
The Company has investments in the ordinary share capital of the following subsidiaries at 30 September 2022:
Name of subsidiary Principal activity Country of incorporation
Proportion of ownership
interestandvotingrights held
2022 2021
AJ Bell Business Solutions Limited
1
Investment / Group administration England and Wales 100% 100%
AJ Bell Management Limited
1
Investment administration England and Wales 100% 100%
AJ Bell Securities Limited
1
Dealing and custody England and Wales 100% 100%
AJ Bell Media Limited
1
Media England and Wales 100% 100%
AJ Bell Asset Management Limited
1
Investment management services England and Wales 100% 100%
AJ Bell Touch Limited
1
Intermediate holding company England and Wales 100% 100%
Ad Alpha Solutions Limited Technology company England and Wales 100% 100%
AJ Bell EBT Limited
1
Dormant England and Wales 100% 100%
AJ Bell Digital Savings Limited
1
Dormant England and Wales 100% 100%
AJ Bell Platinum Limited
1
Dormant England and Wales 100% 100%
AJ Bell Trustees Limited Dormant England and Wales 100% 100%
AJ Bell (PP) Trustees Limited Dormant England and Wales 100% 100%
Ashby London Trustees Limited Dormant England and Wales 100% 100%
Ashby London (PP) Trustees Limited Dormant England and Wales 100% 100%
Lawshare Nominees Limited Dormant England and Wales 100% 100%
Sippdeal Limited Dormant England and Wales 100% 100%
Sippdeal Trustees Limited Dormant England and Wales 100% 100%
Whitehead Trustees Limited Dormant England and Wales 100% 100%
1. Indicates direct investment of AJ Bell plc.
The financial statements for the year ended 30 September 2022 of AJ Bell EBT Limited have been exempted from audit under s479C
ofthe Companies Act 2006 by way of parent guarantee from AJ Bell plc.
The registered office of all subsidiaries is 4 Exchange Quay, Salford Quays, Manchester, M5 3EE.
Adalpha Investments Limited, Adalpha Limited, Adalpha Nominees Limited and Adalpha Trustees Limited, which were dormant entities,
have been struck off the register at Companies House in the year.
Strategic report
Governance
Financial statements
Other information
172 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 173
Notes to the Company financial statements continued
for the year ended 30 September 2022
7 Trade and other receivables
2022
£000
2021
£000
Amounts due within one year:
Amounts owed by Group undertakings 2,768 2,451
Prepayments 36 26
2,804 2,477
Included within amounts owed by Group undertakings is £2,451,000 (2021: £2,451,000) relating to a loan issued to AJ Bell Business
Solutions Limited by the Company in relation to costs incurred by AJ Bell Business Solutions Limited in renewing IT infrastructure and
administration systems in order to enhance products and services for the Group.
2022
£000
2021
£000
Amounts due after one year:
Deferred tax asset relating to share-based payments 748 990
Amounts owed by Group undertakings 6,279 4,251
7,027 5,241
Amounts owed by Group undertakings relate to loans issued to AJ Bell Touch Limited and Ad Alpha Solutions Limited by the Company.
The loan to AJ Bell Touch Limited was issued to facilitate the acquisition of Ad Alpha Solutions Limited. The loan to Ad Alpha Solutions
Limited is a working capital arrangement issued in relation to the costs of developing the simplified mobile-focused platform proposition
for financial advisers.
8 Trade and other payables
2022
£000
2021
£000
Current liabilities
Accruals 296 467
Amounts owed to Group undertakings 982 10
1,278 477
9 Related party transactions
Transactions with key management personnel
The key management personnel of the Group and the Company are the same. The related party disclosure is given in note 28 of the
consolidated financial statements.
Transactions with Group companies
During the year the Company entered into the following transactions with its subsidiaries:
2022 2021
Receivable
£000
Payable
£000
Receivable
£000
Payable
£000
Recharges – 372 – 202
Dividends received 40,600 – 38,500 –
40,600 372 38,500 202
The Company’s balances with fellow group companies at the reporting date are set out in notes 7 and 8 of the Company financial
statements.
All transactions with fellow group companies are provided on an arm’s length basis and are to be settled in cash. None of the balances
are secured and no provisions have been made for doubtful debts for any amounts due from fellow group companies.
Other related party transactions
Charitable donations:
During the year the Company made donations of £298,000 (2021: £272,000) to the AJ Bell Trust, a registered charity of which
MrAJBellis a trustee.
10 Called-up share capital
The Company’s share capital is disclosed in note 23 of the consolidated financial statements.
11 Subsequent events
Events after the reporting period are shown in note 29 of the consolidated financial statements.
Strategic report
Governance
Financial statements
Other information
174 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 175
Consolidated unaudited five-year summary
for the year ended 30 September 2022
2022
£000
2021
£000
2020
£000
2019
£000
2018
£000
Results
Revenue 163,847 145,826 126,749 104,902 89,691
Profit from operations 58,981 55,851 49,236 37,4 0 9 28,256
Profit before tax 58,411 55,084 48,550 37,695 28,359
Profits attributable to equity holders of AJ Bell plc 46,739 43,822 38,829 30,353 22,646
Assets employed
Non-current assets 31,978 30,621 24,395¹ 11,269 11,589
Current assets 133,504 131,521 116,945¹ 92,021 69,770
Current liabilities (17,6 89) (15,999) (15,303)¹ (14,202) (15,511)
Non-current liabilities (14,399) (15,435) (16,571)¹ (3,025) (1,812)
Net assets 133,394 130,708 109,466 86,063 64,036
Financed by
Equity 133,394 130,708 109,466 86,063 64,036
Key statistics
Earnings per share (pence) 11.39 10.71 9.51 7.51 5.76²
Fully diluted earnings per share (pence) 11.35 10.67 9.47 7.47 5.63²
Ordinary dividend per share paid in year (pence) 7.28 7.1 2 4.83 3.74 3.07²
Special dividend per share paid in year (pence) 5.00 — — — 2.03
Ordinary dividend per share declared with respect to profits
generated inyear (pence) 4.59 6.96 6.16 4.83 3.70²
Special dividend per share declared with respect to profits
generated inyear (pence) — 5.00 — — 2.03
1. Reflects the impact of IFRS 16 in 2020.
2. Restated to reflect the share reorganisation in 2019.
Glossary
Adalpha AJ Bell Touch Limited and its wholly-owned
subsidiaries
AGM Annual General Meeting
AJBIC AJ Bell Investcentre
BAYE Buy as you earn
Board, The Board of Directors of AJ Bell plc
Directors
BPS Basis points
CASS Client Assets Sourcebook
CGU Cash Generating Unit
CODM Chief Operating Decision Maker
CSOP Company Share Option Plan
CSR Corporate Social Responsibility
D&I Diversity and Inclusion
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
EMB Executive Management Board
ERC Executive Risk Committee
ESG Environmental, Social and Governance
EVF Employee Voice Forum
ExCo Executive Committee (formerly EMB)
FCA Financial Conduct Authority
FRC Financial Reporting Council
FRS Financial Reporting Standards
FTSE The Financial Times Stock Exchange
FX Foreign Exchange
GHG Greenhouse gas
GIA General Investment Account
HMRC His Majesty’s Revenue and Customs
HR Human Resources
IAS International Accounting Standard
ICAAP Internal Capital Adequacy Assessment Process
ICARA Internal Capital and Risk Assessment
ICO Information Commissioner’s Office
IFA Independent Financial Adviser
IFRIC International Financial Reporting
Interpretations Committee
IFPR Investment Firm Prudential Regime
IFRS International Financial Reporting Standards
IPO Initial Public Offering
ISA Individual Savings Account
IT Information Technology
KOS Key Operating System
KPI Key Performance Indicator
KRI Key Risk Indicator
KYC Know Your Customer
LISA Lifetime ISA
MiFID II Markets in Financial Instruments Directive II
MPS Managed Portfolio Service
OCF Ongoing Charges Figure
OEIC Open-Ended Investment Company
OTB Option To Buy
PBT Profit Before Tax
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
SREP Supervisory Review and Evaluation Process
SSAS Small Self Administered Scheme
TCFD Task Force on Climate-related
Financial Disclosures
TPDFM Third-Party Discretionary Fund Managers
TPR The Pensions Regulator
WACI Weighted Average Carbon Intensity
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Governance
Financial statements
Other information
176 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 177
Definitions
Ad valorem According to value
AUA Assets Under Administration
AUM Assets Under Management
Customer retention rate Relates to platform customers
Fintech Refers to a business that uses technology to enhance or automate financial services and processes
Lang Cat An insight, marketing and communications consultancy business specialising in Financial Services
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 revenue Includes custody fees, retained interest income and investment management fees
Recurring fixed revenue Includes recurring pension administration fees and media revenue
Revenue per £ AUA Represents revenue as a percentage of the average AUA in the year. Average AUA is calculated asthe
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 Code A code which sets out standards for best boardroom practice with a focus on Board leadership and
effectiveness, remuneration, accountability and relations with shareholders
Company information
Company number
04503206
Company Secretary
Mr Christopher Bruce Robinson
Registered office
4 Exchange Quay
Salford Quays
Manchester
M5 3EE
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Banker
Bank of Scotland plc
1 Lochrin Square
92 – 98 Fountainbridge
Edinburgh
EH3 9QA
Strategic report
Governance
Financial statements
Other information
178 AJ Bell plc Annual Report and Financial Statements 2022 AJ Bell plc Annual Report and Financial Statements 2022 179
Designed and produced by Instinctif Partners, www.creative.instinctif.com
Notes
180 AJ Bell plc Annual Report and Financial Statements 2022
182 AJ Bell plc Annual Report and Financial Statements 2022
182
AJ Bell plc
Annual Report and Financial Statements 2022
AJ Bell plc
4 Exchange Quay
Salford Quays
Manchester M5 3EE
T: 0345 40 89 100
ajbell.co.uk
Company registration number 04503206