AJ Bell Annual Report 2014

FY2014 Annual Report · AJ Bell
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Holdings Limited

New customers 
New challenges 
New opportunities

Annual Report and Financial Statements 2014

Contents

Introduction

Business review

Highlights 
Joint statement from the Chairman and Chief Executive 
Strategic report 

Governance

Board of Directors 
Executive Management Board 
Directors’ report 
Statement of directors’ responsibilities in respect of the Strategic report, Directors’ report 
and the ﬁ nancial statements 
Independent auditor’s report to the members of AJ Bell Holdings Limited 

Financial statements

Consolidated income statement 
Consolidated statement of ﬁ nancial position 
Consolidated statement of changes in equity 
Consolidated statement of cash ﬂ ows 
Notes to the consolidated ﬁ nancial statements 
Company balance sheet 
Notes to the Company ﬁ nancial statements 
Five-year summary 

Other information

Deﬁ nitions 
Company information 

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Helping people make 
smarter investment 
decisions

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events held nationally for advisers

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investor events held by 
AJ Bell Media

AJ Bell World 
Investment Outlook
Bookazine of global investment 
market analysis

AJ Bell – the fundamentals

A name to be proud of

Multi-award-winning services

By running our business in an intelligent, principled, 
personal, focussed, straightforward and energetic way, we 
have built AJ Bell into a highly respected brand. In order 
to gain maximum beneﬁ t from the power of that brand, we 
realised that it should be incorporated into all our sub-
brand names. With the conversion of ‘MSM Media’ to 
‘AJ Bell Media’, and ‘Sippcentre’ to ‘AJ Bell Investcentre’ in 
2014, this extensive rebranding project is now complete. 

By striving to exceed the high expectations of our 
customers, we have built up a strong reputation 
across the ﬁ nancial services industry. The quality of 
our service delivery and products is evidenced by the 
many prestigious industry awards that we have won. 
Recognising service and product excellence, many of 
these awards are based on the votes of customers and 
advisers.

Leading our chosen markets

Professional and ﬁ nancially secure

AJ Bell has never provided ﬁ nancial or investment 
advice. It operates exclusively on an execution-only 
basis – whether directed by the client, their adviser or by 
its institutional clients. Our aim is to be a market-leading 
provider of investment products and administration 
services in the adviser and execution-only platform 
markets. This includes providing white labelling, dealing, 
custody and investment administration services for other 
ﬁ nancial services ﬁ rms.

AJ Bell is built on strong foundations. The depth of 
knowledge within the company can be traced to its 
background as an actuarial consultancy, specialising in 
the provision of SIPP administration and stockbroking 
services. AJ Bell is a member of the London Stock 
Exchange and is authorised and regulated by the Financial 
Conduct Authority.

Sponsorship and 
brand awareness

As part of our mission to increase recognition of the AJ Bell brand, we have 
ongoing sponsorship deals with the following partners.

Lancashire County Cricket Club

The LCCC is well into a multi-million pound investment programme at 
Emirates Old Trafford that has already ensured the venue’s position as 
one of Britain’s ﬁ nest cricket stadia. We were proud to put our name to the 
ground’s AJ Bell Players and Media Centre back in 2012, and our strong 
relationship with the LCCC continues to provide excellent opportunities for 
brand awareness raising. One recent initiative was the ‘AJ Bell Hit for 6k 
Challenge’, which saw famous names from the worlds of cricket, rugby and 
TV compete to win a £6,000 donation from AJ Bell to the LCCC Foundation. 

AJ Bell Stadium

As the home of Sale Sharks and Salford Red Devils rugby clubs, the AJ Bell 
Stadium is now ﬁ rmly established as an important cultural asset and familiar 
local landmark in Salford. Regularly hosting televised premiership and 
superleague matches, this ﬁ rst-class sports and events facility is helping to 
put the AJ Bell name in homes up and down the country.

AJ Bell British Squash Grand Prix

Following on from the success of last autumn’s AJ Bell World Squash 
Championship, we sponsored the AJ Bell British Squash Grand Prix 2014 
in Manchester. Our sponsorship of Commonwealth gold medal winner and 
England ﬂ ag bearer Nick Matthew also continues to put our name on the 
world squash stage.

Corporate Social 
Responsibility

AJ Bell and our staff are always keen to support good causes, 
both with charitable donations and practical assistance through 
volunteering. 

Feet First Challenge

In July six members of staff organised and completed the 
Feet First Challenge in order to raise money for Finding Your 
Feet – a charity that supports amputees as they adjust to life 
after limb loss. By ascending Ben Nevis twice in one day then 
cycling from the Atlantic coast of Scotland to the North Sea the 
following day, the team managed to raise a signiﬁ cant amount 
of money for this very worthwhile cause.   

Fund raising activity

The Social Committee held a variety of events in support of 
Children in Need, and individual staff members’ fund raising 
activities were also supported by the company, which matches 
every pound an employee raises for charity with a further 
donation of 50p (up to a maximum of £100 per staff member, 
per year). Charities supported in this way include Sport Relief, 
Mind, the Cystic Fibrosis Trust, Mencap, Breast Cancer Care, 
Leukaemia and Lymphoma Research, Cancer Research, and 
St Ann’s Hospice.

Voluntary work

Every year we encourage members of staff to take a day 
away from the ofﬁ ce and undertake volunteer work for a local 
charity. This year we arranged for a team of 15 volunteers 
to lend a hand at Ronald McDonald House, which provides 
accommodation for families while they support a seriously ill 
child in the neighbouring hospital. Work undertaken included 
gardening, cleaning the property and assisting the kids as they 
did craft activities. 

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Highlights
Key business and ﬁ nancial information

Assets under administration
£23.7 bn 

Total value of assets under 
administration, a 16% increase overall.

Revenue
£53.5m

2012
£17.5bn

2013
£20.4bn

2014
£23.7bn

Total ordinary 
dividend
25.25p

Total number of retail customers
104,142 

Total number of retail customers, 
a 20% increase overall.

Proﬁ t before tax
£16.1m

2012
70,616

2013
86,713

2014
104,142

Diluted earnings
per share
30.76p

2012 
£51.8m

2013 
£57.0m

2014 
£53.5m

2012
24.75p

2013 
25.00p

2014
25.25p

2012
£26.5m

2013 
£23.9m

2014 
£16.1m

2012
49.14p

2013 
44.82p

2014 
30.76p

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Joint statement from the Chairman and Chief Executive

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Les Platts
Chairman

Andy Bell
Chief Executive

We are pleased to present our annual report for the year ended 
30 September 2014. These results evidence both the accelerating growth 
of our platform business and the challenges presented by the current 
economic environment.

As a result of the reduction in revenue, PBT for the year also 
fell.  PBT was £16.1m for the year ended 30 September 
2014, down by £7.8m from £23.9m a year ago. As 
highlighted above, the main cause of the fall in proﬁ t was a 
reduction in interest income. However there were also costs 
incurred in the second half of the year that exacerbated 
the situation, the most notable of which were an increased 
FSCS levy and additional investment in our digital strategy.

Financial Position

As has been the case for a number of years now, our 
ﬁ nancial position is very strong. At 30 September 2014, 
the net assets of the business stood at £49.4m, having 
increased by £2.7m from £46.7m in the previous year. This 
ﬁ nancial strength means the business is well placed to fund 
its continued growth, whilst providing our customers with the 
assurance that the business has the ﬁ nancial strength to 
withstand external shocks.

Although the Group is not formally subject to consolidated 
supervision by the regulator, the Board monitors the capital 
position of the business as if it were subject to consolidated 
requirements. On this basis, at 30 September 2014 the 
Group held a healthy capital surplus over the calculated 
requirement.

Growth

The business reached yet another milestone during the year 
when the number of retail customers using our services 
passed the 100,000 mark. This achievement is the result 
of record growth in the number of retail customers, with 
the total increasing by 17,429 customers, from 86,713 to 
104,142.

This record growth in new business saw AUA take a similar 
leap forward. In a year when markets have gained little 
(the FTSE 100 increased by just 2.5% during the ﬁ nancial 
year), the value of our AUA increased by 16.2% to £23.7bn.  
During the year our customers added over £3.2bn to the 
value of assets we administer on their behalf by way of 
transfers, subscriptions and contributions. The level of new 
business is a testament to both the attractiveness of our 
product propositions and the effectiveness of our back ofﬁ ce 
operation.

Financial Performance

Revenue for the period totalled £53.5m, down 6% from 
the result for the year to 30 September 2013. As has been 
highlighted in every set of reports and accounts since our 
year ended 30 September 2012, this downward pressure 
on revenue has been caused by unfavourable conditions 
in the money markets. Despite the fall in total revenue, the 
extent to which we have weathered this particular storm is 
a testament to our balanced revenue model, which sees 
us draw most of our revenue from the dealing, custody and 
administration fees we charge our customers.

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Joint statement from the Chairman and Chief Executive

Shareholder Returns

Diluted EPS fell by 14.06p per share, from 44.82p per share 
a year ago to 30.76p per share in the year to 30 September 
2014. This fall in diluted EPS was proportionately less than 
the fall in proﬁ t due to the reduction in the effective rate 
of corporation tax. The Board declared a ﬁ nal dividend of 
15.75p per share, taking the total dividend for the year to 
25.25p per share. Despite the fall in EPS, the total dividend 
per share increased slightly year-on-year, illustrating both 
the ﬁ nancial strength of the business and the Board’s 
commitment to a progressive dividend policy.

Governance

As reported in the 2013 annual report and in this year’s 
interim report, there have been a few changes to the 
membership of the Board. Since the publication of our 
interim ﬁ nancial statements, Simon Turner has joined us 
as a non-executive director. Simon joins the Board with 
strong experience in the retail, consumer electronics and IT 
industries, thanks to his time as Group Managing Director 
at a leading UK electrical retailer, and his appointment to 
the boards of several large Internet businesses. No stranger 
to the ﬁ nancial services industry, he has also enjoyed an 
eight-year spell on the board at one of Britain’s biggest 
building societies, and currently sits on the board of a major 
bank. Simon’s appointment completed a process that has 
seen the Board return to its previous composition of three 
independent non-executive directors and two executive 
directors.

The Board continued in its roles of setting strategy and 
ensuring that the execution of that strategy by the executive 
team was subject to appropriate challenge. The Board met 
regularly to discharge its duties and all meetings of the 
Board, and its various sub-committees, were attended by all 
of the directors in ofﬁ ce.

Market Developments

The changes to the pensions market announced in early 
2014 are unquestionably the most signiﬁ cant development 
in our market during the ﬁ nancial year. We campaigned long 
and hard for changes to the drawdown rules and believe 
that, on the whole, the rules are an improvement. However, 
it does seem that yet another opportunity to simplify the 
legislative environment has been missed. Following the 
publication of draft legislation and guidance notes, we 
now have a clear understanding of how the at-retirement 
and decumulation sectors of the market will operate. 
Disappointingly, the continuation of capped drawdown 
adds complexity to both the decisions faced by customers 
in this space and to the back ofﬁ ce operation of pension 
providers. It will result in pension providers needing to offer 
both capped drawdown arrangements and new ﬂ exi-access 
drawdown arrangements for years to come. Although ﬂ exi-
access drawdown will be appropriate for many customers 
in their decumulation phase, the introduction of the Money 

Purchase Annual Allowance (MPAA) means that customers 
need to consider the impact of this reduced annual 
allowance before making a ﬁ nal decision on how best to 
draw their beneﬁ ts.  

Our experience of operating drawdown services means we 
are well placed to adapt our propositions to allow customers 
to take advantage of the new ﬂ exibility being offered. The 
less complex nature of operating ﬂ exi-access drawdown 
means that we will be able to price this service competitively.

Outlook

Notwithstanding the challenges presented by the wider 
economic environment, the outlook for the platform market 
is very positive. Although still relatively small, the platform 
market is now a well established and fast-growing sector of 
the wider UK savings market. Assets held on advised and 
execution only platforms have increased by over 20% in the 
last year. With the introduction of ﬂ exi-access drawdown for 
deﬁ ned contribution pensions, the increase in the annual 
ISA allowance to £15,000, the mechanism for transferring 
from CTFs to JISAs being agreed and the announcement 
of favourable changes to the tax treatment of pensions and 
ISAs on death, the key product wrappers which form part of 
our ﬂ agship platform propositions have all seen favourable 
legislative changes recently and look set to remain a core 
part of the UK savings market for years to come. As is to be 
expected in such an attractive market, there is no shortage 
of competition. To ensure we continue to deliver the kind 
of growth evidenced by these results, we will continue our 
work to increase the awareness of the AJ Bell brand and 
develop our platform propositions with ease of use at the 
forefront of our minds. This focus will inform various pending 
developments, the most visible of which will be the new 
customer interfaces delivered next year as part of our digital 
strategy.

Conclusion

As is to be expected in a year which saw 17,429 new 
customers join and assets totalling £3.2bn being brought on 
board, the year was an incredibly busy one for the business.  
However, the reality is that in addition to those record 
new business volumes, a huge volume of change to our 
product propositions and our back ofﬁ ce operation was also 
delivered, the details of which are provided in the strategic 
report.

Finally, we would like to offer our collective thanks to all 
of our colleagues for their tireless work and exceptional 
delivery throughout the year.

Les Platts
Chairman

Andy Bell
Chief Executive Ofﬁ cer

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Strategic report

Platform Business

Assets under administration

Retail customers

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22% 

25% 

2013 
£12.7bn

2014 
£15.5bn

2013 
65,228

2014 
81,795

Our platform business consists of three distinct propositions, each serving a different 
segment of the platform market:

Distributed only by UK ﬁ nancial advisers, 
AJ Bell Investcentre offers an award-
winning SIPP, ISA, Junior ISA and GIA with a 
highly competitive charging structure.

Advised platforms in the UK have 
approximately £300bn of AUA. The 
AJ Bell Investcentre platform is one of the 
largest and fastest growing platforms in this 
segment of the market.

A platform designed to provide an easy 
and cost-effective way for DIY investors 
to take control of their investments. The 
platform includes a SIPP, ISA, Junior ISA 
and Dealing Account, with each offering a 
wide range of investments and access to our 
comprehensive research centre.

Direct platforms in the UK have over £120bn 
of AUA. The AJ Bell Youinvest platform is 
one of the fastest growing platforms in this 
segment of the market.

IMAS – A fully integrated investment 
custody administration solution that allows 
wealth managers to focus on delivering a 
high quality service without the distraction of 
administration.

12

 
 
 
Strategic report

Platform Overview

Brand Recognition

This year has seen the strong growth in our platform 
business continue. The number of retail customers using 
one of our platform propositions grew at a record pace in the 
year ended 30 September 2014. The total number of retail 
customers increased from 65,228 to 81,795, an increase of 
over 25% in the year.

In the year to 30 September 2014, our customers transferred 
in, subscribed or contributed £2.9bn of assets, again a 
record increase. Largely static asset values and limited 
transfers out meant that this strong ﬂ ow of new money saw 
total AUA increase from £12.7bn to £15.5bn.

The key objective for the platform business is to continue 
to grow the customer base. Underpinning this objective is 
increased brand awareness of our ﬂ agship products, AJ Bell 
Investcentre and AJ Bell Youinvest, further development of 
our platform to enhance the customer journey and further 
improvement to our back ofﬁ ce operation to ensure that we 
provide a ﬁ rst class service to our customers. 

The successful launch of the AJ Bell Investcentre brand 
(previously Sippcentre) in October 2014 completes the 
rebranding exercise of our two ﬂ agship platform products 
following the earlier launch of the AJ Bell Youinvest brand 
(previously Sippdeal) in November 2013. The inclusion of 
AJ Bell within both the AJ Bell Investcentre and AJ Bell 
Youinvest propositions enhances our overall brand 
recognition.   

During the year, we continued our ongoing sponsorship 
partnerships with Lancashire County Cricket Club and Sale 
Sharks Rugby Club. We also sponsored the 2013 AJ Bell 
World Squash Championships and more recently, the 2014 
AJ Bell British Squash Grand Prix. This kind of sponsorship 
activity is still relatively new for the business but is certainly 
proving beneﬁ cial to our proﬁ le in the market.

a

name
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big boots
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If you are already registered with us there is 
no need to sign up again. If you are not yet 
working with us, ﬁnd out why you should be.

Visit www.investcentre.co.uk today 
Tel 0845 83 99 060    email enquiry@investcentre.co.uk

TICKET HOTLINE 0844 8797 949

www.ajbellsquashgrandprix.com

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(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:45)(cid:3)(cid:37)(cid:72)(cid:79)(cid:79)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:36)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3)(cid:36)(cid:79)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:40)(cid:81)(cid:74)(cid:79)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:58)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:55)(cid:85)(cid:68)(cid:73)(cid:73)(cid:82)(cid:85)(cid:71)(cid:3)(cid:43)(cid:82)(cid:88)(cid:86)(cid:72)(cid:15)(cid:3)
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OFFICIAL CAR

OFFICIAL GRIP 
& CLOTHING

OFFICIAL BALL

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13

 
 
 
Strategic report

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14

Customer Journey & Investment Content

Our digital strategy will be a key focus during the coming 
year following the appointment of Tim Huckle as Director of 
this area. The ﬁ rst phase of the strategy is to deliver new 
product websites, initially for AJ Bell Youinvest and then 
AJ Bell Investcentre. The new sites will integrate our product 
administration, dealing service and investment content. 
The launch of new websites will enhance the customer 
journey and will be a key deliverable in our aim to become 
the easiest investment platform to use. In addition, this 
will require ongoing development of all our main customer 
interfaces due to the ever-growing demand from both new 
and existing customers who increasingly want to access our 
products on mobile devices. We will work hard to ensure that 
these demands are met and in the coming months we will 
be releasing new mobile and tablet applications that will be 
closely aligned to our desktop websites.

Having been the ﬁ rst online SIPP provider back in 2000, 
we are continually exploring ways in which to innovate. 
The development of a Google Glass application which was 
presented as a prototype at the 2014 Platforum Conference 
is an example of how new technologies can be embraced in 
our sector. We will continue to invest in technology-led R&D 
and will seek to capitalise on opportunities in this area as 
they present themselves.

The provision of quality investment content to our customers 
remains a key feature of our product propositions and this 
has been enhanced signiﬁ cantly since the acquisition of 
MSM Media in December 2012. During the year, MSM 

Media was rebranded to AJ Bell Media. This was the ﬁ nal 
piece of integration work following the acquisition, the 
rebrand being timed to coincide with the move to our new 
London premises in September 2014.  

Information is provided by AJ Bell Media to our platform 
customers through a variety of channels including weekly 
videos, daily market roundups, newsletters and investment 
conferences. The 2015 World Investment Outlook has 
recently been published and is available free of charge 
to advisers supporting AJ Bell Investcentre and to AJ Bell 
Youinvest customers.   

Another success story was the annual AJ Bell Investcentre 
investment event for advisers. This year the event was 
named ‘Investival’ and once again it was extremely well 
received with over 300 delegates attending on the day. In 
addition to this, a number of ETF summits were held in 
Manchester and London earlier this year, giving advisers the 
opportunity to hear from representatives of several leading 
ETF providers.  

First Class Customer Service

A single administration system now fully supports both 
AJ Bell Investcentre and AJ Bell Youinvest. This is expected 
to generate long-term operational efﬁ ciencies, whilst 
releasing signiﬁ cant resources in the short-term to focus 
on both our digital strategy and our wider programme of 
functionality improvements for customers and back ofﬁ ce 
efﬁ ciencies. 

 
 
 
Strategic report

Non-platform Business

Assets under administration

Retail customers

6% 

4% 

2013 
£7.7bn

2014 
£8.2bn

2013 
21,485

2014 
22,347

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An award winning specialist ﬁnancial 
publishing company that supports the 
platform business by providing high 
quality investment content via a variety of 
media channels. It also publishes a weekly 
investment magazine, hosts investment 
conferences and events and provides stock 
market data and independent news content 
to a wide range of corporate and retail 
customers.

AJ Bell Media held a number of investor events during 
the course of the year, the most notable of which was the 
inaugural Stock Market Show held in association with The 
London Stock Exchange. This event was held in London 
in September 2014 and attracted over 1,000 delegates 
and more than 50 speakers including company executives, 
product developers and market experts. 

AJ Bell Platinum – A bespoke service that 
provides expert technical support, backed 
by a dedicated team of administrators.  
Distributed by UK ﬁ nancial advisers but also 
available on a DIY basis, Platinum offers 
both SIPPs and SSASs.

Institutional – A dealing, settlement and 
custody service with research facilites 
provided to institutional investment 
businesses.

Third party administration – A white label 
SIPP administration service provided to 
a number of leading ﬁ nancial services 
companies.

The year to 30 September 2014 was another stable one 
for our non-platform business. Both customer numbers and 
AUA grew in the year, which is particularly pleasing given 
the maturing state of the markets that our non-platform 
propositions serve.

The number of retail customers using one of our SIPP-
only services increased by 4% to 22,347. AUA across our 
book of non-platform business (which also includes our 
SSAS business and our traditional institutional stockbroking 
services) increased by 6%, reaching £8.2bn by 
30 September 2014.

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15

 
 
 
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16

Strategic report

Principal risks and uncertainties

The Board is committed to a continual process of 
improvement and embedment of the risk management 
framework within the Group. This is to ensure that the 
business identiﬁ es both existing and emerging risks and 
develops appropriate mitigation strategies.

The directors believe that there are a number of potential 
risks to the Group that could hinder the successful 
implementation of their strategy. These risks may arise 
from internal and external events, acts and omissions. 
The directors are proactive in identifying, assessing and 
managing all risks facing the business.

operators. The Group has assessed the likely ﬁ nancial 
impact at both Group and regulated entity level and does not 
expect it to be material.

The changes to the pension beneﬁ t rules announced by the 
Government in the 2014 Budget, whilst increasing choice, 
do create the potential for poor outcomes for consumers 
undertaking what is probably one of the most signiﬁ cant 
and complex decisions of their lives. One of the primary 
concerns of the project established to implement these 
changes will be to ensure that the beneﬁ t options provided 
under the Group’s products are designed to deliver positive 
outcomes for our customers and to minimise the risk of 
consumer detriment.

The Internal Audit function carries out a rolling programme, 
reviewing key business areas throughout the Group. These 
reviews have been focused on areas where the directors 
believe they require further assurance on controls and risk 
mitigation. This, along with the Risk and Compliance and 
Quality Assurance functions, comprises the ‘Assurance 
Framework’. The appropriateness and effectiveness of the 
Assurance Framework is assessed and documented within 
the Group’s Combined Assurance Model and reviewed by 
the Executive Management Assurance Committee and the 
Audit Committee.

The Group works to ensure FCA best practice and, 
in particular, Treating Customers Fairly principles are 
embedded across the business and followed consistently. 
Speciﬁ cally, conduct and consumer outcomes risks are 
assessed, monitored and reported on an ongoing basis. 
Following the publication of the FCA’s new capital framework 
for SIPP operators and the results of the FCA’s most recent 
SIPP thematic review, changes have been made to the 
investments we will allow to be purchased by SIPPs to 
limit further the risks posed through holding non-standard 
investments. 

The directors present below the principal risks and 
uncertainties facing the Group that could pose a threat to the 
delivery of their strategy. 

Industry risks

Regulatory risk

The Group operates within an increasingly regulated 
environment such that new or revised legislation or 
regulation may have a materially adverse effect on it. 
The Group retains a substantial cash surplus to provide 
additional regulatory capital to its regulated subsidiaries if 
the need arises. 

The Group closely monitors all regulatory developments, 
such as the evolving regulation in relation to the holding 
of client assets. This enables an assessment to be made 
of their impact on the Group’s businesses and for steps to 
be taken to mitigate any regulatory risks. Furthermore, it 
enables the Group to ensure it continues to operate in line 
with regulatory best practice. 

The Group will continue to monitor developments in terms of 
pricing and the movement to clean funds in accordance with 
the FCA’s RDR platform charging rules. 

In August 2014, the FCA published PS14/2 setting out the 
new capital framework for SIPP operators which will apply 
from September 2016. This will generally increase the 
amount of regulatory capital required to be held by SIPP 

The Group contributes to the debate on regulatory issues 
affecting its markets. It does this, for example, through its 
membership of the Association of Member-directed Pension 
Schemes (AMPS) and the Wealth Management Association 
(WMA), as well as through direct responses to Government 
and FCA consultation. 

Taxation law change risk

Changes to tax legislation may reduce the attractiveness 
of tax-advantaged saving wrappers offered by the Group 
as a means of saving for retirement. The 2014 Budget 
has brought signiﬁ cant changes to the pensions and ISAs 
market. 

With respect to pensions, the Government increased 
drawdown limits, reduced the guaranteed income 
requirement for ‘ﬂ exible drawdown’ from £20,000 to £12,000 
in the short term and announced plans to signiﬁ cantly 
increase the ﬂ exibility available to customers taking beneﬁ ts 
from their plans from April 2015. Overall, the directors 
believe that these changes will have a positive impact on the 
pensions market.

The Government essentially removed the distinction 
between Cash ISAs and Stocks and Shares ISAs and 
also increased the annual ISA allowance from £11,500 to 
£15,000. The Government also announced plans to allow 
transfers from CTFs to JISAs from April 2015. The directors 
are optimistic about the prospects for continued growth in 
saving into tax-advantaged wrappers.

 
 
 
Strategic report

Competitor and market risks

Economic risk

The Group operates in a highly competitive and dynamic 
industry which constantly aims to improve the services 
and products available to customers. This may impact 
the Group such that its products become either obsolete 
or uncompetitive when compared to other offerings in the 
marketplace. The Group regularly reviews its product range 
and prices against competitors and actively seeks new 
income streams, whilst enhancing its existing portfolio. 

In the event that the economy falls back into a prolonged 
recession, this may impact contribution levels and 
conﬁ dence 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 any economic 
downturn.

A number of developments have been made to the 
AJ Bell Youinvest platform over the last year to maintain 
its competitive position, including the introduction of a new 
charging structure in January 2014. In response to feedback 
from customers and market developments, a number of 
further improvements are planned for the next calendar year, 
including enhancements to the AJ Bell Youinvest website, 
and the introduction of guided investment facilities. The 
planned changes to the website aim to make it the easiest 
investment platform to use in the market, whilst the guided 
investment facilities will help our customers to choose an 
appropriate investment strategy that suits their needs.

Following the rebranding of Sippcentre to AJ Bell 
Investcentre in October 2014, a number of developments 
are now planned to improve the services provided to 
customers and advisers. These include improved reporting 
services and links to adviser back ofﬁ ce service providers 
and payment options for customers.

Evolving technology risk

The reliance on evolving technology remains crucial to the 
Group’s effort to develop its services and enhance products. 
The risk exists that either the Group’s technology fails to 
operate correctly in some way or that the Group fails to take 
advantage of any emerging technologies. During the year 
the Board has agreed a number of changes to the strategies 
for IT, business change and software development which 
will be implemented over the next few years. These changes 
have triggered an investment in new personnel and skills 
supporting the Group’s IT assets as they grow in scale and 
complexity. The strategies increase our focus on system 
performance, capacity and security planning controls.

The directors acknowledge that a scalable operating system 
is paramount to the continued success of the Group. The 
last year has seen the completion of the project to renew the 
product IT and administration platform, with the Group’s 
AJ Bell Investcentre SIPPs being migrated on to this 
platform during the year. The directors have approved a 
programme of improvements to the Group’s IT infrastructure, 
to be implemented over the coming months, which will 
ensure that it is capable of supporting the continued planned 
growth in the business. In addition, the Group’s Digital 
Strategy will see the customer and adviser-facing websites 
redeveloped over the next 12 months in support of our 
ambition to be the easiest platform to use. 

Capital market ﬂ uctuations risk

Capital market ﬂ uctuations can have an effect on customer 
transactional activity and the value of assets under 
administration. 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 capital market 
ﬂ uctuations.

Operational risks

Group reputation risk

Damage may be sustained to the Group’s reputation or to 
one of its leading brands because of either the actions of an 
unassociated third party or the misconduct of an employee. 
The security procedures within the Group have been 
reviewed and action taken to ensure any risk of fraudulent 
access to customer accounts is minimised. Thorough 
controls and checks are in place to ensure the appropriate 
calibre of individual is recruited into the Group and training 
is ongoing to ensure employees maintain technical 
competency in fulﬁ lling their role within the Group along with 
awareness of risks.

Conduct risk

Conduct risk is the risk that detriment is caused to the 
Group’s customers as a result of inappropriate execution 
of the Group’s business activities. During the year the 
Group has focussed on continued enhancements to its risk 
management framework, in relation to the identiﬁ cation, 
monitoring and mitigation of conduct risks, and to its 
product development process to reduce the potential for 
poor consumer outcomes. The level of service provided to 
customers is monitored on an ongoing basis to ensure any 
weaknesses are identiﬁ ed and remedial action taken where 
required.

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17

 
 
 
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Strategic report

Third party reliance risk

Litigation risk

The Group undertakes its dealing, custody, settlement and 
administrative activities in-house and is therefore exposed to 
risk as a consequence of its reliance on third party software 
suppliers. 

There is a risk of liability related to litigation from customers 
or third parties. The Group has robust systems and controls 
and maintains an appropriate level of professional indemnity 
insurance cover against these potential liabilities.

Business continuity management risk

There is a risk of disruption to the Group’s business in the 
event of a loss of access to any of the Group’s properties 
or in the event of a catastrophic systems failure. The 
Group has agreements in place with specialist suppliers for 
geographically remote disaster recovery facilities for all of its 
operations, including separate offsite IT recovery facilities. 
There is a rolling programme of testing of all business 
continuity plans. 

Key personnel risk

The loss of key personnel within the Group, an increase 
in staff turnover or an inability to ﬁ nd new or replacement 
employees, appropriately qualiﬁ ed, particularly in periods of 
sustained growth, may have a material adverse impact on 
the Group’s performance. The Group has sought to mitigate 
this risk by facilitating equity ownership for employees within 
the organisation through various share schemes and the 
development of a staff engagement strategy. Furthermore, 
the Group maintains a succession plan for key members of 
management across the whole business.

By order of the Board

Bruce Robinson
Company Secretary

11 December 2014

To mitigate the risk posed by third party software suppliers, 
the Group maintains a strong partnership relationship with 
the key suppliers and monitors their performance to ensure 
their continued commitment to service, ﬁ nancial stability and 
viability. Where possible, the Group has had, or will have, 
software code from these suppliers placed into escrow so 
that access can be gained to that code in the event of the 
supplier’s failure.

Where a regulatory breach or a failure in service supply 
could be caused by an external supplier, the Group performs 
extensive due diligence on that supplier prior to entering into 
the commercial relationship. The Group secures the ability to 
audit that supplier at regular intervals during the term of the 
relationship.

Operational processing risk

There is a risk that the Group’s operational processes are 
subject to error, causing both a reduction in earnings and 
damage to the Group’s reputation. The Group focuses on 
increasing the effectiveness of all its operational procedures 
and aims to achieve straight-through processing wherever 
practical. Certain operational processes are subject to 
manual intervention. Examples include dealing on the basis 
of a customer’s verbal instruction, processing of certain 
corporate actions and trade and settlement of certain 
transactions on behalf of customers. 

There is a risk that the volume of business activity in some 
areas signiﬁ cantly exceeds planned levels resulting in 
difﬁ culties in maintaining the services standards expected 
by the Group’s customers and advisers. The Group takes 
into account any regulatory or other events, expected to 
lead to an increase in activity, within its business planning 
processes and monitors activity levels on an ongoing 
basis for any indication of unexpected variations so that 
appropriate action can be taken.

The Group has incorporated a high level of operational 
resilience within its day-to-day operations. It has 
documented procedures with pre-set, speciﬁ ed management 
authorisation limits for all relevant operational processes. 
The Group employs experienced, FCA-registered and 
approved staff in all its key FCA-regulated activities. In 
addition to regular performance targets, the Group sets 
tolerance limits for operational errors which are applied from 
Board level down to the relevant operational department.

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18

 
 
 
 
Board of Directors

Les Platts
Chairman

Les joined AJ Bell in September 2008 having retired as an Audit Partner and 
practice Senior Partner for the north-east with international professional services 
ﬁ rm Deloitte. Over a period of 33 years with Deloitte, Les gained extensive UK and 
international experience across all industry sectors, including FTSE 100, FTSE 
250, smaller listed PLCs, large private companies and private equity investments. 
He has advised at Board level on a wide range of ﬁ nancial, commercial and 
governance issues, and is also Vice Chairman of Leeds Building Society.

Andy Bell
Chief Executive Ofﬁ cer

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Andy co-founded AJ Bell in 1995, having spent a number of years working within 
the ﬁ nancial services sector. Graduating from Nottingham University in 1987 with 
a ﬁ rst class degree in Mathematics, he qualiﬁ ed as a Fellow of the Institute of 
Actuaries in 1993 and has built AJ Bell into one of the largest providers of low-
cost, online investment platforms and stockbroker services in the UK. Andy is the 
principal driving force behind the business, and his focus is increasingly on future 
strategy and growth opportunities.

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Michael Summersgill
Chief Financial Ofﬁ cer

Michael joined AJ Bell in July 2007 and became Chief Financial Ofﬁ cer in June 
2011. He is responsible for a range of operational and support functions in the 
business, overseeing Finance, HR, the Group’s stockbroking operation and key 
control functions within the SIPP administration business. Michael graduated from 
the University of Shefﬁ eld with a degree in Economics and began his career as an 
accountant in public practice, gaining experience with a broad portfolio of clients.

John Tomlins
Non-executive Director

John joined AJ Bell with a wealth of experience, having spent his entire full time 
career working in the IT and ﬁ nancial services sectors. Career highlights include 
pioneering work on new client investment solutions, and helping to develop a 
customer proposition that grew one start-up platform’s assets under administration 
from zero to £40 billion. John also co-founded the Institute of Customer Services, 
and is presently the Non-executive Chairman of a major technology and software 
supplier to investment platforms.

Simon Turner
Non-executive Director

Simon joins the Board with strong experience in the retail, consumer electronics 
and IT industries, thanks to his time as Group Managing Director at a leading 
UK electrical retailer, and his appointment to the boards of several large Internet 
businesses. No stranger to the ﬁ nancial services industry, he has also enjoyed 
an eight-year spell on the board at one of Britain’s biggest building societies, and 
currently sits on the board of a major bank.

19

 
 
 
Executive Management Board

The EMB is the decision-making body that is responsible for the execution of the strategy 
agreed with the Board of Directors. It is charged with the day-to-day management of the 
Group, this within the conﬁ nes of the matters reserved to the Board of Directors. The EMB 
meets regularly to review the performance of the Group and to agree corrective action 
where issues arise.

The EMB consists of the Chief Executive Ofﬁ cer, the Chief Financial Ofﬁ cer and the following 
members of senior management:

Fergus Lyons
Managing Director, AJ Bell Investcentre

Fergus joined AJ Bell in August 2000, having previously been employed at a major 
bank for over 20 years. Over the years Fergus has worked in virtually all areas 
of the business. In addition to his current role as Managing Director of AJ Bell 
Investcentre, Fergus has overall responsibility for Customer Services, Technology 
Services and our Platinum SIPP/SSAS products.

Richard Taylor
Chief Risk Ofﬁ cer

Richard joined AJ Bell in October 2005 with over 25 years’ experience in the 
ﬁ nancial services industry. He is responsible for the risk, compliance, legal and 
technical resources functions within AJ Bell. Before joining AJ Bell, Richard held 
senior legal, marketing and strategy roles with a number of leading insurance 
companies. For many years he worked for a company specialising in the SSAS 
and SIPP market, leading its Legal, Pensions Technical and Compliance teams.

Charles Galbraith
Managing Director, AJ Bell Youinvest

Charles joined AJ Bell Securities in 2006 as Managing Director. He has worked 
in a number of stockbroking ﬁ rms over the past 20 years, concentrating on both 
private and institutional clients. Previously he was Managing Director of Lloyds 
TSB Stockbrokers Limited, and was also responsible for Lloyds TSB’s Stocks 
and Shares ISA business. Charles has overall responsibility for our institutional 
stockbroking business, our AJ Bell Youinvest platform and media business.

Roger Stott
Group Finance Director

Roger qualiﬁ ed as a Chartered Accountant in 1990 with KPMG, and has worked in 
retail stockbroking since 1999. He spent seven years as Finance Director at a well-
known stockbroker, joining the company at start-up and seeing it through an MBO 
and sale. With AJ Bell since 2008, Roger is responsible for overseeing the Group’s 
ﬁ nance function, the commercial management of supplier relationships and our 
third party products.

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20

 
 
 
Directors’ report

The directors present their annual report on the affairs of the Group, together with the 
consolidated ﬁ nancial statements and auditor’s report, for the year ended 30 September 
2014.

Directors

The directors, who served throughout the year, are disclosed on page 19. 

Directors’ interests

The directors who held ofﬁ ce at 30 September 2014 had the following interests in the share capital of the Company:

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Les Platts

Andy Bell

Michael Summersgill

John Tomlins

Simon Turner

Total

Ordinary

A non-voting

30 Sept 2014

30 Sept 2013

30 Sept 2014

30 Sept 2013

50,305

30,000

12,764,019

12,764,019

-

31,578

20,000

-

-

-

-

104,093

60,176

-

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70,757

50,032

-

-

12,865,902

12,794,019

164,269

120,789

No director held Ordinary non-voting shares at 30 September 2014, 30 September 2013 or at any time during the period 
between these dates.

Directors’ share options

At 30 September 2014, the directors who held ofﬁ ce held the following share options:

Director

M Summersgill

M Summersgill

M Summersgill

Number

Exercise price £

Date of grant of 
option

Earliest date of 
exercise

10,000

2,500

1,000

1.90

3.00

3.50

1 Aug 09

1 Oct 10

19 Dec 11

1 Jul 15

1 Jul 15

1 Jul 15

There are no performance criteria attaching to any of the three tranches of share options.

No options were exercised by the directors during the year, or during the previous year.

FCA Remuneration Code

AJ Bell Securities Limited, as an IFPRU limited licence ﬁ rm, is subject to the requirements of the FCA Remuneration Code. 
More information about AJ Bell Securities Limited and the Company’s Pillar III disclosure is available to view at 
www.ajbellsecurities.co.uk. 

We have taken the decision to apply the Code to the Group and we do so, on the basis of AJ Bell Securities Limited’s status 
as a Proportionality Level 3 ﬁ rm, under the FCA’s Guidance. We maintain remuneration policies and practices in accordance 
with the applicable principles of the Remuneration Code, which are overseen by the Remuneration Committee, comprised 
of the Non-executive Directors of the Board. Material decisions in relation to the remuneration of staff whose actions 

21

 
 
 
Directors’ report

have a material impact on the risk proﬁ le of the ﬁ rm and in relation to individuals in control functions are overseen by the 
Remuneration Committee. Our remuneration policies provide for variable remuneration to be linked to performance. 

Key Performance Indicators

Key performance indicators in relation to the Group’s activities, as reviewed continually by senior management, are 
presented on the highlights page, given at page 9.

Dividends

The Company has declared a ﬁ nal dividend of 15.75p (2013: 15.50p) per share, to be paid on 12 December 2014. This, 
together with the interim dividend of 9.50p (2013: 9.50p) paid on 23 May 2014, makes a total dividend in respect of the 
ﬁ nancial year ended 30 September 2014 of 25.25p per share (2013: 25.00p).

Capital management

The Group is not currently subject to any consolidated regulatory capital requirements. However, two subsidiaries, AJ Bell 
Management Limited and AJ Bell Securities Limited, are regulated by the FCA and are therefore subject to regulatory capital 
requirements.

The capital in both of these companies comprises share capital, share premium and retained earnings. The directors ensure 
that the level of capital held in these two subsidiary entities:

•  meets the regulatory capital requirements;

• 

• 

provides a strong base for ongoing trading activities;

is sufﬁ cient to support the Group’s long-term strategy.

At 30 September 2014, AJ Bell Management Limited held 290% (2013: 329%) and AJ Bell Securities Limited held 698% 
(2013: 219%) of their respective regulatory capital requirements.

Financial risks

Interest rate risk

As at the year-end, the Group had no borrowings and therefore was not exposed to interest rate risk related to debt.

The Group’s income levels are affected by prevailing interest rates. In a low interest rate environment, cash balances tend 
to decline and the revenue the Group earns on cash deposits reduces. The Group maintains good relationships with its 
banking partners and is able to access competitive rates due to the large value of deposits it places. This, along with the 
ability to control the interest rate on customer balances, enables the Group to mitigate this risk as far as it is practicable to do 
so. 

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 sufﬁ cient cash and standby banking facilities to fund its foreseeable trading requirements. 

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22

 
 
 
Directors’ report

Credit and bank default risk

The Group’s credit risk extends to its principal ﬁ nancial assets. These are cash balances held with banks and trade and 
other receivables. 

As regards trade receivables, 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 directors continue to monitor the strength of the banks used by the Group. The banks currently used by the Group are 
Bank of Scotland plc, HSBC Bank plc, The Royal Bank of Scotland plc, Brown Brothers Harriman & Co. and Bank of Ireland 
(UK) plc. Bank of Scotland plc, the Group’s principal banker, is substantial and is 100% owned by Lloyds Banking Group in 
which the UK Government still has a signiﬁ cant strategic stake. The degree of state ownership is closely monitored by the 
Group. All of the banks currently used by the Group have long-term credit ratings of at least A (Fitch) or A3 (Moody’s), apart 
from Bank of Ireland (UK) plc, which currently has ratings of BBB (Fitch) and B1 (Moody’s). 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.

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Charitable donations and political contributions 

During the year the Group made charitable donations of £81,800 (2013: £182,688), all to UK registered charities.

There were no political contributions in the current year or prior year.

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Disabled employees

Applications for employment by disabled persons are considered bearing in mind the aptitude of the applicant concerned. In 
the event of employees becoming disabled every effort is made to ensure that their employment with the Group continues 
and that 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 identical to that of other employees.

Employee consultation

The Group places considerable value on the involvement of its employees. It has continued to keep them informed on 
matters affecting them as employees and arising from the various 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. Employee share schemes have operated since June 
2005. These schemes have promoted wider employee involvement in the Group.

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. 

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 Executive 
Management Assurance Committee which is responsible for overseeing the Group’s Risk Management, Compliance and 
Internal Audit functions.

23

 
 
 
Directors’ report

Going concern

The consolidated ﬁ nancial statements have been prepared on a going concern basis. After making enquiries, the directors 
believe that they have a reasonable expectation that the Group has adequate resources to continue in operational existence 
for the foreseeable future. The going concern basis of preparation is discussed in note 2.1 of the consolidated ﬁ nancial 
statements.

Auditor

Each of the persons who are a director at the date of approval of this annual report conﬁ rms 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 he ought to have taken as a director in order to make himself aware of any 
relevant audit information and to establish that the Company’s auditor is aware of that information. 

The Board plans to put KPMG LLP forward to be appointed as auditors and a resolution concerning their appointment 
will be put to the forthcoming AGM of the Company. 

By order of the Board

Bruce Robinson
Company Secretary
11 December 2014

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24

 
 
 
Statement of directors’ responsibilities in respect of the Strategic 
report, Directors’ report and the ﬁ nancial statements

The directors are responsible for preparing the Annual Report and the Group and parent company ﬁ nancial statements in 
accordance with applicable law and regulations.

Company law requires the directors to prepare Group and parent company ﬁ nancial statements for each ﬁ nancial year. 
Under that law they have elected to prepare the Group ﬁ nancial statements in accordance with IFRSs as adopted by the EU 
and applicable law and have elected to prepare the parent company ﬁ nancial statements in accordance with UK Accounting 
Standards and applicable law (UK Generally Accepted Accounting Practice).

Under company law the directors must not approve the ﬁ nancial statements unless they are satisﬁ ed that they give a true 
and fair view of the state of affairs of the Group and parent company and of their proﬁ t or loss for that period. In preparing 
each of the Group and parent company ﬁ nancial statements, the directors are required to:

• 

select suitable accounting policies and then apply them consistently;

•  make judgements and estimates that are reasonable and prudent;

• 

• 

• 

for the Group ﬁ nancial statements, state whether they have been prepared in accordance with IFRSs as adopted by the 
EU;

for the parent company ﬁ nancial statements, state whether applicable UK Accounting Standards have been followed, 
subject to any material departures disclosed and explained in the ﬁ nancial statements; and 

prepare the ﬁ nancial statements on the going concern basis unless it is inappropriate to presume that the Group and the 
parent company will continue in business. 

The directors are responsible for keeping adequate accounting records that are sufﬁ cient to show and explain the parent 
company's transactions and disclose with reasonable accuracy at any time the ﬁ nancial position of the parent company and 
enable them to ensure that its ﬁ nancial statements comply with the Companies Act 2006. They have general responsibility 
for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud 
and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and ﬁ nancial information included on the 
Company's website. Legislation in the UK governing the preparation and dissemination of ﬁ nancial statements may differ 
from legislation in other jurisdictions.

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25

 
 
 
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26

Independent auditor’s report to the members of 
AJ Bell Holdings Limited

Opinion on other matter prescribed by the 
Companies Act 2006 

In our opinion the information given in the strategic report 
and the directors’ report for the ﬁ nancial year for which the 
ﬁ nancial statements are prepared is consistent with the 
ﬁ nancial statements. 

Matters on which we are required to report 
by exception

We have nothing to report in respect of the following matters 
where 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 ﬁ nancial statements are not in 
agreement with the accounting records and returns; or 

certain disclosures of directors’ remuneration speciﬁ ed 
by law are not made; or 

•  we have not received all the information and 

explanations we require for our audit. 

Richard Gabbertas (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor 
Chartered Accountants 
St James Square
Manchester
M2 6DS

11 December 2014

We have audited the ﬁ nancial statements of AJ Bell Holdings 
Limited for the year ended 30 September 2014 set out 
on pages 30 to 70. The ﬁ nancial reporting framework that 
has been applied in the preparation of the Group ﬁ nancial 
statements is applicable law and International Financial 
Reporting Standards (IFRSs) as adopted by the EU. The 
ﬁ nancial reporting framework that has been applied in the 
preparation of the parent company ﬁ nancial statements is 
applicable law and UK Accounting Standards (UK Generally 
Accepted Accounting Practice). 

This report is made solely to the 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 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 company and the company’s 
members, as a body, for our audit work, for this report, or for 
the opinions we have formed. 

Respective responsibilities of directors and 
auditor 

As explained more fully in the Directors’ Responsibilities 
Statement set out on page 25, the directors are responsible 
for the preparation of the ﬁ nancial statements and for 
being satisﬁ ed that they give a true and fair view. Our 
responsibility is to audit, and express an opinion on, the 
ﬁ nancial statements in accordance with applicable law and 
International Standards on Auditing (UK and Ireland). Those 
standards require us to comply with the Auditing Practices 
Board’s Ethical Standards for Auditors. 

Scope of the audit of the ﬁ nancial statements 

A description of the scope of an audit of ﬁ nancial statements 
is provided on the Financial Reporting Council’s website at 
www.frc.org.uk/auditscopeukprivate.

Opinion on ﬁ nancial statements 

In our opinion: 

• 

• 

• 

• 

the ﬁ nancial 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 2014 and of the Group’s proﬁ t for 
the year then ended; 

the Group ﬁ nancial statements have been properly 
prepared in accordance with IFRSs as adopted by the 
EU;

the parent company ﬁ nancial statements have been 
properly prepared in accordance with UK Generally 
Accepted Accounting Practice; 

the ﬁ nancial statements have been prepared in 
accordance with the requirements of the Companies Act 
2006. 

 
 
 
Financial Statements 

Consolidated income statement

For the year ended 30 September 2014

Revenue

Administrative expenses

Operating proﬁ t

Investment revenue

Finance costs

Proﬁ t before tax

Taxation

Proﬁ t for the ﬁ nancial year attributable to equity holders 
of the parent company

Earnings per ordinary share:

Basic (pence)

Diluted (pence)

Notes

4

7

8

10

10

2014
£’000

53,493

(37,579)

15,914

234

(31)

16,117

(3,594)

12,523

30.87

30.76

2013
£’000

57,043

(33,318)

23,725

228

(51)

23,902

(5,738)

18,164

45.08

44.82

The notes and information on pages 34 to 64 form part of these consolidated ﬁ nancial statements. All income, proﬁ t and 
earnings are in respect of continuing operations.

There were no other components of recognised income or expense in either year and consequently no Statement of Other 
Comprehensive Income has been presented.

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30

 
 
 
Consolidated statement of ﬁ nancial position

As at 30 September 2014

Assets

Non-current assets:

Goodwill

Other intangible assets

Property, plant and equipment

Current assets:

Trade and other receivables

Client and market receivables

Cash and cash equivalents

Total assets

Liabilities

Current liabilities:

Trade and other payables

Client and market payables

Current tax liabilities

Obligations under ﬁ nance leases

Provisions 

Non-current liabilities:

Obligations under ﬁ nance leases

Provisions

Other payables

Deferred tax liability

Total liabilities

Net assets

Equity

Share capital

Share premium

Retained earnings

Total equity attributable to equity holders of the parent company

* Restated – see note 2 to the ﬁ nancial statements

Notes

2014
£’000

2013*
£’000

11

12

13

15

15

15

18

18

17

19

17

19

18

16

20

1,957

8,281

1,249

11,487

11,484

43,328

33,222

88,034

99,521

(5,479)

(41,692)

(1,970)

(100)

(68)

1,957

9,090

816

11,863

9,730

41,672

32,506

83,908

95,771

(5,495)

(40,075)

(2,739)

(43)

(68)

(49,309)

(48,420)

(203)

(398)

(57)

(168)

(826)

(104)

(315)

(29)

(225)

(673)

(50,135)

(49,093)

49,386

46,678

40

1,085

48,261

49,386

40

639

45,999

46,678

The notes and information on pages 34 to 64 form part of the consolidated ﬁ nancial statements.

The ﬁ nancial statements were approved by the Board of Directors on 11 December 2014 and were signed on its behalf by:

Michael Summersgill
Director

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Consolidated statement of changes in equity

For the year ended 30 September 2014

Notes

Share
capital
£’000

40

Share
premium
£’000

Retained 
earnings 
£’000

Total 
£’000

617

37,750

38,407

Balance at 1 October 2012

Total comprehensive income 
for the year:

Proﬁ t for the ﬁ nancial year

Transactions with owners, 
recorded directly in equity:

Issue of share capital

Dividends

Credit to equity in respect of 
share-based payments

Deferred tax effect of share-based 
payments

Tax relief on exercise of share options

Total transactions with owners

-

-

-

-

-

-

-

9

23

8

8

-

18,164

18,164

22

-

22

-

-

-

-

22

639

(9,982)

(9,982)

27

22

18

27

22

18

(9,915)

(9,893)

45,999

46,678

Balance at 30 September 2013

40

The notes and information on pages 34 to 64 form part of the consolidated ﬁ nancial statements.

Balance at 1 October 2013

Total comprehensive income 
for the year:

Proﬁ t for the ﬁ nancial year

Transactions with owners, recorded 
directly in equity:

Issue of share capital

Repurchase of own shares

Dividends

Credit to equity in respect of share-based 
payments

Deferred tax effect of share-based 
payments

Tax relief on exercise of share options

Total transactions with owners

9

23

8

8

40

639

45,999

46,678

-

-

-

-

-

-

-

-

-

12,523

12,523

446

-

-

-

-

-

-

(99)

446

(99)

(10,154)

(10,154)

2

(16)

6

2

(16)

6

446

1,085

(10,261)

(9,815)

48,261

49,386

Balance at 30 September 2014

40

The notes and information on pages 34 to 64 form part of the consolidated ﬁ nancial statements.

32

 
 
 
Consolidated statement of cash ﬂ ows

For the year ended 30 September 2014

Net cash from operating activities

21

11,949

16,869

Notes

2014
£’000

2013*
£’000

Investing activities

Purchase of other intangible assets

Purchase of property, plant and equipment

Net cash paid to acquire subsidiary

Interest received

Net cash used in investing activities

Financing activities 

Payment of obligations under ﬁ nance leases

Proceeds from issue of share capital

Repurchase of own shares

Dividends paid

Net cash used in ﬁ nancing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Total cash and cash equivalents at end of year

* Restated – see note 2 to the ﬁ nancial statements

12

20

9

(945)

(650)

-

234

(1,361)

(65)

446

(99)

(10,154)

(9,872)

716

32,506

33,222

(1,404)

(314)

(1,979)

228

(3,469)

(54)

22

-

(9,982)

(10,014)

3,386

29,120

32,506

The notes and information on pages 34 to 64 form part of the consolidated ﬁ nancial statements.

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33

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

1.  General information

The Company is incorporated and registered in England and Wales. The address of the registered ofﬁ ce is given on page 
73. The nature of the Group’s operations are set out in the strategic report on pages 12 to 18 and the directors’ report on 
pages 21 to 24.

The consolidated ﬁ nancial statements for the Company and its subsidiaries were approved by the Board on 11 December 
2014.

2.  Signiﬁ cant accounting policies

Basis of accounting 

The consolidated ﬁ nancial statements are prepared on a going concern basis as noted on page 35 and are presented 
in sterling, rounded to the nearest thousand. They are prepared on the historical cost basis and the principal accounting 
policies applied in the preparation of these ﬁ nancial statements are set out on pages 34 to 41. 

The consolidated ﬁ nancial statements of AJ Bell Holdings Limited have been prepared in accordance with International 
Financial Reporting Standards (‘IFRS’) as adopted by the EU. The directors have elected to prepare the parent company’s 
ﬁ nancial statements in accordance with UK GAAP and as permitted by Section 408 of the Companies Act 2006, no proﬁ t and 
loss account is presented for the Company; the notes and information for the Company are presented on pages 66 to 70.

Change in accounting policy

During the year there has been a change in accounting policy relating to clients’ settlement cash balances which were 
previously disclosed as cash held on behalf of clients and included within cash and cash equivalents. Clients’ settlement 
cash balances represent the Group’s right to receive cash from clients, who hold cash balances with the Group under a 
trust arrangement, to meet the Group’s settlement obligations incurred on their behalf. These balances have therefore been 
reclassiﬁ ed as client and market receivables, which better reﬂ ects their underlying substance as a debtor to the Group. 
The effect of this change is to reduce clients’ settlement cash balances by £20.0m with a corresponding increase to client 
and market receivables. The subsequent impact on the cash ﬂ ow statement for the year ended 30 September 2013 is that 
net cash from operating activities was reduced by £10.6m. The directors have elected not to prepare a third consolidated 
statement of ﬁ nancial position following the change in accounting policy as there would be no impact on net assets or proﬁ t 
for the year. The effect of the change on the prior year consolidated statement of ﬁ nancial position is to reduce clients’ 
settlement cash balances by £20.6m with a corresponding increase to client and market receivables.

The Group has early adopted the guidance provided in IFRIC 21 ‘Levies’. This has resulted in the full recognition of 2014/15 
Financial Services Compensation Scheme (FSCS) levies in the year ended 30 September 2014. Please see note 2.19 for 
further detail.

At the date of issue of these ﬁ nancial statements there were a number of standards and interpretations which were relevant 
in issue but not yet effective for the Group. The directors do not believe that any of these will have a signiﬁ cant impact on the 
Group.

Accounting policies as shown below have been consistently applied throughout the current and prior ﬁ nancial year.

Basis of consolidation

The consolidated ﬁ nancial statements incorporate the ﬁ nancial statements of the Company and entities controlled by the 
Company (its subsidiaries) made up to 30 September each year. Control is achieved where the Company has the power to 
govern the ﬁ nancial and operating policies of an investee entity so as to obtain beneﬁ ts from its activities. They cease to be 
consolidated from the date that the Group no longer has control.

All intercompany transactions, balances, income and expenses are eliminated on consolidation.

A list of the signiﬁ cant investments in subsidiaries, including the name, country of incorporation, principal activities and 
proportion of ownership interest is given in note 4 to the Company’s separate ﬁ nancial statements.

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34

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

2.1  Going concern

The Group’s business activities, together with its ﬁ nancial position and the factors likely to affect its future development and 
performance are set out in the strategic report on pages 12 to 18 and the directors’ report on pages 21 to 24. Within the 
directors’ report, the ﬁ nancial risks section on pages 22 to 23 includes the Group’s policies and processes for managing 
exposure to credit and liquidity risk. The Group’s forecasts and objectives, taking into account a number of potential changes 
in trading performance show that the Group should be able to operate at adequate levels of both liquidity and capital for 
the foreseeable future. The directors have performed a number of stress tests on capital and liquidity and these provide 
assurance that the Group has sufﬁ cient capital to operate under stressed liquidity conditions.

Consequently, after making reasonable enquiries, the directors are satisﬁ ed that the Group has sufﬁ cient resources to 
continue in business for the foreseeable future and therefore have continued to adopt the going concern basis in preparing 
the ﬁ nancial statements.

2.2  Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured as 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 acquiree. Acquisition-related costs are recognised in proﬁ t or loss 
as incurred. The acquiree’s identiﬁ able tangible and intangible assets, liabilities and contingent liabilities that meet the 
conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date.

2.3  Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of 
the identiﬁ able assets and liabilities of the subsidiary, associate or jointly-controlled entity at the date of acquisition.

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment 
losses. Goodwill that is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised 
immediately and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to one or more of the Group’s CGUs expecting to beneﬁ t 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 ﬁ nancial position forming 
that CGU, the impairment loss is allocated ﬁ rst 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, associate or jointly-controlled entity, the attributable amount of goodwill is included in the 
determination of the proﬁ t or loss on disposal.

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35

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

2.4  Revenue recognition 

In recognising revenue, the directors follow the principles contained in IAS 18 ‘Revenue’ to determine appropriate revenue 
recognition policies. Revenue is recognised to the extent that it is probable that the economic beneﬁ ts associated with the 
transaction will ﬂ ow into the Group.

Revenue is measured at the fair value of the consideration received or receivable net of discounts, VAT and other sales-
related taxes, for goods sold and services provided in the year.

Administration and custodian fees are recognised in the period in which the service is rendered using the percentage 
completion method. The extent to which a service is complete is determined by the different work activity proﬁ les of the 
associated individual services.

Services rendered at the inception of a ﬁ xed-term contract are recognised over the life of that contract.

Asset-based commissions are accrued on a time basis by reference either to the principal and effective interest rate or the 
due date for payment.

Transaction-based commissions are recognised when receivable in accordance with the date of the underlying transaction.

Investment revenue comprises interest income receivable on the Group’s bank deposits. Interest income is recognised in the 
income statement as it accrues, using the effective interest rate method.

2.5  Leasing

Leases are classiﬁ ed as ﬁ nance leases whenever the terms of the lease transfer substantially all the risks and rewards of 
ownership to the lessee. All other leases are classiﬁ ed as operating leases.

Assets held under ﬁ nance leases are recognised as assets of the Group at their fair value or, if lower, at the present value 
of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is 
included in the consolidated statement of ﬁ nancial position as a ﬁ nance lease obligation. Lease payments are apportioned 
between ﬁ nance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining 
balance of the liability.

Rental payments under operating leases are charged to the income statement on a straight-line basis over the term of 
the relevant lease. Beneﬁ ts received and receivable as an incentive to enter into an operating lease are also spread on a 
straight-line basis over the lease term.

2.6  Finance costs

Finance costs comprise interest payable and ﬁ nance charges on ﬁ nance leases. Finance costs are recognised in the income 
statement using the effective interest rate method.

2.7  Retirement beneﬁ t 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.

Alternatively, the Group will pay contributions to an employee’s AJ Bell Youinvest SIPP, if they wish, instead of the 
stakeholder pension.

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36

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

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 

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 

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for ﬁ nancial 
reporting purposes and the amounts used for taxation purposes. Deferred tax liabilities are generally recognised on all 
taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable proﬁ ts will 
be available in the future, against which deductible temporary differences can be utilised. Such assets and liabilities are not 
recognised if the temporary difference arises (other than in a business combination) from:

•  The initial recognition of goodwill; or

• 

• 

investment in subsidiaries to the extent that they will probably not reverse in the foreseeable future; or

the initial recognition of other assets and liabilities in a transaction that affects neither the tax proﬁ t nor the accounting 
proﬁ t.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of 
assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

2.9  VAT

Revenues, expenses and assets are recognised net of the amount of sales tax except where the sales tax incurred on a 
purchase of assets or services is not recoverable in whole or in part from the taxation authority.

Where the sales tax is not recoverable in whole or in part from the taxation authority, it is expensed through the income 
statement, except in the case of a capital asset where the irrecoverable proportion is capitalised as part of the capital cost of 
that asset.

2.10  Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment losses. 

Depreciation is provided, where material, on all property, plant and equipment at rates calculated 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

Ofﬁ ce equipment

Computer equipment

4 years

4 years

Assets held under ﬁ nance leases are depreciated over their expected useful lives on the same basis as owned assets or, 
where shorter, over the term of the relevant lease.

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.

Where an asset is under construction at the end of a reporting period, the costs involved that meet the relevant recognition 
criteria are disclosed as a separate class of asset. As these assets are not available for use by the business they are not 
depreciated, instead they are reviewed for impairment.

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37

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

2.11  Intangible assets (excluding goodwill)

Intangible assets comprise computer software, customer contracts and non-contractual customer relationships, website 
development costs and the Group’s key operating system (KOS). These are stated at cost or fair value less amortisation and 
any recognised impairment loss. Amortisation is provided, where material, on all intangible ﬁ xed assets excluding goodwill 
at rates calculated 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

KOS

4 years

10 years

KOS enhancements

Over the remaining life of the KOS

Customer contracts and non-contractual 
customer relationships

5-10 years

Media website development costs

3 years

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.

Where an asset is under construction at the end of a reporting period, the costs involved that meet the relevant recognition 
criteria are disclosed as a separate class of asset. As these assets are not available for use by the business they are not 
amortised, instead they are reviewed for impairment.

2.12  Internally-generated intangible assets

An internally-generated asset arising from work performed by the Group is recognised only if all the following conditions are 
met:

•  An asset is created that can be identiﬁ ed (such as software);

• 

• 

it is probable that the asset created will generate future economic beneﬁ ts; and

the development costs of the asset can be measured reliably.

Where such an asset is under construction at the end of a reporting period, the costs involved that meet the relevant 
recognition criteria are disclosed as a separate class of asset. As these assets are not available for use by the business they 
are not depreciated or amortised, instead they are reviewed for impairment. Typically, such projects consist of a mixture of 
tangible and intangible components and these are disclosed separately in the ﬁ nancial statements.

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38

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

2.13  Impairment of tangible and intangible assets (excluding goodwill)

At each reporting date of the consolidated statement of ﬁ nancial position the directors review the carrying amount of 
the Group’s tangible and intangible 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 ﬂ ows generated by the CGU is tested. A CGU is the smallest group of assets that generates cash inﬂ ows 
from continuing use that are largely independent of the cash inﬂ ows of other assets or of groups of other assets. An 
intangible asset with an indeﬁ nite useful life is tested for impairment annually and whenever there is an indication that the 
asset may be impaired.

Recoverable amount

The recoverable amount of a tangible or intangible asset 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 cash ﬂ ows are discounted to their present value using a pre-tax 
discount rate that reﬂ ects current market assessments of the time value of money and the risks speciﬁ c to the asset for 
which the estimates of future cash ﬂ ows 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.

Reversals of impairment

An impairment loss is reversed on tangible and intangible assets 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.

2.14  Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held on call with banks and other short-term highly liquid 
investments with original maturities of three months or less. Where appropriate, bank overdrafts are shown within borrowings 
in current liabilities in the consolidated statement of ﬁ nancial position. For the purposes of the consolidated cash ﬂ ow 
statement, cash and cash equivalents are deﬁ ned as above, net of outstanding bank overdrafts if the Group has the right of 
set off.

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40

Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

2.15  Financial instruments

Financial assets and liabilities are recognised in the consolidated statement of ﬁ nancial position when a member of the 
Group becomes a party to the contractual provisions of the instrument.

Financial assets

All ﬁ nancial assets are recognised and derecognised on a trade date where the purchase or sale of a ﬁ nancial asset is under 
a contract whose terms require delivery of the ﬁ nancial asset within the timeframe established by the market concerned.

All ﬁ nancial assets are classiﬁ ed as loans and receivables. 

Loans and receivables

Trade receivables, loans, and other receivables that have ﬁ xed or determinable payments that are not quoted in an active 
market are classiﬁ ed as loans and receivables. Loans and receivables are measured at fair value, less any impairment. In 
accordance with market practice, certain balances with clients, Stock Exchange member ﬁ rms and other counterparties are 
included as receivables. Client and market receivables are presented net where there is a legal right of offset and the ability 
and intention to settle on the net basis. Clients’ settlement cash balances represent a right to receive cash from clients to 
settle an obligation incurred on their behalf. No interest income is recognised as all loans and receivables are short-term 
receivables and the recognition of interest would be immaterial.

Impairment of ﬁ nancial assets

Financial assets are assessed for indicators of impairment at each date of the consolidated statement of ﬁ nancial position. 
These assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the 
initial recognition of the ﬁ nancial asset, the estimated future cash ﬂ ows of the investment have been affected.

For ﬁ nancial assets objective evidence of impairment could include:

•  Default or delinquency in interest or principal payments; or

• 

it becoming probable that the borrower will enter bankruptcy or ﬁ nancial re-organisation.

For certain categories of ﬁ nancial asset, such as trade receivables, assets that are assessed not to be impaired individually 
are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables 
could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in 
the portfolio past the average credit period of 30 days, as well as the observable changes in national or local economic 
conditions that correlate with default on receivables.

The carrying amount of the ﬁ nancial assets is reduced by the use of a provision. When a trade receivable is considered 
uncollectable, it is written off against the provision. Subsequent recoveries of amounts previously written off are credited 
against the provision. Changes in the carrying amount of the provision are recognised in the income statement.

Financial liabilities and equity

Financial liabilities and equity instruments are classiﬁ ed according to the substance of the contractual arrangements entered 
into.

An equity instrument is any contract that evidences a residual interest in the assets in which the investment is made after 
deducting all of its liabilities.

Financial liabilities

All ﬁ nancial liabilities are classiﬁ ed as other ﬁ nancial liabilities.

Other ﬁ nancial liabilities, including any borrowings, are initially measured at fair value, net of transaction costs. They are 
subsequently measured at amortised cost using the effective interest rate method. In accordance with market practice, 
certain balances with clients, Stock Exchange member ﬁ rms and other counterparties are included as payables. Client and 
market payables are presented net where there is a legal right of offset and the ability and intention to settle on the net basis.

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

Effective interest rate method

The effective interest rate method is a method of calculating the amortised cost of a debt instrument and of allocating the 
interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash ﬂ ows 
through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial 
recognition.

Derecognition of ﬁ nancial liabilities

The Group derecognises ﬁ nancial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they 
expire.

2.16  Provisions

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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. Provisions are measured at the directors’ best estimate 
of the consideration required to settle that obligation at the date of the consolidated statement of ﬁ nancial position and are 
discounted to present value where the effect is material. 

2.17  Share-based payments

The Group applies the requirements of IFRS 2 ‘Share-based Payment’. For the purposes of this ﬁ nancial information, IFRS 2 
has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2006.

The Group issues equity-settled share-based payments to certain employees. These are measured at fair value (excluding 
the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the 
equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the directors’ 
estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. Where a grant 
of equity-settled share-based payments is not subject to vesting conditions, the fair value determined at the grant date is 
expensed immediately.

Fair value is measured by use of the Black-Scholes model. The expected life applied in the model has been adjusted based 
on the directors’ best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations. As 
the Company’s shares are not listed on a recognised stock exchange and therefore no readily available market price exists 
for the shares, the share price has been estimated using a generally accepted business valuation method. Share price 
volatility has been estimated as the average of the volatility applying to a comparable group of listed companies.

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2.18  Dividends

Dividend distributions to the Company’s shareholders are recognised in the period in which the dividends are paid. Final 
dividends declared after the reporting period are not included as a liability in the ﬁ nancial statements but are disclosed in the 
notes to the ﬁ nancial statements.

2.19  Levies

The Group applies the guidance provided in IFRIC 21 ‘Levies’. When eligible revenue which triggers a levy liability is 
generated in a levy period, the Group recognises the relevant liability immediately in full.

41

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

3.  Critical accounting judgements 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.

Critical judgements in applying the Group’s accounting policies

The following critical judgements have been made by the directors in applying the Group’s accounting policies.

Impairment reviews of non-current assets

At each reporting date, the Group’s non-current assets are reviewed for impairment where there are indicators of impairment 
or a review is speciﬁ cally required by IAS 36. As it is not possible to test the Group’s assets for impairment on an individual 
basis, impairment reviews are carried out on a CGU basis. In order to determine an asset’s recoverable amount, the 
directors review the expected future cash ﬂ ows of the CGU to which the asset is allocated. 

There are a number of estimations that the directors have used to forecast the expected future cash ﬂ ows of the CGUs that 
have been reviewed. Key judgements in arriving at these estimations include:

•  The revenue generated by the future demand for the Group’s products and services;

• 

• 

the anticipated future costs attributable to the supply of the Group’s products and services; and

the level of ongoing maintenance expenditure required on the Group’s assets in order to generate the expected level of 
cash ﬂ ows.

Capitalisation of internally-generated intangible assets

The Group’s accounting policy in relation to internally-generated intangible assets is given at section 2.12 in the notes to the 
consolidated ﬁ nancial statements.

Management judges whether incremental cash ﬂ ows attributable to each project can be reliably measured. For projects 
where it is deemed probable that the asset will generate future economic beneﬁ ts that can be measured, expenditure is 
capitalised. Examples of this are the delivery of a new product or service and the development of a new operating system. 
For projects that do not meet this expenditure criteria, such as the maintenance of an asset or new functionality for an 
existing product, the cost is expensed to the income statement as incurred. 

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42

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

4.  Revenue 

An analysis of the consolidated revenue is as follows:

Investment administration services

Dealing and custody services

Media services

Total

5.  Proﬁ t for the ﬁ nancial year

Notes

12

13

22

6

Proﬁ t for the ﬁ nancial year has been arrived at after charging:

Amortisation of intangible assets

Depreciation of tangible assets

Loss on disposal of intangible assets

Loss on disposal of tangible assets

Operating lease rentals: 

Other assets

Staff costs 

Fees payable to the company’s auditor for the audit of the 
company’s annual accounts

Fees payable to the company’s auditor and its associates for other services:

Audit of the accounts of subsidiaries

Audit-related assurance services

Other assurance services

2014
£’000

2013
£’000

33,783

16,348

3,362

53,493

2014
£’000

1,753

436

-

2

44,256

10,461

2,326

57,043

2013
£’000

1,542

476

-

6

857

737

21,265

18,884

19

43

38

13

19

68

23

13

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43

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

6.  Employee beneﬁ t costs and employee numbers

The average number of employees (including Executive Directors) in the continuing 
operations of the Group during the year ended 30 September 2014 were:

Administrative functions 

548

495

The aggregate employee costs for the continuing operations of the Group were as follows:

2014
No.

2013
No.

Short-term employee beneﬁ ts

Social security costs

Retirement beneﬁ t costs 

Termination beneﬁ ts

Total

Remuneration of key management personnel

Key management personnel are represented by the Board of Directors as shown on 
page 19 and the EMB as shown on page 20:

Short-term employee beneﬁ ts

Retirement beneﬁ t costs

Share-based payments

Total

Remuneration of directors

The following costs relate to the Board of Directors as shown on page 19:

Short-term employee beneﬁ ts

Retirement beneﬁ t costs

Shared-based payments 

Total

2014
£’000

18,563

2,093

530

79

2013
£’000

16,535

1,879

404

66

21,265

18,884

2014
£’000

2013
£’000

1,675

1,561

22

8

33

3

1,705

1,597

2014
£’000

2013
£’000

785

-

-

785

773

11

1

785

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44

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

Remuneration of highest paid director

Short-term employee beneﬁ ts

Total

7.  Finance costs

Obligations under ﬁ nance leases

Other

Total

2014
£’000

520

520

2014
£’000

26

5

31

2013
£’000

502

502

2013
£’000

29

22

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45

 
 
 
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Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

8.  Taxation

An analysis of the charge recognised in the consolidated income statement is presented below:

Current tax

Adjustment to current tax in respect of prior period

Deferred tax

Origination and reversal of temporary differences

Change in recognised deductible temporary differences

Reduction in tax rate

2014
£’000

3,669

(2)

(90)

23

(6)

2013
£’000

5,691

3

(45)

96

(7)

Tax charge per the consolidated income statement

3,594

5,738

Corporation Tax is calculated at 22% of the estimated assessable proﬁ t for the ﬁ nancial year (2013: 23.5%).

In addition to the amount charged to the income statement, certain tax amounts have been charged/(credited) directly to 
equity as follows:

Deferred tax relating to share-based payments (see note 16)

Current tax relief on exercise of share options

The charge for the year can be reconciled to the proﬁ t per the income statement as follows:

Proﬁ t before tax

Proﬁ t before tax multiplied by a pro-rata rate of corporation tax in the UK of 
22% (2013: 23.5%)

Effects of:

Expenses not deductible

Adjustments to current tax in respect of prior period

Change in recognised deductible temporary differences

Reduction in tax rate

Total tax expense in consolidated income statement

Effective tax rate

2014
£’000

16

(6)

10

2013
£’000

(22)

(18)

(40)

2014
£’000

2013
£’000

16,117

23,902

3,546

5,615

31

21

(4)

-

3,594

22.3%

34

3

93

(7)

5,738

24.0%

During the period the Group has reﬂ ected the change in the main rate of Corporation Tax from 23% to 21%. The Group has 
also reﬂ ected the substantively enacted tax rate of 20%. 

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46

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

9.  Dividends

Amounts recognised as distributions to equity holders during the year:

Final dividend for the year ended 30 September 2013 of 15.50p (2012: 15.25p) 
per share

Interim dividend for the year ended 30 September 2014 of 9.50p (2013: 9.50p) 
per share

Ordinary dividends paid on equity shares

Proposed ﬁ nal dividend for the year ended 30 September 2014 of 15.75p 
(2013: 15.50p) per share

2014
£’000

2013
£’000

6,297

6,151

3,857

10,154

3,831

9,982

6,411

6,260

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Dividends are payable on all classes of issued and fully or partially paid up ordinary shares as disclosed in note 20.

10.  Earnings per share

Basic earnings per share is calculated by dividing the proﬁ t attributable to equity holders of the parent company by the 
weighted average number of ordinary, non-voting ordinary and A non-voting ordinary shares in issue during the period.

Diluted earnings per share is calculated by adjusting the weighted average number of shares in all classes outstanding to 
assume exercise of all potentially dilutive share options.

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Earnings for the purposes of basic and diluted earnings per share being proﬁ t 
attributable to equity holders of the parent company

Number of Shares

Weighted average number of ordinary shares (for the purpose of basic earnings 
per share) in issue during the year

Effect of potentially dilutive share options

2014
£’000

2013
£’000

12,523

18,164

Number of shares 
2014

Number of shares 
2013

40,568,194

40,295,307

144,002

232,098

Weighted average number of ordinary shares for the purposes of fully 
diluted earnings per share

40,712,196

40,527,405

47

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

11.  Goodwill

Cost

At 1 October 2013

Additions

At 30 September 2014

Accumulated impairment losses

At 1 October 2013

Charge for the ﬁ nancial year

At 30 September 2014

2014
£’000

2,069

-

2,069

112

-

112

2013
£’000

532

1,537

2,069

112

-

112

Carrying value at 30 September 2014

1,957

1,957

The directors test goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

Goodwill arising on acquisition of AJ Bell Securities Limited

Goodwill of £532,000 recognised in the statement of ﬁ nancial position arose on the acquisition of AJ Bell Securities Limited 
during the year ended 30 September 2008. 

For the purposes of impairment testing, goodwill arising on the acquisition of AJ Bell Securities Limited is allocated to the 
dealing and custody CGU.

Goodwill arising on acquisition of AJ Bell Media Limited

Goodwill of £1,537,000 recognised in the statement of ﬁ nancial position arose on the acquisition of AJ Bell Media Limited 
during the year ended 30 September 2013. 

For the purposes of impairment testing, £380,000 of goodwill arising on the acquisition of AJ Bell Media Limited is allocated 
to the investment administration CGU, with the remaining £1,157,000 being allocated to the dealing and custody CGU.

Calculation of value-in-use of CGUs

Dealing and custody CGU

The recoverable amount of the assets contained within the dealing and custody CGU is determined by estimating its value-
in-use; the discounted future cash ﬂ ows attributable to the CGU are projected over the remaining three-year life of the 
customer list, which is the most prominent asset in the CGU, based on the most recent forecasts approved by the Board.

Investment administration CGU

The recoverable amount of the assets contained within the investment administration CGU is determined by estimating its 
value-in-use; the discounted future cash ﬂ ows attributable to the CGU are projected over the remaining seven-year life of the 
key operating system, which is the most prominent asset in the CGU, based on the most recent forecasts approved by the 
Board.

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48

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

The directors have exercised the following key judgements in estimating the future cash ﬂ ows:

Revenue 

A moderate rate of growth has been used to extrapolate cash ﬂ ow projections beyond the most recent budget approved by 
the Board for the investment administration and dealing and custody CGUs.

Administrative expenses

Economies of scale are expected to be gained in the medium to long-term, although there are not expected to be any 
signiﬁ cant changes to the nature of administrative expenses.

Asset maintenance 

Modest ongoing maintenance expenditure is required on the assets in the CGUs in order to generate the expected level of 
cash ﬂ ows.

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Discount rate 

A discount rate of 5% has been applied to the forecast cash ﬂ ows in order to estimate the value-in-use of the CGUs.

Based on these key judgements, the estimated value-in-use of the CGUs comfortably supports the carrying values of the 
assets held within them. 

In addition to the impairment review carried out as described above, the directors have performed sensitivity analysis on 
their calculations, with key assumptions being revised adversely to reﬂ ect the potential for future performance being below 
expected levels. The results of these revised calculations continue to support the carrying values of the assets contained in 
the CGUs.

Following their review of both the dealing and custody CGU and investment administration CGU, the directors are satisﬁ ed 
that goodwill is not impaired.

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Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

12.  Other intangible assets

Computer 
software
£’000

Assets under 
construction 
£’000

Customer 
contracts and 
non-contractual 
customer 
relationships 
£’000

Key operating 
system
£’000

Total
£’000

Cost

At 1 October 2012

Additions

Acquisitions through business 
combinations

Transfer

At 30 September 2013

Additions

Acquisitions through 
business combinations

Transfer

At 30 September 2014

Amortisation

At 1 October 2012

Charge for the ﬁ nancial year

At 30 September 2013

Charge for the ﬁ nancial year

Impairment

At 30 September 2014

Carrying value at 
30 September 2013

Carrying value at 
30 September 2014

Average remaining 
amortisation period

5,710

236

177

-

6,123

190

-

117

6,430

4,766

558

5,324

513

-

5,837

799

593

1 year
11 months

5,679

1,168

-

(5,276)

1,571

754

-

(2,325)

-

-

-

-

-

-

-

1,523

-

612

-

2,135

-

-

-

2,135

722

244

966

275

-

1,173

-

-

5,276

6,449

-

-

2,208

8,657

158

740

898

965

-

1,241

1,863

14,085

1,404

789

-

16,278

944

-

-

17,222

5,646

1,542

7,188

1,753

-

8,941

1,571

1,169

5,551

9,090

-

n/a

894

6,794

8,281

3 years
3 months

6 years
6 months

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Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

Assets under construction

During the year ended 30 September 2010, the Group embarked upon a project to renew its IT infrastructure and 
administration systems in order to enhance its products and services. The ﬁ nal phase of the project completed in the 
current year and the remaining assets held as assets under construction were brought into use. £2.3m has therefore been 
transferred from assets under construction to intangible assets.

Purchased software

External consultancy costs

Other external costs

Internal costs

Total assets under construction

2014
£’000

-

-

-

-

-

-

2013
£’000

20

1,129

-

1,149

422

1,571

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Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

13.  Property, plant and equipment

Cost

At 1 October 2012

Additions

Acquisitions through business combinations

Disposals

At 30 September 2013

Additions

Acquisitions through business combinations

Disposals

At 30 September 2014

Depreciation

At 1 October 2012

Charge for the ﬁ nancial year

Disposals

At 30 September 2013

Charge for the ﬁ nancial year

Disposals

At 30 September 2014

Carrying value at 30 September 2013

Carrying value at 30 September 2014

Leasehold 
improvements 
£’000

Computer 
equipment 
£’000

Ofﬁ ce 
equipment 
£’000

543

1,728

Total
£’000

3,247

356

26

(107)

3,522

871

-

(83)

255

25

(22)

1,986

382

-

(80)

976

96

1

(85)

988

361

-

(3)

2,288

1,346

4,310

1,203

289

(22)

1,470

276

(78)

1,668

516

620

699

137

(76)

760

117

(3)

874

228

472

2,328

476

(98)

2,706

436

(81)

3,061

816

1,249

5

-

-

548

128

-

-

676

426

50

-

476

43

-

519

72

157

During the year, additions of property, plant and equipment under ﬁ nance leases totalled £221,000 (2013: £42,000).

The carrying amount of the Group’s ofﬁ ce equipment includes an amount of £285,000 (2013: £134,000) in respect of assets 
held under ﬁ nance leases.

At the year-end, the Group had no commitments (2013: £Nil) to purchase any tangible ﬁ xed assets.

14.  Subsidiaries

A list of the signiﬁ cant investments in subsidiaries, including the name, country of  incorporation, and proportion of ownership 
interest is given in note 4 to the Company’s separate ﬁ nancial statements.

The ﬁ nancial statements for the year ended 30 September 2014 of AJ Bell EBT Limited have been exempted from audit 
under s479C of the Companies Act 2006 by way of parent guarantee from AJ Bell Holdings Limited.

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Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

15.  Other ﬁ nancial assets

Trade and other receivables

Trade receivables 

Prepayments and accrued income

Total trade and other receivables

2014
£’000

5,139

6,345

11,484

The directors consider that the carrying value of trade and other receivables approximates to their fair value.

The maturity proﬁ le of the Group’s trade receivables was as follows:

Neither past due nor impaired

31 to 60 days

61 to 90 days

91 days and over

Less provision for doubtful debts

Trade receivables per consolidated statement of ﬁ nancial position

The movement in the provision for doubtful debts is as follows:

At 1 October 2013

Amounts charged to the income statement as irrecoverable

Amounts recovered during the year

At 30 September 2014

2014
£’000

3,977

84

163

1,084

5,308

(169)

5,139

2014
£’000

109

102

(42)

169

2013
£’000

4,577

5,153

9,730

2013
£’000

4,080

41

72

493

4,686

(109)

4,577

2013
£’000

165

6

(62)

109

The directors have reviewed the collectability of all receivables and are satisﬁ ed that those balances not otherwise provided 
against are recoverable.

Client and market receivables

Client and market receivables

Clients’ settlement cash balances

2014
£’000

23,304

20,024

43,328

2013*
£’000

21,054

20,618

41,672

*The prior period comparatives have been restated as a result of a change in accounting policy. The impact of this is 
disclosed in note 2.

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Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

Client and market receivables arise as a result of the provision of stockbroking services. 

Cash and cash equivalents

Cash and cash equivalents

Total

2014
£’000

33,222

33,222

2013*
£’000

32,506

32,506

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*The prior period comparatives have been restated as a result of a change in accounting policy. The impact of this is 
disclosed in note 2.

Cash and cash equivalents comprise cash held by the Company and any of its operating subsidiaries. It also includes short-
term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates to 
their fair value. Any client bank accounts in foreign currency have been translated into sterling at the prevailing exchange 
rate at the statement of ﬁ nancial position date.

Financial assets

Financial assets consist of cash and cash equivalents, trade receivables and client and market receivables and total 
£81,689,000 (2013: £78,755,000).

Risks arising from ﬁ nancial assets

Credit and bank default risk

The Group’s credit risk extends to its principal ﬁ nancial assets. These are cash balances held with banks and trade and 
other receivables. 

As regards trade receivables, 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 directors continue to monitor the strength of the banks used by the Group. The banks currently used by the Group are 
Bank of Scotland plc, HSBC Bank plc, The Royal Bank of Scotland plc, Brown Brothers Harriman & Co. and Bank of Ireland 
(UK) plc.  

Bank of Scotland plc, the Group’s principal banker, is substantial and is 100% owned by Lloyds Banking Group in which the 
UK Government still has a signiﬁ cant strategic stake. The degree of state ownership is closely monitored by the Group. All of 
the banks currently used by the Group have long-term credit ratings of at least A (Fitch) or A3 (Moody’s), apart from Bank of 
Ireland (UK) plc, which currently has ratings of BBB (Fitch) and B1 (Moody’s). 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.

Embedded derivatives

In accordance with IAS39, ‘Financial Instruments: Recognition and Measurement’, the Group has reviewed all contracts for 
embedded derivatives that are required to be separately accounted for if they do not meet certain requirements set out in the 
standard. The directors are satisﬁ ed that there are no material embedded derivatives held by the Group.

54

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

16.  Deferred tax

The following are the major deferred tax assets/(liabilities) recognised by the Group and movements thereon during the 
current and prior reporting period.

Accelerated 
capital 
allowances 
£’000

Share-based 
payments 
£’000

Short-
term timing 
difference 
£’000

Unused tax 
losses 
£’000

(150)

-

(28)

-

(178)

-

20

-

(158)

137

-

5

22

164

-

(11)

(16)

137

(143)

(141)

64

-

(220)

-

73

-

(147)

-

87

(78)

-

9

-

(9)

-

-

Total 
£’000

(156)

(54)

(37)

22

(225)

-

73

(16)

(168)

At 1 October 2012

Acquired through business 
combinations

Credit/(charge) to the 
income statement

Credit to equity

At 1 October 2013

Acquired through 
business combinations

Credit/(charge) to the 
income statement

(Charge) to equity

At 30 September 2014

The current year deferred tax adjustment relating to share-based payments reﬂ ects the estimated total future tax relief 
associated with the cumulative share-based payment beneﬁ t arising in respect of share options granted but unexercised as 
at 30 September 2014.

As at 30 September 2014 the Group had unused tax losses of £87,000 (2013: £87,000) which have not been recognised as 
a deferred tax asset. 

Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after 
offset) for ﬁ nancial reporting purposes:

Deferred tax asset

Deferred tax liability

Net deferred tax liability

2014
£’000

137

(305)

(168)

2013
£’000

173

(398)

(225)

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55

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

17.  Obligations under ﬁ nance leases

Minimum lease payments

Amounts payable under ﬁ nance leases:

Within one year

In the second to ﬁ fth years inclusive

Less: future ﬁ nance charges

Present value of lease obligations

Present value of minimum lease payments

Amounts payable under ﬁ nance leases:

Within one year

In the second to ﬁ fth years inclusive

Present value of lease obligations

2014
£’000

2013
£’000

123

219

342

(39)

303

64

121

185

(38)

147

2014
£’000

2013
£’000

100

203

303

43

104

147

It is the Group’s policy to lease certain items of ofﬁ ce equipment under ﬁ nance leases. The average lease term is between 
three and ﬁ ve years. All lease obligations are denominated in sterling. The fair value of the Group’s lease obligations 
approximates to their carrying amount.

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56

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

18.  Other ﬁ nancial liabilities

Trade and other payables

Trade payables

Social security and other taxes

Accruals and deferred income

2014
£’000

552

1,312

3,615

5,479

2013
£’000

669

984

3,842

5,495

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Trade payables, accruals and deferred income principally comprise amounts outstanding for trade purchases and ongoing 
costs. The directors consider that the carrying amount of trade payables approximates to their fair value.

Client and market payables

Client and market payables arise as a result of the provision of stockbroking services. 

Non-current payables

Other payables

Financial liabilities

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£’000

2013
£’000

41,692

40,075

2014
£’000

2013
£’000

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Financial liabilities consist of trade payables, client and market payables and obligations under ﬁ nance leases.

The following details the Group’s remaining contractual maturity for its non-derivative ﬁ nancial liabilities.

2014

2013

Less than 
1 month 
£’000

42,240

40,720

1 to 3 
months 
£’000

(14)

(4)

3 to 12 
months 
£’000

117

71

1 to 5 
years 
£’000

203

104

Total
£’000

42,546

40,891

Risks arising from ﬁ nancial liabilities

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 sufﬁ cient cash and standby banking facilities to fund its foreseeable trading requirements. Where customers’ funds 
are deposited on a term basis with banks, the Group’s policy ensures that funds are available on customer demand.

57

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

19.  Provisions

At 1 October 2013

Utilised in the year

Charged in the year

At 30 September 2014

Included in current liabilities

Included in non-current liabilities

FSCS 
levy 
£’000

Ofﬁ ce 
dilapidations 
£’000

68

-

-

68

68

-

315

-

83

398

-

398

Total 
£’000

383

-

83

466

68

398

The Group is contractually obliged to reinstate its three leased properties to their original state and layout at the end of the 
lease terms. The ofﬁ ce dilapidations provision represents the directors’ best estimate of the present value of costs which will 
ultimately be incurred in settling these obligations.

The FSCS levy provision represents an estimate of a potential interim levy for the year ending 31 March 2015.

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58

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

20.  Share Capital

Issued, fully-called and paid:

38,035,865 (2013: 37,936,378) ordinary shares of 0.1p each

75,000 (2013: 75,000) ordinary non-voting shares of 0.1p each

1,858,436 (2013: 1,909,205) A non-voting ordinary shares of 0.1p each

Issued, partly-called and paid:

77,910 (2013: 77,910) A non-voting ordinary shares of 0.1p each 
– 10% partly-called and paid

174,242 (2013: 187,100) A non-voting ordinary shares of 0.1p each 
– 0.2% partly-called and paid

484,205 (2013: 155,739) A non-voting ordinary shares of 0.1p each 
– 0.3% partly-called and paid

2014
£

38,036

75

1,858

39,969

8

1

1

10

2013
£

37,936

75

1,909

39,920

8

1

1

10

Total value of issued, fully or partly-paid shares

39,979

39,930

The following share transactions have taken place during the year:

Transaction type

Share class

Full payment

A non-voting ordinary shares of 0.1p each

Exercise of CSOP options

Ordinary shares of 0.1p each

New issue under OTB

A non-voting ordinary shares of 0.1p each, 
0.3% partly-paid

New issue under OTB

A non-voting ordinary shares of 0.1p each

New issue

Ordinary shares of 0.1p each

Number of 
shares

Premium
£’000

n/a

27,604

339,566

263

71,883

91

78

3

1

273

446

The ordinary non-voting shares and A non-voting ordinary shares have the same rights as to dividend and on winding-up as 
the ordinary shares except that they cannot vote at meetings of shareholders.

After the year end a new equity instrument in the form of growth shares was brought into use by the business. Growth 
shares are non-voting and do not carry dividend rights. On 11 December 2014 167,102 growth shares were issued to 
employees.

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59

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

21.  Notes to the statement of cash ﬂ ows

Proﬁ t for the ﬁ nancial year

Adjustments for:

Investment revenue

Finance costs

Income Tax expense

Depreciation of property, plant and equipment

Amortisation of intangible assets

Share-based payment expense

Increase in provisions and other payables

Loss on disposal of intangible assets

Loss on disposal of ﬁ xed assets

Operating cash ﬂ ows before movements in working capital

Decrease/(increase) in receivables

(Decrease)/increase in payables

Cash generated from operations

Income Taxes paid

Interest paid

Net cash from operating activities

2014
£’000

2013*
£’000

12,523

18,164

(234)

31

3,594

436

1,753

2

111

-

2

(228)

51

5,738

476

1,542

27

1

-

6

18,218

25,777

(3,410)

1,601

(15,047)

12,538

16,409

23,268

(4,429)

(31)

(6,348)

(51)

11,949

16,869

*The prior period comparatives have been restated as a result of a change in accounting policy. The impact of this is 
disclosed in note 2.

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60

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

22.  Operating leases

The Group as lessee:

Minimum lease payments under operating leases recognised 
as an expense in the year

2014
£’000

2013
£’000

857

737

At the date of the consolidated statement of ﬁ nancial position, the Group had outstanding commitments for future minimum 
lease payments under non-cancellable operating leases as shown in the table presented below. The calculations represent 
the minimum payments up to the next available break point in each of the Group’s leases.

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Within one year

In the second to ﬁ fth years inclusive

After ﬁ ve years

2014
£’000

984

2,408

303

3,695

2013
£’000

840

2,477

3

3,320

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Presented below are the minimum lease payments to which the Group would be contractually obligated if all break options 
were removed:

Within one year

In the second to ﬁ fth years inclusive

After ﬁ ve years

2014
£’000

984

4,003

6,201

11,188

2013
£’000

840

2,977

5,035

8,852

Operating lease payments represent rentals payable by the Group for its ofﬁ ce properties. At original inception, ofﬁ ce 
property leases are negotiated for an average term of ten to ﬁ fteen years and rentals are ﬁ xed for an average of ﬁ ve years.

61

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

23.  Share-based payments

Equity-settled share option schemes

During the year there have been two HMRC-approved share option schemes in operation, an EMI scheme and CSOP. 
Following amendments to the EMI thresholds, the Group ceased to qualify as an eligible participant and the EMI scheme 
was closed to new entrants in July 2008. The CSOP was created in July 2009 to replace the EMI scheme, and to ensure that 
equity ownership for all levels of employees within the organisation continued to be facilitated.

All unexercised options granted under the EMI scheme prior to July 2008 are fully vested and remain exercisable. Options 
granted under the EMI scheme are usually forfeited if the employee leaves the Group before the option expires. There 
were no unvested EMI scheme options in existence during the current or prior year. Therefore, there was no share-based 
payment expense in respect of the EMI scheme in either the prior year or current year, nor will there be any expense in 
future accounting periods. 

Options granted under the CSOP vest between three and ten years after the date of grant. They are exercisable at a price 
determined by the directors but not materially less than the greater of the market value of a share on the date of grant and, 
in the case of an option which is a right to subscribe for shares, the nominal value of the share. Options granted under 
the CSOP 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. The expense recognised in the 
year to 30 September 2014 was £2,111 (2013: £27,381).

The fair value of equity-settled share options granted is estimated as at the date of grant using the Black-Scholes method, 
taking into account the terms and conditions upon which the options were granted. 

During the period, a total of 20,715 options were granted under the CSOP. The fair value of these options has been 
estimated using the Black-Scholes method. 

The inputs to that model for this new issue of options are listed below:

Fair value of share from generally accepted business model (£)

Exercise price of an option (£)

Expected volatility

Expected dividend yield

Risk-free interest rate

Expected option life to exercise (months)

3.80

3.80

25%

6.58%

0.81%

36

The share price at the date of grant of all options is based on the market value of the shares on that date. As the Company 
is unlisted, it has no readily available share price and so its share value is calculated using dividend and earnings-
based models to determine a range of valuations. The average price indicated by these valuations is assumed to be the 
approximate market value at the date of grant and is agreed with HMRC prior to the granting of options. The expected life 
of the options is based on the minimum period between the grant of the option, the earliest possible exercise date and an 
analysis of the historical exercise data and is not necessarily indicative of exercise patterns that may occur. The expected 
volatility reﬂ ects the assumption that historical volatility is indicative of future trends, which may also not necessarily be the 
case.

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62

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

Details of the aggregate share options (EMI and CSOP) outstanding during the year are as follows:

Reconciliation of the movement in the number of share options:

Outstanding at beginning of period

Granted during the period

Exercised during the period

Forfeitures

Outstanding at the end of the period

Exercisable at the end of the period

2014

2013

Weighted 
average 
exercise price 
(£)

2.72

3.80

2.82

3.16

2.69

1.65

Number of 
options

537,644

20,715

(27,604)

(69,936)

460,819

251,653

Weighted 
average 
exercise price 
(£)

2.05

4.20

0.84

2.87

2.72

1.48

Number of 
options

414,702

159,360

(23,776)

(12,642)

537,644

249,590

The Company is unlisted; therefore no quoted price is available for its stock.

The lowest exercise price for share options outstanding at the end of the period was 22p (2013: 22p) and the highest 
exercise price was 420p (2013: 420p). The weighted average remaining contractual life of share options outstanding at the 
end of the period was 6 years (2013: 7 years and 1 month).

Option to buy shares scheme

The Group continues to operate its OTB scheme which was introduced during the year ended 30 September 2011. During 
the current year, the third awards under this scheme were made to members. This consisted of the 20,715 share options 
granted under the CSOP and the issue of A non-voting ordinary shares as disclosed in note 20. The A non-voting ordinary 
shares were issued at market value and therefore no share-based payment charge was recognised in respect of these 
shares.

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63

 
 
 
Notes to the consolidated ﬁ nancial statements

For the year ended 30 September 2014

24.  Related party transactions

Subsidiaries

The Company has a related party relationship with its subsidiaries. Transactions between the Company and its subsidiaries 
and between subsidiaries have been eliminated on consolidation.

Key management personnel

The Group has a related party relationship with its directors and members of the senior management team (the ‘key 
management personnel’). Remuneration of key management personnel is disclosed in note 6. During the year there were no 
material transactions or balances between the Group and its key management personnel or members of their close family, 
other than noted below. 

Directors

Remuneration of the directors is disclosed in note 6.

Charitable donations

During the year, the Group made donations totalling £76,000 (2013: £177,400) to the AJ Bell Trust, a registered charity of 
which Mr A J Bell is a trustee.

In the year ended 30 September 2013 £77,400 of the £177,400 was paid by the Group following the waiving of remuneration 
by Mr Bell. Mr Bell sacriﬁ ced the right to receive performance-related bonuses to which he would have become entitled, 
requesting that an equivalent amount be instead paid to the AJ Bell Trust. 

25.  Events after the date of the consolidated statement of ﬁ nancial position

At the date of approval of these consolidated ﬁ nancial statements, the directors are not aware of any material events after 
the date of the consolidated statement of ﬁ nancial position.

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64

 
 
 
Company balance sheet

As at 30 September 2014

Fixed assets

Investments

Current assets

Debtors:

- due within one year

- due after one year

Cash at bank and in hand

Current liabilities

Creditors: Amounts falling due 
within one year

Net assets

Capital and reserves

Called-up share capital

Share premium account

Proﬁ t and loss account

Shareholders’ funds

Notes

£’000 

£’000 

£’000

£’000

2014

2013

4

5

5

6

7

8

8

9

18,010

8,010 

1,816

7,450

9,266

8,327

2,507

7,464

9,971

21,065

17,593

(725)

34,878

40

1,085

33,753

34,878

31,036

(2,182)

36,864

40 

639

36,185

36,864 

The ﬁ nancial statements of AJ Bell Holdings Limited (registered number 04503206) were approved by the Board of Directors 
and authorised for issue on 11 December 2014. They were signed on its behalf by:

Michael Summersgill
Director

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66

 
 
 
Notes to the Company ﬁ nancial statements

For the year ended 30 September 2014

1.  Signiﬁ cant accounting policies

Basis of accounting

The separate ﬁ nancial statements of the Company are presented as required by the Companies Act 2006. They have been 
prepared under the historic cost convention and in accordance with applicable United Kingdom Accounting Standards and 
law.

The accounting policies that are different to those used in the preparation of the consolidated ﬁ nancial statements are 
summarised below. They have all been applied consistently throughout the year and the preceding year.

The separate statements have been prepared on a going concern basis. The directors believe that they have a reasonable 
expectation that the Company has adequate resources to continue in operational existence for 12 months from the date the 
ﬁ nancial statements are approved.

Investments

Investments in subsidiary undertakings are shown at cost less provision for impairment.

Taxation

The charge or credit for taxation is based on the proﬁ t or loss for the year and takes into account taxation deferred because 
of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised 
without discounting in respect of all timing differences between the treatment of certain items for taxation and accounting 
purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.

2.  Proﬁ t for the ﬁ nancial year

As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own proﬁ t and 
loss account for the year. The Company reported a proﬁ t for the year ended 30 September 2014 of £7,819,000 (2013: 
£16,086,000). This proﬁ t 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 5 to the consolidated ﬁ nancial statements.

3.  Charitable donations

During the year, the Company made charitable donations of £76,000 (2013: £177,400).

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67

 
 
 
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68

Notes to the Company ﬁ nancial statements

For the year ended 30 September 2014

4. 

Investments

Cost

At 1 October 2013

Additions

At 30 September 2014

Accumulated impairment losses

At 1 October 2013

Charge for the ﬁ nancial year

At 30 September 2014

2014
£’000

8,412

10,000

18,412

402

-

402

2013
£’000

5,957

2,455

8,412

402

-

402

Carrying value at 30 September 2014

18,010

8,010

The Company has investments in the ordinary share capital of the following subsidiaries:

Name of Company

AJ Bell Limited *

AJ Bell Trustees Limited

Ashby London Trustees Limited

AJ Bell Platinum Limited*

Ashby London Actuarial Services Limited*

Country of 
incorporation

Principal
Activity

Holding %

England

England

England

England

England

Investment / Group
administration

Dormant

Dormant

Dormant

Dormant

AJ Bell Management Limited*

England

Investment administration

Sippdeal Trustees Limited

AJ Bell (PP) Trustees Limited

Whitehead Trustees Limited

Ashby London (PP) Trustees Limited

Sippdeal Limited

MSM Media Limited*

England

England

England

England

England

England

Dormant

Dormant

Dormant

Dormant

Dormant

Dormant

AJ Bell Securities Limited*

England

Dealing and custody

Lawshare Nominees Limited

AJ Bell EBT Limited*†

AJ Bell Media Limited*

MoneyAM Limited

* Held directly by AJ Bell Holdings Limited.

England

England

England

England

Dormant

Dormant

Media

Media

† The ﬁ nancial statements for the year ended 30 September 2014 of AJ Bell EBT Limited have been exempted from audit 
under s479C of the Companies Act 2006 by way of parent guarantee from AJ Bell Holdings Limited. 

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

 
 
 
Notes to the Company ﬁ nancial statements

For the year ended 30 September 2014

5.  Debtors

Due within one year:

Trade debtors

Amounts owed by Group undertakings

Prepayments and accrued income

Due after one year:

Deferred tax asset relating to share-based payments

Amounts owed by Group undertakings

2014
£’000

1,052

747

17

1,816

2014
£’000

-

7,450

7,450

2013
£’000

1,534

936

37

2,507

2013
£’000

14

7,450

7,464

Amounts owed by Group undertakings falling due after one year relate to loans issued to AJ Bell Limited by the Company 
in relation to costs incurred by AJ Bell Limited in renewing IT infrastructure and administration systems in order to enhance 
products and services for the Group.

6.  Creditors – Amounts falling due within one year

Amounts owed to Group undertakings

Corporation tax

Accruals and deferred income

7.  Called-up share capital

The Company’s share capital is disclosed in note 20 to the consolidated ﬁ nancial statements.

2014
£’000

205

501

19

725

2013
£’000

162

1,992

28

2,182

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69

 
 
 
Notes to the Company ﬁ nancial statements

For the year ended 30 September 2014

8.  Reserves

At 1 October 2013

Retained proﬁ t for the ﬁ nancial year

Issue of new shares

Pay up of part-paid shares

Dividends paid

Share repurchase

Credit to equity for equity-settled share-based payments

Share premium 
£’000

Proﬁ t & loss 
£’000

639

-

355

91

-

-

-

36,185

7,819

-

-

(10,154)

(99)

2

At 30 September 2014

1,085

33,753

9.  Reconciliation of movement in equity shareholders’ funds

Retained proﬁ t for the ﬁ nancial year

Credit to equity for equity-settled share-based payments

Dividends

Proceeds from issue of new shares

Proceeds from pay-up of part-paid shares

Repurchase of own shares

Net addition to shareholders’ funds

Opening shareholders’ funds at 1 October 2013

Closing shareholders’ funds at 30 September 2014

2014
£’000

7,819

2

(10,154)

2013
£’000

16,086

27

(9,982)

(2,333)

6,131

355

91

(99)

(1,986)

36,864

34,878

22

-

-

6,153

30,711

36,864

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70

 
 
 
Five-year summary

For the year ended 30 September 2014

Results

Revenue

Proﬁ t from operations

Proﬁ t before tax

Proﬁ ts attributable to equity 
holders of AJ Bell Holdings 
Limited

Assets employed

Non-current assets

Current assets

Current liabilities

Non-current liabilities

Long-term provisions

Net assets

Financed by

Equity

Key statistics

Earnings per share (pence)

Fully diluted earnings per share 
(pence)

Dividends paid in year 
(pence per share)

Dividend declared with respect to 
proﬁ ts generated in year 
(pence per share)

2014
£’000

53,493

15,914

16,117

2013
£’000

57,043

23,725

23,902

IFRS

2012
£’000

2011
£’000

2010
£’000

51,765 

26,360 

26,501 

41,570 

18,940 

19,046 

35,435 

16,047 

16,122 

12,523

18,164

19,799 

13,882 

11,823 

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11,487

88,034

11,863

83,908

(49,309)

(48,420)

(428)

(398)

(358)

(315)

9,778 

64,907 

(35,711)

(287)

(280)

7,710 

58,193 

(38,134)

(79)

(136)

5,767 

47,282 

(32,281)

(30)

(82)

49,386

46,678

38,407 

27,554 

20,656 

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49,386

46,678

38,407 

27,554 

20,656 

30.87

30.76

25.00

45.08 

49.39 

34.82 

29.91 

44.82 

49.14 

34.66 

29.51 

24.75 

22.50 

18.50 

22.00 

25.25

25.00 

24.75 

21.00 

18.50 

71

 
 
 
Deﬁ nitions

The following deﬁ nitions are used throughout the annual report and ﬁ nancial statements:

AJBMd

AUA

AJ Bell Media Limited and its wholly-owned subsidiary MoneyAM Limited

Assets under administration

Board, Directors

The Board of Directors of AJ Bell Holdings Limited

bps

Clean fund

Company

CGU

CSOP

CTF

DIY

EMB

EMI

EPS

ETF

FCA

FSCS

Fund

GIA

Group

HMRC

ISA

JISA

KOS

Basis points

A unit of a fund on which a platform does not receive any payment from the fund 
management group

AJ Bell Holdings Limited

Cash Generating Unit

Company Share Option Plan

Child Trust Fund

Do It Yourself

Executive Management Board

Enterprise Management Incentive

Earnings Per Share

Exchange-Traded Funds

Financial Conduct Authority

Financial Services Compensation Scheme

The generic term used to describe unit trusts and Open-Ended Investment Companies

General Investment Account

AJ Bell Holdings Limited and its wholly-owned subsidiaries

HM Revenue and Customs

Individual Savings Account

Junior Individual Savings Account

Key Operating System

Non-platform business

Includes our SIPP only and institutional stockbroking services

OTB

PBT

Platform business

RDR

SIPP

SSAS

Option to Buy Shares Scheme

Proﬁ t Before Tax

Includes our AJ Bell Investcentre (formerly Sippcentre), AJ Bell Youinvest 
(formerly Sippdeal) and IMAS propositions

Retail Distribution Review

Self-Invested Personal Pension

Small Self-Administered Scheme

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72

 
 
 
Company information

Company number

04503206

Company Secretary

Bruce Robinson

Registered ofﬁ ce

Auditor

Trafford House

Chester Road

Manchester

M32 0RS

KPMG LLP

St James’ Square

Manchester

M2 6DS

Principal banker

Bank of Scotland plc

1 Lochrin Square

92 – 98 Fountainbridge

Edinburgh

EH3 9QA

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73

 
 
 
AJ Bell Holdings Limited, Trafford House, Chester Road, Manchester M32 0RS       

   0845 40 89 100
www.ajbell.co.uk

Company registration number 04503206