What were the AJ Bell full-year numbers like?

The full-year figures showed that AJ Bell enjoyed a year of record growth with customer numbers rising by 87,449 to 382,754.

Assets Under Administration or AUA rose to £72.8 billion.

Customer churn rates rose slightly, however, the business managed to retain 95.0% of its clients compared to 95.50% during the prior year.

Revenues rose by +15.0% to £145.80 million and profits before tax jumped +13.0% to come in at £55.10 million, that meant earnings per share rose to a figure of 10.67p

Net assets at AJ Bell were up +19.0% over the year and now sit at £130.70 million.

Did AJ bell declare a dividend?

AJ Bells’s management proposed a final dividend of 4.50p, a 13% increase over the full year 2020 payout, on top of which they recommended a special dividend of 5.0p per share.

CEO Andy Bell said of the payout to shareholders:

“The Board has recommended a final dividend of 4.50 pence per share, increasing the total ordinary dividend for the year by 13% to 6.96 pence per share, our 17th consecutive year of ordinary dividend growth. Reflecting the Board’s confidence in the outlook for the business, it has also recommended a special dividend of 5.00 pence per share in line with our policy to periodically return surplus capital to shareholders whilst continuing to maintain our strong financial position.”

How did the AJ Bell share price react to the full-year figures?

Despite the impressive growth in profits and client numbers AJ Bell shares sold off following the announcement and finished Thursday’s session down by 30p at 361.20p.

Digging down into the data analysts found that revenues per £1.00  of assets under administration had fallen from 23.90 basis points in 2020 to 22.20 basis points in 2021.

That might sound like a small change, but at heart, AJ Bell is a volume business that makes a small amount of money on a large number of transactions, and assets and even modest dips in marginal revenue can have a big impact, particularly when a business is increasing spending on key items such as technology.

AJ Bell’s technology spending went up by £20.00 million to just below £26.0 million over the last year, though a chunk of that rise related to the one-off acquisition of Adalpha.

AJ Bell highlighted the increasing technology budget at its interim results in May, but the company believes that it’s crucial for its systems to withstand surges, in the volume of deals, its clients undertake.

The fall in the share price also likely reflected the price that ABDN is paying for AJ Bell’s rival Interactive Investors.  ABDN is paying a multiple of some 23 times the projected 2023 revenues for II.

AJ Bell itself was trading at a multiple of 29.0 times its forecast 2023 earnings ahead of its full-year figures. Meanwhile, market leader, Hargreaves Lansdown is on a multiple of around 20 times its 2023 earnings estimates, according to data from Deutsche Bank.

Overall AJ Bell’s share price has fallen almost -16.0% over the last quarter and is down -14.67% over the year to date. That compares to a -7.51% year to date drop in the wider FTSE 250 index.

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