Consolidated revenue 2,800.0m EUR. Intra-group turnover 4,200.0m EUR.

Operating model

Group revenue arises from services supplied at four stages in the life of a corporate exposure: its origination, its cover, its transfer, and its administration once formal responsibility has been attributed.

1. Origination. Division 23 designs the instrument carrying the exposure and issues the characterisation opinion determining its treatment. Division 11 provides banking and treasury services for the resulting flows.
2. Cover. Division 12 underwrites the exposure on group standard terms, priced using eligibility data supplied by Division 04.
3. Transfer. Division 22 novates the obligation to a central counterparty before crystallisation, charging on acceptance and on carry.
4. Administration. Division 21 supplies the individual holding formal responsibility. Division 14 supplies communications. Division 20 supplies representation and standing. Division 30 supplies the consent instruments. Division 01 provides statutory audit and assurance. Training and Recognition (//EDU) provides recognition training.

Each service is invoiced at arm’s length, documented in the group transfer pricing file and supported by a comparable. Between four and seven such charges arise against a single exposure before it leaves the register. The full matrix is set out at /structure/.

Results for the period

All figures in EUR millions unless otherwise marked.

Gross margin was 52.0 per cent against 51.8 per cent. Operating margin was 22.0 per cent against 21.2 per cent. The effective tax rate was 15.0 per cent against 11.6 per cent.

Intra-group turnover, eliminated on consolidation and therefore absent from every line above, was 4,200.0m EUR. Turnover before elimination was 7,000.0m EUR, an internal share of 60.0 per cent.

The group employed 6,400 people and revenue per employee was 437,500 EUR. Of those employees 1,850, being 28.9 per cent, were seconded to a group entity other than their employer and were recharged to it.

Segments

Financial Services comprises Divisions 11, 12, 22 and 23, at 70.0 per cent of external revenue. Assurance and Advisory comprises Divisions 01, 14 and 21, at 15.0 per cent. Consumer and Personal Markets comprises Divisions 04 and 30, at 13.0 per cent. Institutional and Central comprises Division 20, Training and Recognition, and the central office, at 2.0 per cent.

Institutional and Central reports an operating loss on external revenue and is funded by charges to the other three segments of 905.0m EUR, being 21.5 per cent of group internal revenue.

Capital and distributions

Per-share figures are rounded to two decimal places; on unrounded figures earnings rose 13.3 per cent and the distribution rose 10.5 per cent.

Holders of record: Everything Group 72.0 per cent, institutional investors 21.5 per cent, directors and employees 4.0 per cent, other holders 2.5 per cent. Those figures sum to 100.0 per cent.

Distributions to the holder of record were 238.7m EUR, being 72.0 per cent of 331.5m EUR. Notable items recognised in the period were 238.0m EUR.

Beneficial ownership above Everything Group is not disclosed. Everything Group has no employees, no premises and no operations, and holds no assets other than its interests in the register.

Risk factors

The risks below are those the Board considers material to the group’s results and prospects. They are stated in the order of the Board’s assessment of their significance.

A majority of turnover is invoiced between entities within the register

Turnover before elimination was 7,000.0m EUR, of which 4,200.0m EUR, or 60.0 per cent, was invoiced between entities in the register. Those charges determine where profit is recognised and therefore taxed. Each is supported by a comparable, and comparables are matters of judgement. Were a tax authority in one jurisdiction to re-characterise the charges and others to follow, an adjustment of 10.0 per cent of intra-group charges would be 420.0m EUR, being 80.8 per cent of profit before tax. The group would contest such an adjustment. Contesting it would take years, during which the charges would continue.

The statutory auditor is an entity within the register

CONDAMA Partners, Division 01, code //0666, audits every entity in the register, including its own accounts. Audit fees were 96.0m EUR and non-audit fees 189.0m EUR, a ratio of 1.97 to 1. The appointment was recommended by the Audit Committee, which considered one candidate. Were auditor independence rules to be applied here in the form applied elsewhere, the appointment would end and the group would enter its first external audit with no comparable prior period for the incoming auditor to rely on.

A material part of consumer revenue depends on rights customers hold and do not exercise

In the period, 1,250,000 determinations were declined across personal lines. Of those, 3.2 per cent, being 40,000, were appealed. Of appeals heard, 46.0 per cent, being 18,400, were reversed at an average cost of 4,000 EUR, or 73.6m EUR in total. Were the appeal rate to rise to 20.0 per cent with the reversal rate held, reversals would be 115,000 and the cost 460.0m EUR. The increase of 386.4m EUR would be 74.3 per cent of profit before tax. Nothing prevents this outcome. The right is held by every customer, is disclosed in every determination letter, and is exercised by 3.2 per cent of them.

Settlements are presented as notable items

Notable items of 238.0m EUR were 8.5 per cent of revenue and 45.8 per cent of profit before tax. Underlying operating profit, which excludes them, was 854.0m EUR, being 38.6 per cent above the statutory figure. Such items have been recognised in each of the last several periods and rose 21.4 per cent against revenue growth of 12.0 per cent. The excluded item is recurring.

The group’s scale is understood to carry consequences beyond it

The group is of a scale at which action against it as a whole is understood, by parties who have said so in writing, to carry consequences for markets in which it is a participant rather than a defendant. That understanding is a pattern of past decisions and is not a legal protection. It has not been granted to the group in terms and may not be extended again.

The accountability framework depends on individuals willing to be named

Formal responsibility across the register is held by named individuals placed by Division 21. The framework cost 210.0m EUR in the period. It has not been tested in a jurisdiction that declines to stop at the named individual. Were the supply of candidates to contract, the price of the framework would rise. The group does not model a scenario in which it cannot be bought.

Holders have no claim above the holder of record

Holders of the company’s shares have a claim against the company. They have no claim against Everything Group beyond its interest, and no claim against the beneficiaries above it, whose identities are not disclosed. This follows from the structure set out at /structure/, under which the shares were issued.