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Curtis Banks Group PLC  -  CBP   

Final Results

Released 07:00 15-Mar-2018

RNS Number : 7732H
Curtis Banks Group PLC
15 March 2018
 

 

 

 

 

 

 

 

Curtis Banks Group plc

("Curtis Banks", the "Group")

Final Results for 12 months to 31 December 2017

 

Curtis Banks Group plc, one of the UK's leading SIPP providers, is pleased to announce its final results for the 12 months to 31 December 2017 in line with the audited accounts available on the Group's website.

 

Highlights

 

·     Operating revenue increased by 47% to £43.6m (2016: £29.7m)

 

·     Adjusted operating profit1 increased by 51% to £10.7m (2016: £7.1m)

 

·     Adjusted operating margin increased to 25% (2016: 24%)

 

·     Profit before tax increased by 31% to £5.9m

 

·     Adjusted diluted EPS increased by 48% to 15.38p

 

·     Strong gross organic growth in own SIPP numbers of 14% with total administered now 76,474

 

·     Assets under administration increased by 21% to £24.7bn

 

·     Proposed final dividend of 4.75p (2016: 3p) making a full year payment of 6.25p (2016: 4p)

 

Highlights and key performance indicators for the year include:

 

Financial

2017

2016

Operating Revenue

£43.6m

£29.7m

Adjusted Operating Profit   

£10.7m

£7.1m

Profit before Tax

£5.9m

£4.5m

 

 

 

Adjusted Operating Margin

25%

24%

 

 

 

Basic EPS

9.75p

7.23p

Diluted EPS

9.26p

7.02p

 

 

 

 

 

 

 

2017

2016

Basic EPS on Adjusted Operating Profit less an effective tax rate

 

16.20p

 

10.67p

Diluted EPS on Adjusted Operating Profit less an effective tax rate                                                                            

 

15.38p

 

10.37p

 

 

 

Operational Highlights

 

 

Number of SIPPs Administered

76,474

72,983

Assets under Administration

£24.7bn

£20.4bn

 

Total organic new own SIPPs in year

 

8,719

 

6,236

 

____________

1 Profit before tax, amortisation and non- recurring costs 

 

Commenting on the results and prospects, Rupert Curtis, CEO of Curtis Banks, said:

 

"This year has been one of considerable progress for the Group with a strong increase in our operating revenues and adjusted operating profit. As a result and in accordance with our progressive dividend policy I am pleased to report a 56% proposed increase in our dividend for the year.

"We have undergone a period of consolidation following the acquisition of Suffolk Life and now have a single identity for the Group. Our new integrated Group Management Committee has built the foundations for us to operate more efficiently and to provide an even better service for our customers.

"The market opportunity for SIPP providers remains compelling. The key regulatory and demographic drivers of our organic growth persist and we are well positioned to continue our profitable growth."

 

Analyst Presentation:

There will be a presentation on Thursday 15 March 2018 at 9.30am for institutional investors and analysts at Peel Hunt LLP, Moor House, 120 London Wall, London EC2Y 5ET. Those wishing to attend should contact jane.glover@camarco.co.uk.

 

Copies of the audited accounts of the Group will be available on the Group website today.

 

For more information: 

 

Curtis Banks Group plc

www.curtisbanks.co.uk

Rupert Curtis - Chief Executive Officer 

+44 (0) 117 9107910

Paul Tarran - Chief Financial Officer

Will Self - Deputy Chief Executive Officer

 

 

 

 

 

Peel Hunt LLP (Nominated Adviser & Broker)

+44 (0) 20 7418 8900

Guy Wiehahn

 

Rishi Shah

 

 

 

Camarco             

+44 (0) 20 3757 4984

Ed Gascoigne-Pees

 

Hazel Stevenson

Jane Glover

 

 

LEI Code:  213800LYP7YTVDXRMP40

 

Notes to Editors:

Curtis Banks administers over 76,000 Self-Invested Pension Schemes, principally SIPPs and SSASs. The Group commenced trading in 2009 and has successfully developed, through a combination of organic growth and acquisitions, into one of the largest UK providers of these products. The Group currently employs approximately 570 staff in its head office in Bristol and regional offices in Ipswich and Dundee.

For more information - www.curtisbanks.co.uk

 

 

 

 

 

Chairman's Statement

 

 

I am pleased to present my first statement as Chairman of Curtis Banks for the year ended 31 December 2017. I would like to start by thanking my predecessor Chris Banks as previous Chairman of the Group for his contribution to the growth of the Group. Chris was a founder of the business and has been a major contributor in the growth of the business and we are delighted that he remains a strategic advisor to the business.

The year has been one of consolidation as we made the Suffolk Life business an integral part of the Curtis Banks Group and these results are our first full year results that include the full period's contribution of Suffolk Life which the Group acquired in 2016. We have enhanced our level of governance and management control, to meet the needs of the enlarged Group, and are well positioned to deliver our strategy in 2018 and thereafter. As a result of this transaction and the progress we have made in growing the rest of our business, our revenue and profitability have grown strongly compared to the prior year. 

 

The period under review has shown operating revenue increasing by 47% from £29.7m to £43.6m compared to the same period last year, with adjusted operating profit increasing by 51% from £7.1m to £10.7m. Fully diluted earnings per share on these results (after tax) amounted to 15.38p per share (2016 - 10.37p) and on the statutory profits after tax diluted earnings per share are 9.26p (2016 - 7.02p). This is a good set of results particularly with the high levels of regulatory focus on SIPP providers and industry changes.

 

Our operating margin has continued to improve over the second half of the year and now stands at 25% for the full year.  We expect to achieve further improvement in this margin in the medium term as we grow our top line and achieve operational efficiencies.

 

The year has seen us make substantial progress against our strategic objectives in order to ensure we realise the benefits of our acquisitions, market ourselves more efficiently and continuously look for ways to grow our revenues.  We have launched a new group wide brand and have rationalised our office locations down to three sites in Bristol, Dundee and Ipswich. As part of our focus on growing revenues we are also enhancing our property administration services across the Group.  We will continue to explore ways in which we can capture the opportunities within the SIPP administration industry and one of our major objectives for 2018 is the standardisation of our service offerings.

 

We announced in December that we completed our review of our operating systems and have decided to implement a material upgrade of the existing Curtis Banks operating system and to continue to use the Suffolk Life back office system. We are confident that this is the optimal solution in terms of cost, efficiency and risk.

 

The total number of SIPPs currently administered by the Group now exceeds 76,000 and this is as a result of continued new organic growth of all SIPPs and our attrition rates remaining stable with previous years. 

 

 

 

Dividends

 

We paid an interim dividend of 1.5p per share (2016: 1.0p per share) on 15 November 2017 and the Board proposes a final dividend of 4.75p per share (2016: 3p per share) which, if approved, will be paid to shareholders on the register at the close of business on 27 April 2018.  The shares will be marked ex-dividend on 26 April 2018 and the proposed dividend paid on 18 May 2018.  This will mean the total dividend paid in respect of the year ended 31 December 2017 will amount to 6.25p per share reflecting a 56% increase in the operating profit from the enlarged group.

 

 

Summary and outlook

 

 

During the course of this year, the Group has made considerable progress against its strategic objectives.  We have also enhanced our revenue generation capabilities and are excited about the prospects for offering enhanced property administration services across the organisation.  With a strong market position, the continued growth of the SIPP industry, excellent staff, strong relationships with high quality professional introducers and a real focus on delivering value to clients and shareholders alike the board look forward to the future with confidence.

 

 

Chris Macdonald

Chairman

14 March 2018

 

 

 

 

 

Chief Executive's Review

 

 

Operational Review

 

2017 has been a successful year for us and I would like to start by thanking all our staff for their hard work and dedication over the last year which has made these results possible.

 

The year has been one of consolidation as we made the Suffolk Life business an integral part of the Curtis Banks Group. A Group Management Committee was created in April. This team comprises talented managers from both the original Curtis Banks and Suffolk Life teams and has removed any 'silo' effect of different business entities. The team now oversees the Group and manages the changes needed to improve service for our customers and increase our operating margins. Having a team acting with a common Group purpose has already yielded results, such as standardised operating procedures and aligned risk management.

 

We have rationalised our office network down to three sites in Bristol, Dundee and Ipswich.  In January 2017 we closed our Chilmark office which was part of the acquisition of a book of 5,000 SIPPs in 2016. Post period end, in January 2018, we closed our Market Harborough office. 

 

These significant changes are the most notable part of our work towards our five strategic objectives, which everyone in the business is focused on meeting. They are: 

·  Meet changing customer needs - adapting to the changing needs of the UK population and regulatory environment to be the SIPP provider of choice.

·    Capitalise on the right opportunities for growth - Focus on profitable areas of organic market growth and selective acquisitions of well-aligned books or businesses, with a clear business identity.

·   Enhance revenue generation - extend proven revenue generation activities across the wider group and continually review fee income relative to the services provided.

·   Drive efficiency through technology - continue technology advances appropriate to the business to deliver improved margins through efficiency and improved service to customers.

·   Maintain a robust and sustainable business model - market leading governance, capitalisation and robust systems to ensure a sustainable long term business and confidence for our business partners, customers and shareholders. 

We are now taking action to build on our foundations and deliver on our strategic objectives.

We have launched a new Group brand and a single objective of growing profitably by delivering the best SIPP in the market.  There is now a common identity and culture across our Group, across all businesses and products, reflecting that all our customers can expect the same quality service-led approach that underpins our values.

 

 

 

SIPP Numbers and Revenues

 

 

Full SIPPs

Mid SIPPs

eSIPPs

Total own SIPPs

Third Party Administered

Total

2017 number

20,539

24,682

22,193

67,414

9,060

76,474

2016 number

20,955

22,097

19,428

62,480

10,503

72,983

Gross organic growth rate*

3.39%

18.45%

20.22%

13.95%

0.75%

12.05%

SIPPs added organically

711

4,079

3,929

8,719

79

8,798

EPML data cleanse 

-

-250

-

-250

-

-250

SIPPs lost through attrition

-1,127

-1,244

-1,164

-3,535

-1,522

-5,057

Attrition rate*

5.38%

5.63%

5.99%

5.66%

14.49%

6.93%

 

 

*Growth and attrition percentage rate based on opening SIPP numbers at the beginning of the year

At the year end the number of SIPPs administered increased to 76,474, adding a net 3,491 schemes. 8,798 new SIPPs were added and attrition rates on own SIPPs remained stable from previous years at 5.7%.  We are grateful to our professional introducers for their continued support.

 

Our market and products

 

Customers with SIPPs invested in our 6,000 strong commercial property portfolio currently contract with third parties, who often do not have the related pension expertise, principally offering legal, management, inspection and valuation services. Extending our expertise to these services will enhance our customer proposition and diversify revenue generation.

 

We have formed a legal services company, Rivergate Legal Ltd, and an application has been submitted to the Solicitors Regulatory Authority for this company. In addition, we have formed a property management company, Templemead Property Solutions Ltd, and have submitted an application for RICS approval.  

 

The Group has also recruited a Group Sales Director, Dave Stratton, previously Head of IFA Distribution at AXA Elevate. He has commenced work on restructuring and aligning the sales teams across the Group to build on our strong organic sales figures.

 

We are also developing a new SIPP proposition for the Group, to deliver a single suite of products across the Group and providing enhanced functionality. This will be our organic new business proposition and will also enhance the functionality of existing products.

 

 

Regulation

 

Regulatory scrutiny of the SIPP market continues, but our simple business model and our scale position us well within the complex regulatory environment facing the wider industry. A recent area of focus is that of the nature of the assets within SIPPs. The Group undertakes robust due diligence on non standard investments, and the nature of the investments we are prepared to accept into SIPPs puts the Group in a strong position.

 

HMRC action on in specie contributions is an issue affecting our industry and the outcome and impact are not known at this stage. We do not believe that the net exposure arising from this will be material to the Group.

 

IT strategy

 

During the year we continued to review our operating systems, to ensure that they are appropriate for the enlarged Group, providing the necessary functionality to enable the Group to provide an efficient and cost effective service to both IFAs and their customers.

 

This review was completed in December 2017 when we concluded that the most cost effective, appropriate and lowest risk solution is to implement a material upgrade of the existing back office operating system at Curtis Banks and to continue to use the Suffolk Life back office system as well. A material consideration in reaching this decision was the additional functionality provided by a new version of the Curtis Banks operating system, which only recently became available. We believe this is an effective solution for the foreseeable future based on our current strategy.

 

The upgrade of the systems at Curtis Banks is expected to commence in H2 2018. Costs associated with this upgrade will be capitalised and amortised in accordance with our normal accounting policy. Amortisation will commence once the upgrade is completed and fully operational.

 

People and culture

Operational efficiencies have allowed us to grow the business while maintaining staff numbers, delivering a positive contribution to our operating margin.

We value our people and the positive contribution they make to our culture and the performance of our business. We continue to place emphasis on staff engagement and wellbeing and have established a structured reward and recognition scheme and an employee forum that drives engagement and communication. We have also grown our corporate social responsibility activities, promoting our presence in our local communities and increasing our support for our people's own fundraising activities.

 

Rupert Curtis

Chief Executive Officer

14 March 2018

 

 

 

 

 

Chief Finance Officer's review

 

 

Financial Review

 

Operational revenues of £43.6m in 2017 have increased by 47% over the comparable period. This is through a combination of strong organic growth and the full year effect of the acquisition of the Suffolk Life Group of Companies in May 2016.

 

The operational revenue contribution from the Suffolk Life group of companies accounted for £22.5m of such revenue for the year ended 31 December 2017 compared to £10.4m in the seven months ended 31 December 2016. Operational revenues for the Group in the year ended 31 December 2017 excluding Suffolk Life grew by 8.6%.

 

Fee revenue remains the predominant source of income for the Group with a strong emphasis on recurring annual fee income. In the year ended 31 December 2017 annual recurring fees represented 84% of the total fee income.  Fees are based on a recurring fixed monetary annual fee and a menu of additional fixed fees depending on the services provided to the SIPP. Fees are not dependent on movements in the value of underlying assets within SIPPs and as a result the income of the Group is not dependent on movements in financial markets.

 

Interest income remains part of Group income. In the year ended 31 December 2017 £9.5m of the Group operating revenues were from interest margin (2016 - £4.5m). The significant increase in this income from the previous year arose from the alignment in November 2016 of Suffolk Life banking systems with the virtual banking system operated at Curtis Banks. This allowed for funds to be placed on deposit with more attractive interest rates than previously. Future interest rate increases will not meaningfully impact Group operational revenue as clients will share in any uplift in bank base rate.

 

Administrative expenses of £32m for the Group increased by 44% compared to the previous year.  This was largely a result of a full year of costs from the Suffolk Life Group of Companies. Suffolk Life administration costs for the year ended 31 December 2017 were £16.8m compared to £8.4m for the seven month period to 31 December 2016.

 

Staff costs for the year totalled £21.0m compared to £15.2m for the year ended 31 December 2016. Of this increase £4.8m related to the full year effect of the acquisition of Suffolk Life. In addition staff costs have increased due to annual pay reviews related to average wage earnings and, as set out in the report of the Remuneration Committee, the introduction during the year of an Executive Bonus Scheme and Long Term incentive Plan for key members of staff, as well as a further offering of the Save as You Earn option schemes for all staff members. Whilst such measures have a financial impact their introduction results in the retention and reward of key members of staff that is necessary to grow and develop the business.

 

 

 

 

Financial Review (continued)

 

Staff numbers have remained relatively static at 597 as at 31 December 2017 compared to 591 as at 31 December 2016, the slight increase arising from additional staff being recruited in the final quarter of the year to cover the imminent closure of Market Harborough office in January 2018.

 

Integration of the Suffolk Life operations was completed during the year and a full review of costs across the Group is taking place to identify areas where further cost efficiencies can be made as well as more efficient operational processing of the day to day SIPP administration activities. The objective of this review is to accelerate our progress in rebuilding the adjusted operating margin to  30%. This will be achieved by a combination of revenue enhancements, in year cost savings and operating improvements. These will not only benefit the Group but will also enhance the level and quality of services that are being provided to clients and introducers of business. A number of these enhancements have already been actioned.

 

The balance sheet as at 31 December 2017 shows a strong position with shareholder net assets increasing from £41.5m to £44.6m. Shareholder cash balances at year end were £25.7m compared to £21.5m at the end of the previous year and after regulatory capital requirements are taken into account at year end there were free shareholder cash balances of circa £9m available.

 

In 2016 the Group borrowed £23m for the acquisition of Suffolk Life. This comprised a £15m term loan repayable over 5 years and a revolving credit facility of £8m. Interest on this debt accrues at the rate of 2.25% plus LIBOR. The debt continues to be repaid in line with scheduled terms and the covenants required by the bank in respect of this gearing are well covered. As at year end the Group had net shareholder cash (after debt) of £8.1m (2016: £0.5m).

 

 

Suffolk Life Annuities

 

Part of the Suffolk Life Group of Companies, Suffolk Life Annuities Limited, is an insurance company that writes SIPP Products as insurance contracts. These are all non-participating insurance policy contracts and so the Group does not bear any insurance risk. As the policyholder assets and liabilities are shown on the balance sheet of Suffolk Life Annuities Limited, these also show on the Group balance sheet on consolidation. As the policies are non-participating contracts, the Client related assets and liabilities in Suffolk Life Annuities match. In addition the revenues, expenses and investment returns of the non-participating insurance policy contracts are shown in the consolidated statement of comprehensive income. Again, these income, expense items and investment returns due to the policy holders are completely matched. The acquisition was accounted for in accordance with IFRS 3 Business Combinations. An illustrative balance sheet as at 31 December 2017 showing the financial position of the Group excluding the policy holder assets and liabilities is included as supplementary unaudited information after the Notes to the Accounts. An illustrative cash flow on the same basis has also been provided.

 

 

 

Financial Review (continued)

 

Non recurring costs

 

Non recurring costs for the year ended 31 December 2017 of £3.8m principally comprise:

 

·     An exceptional impairment charge of £2.1m following completion of an operating systems review, as was noted in last year's financial statements and subsequently reported.

 

·     Closure cost provisions of £0.9m relating to the rationalisation of offices during the year.

 

·     Restructuring costs of £0.6m following acquisitions of businesses in prior years.

 

During the year ended 31 December 2017 the Group completed the review of its operating systems following the acquisition of the Suffolk Life business in May 2016. As a result the Group concluded that the most cost effective, appropriate and lowest risk solution was, subject to contract, to implement a material upgrade of the existing back office operating system at Curtis Banks whilst retaining the current systems at Suffolk Life. 

 

As a result of this decision costs of £2.1m incurred and capitalised on the initial development, installation, and evaluation and testing of an alternative system over recent years have now been written off as an exceptional impairment charge in the financial statements for the year ended 31 December 2017. Other than £0.1m, all of these costs were originally incurred in accounting periods up to and including the year to 31 December 2016.

 

During the year ended 31 December 2017 a review of all the office locations used by the Group was carried out. As a result of that review, and after full consultation with all relevant staff, the decision was taken to close the Group's office in Market Harborough.  The closure was effective from the end of January 2018. Full provision has been made in the financial statements for the year ended 31 December 2017 for all the financial costs arising from the decision to close that office including redundancy payments, amounts due under onerous leases and cost of relocating the activities of that office to other Group locations. The benefits of the decision to close the Market Harborough will be reflected in the current year.

 

Restructuring costs arose from previous year's acquisitions, principally the acquisition of the business of European Pensions Management Limited in July 2016.

 

 

 

Financial Review (continued)

 

 

Systems Development

 

As noted above, and in the Chief Executive's Report, after a full review the decision has been taken to upgrade the existing systems at Curtis Banks whilst retaining existing systems at Suffolk Life.

 

The upgrade of the systems at Curtis Banks is expected to commence in H2 2018. Costs associated with this upgrade will be capitalised and amortised in accordance with our normal accounting policy. Amortisation will commence once the upgrade is completed and fully operational.

 

 

Employee Benefit Trust

 

During the year under review the Group set up an offshore Employee Benefit Trust ("EBT") to acquire shares in the Company in the market to satisfy future option and long term incentive awards. The EBT is funded by loans from the Group. As at 31 December 2017 the EBT had acquired 99,155 shares in Curtis Banks Group plc funded by a £250,000 loan from the Group. The financial statements of the EBT are consolidated within the overall Group financial statements and these shares are shown on the balance sheet of the Group as Treasury Shares and are included within total equity.

 

Earnings per Share

 

Fully diluted Earnings per Share ("EPS") based on adjusted operating profits have increased by 48% in the year ended 31 December 2017 from 10.37p to 15.38p. On the profit after tax the fully diluted EPS shows a 32% increase in the same period from 7.02p to 9.26p. With the granting of new options in the year ended 31 December 2017 under the various option schemes adopted by the Group diluted EPS is considered to be a more meaningful measure of performance for investors than basic EPS.

 

 

Capital requirements

 

The Group's regulated subsidiary companies submit regular returns to the FCA and the PRA relating to their capital resources.  At 31 December 2017 the total regulatory capital requirement across the Group was £11.4 m and the Group had an aggregate surplus of £13.1m across all regulated entities. In addition to this it is Group internal policy for regulated companies within the Group to hold at least 130% of their required regulatory capital resulting in the aggregate surplus reducing to £9m. All the regulated firms within the Group maintained surplus regulated capital throughout the year.

 

 

Paul Tarran

Chief Financial Officer

14 March 2018

Curtis Banks Group PLC

 

Consolidated statement of comprehensive income

 

 

 

 

Year ended 31 December 2017

 

Year ended 31 December 2016

 

 

 

Before amortisation and non-recurring costs

Amortisation and non-recurring costs

Total

 

Before amortisation and non-recurring costs

Amortisation and

non-recurring costs

Total

 

 

Notes            

£'000

£'000

£'000

 

£'000

£'000

£'000

Operating revenue

 

 

 

43,573

 

-

43,573

 

 

29,731

 

-

29,731

Policyholder investment returns

2

 

343,009

 

-

 

343,009

 

 

261,639

 

-

 

261,639

Revenue

 

 

 

386,582

 

-

386,582

 

 

291,370

 

-

291,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative expenses

 

     3

 

(32,336)

 

-

(32,336)

 

 

(22,403)

 

 

(22,403)

Non-participating investment contract expenses

 

(34,560)

 

-

 

(34,560)

 

 

(18,268)

 

-

 

(18,268)

 

Changes in provisions: Non-participating investment contract liabilities

 

(308,449)

 

-

 

(308,449)

 

 

 

(243,371)

 

-

 

(243,371)

 

Policyholder total expenses

 

 

 

(343,009)

 

-

(343,009)

 

 

(261,639)

 

-

(261,639)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit before amortisation and non-recurring costs

 

 

11,237

 

-

 

11,237

 

 

7,328

 

-

 

7,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring costs

 

4

 

-

 

(3,754)

 

(3,754)

 

 

-

 

(1,690)

 

(1,690)

Amortisation

 

 

 

-

 

(1,131)

 

(1,131)

 

 

-

 

(884)

 

(884)

Operating profit         

 

 

 

11,237

 

(4,885)

6,352

 

 

7,328

 

(2,574)

4,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

 

67

 

-

 

67

 

 

117

 

-

 

117

Finance costs

 

 

 

(562)

 

-

 

(562)

 

 

(381)

 

-

 

(381)

Profit before tax

 

 

 

10,742

 

(4,885)

 

5,857

 

 

7,064

 

(2,574)

 

4,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax

 

6

 

(1,565)

 

940

 

(625)

 

 

(1,126)

 

470

 

(656)

Total comprehensive income for the year

 

 

9,177

 

(3,945)

 

5,232

 

 

5,938

 

(2,104)

 

3,834

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of the company

 

 

 

 

 

 

 

5,222

 

 

 

 

 

 

3,829

Non-controlling interests

 

 

 

 

 

 

 

10

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

5,232

 

 

 

 

 

 

3,834

Earnings per ordinary share on net profit

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (pence)

 

7

 

 

 

 

9.75

 

 

 

 

 

7.23

Diluted (pence)

 

7

 

 

 

 

9.26

 

 

 

 

 

7.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

The consolidated statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

Curtis Banks Group Plc

 

Consolidated statement of financial position

 

 

 

 

 

 

 

 

Group

 

 

 

 

Notes

 

 

 

31-Dec-17

£'000

 

31-Dec-16

£'000

ASSETS

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

8

 

 

 

44,593

 

47,442

Investment property

 

 

9

 

 

 

1,206,298

 

1,149,135

Property, plant and equipment

 

 

10

 

 

 

1,148

 

1,073

Investments

 

 

 

 

 

 

2,032,293

 

1,924,913

Deferred tax asset

 

 

 

 

 

 

124

 

-

 

 

 

 

 

 

 

3,284,456

 

3,122,563

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

 

 

 

 

16,687

 

17,523

Cash and cash equivalents

 

11

 

 

 

437,849

 

447,510

Current tax asset

 

 

 

 

 

 

310

 

-

 

 

 

 

 

 

 

454,846

 

465,033

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

 

 

3,739,302

 

3,587,596

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

 

 

12,658

 

12,138

Deferred income

 

 

 

 

 

 

24,374

 

21,993

Borrowings

 

 

12

 

 

 

29,444

 

38,329

Provisions

 

 

 

 

 

 

641

 

-

Deferred consideration

 

 

 

 

 

 

341

 

641

Current tax liability

 

 

 

 

 

 

-

 

504

 

 

 

 

 

 

 

67,458

 

73,605

Non-current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

 

12

 

 

 

64,584

 

77,194

Provisions

 

 

 

 

 

 

259

 

-

Deferred consideration

 

 

 

 

 

 

454

 

821

Non-participating investment contract liabilities

 

 

 

 

3,561,929

 

3,394,404

Deferred tax liability

 

 

 

 

 

 

-

 

42

 

 

 

 

 

 

 

3,627,226

 

3,472,461

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

 

 

3,694,684

 

3,546,066

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

44,618

 

41,530

 

 

 

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

 

 

Issued capital

 

 

 

 

 

 

269

 

268

Share premium

 

 

 

 

 

 

33,451

 

33,425

Equity share based payments

 

 

 

 

 

 

731

 

239

Treasury shares

 

 

 

 

 

 

(250)

 

-

Retained earnings

 

 

 

 

 

 

10,403

 

7,589

 

 

 

 

 

44,604

 

41,521

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

 

 

 

14

 

9

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

 

 

 

44,618

 

41,530

 

 

Approved by the Board and authorised for issue on 14 March 2018.

 

Paul Tarran

Chief Financial Officer

 

 

Company Registration No. 07934492

Curtis Banks Group Plc

Consolidated statement of changes in equity

 

 

 

 

Issued capital

 

£'000

 

Share premium

 

£'000

 

Equity share based payments

£'000

 

Treasury shares

 

£'000

 

Retained earnings

 

£'000

 

Total

 

 

£'000

 

Non-controlling

interest

£'000

 

Total

equity

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2016

225

 

7,146

 

97

 

-

 

6,163

 

13,631

 

9

 

13,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

-

 

-

 

-

 

-

 

3,829

 

3,829

 

5

 

3,834

Share based payments

-

 

-

 

142

 

-

 

-

 

142

 

-

 

142

Ordinary shares issued

43

 

26,279

 

-

 

-

 

-

 

26,322

 

-

 

26,322

Ordinary dividends declared and paid

-

 

-

 

-

 

-

 

(2,403)

 

(2,403)

 

(5)

 

(2,408)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2016

268

 

33,425

 

239

 

-

 

7,589

 

41,521

 

9

 

41,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

-

 

-

 

-

 

-

 

5,222

 

5,222

 

10

 

5,232

Share based payments

-

 

-

 

492

 

-

 

-

 

492

 

-

 

492

Ordinary shares bought by EBT

-

 

-

 

-

 

(250)

 

-

 

(250)

 

-

 

(250)

Ordinary shares issued

1

 

26

 

-

 

-

 

-

 

27

 

-

 

27

Ordinary dividends declared and paid

-

 

-

 

-

 

-

 

(2,408)

 

(2,408)

 

(5)

 

(2,413)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2017

269

 

33,451

 

731

 

(250)

 

10,403

 

44,604

 

14

 

44,618

Curtis Banks Plc

Consolidated statement of cash flows

 

 

 

 

 

Group

 

 

 

 

 

Year ended 31 December

                          

 

 

 

 

2017

      £'000

 

2016

£'000

Cash flows from operating activities

 

 

 

 

 

 

Profit before tax

 

 

 

 

5,857

 

4,490

Adjustments for:

 

 

 

 

 

 

 

Depreciation

 

 

 

 

570

 

519

Amortisation and impairments

 

 

 

 

3,126

 

884

Interest expense

 

 

 

 

554

 

387

Share based payment expense

 

 

 

 

492

 

142

Fair value gains on financial investments

 

 

 

(156,046)

 

(199,681)

Additions of financial investments

 

 

 

 

(493,638)

 

(328,511)

Disposals of financial investments

 

 

 

 

542,304

 

390,603

Fair value gains on investment properties

 

 

 

(44,074)

 

25,038

Increase in liability for investment contracts

 

 

 

167,525

 

156,175

Changes in working capital:

 

 

 

 

 

 

 

Decrease/(increase) in trade and other receivables

 

(433)

 

(6,447)

Increase in trade and other payables

 

 

 

4,193

 

11,024

Taxes paid

 

 

 

 

(999)

 

(667)

Net cash flows received from operating activities

 

 

29,431

 

53,956

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchase of intangible assets

 

 

 

 

(277)

 

(1,533)

Purchase of property, plant and equipment

 

 

(161,923)

 

(101,473)

Investment in employee benefit trust

 

 

 

(250)

 

-

Receipts from sale of property, plant and equipment

 

 

148,191

 

85,758

Net cash flows from acquisitions

 

 

 

 

(669)

 

357,821

Net cash flows (used in)/received from investing activities

 

 

(14,928)

 

340,573

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Equity dividends paid

 

 

 

 

(2,413)

 

(2,408)

Net proceeds from issue of ordinary shares

 

 

 

27

 

26,322

Net increase/(decrease) in borrowings

 

 

 

 

(21,274)

 

21,848

Interest paid

 

 

 

 

(504)

 

(411)

Net cash (used in)/received from financing activities

 

 

(24,164)

 

45,351

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

 

(9,661)

 

439,880

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

 

447,510

 

7,630

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the year

 

 

 

437,849

 

447,510

                   

 

 

 

The Group's Consolidated Statement of Cash Flows includes all cash and cash equivalent flows, including £412,175,567 (2016: £426,054,538) relating to policyholder non-participating investment contracts.

 

1              Corporate information

Curtis Banks Group PLC ("the Company") is a public limited company incorporated and domiciled in England and Wales, whose shares are publicly traded on the AIM market of the London Stock Exchange PLC.  The financial statements are presented in pounds sterling, with all values rounded to the nearest thousand pounds except when otherwise indicated. The financial statements were authorised for issue in accordance with a resolution of the Directors on 14 March 2018.

The principal activity of the Group is that of the provision of pension administration services principally for Self Invested Personal Pension schemes ("SIPPs") and Small Self-Administered Pension schemes ("SSASs").  The Group is staffed by experienced professionals who all have proven track records in this sector.

As a result of the acquisition of Suffolk Life in 2016, Suffolk Life Annuities Limited became a wholly owned subsidiary of the Group. This company is an insurance company that writes SIPP Products as insurance contracts. These are all non-participating insurance policy contracts and so the Group does not bear any insurance risk. As the policyholder assets and liabilities are shown on the balance sheet of Suffolk Life Annuities Limited, these will also show on the Group balance sheet on consolidation. As the policies are non-participating contracts, the Client related assets and liabilities in Suffolk Life Annuities match. In addition the revenues, expenses and investment returns of the non-participating insurance policy contracts are shown in the consolidated statement of comprehensive income. Again, these income, expense items and investment returns due to the policy holders equal each other. Note 15 and 16 to this Announcement shows for illustrative purposes the Group Balance Sheet and cash flows excluding policy holder assets and liabilities.

 

2              Revenue

Revenue is wholly derived from activities undertaken within the United Kingdom and comprises the following categories:

 

 

                                        Year ended 31 December

 

 

 

 

 

2017

£'000

 

2016

£'000

 

 

 

 

 

 

 

Fees

 

 

 

34,073

 

25,214

Interest income

 

 

 

9,500

 

4,517

Policyholder investment returns

 

 

 

343,009

 

261,639

 

 

 

 

 

 

 

 

 

 

 

386,582

 

291,370

 

3             Profit for the year

Profit for the year is arrived at after:

 

 

                                        Year ended 31 December

 

 

 

 

 

2017

£'000

 

2016

£'000

 

 

 

 

 

 

 

Charging:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation of intangible assets

 

 

 

1,131

 

884

Depreciation of property, plant and equipment

 

 

 

570

 

519

Auditors remuneration:

 

 

 

 

 

 

- audit of the financial statements of the Group

 

 

 

177

 

162

- audit of the financial statements of the Company

 

 

 

29

 

24

- audit related assurance services

 

 

 

97

 

110

 

4             Non-recurring costs

Non-recurring costs include the following significant items:

 

 

                                        Year ended 31 December

 

 

 

 

 

2017

£'000

 

2016

£'000

 

 

 

 

 

 

 

Set up costs associated with the take on of SIPPs

 

 

 

20

 

50

Exceptional legal fees

 

 

 

67

 

537

Redundancy & restructuring costs following acquisitions

 

 

1,143

 

310

Suffolk Life acquisition costs

 

 

 

72

 

735

European Pension Management acquisition costs

 

 

 

328

 

58

Exceptional impairment charge

 

 

 

2,124

 

-

 

 

 

 

 

 

 

 

 

 

 

3,754

 

1,690

 

 

Redundancy & restructuring costs following acquisitions

During the year ended 31 December 2017 a full strategic review of all the office locations used by the Group was carried out. As a result of that review, and after full consultation with all relevant staff, the decision was taken to close the Group's office in Market Harborough.  The closure was effective from the end of January 2018. Full provision has been made in the financial statements for the year ended 31 December 2017 for all the financial costs arising from the decision to close that office including redundancy payments, amounts due under onerous leases and cost of relocating the activities of that office to other Group locations. 

Exceptional impairment charge

During the year ended 31 December 2017 the Group continued and completed the review if its operating systems following the acquisition of the Suffolk Life business in May 2016. As a result of this review the Group concluded that the most cost effective, appropriate and lowest risk solution was, subject to contract, to implement a material upgrade of the existing back office operating system at the Group.  

As a result of this decision, costs of approximately £2.1 million incurred and capitalised on the initial development, installation, evaluation and testing of an alternative system over recent years have now been written off as an exceptional impairment charge in the financial statements for the year ended 31 December 2017. Other than £0.1m, all of these costs were originally incurred in accounting periods up to and including the year to 31 December 2016.

Exceptional legal fees

During the year ended 31 December 2016 the Group entered into an agreement to settle a potential legal claim by another business. The terms of settlement are confidential however no further costs are expected and the total cost included above includes all associated legal fees incurred.

Suffolk Life acquisition costs

The Group incurred a significant level of legal and professional fees in connection with the acquisition of Suffolk Life Group Limited and its subsidiaries during the year ended 31 December 2016. In accordance with IFRS 3 Business Combinations, these have been expensed and treated as non-recurring costs.

European Pension Management acquisition costs

The Group incurred considerable legal and professional fees in connection with the acquisition of the trade and assets of European Pension Management Limited during the year ended 31 December 2016. In accordance with IFRS 3 Business Combinations, these have been expensed and treated as non-recurring costs.



5              Directors and employees

 

               

                                        Year ended 31 December

 

 

 

2017

£'000

 

2016

£'000

 

 

 

 

 

 

Wages and salaries

 

 

17,585

 

12,930

Social security costs

 

 

1,630

 

1,275

Other pension costs

 

 

1,337

 

900

Share-based incentive awards

 

 

492

 

142

 

 

 

21,044

 

15,247

 

 

 

 

 

 

The average number of employees during the year was:

 

 

2017

 

2016

 

 

 

 

 

 

Directors

 

 

7

 

6

Administration

 

 

571

 

452

 

 

 

578

 

458

 

Details of emoluments paid to the directors and key management personnel are as follows:

 

 

                                        Year ended 31 December

 

 

 

 

2017

£'000

 

2016

£'000

Total emoluments paid to:

 

 

 

 

Directors

 

 

 

 

 

   Wages and salaries

 

 

1,411

 

787

   Social security costs

 

123

 

95

   Post-employment costs

 

21

 

21

 

 

 

 

 

Key management personnel

 

 

 

 

   Wages and salaries

 

806

 

1,021

   Social security costs

 

93

 

126

   Post-employment costs

 

47

 

49

 

 

 

 

 

 

 

2,501

 

2,099

 

 

 

 

 

 

Emoluments of highest paid director 

 

 

 

 

 

Wages and salaries        

 

 

468

 

258

Pension Contributions

 

 

8

 

8

 

 

 

476

 

266

 

      

6            Taxation               

 

                                    Year ended 31 December

 

 

 

 

2017

£'000

 

2016

£'000

 

 

 

 

 

 

Domestic current period tax

 

 

 

 

 

UK Corporation tax

 

 

791

 

601

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

Origination and reversal of temporary differences

 

 

(166)

 

55

 

 

 

625

 

656

 

 

 

 

 

 

 

 

 

 

 

 

Factors affecting the tax charge for the period

 

 

 

 

 

Profit before tax

 

 

5,857

 

4,490

 

 

 

 

 

 

Profit before tax multiplied by standard rate of UK Corporation tax of 19.25% (2016: 20.00%)

 

 

1,127

 

898

 

 

 

 

 

 

Effects of:

 

 

 

 

 

Adjustment to prior period

 

 

(305)

 

(234)

Non-deductible expenses

 

 

13

 

58

Other tax adjustments 

 

 

(210)

 

(66)

 

 

 

(502)

 

(242)

 

 

 

 

 

 

Current tax charge

 

 

625

 

656

 

 

 

7              Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Changes in income or expense that would result from the conversion of the dilutive potential ordinary shares are deemed to be trivial, and therefore no separate diluted net profit is presented.

The following reflects the income and share data used in the basic and diluted earnings per share computations:

 

 

 

     2017

£'000

 

2016

£'000

Net profit and diluted net profit available to equity holders of the Group

 

5,222

 

3,829

 

 

 

 

 

 

Net profit and diluted net profit before non-recurring costs (note 6) and amortisation (note 5) available to equity holders of the Group.

 

10,742

 

7,064

 

 

 

 

 

 

Weighted average number of ordinary shares:

 

 

           Number

 

Number

 

 

 

 

 

 

Issued ordinary shares at start of the year

 

 

53,599,669

 

44,954,769

Effect of shares issued in the current year

 

 

25,127

 

8,031,907

Basic weighted average number of shares

 

 

53,624,796

 

52,986,676

 

 

 

 

 

 

Effect of options exercisable at the reporting date

 

 

800,000

 

533,333

Effect of options not yet exercisable at the reporting date

 

 

2,044,484

 

991,959

Diluted weighted average number of shares

 

 

56,469,280

 

54,511,968

 

 

 

 

 

 

 

 

 

Pence

 

Pence

Earnings per share:

 

 

 

 

 

Basic

 

 

9.75

 

7.23

Diluted

 

 

9.26

 

7.02

 

Earnings per share on net profit before non-recurring costs and amortisation, less an effective tax rate:

 

 

 

 

As restated*

Basic

 

 

16.20

 

10.67

Diluted

 

 

15.38

 

10.37

 

*The effective tax rate used in previous years was calculated using the formula "current tax charge / profit before tax". In order to reduce the impact of accounting measures such as deferred tax, and the timing of tax reliefs, the effective tax rate has been changed to match the current tax rate applicable to the accounting year. The current tax rate applicable for the year ended 31 December 2017 was 19.25% (2016: 20.00%).



8              Intangible assets

Group

 

 

 

 

Goodwill

£'000

 

Client Portfolios

£'000

 

Computer

Software

£'000

 

 

Total

£'000

Cost

 

 

 

 

 

 

 

 

At 1 January 2017

 

28,903

 

18,430      

 

3,116

 

50,449

 

 

 

 

 

 

 

 

 

Additions

 

-

 

5

 

272

 

277

Disposals

 

-

 

(2)

 

(1,993)

 

(1,995)

 

 

 

 

 

 

 

 

 

At 31 December 2017

 

28,903

 

    18,433

 

     1,395

 

48,731

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

 

At 1 January 2017

 

-

 

2,533

 

474

 

3,007

 

 

 

 

 

 

 

 

 

Charge for the year

 

-

 

922

 

209

 

1,131

Disposals

 

-

 

         -

 

-

 

-

 

 

 

 

 

 

 

 

 

At 31 December 2017

 

-

 

3,455

 

683

 

4,138

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

At 31 December 2016

 

28,903

 

    15,897

 

2,642

 

47,442

At 31 December 2017

 

28,903

 

    14,978

 

712

 

44,593

 

Goodwill

Goodwill arose on the acquisition of Suffolk Life Group Limited and its subsidiaries on 25 May 2016. The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill might be impaired.  The recoverable amount of goodwill has been determined based on value-in-use calculations using a discount rate appropriate to the risk profile of the asset. These calculations use operating cash flow projections based on financial budgets approved by management covering a three year period, assuming business then continues onwards after this period at a steady rate for the purpose of the analysis.

 

 

Computer Software

Computer software contains costs that meet the recognition criteria under IAS 38 as Intangible Assets. General small computer software costs are amortised over their useful economic life of four years on a straight-line basis. Computer software costs for significant projects are amortised over an estimated UEL on a project by project basis.

Following completion of a review of a potential new operating system, and the resultant decision  to retain and upgrade the existing system, intangible costs of approximately £2 million incurred and capitalised on the initial development, installation, evaluation and testing of an alternative operating system over recent years have been written off during the year ended 31 December 2017.

Client Portfolios

Client portfolios represent individual client portfolios acquired through business combinations and accounted for under the acquisition method. The directors consider that there is no impairment to assets as at the year end. The client portfolios are being amortised over a period of 20 years.

The brought forward balance relates to the purchase by Curtis Banks Limited, a subsidiary company, of the trade and assets of Montpelier Pension Administration Services Limited on 13 May 2011, the full SIPP business of Alliance Trust Savings Limited on 18 January 2013, the full SIPP business and certain assets of Pointon York SIPP Solutions Limited on 31 October 2014, the full SIPP business of Rathbones Pension & Advisory Services Limited on 31 December 2014, and a book of full SIPPs from Friends Life plc (now Aviva plc) on 13 March 2015.

The brought forward balance also includes the purchase by Suffolk Life Pensions Limited, a subsidiary company, of the trade and assets of European Pensions Management Limited on 14 July 2016, and books of SIPPs purchased from Pointon York SIPP Solutions Limited on 9 November 2012, Pearson Jones PLC on 30 April 2013, and Origen Investment Services Limited on 22 May 2013.

All acquisitions have been accounted for under the acquisition method of accounting. 

The directors have considered the carrying value of the client portfolios and have concluded that no impairment is required.  The client portfolios are being amortised over a period of 20 years and have an average remaining expected useful economic life as at 31 December 2017 of 16 years and 4 months.

 

9              Investment Property

 

Assets held at fair value

 

Group

               

 

 

 

 

Investment Properties

 

 

Total

 

 

 

 

 

£'000

 

£'000

Fair value

 

 

 

 

 

 

At 1 January 2017

 

 

 

 

1,149,135

1,149,135

 

 

 

 

 

 

 

Arising on acquisitions

 

 

 

 

-

-

Additions

 

 

 

 

161,280

161,280

Disposals

 

 

 

 

(148,191)

(148,191)

Fair value gains

 

 

 

 

44,074

44,074

 

 

 

 

 

 

 

At 31 December 2017

 

 

 

 

1,206,298

1,206,298

 

 

 

 

 

 

 

 

 

All investment properties have been valued at the year end by reference to most recent professional valuations and this is further adjusted by applying the corresponding property index available. Investment properties held to cover the linked policyholder business are included in non-participating investment contract liabilities.

 

 

10           Property, plant and equipment

 

Assets held at cost

 

Group

               

Leasehold

Improvements

 

Computer equipment

 

Office equipment, fixtures & fittings

 

 

Total

 

£'000

 

£'000

 

£'000

 

£'000

Cost

 

 

 

 

 

 

At 1 January 2017

54

 

3,606

 

1,093

4,753

 

 

 

 

 

 

 

Additions

-

 

520

 

125

645

Disposals

-

 

(42)

 

-

(42)

 

 

 

 

 

 

 

At 31 December 2017

54

 

4,084

 

1,218

5,356

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

At 1 January 2017

28

 

2,697

 

955

3,680

 

 

 

 

 

 

 

Charge for the year

13

 

493

 

64

570

Disposals

-

 

(42)

 

-

(42)

 

 

 

 

 

 

 

At 31 December 2017

41

 

3,148

 

1,019

4,208

 

 

 

 

 

 

 

Carrying value

 

 

 

 

 

 

At 31 December 2016

26

 

909

 

138

1,073

At 31 December 2017

13

 

936

 

199

1,148

 

 

 

 

 

 

 

 

 

 

11           Cash and cash equivalents

As at 31 December 2017 and 2016 cash and cash equivalents were as follows:

 

Group

Company

 

As at 31 December

As at 31 December

 

2017

£'000

2016

£'000

 

2017

£'000

2016

£'000

 

 

 

 

 

 

Cash at bank and in hand

437,849

447,510

 

2,318

458

 

All cash at bank is held on overnight deposit. Cash at bank and in hand includes £48,000 (2016: £1,634,000) of cash equivalents held at fair value.

12           Borrowings

 

 

Group

Company

 

 

As at 31 December

As at 31 December

 

 

2017

£'000

 

2016

£'000

 

2017

£'000

 

2016

£'000

Current

 

 

 

 

 

 

 

 

Bank loans

 

29,444

 

38,329

 

3,158

 

3,108

 

 

29,444

 

38,329

 

3,158

 

3,108

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

 

Bank loans

 

64,584

 

77,194

 

14,508

 

17,667

 

 

64,584

 

77,194

 

14,508

 

17,667

 

 

 

 

 

 

 

 

 

Total borrowings

 

94,028

 

115,523

 

17,666

 

20,775

 

 

 

 

 

 

 

 

 

 

Bank borrowings

The bank borrowings are repayable as follows:

 

Group

Company

 

As at 31 December

As at 31 December

 

 

2017 £'000

 

2016

£'000

 

2017

£'000

 

2016

£'000

 

 

 

 

 

 

 

 

 

Within 1 year

 

29,444

 

38,329

 

3,158

 

3,108

Between 1 year and 5 years

 

44,158

 

51,922

 

14,508

 

17,667

After more than 5 years

 

20,426

 

25,272

 

-

 

-

 

 

94,028

 

115,523

 

17,666

 

 

20,775

 

 

Bank borrowings of the Company mature between December 2018 and December 2021 and bear average coupons of 2.25% plus LIBOR per annum.

Total borrowings include liabilities of £76,464,000 (2016: £94,580,000) secured by legal charge over certain properties held within non-participating investment contracts, and liabilities of £17,666,000 (2016: £20,775,000) secured on the shares of Curtis Banks Limited, Suffolk Life Pensions Limited and Suffolk Life Annuities Limited.

 

13           Dividends

 

 

Year to 31 December

 

 

 

 

2017

 

2016

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

Ordinary interim declared and paid

 

 

 

2,408

 

2,403

 

 

 

 

 

 

 

 

 

 

 

2,408

 

2,403

 

A second interim share dividend in respect of 2016 was declared and paid on 12 May 2017 of 3p per ordinary share.

An interim share dividend was declared and paid on 15 November 2017 of 1.5p per ordinary share.

 

14           Contingent liabilities

The Group has been in correspondence with HMRC regarding processes and documentation in respect of in specie contributions. HMRC have alleged that incorrect procedures were followed and is seeking to reclaim tax reliefs granted and interest thereon. This is an industry wide issue affecting other SIPP operators and is being challenged by the industry as a whole. It is not possible to determine when this matter will be resolved and the outcome and impact are not known at this stage. We do not believe that the net exposure arising from this will be material to the Group.

 

15. Illustrative IFRS Consolidated Statement of Financial Position as at 31 December 2017 split between insurance policy holders and the Group's shareholders

 

 

ASSETS

 

 

 

 

£'000

    

£'000

 

£'000

 

 

 

 

 

Group Total

 

Policyholder

 

Shareholder

Non-current assets

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

 

 

44,593

 

-

 

44,593

Investment property

 

 

 

 

1,206,298

 

1,206,258

 

40

Property, plant and equipment

 

 

 

 

1,148

 

-

 

1,148

Investments

 

 

 

 

2,032,293

 

2,032,293

 

-

Deferred tax asset

 

 

 

 

124

 

-

 

124

 

 

 

 

 

3,284,456

 

3,238,551

 

45,905

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

 

 

16,687

 

7,855

 

8,832

Cash and cash equivalents

 

 

 

 

437,849

 

412,176

 

25,673

Current tax asset

 

 

 

 

605

 

605

 

-

 

 

 

 

 

455,141

 

420,636

 

34,505

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

3,739,597

 

3,659,187

 

80,410

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

12,658

 

7,348

 

5,310

Deferred income

 

 

 

 

24,374

 

13,446

 

10,928

Borrowings

 

 

 

 

29,444

 

26,286

 

3,158

Restructuring provision

 

 

 

 

534

 

-

 

534

Onerous lease provision

 

 

 

 

107

 

-

 

107

Deferred consideration

 

 

 

 

341

 

-

 

341

Current tax liability

 

 

 

 

295

 

-

 

295

 

 

 

 

 

67,753

 

47,080

 

20,673

Non-current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

 

64,584

 

50,178

 

14,406

Onerous lease provision

 

 

 

 

259

 

-

 

259

Deferred consideration

 

 

 

 

454

 

-

 

454

Non-participating investment contract liabilities

 

 

3,561,929

 

3,561,929

 

-

 

 

 

 

 

3,627,226

 

3,612,107

 

15,119

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

3,694,979

 

3,659,187

 

35,792

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

44,618

 

-

 

44,618

 

 

 

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

 

 

Issued capital

 

 

 

 

269

 

-

 

269

Share premium

 

 

 

 

33,451

 

-

 

33,451

Equity share based payments

 

 

 

 

731

 

-

 

731

Treasury shares

 

 

 

 

(250)

 

-

 

(250)

Retained earnings

 

 

 

 

10,403

 

-

 

10,403

 

 

 

44,604

 

-

 

44,604

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

 

14

 

-

 

14

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

 

44,618

 

-

 

44,618

16. Illustrative IFRS Consolidated Statement of Cash Flows as at 31 December 2017 split between insurance policy holders and the Group's shareholders

 

 

 

£'000

Group Total

 

£'000

Policyholder

 

£'000

Shareholder

Cash flows from operating activities

 

 

 

 

 

 

 

Profit before tax

 

 

5,857

 

-

 

5,857

Adjustments for:

 

 

 

 

 

 

 

Depreciation

 

 

570

 

-

 

570

Amortisation and impairments

 

 

3,126

 

-

 

3,126

Interest expense

 

 

554

 

-

 

554

Share based payment expense

 

 

492

 

-

 

492

Fair value gains on financial investments

 

 

(156,046)

 

(156,046)

 

-

Additions of financial investments

 

(493,638)

 

(493,638)

 

-

Disposals of financial investments

 

542,304

 

542,304

 

-

Fair value gains on investment properties

 

 

(44,074)

 

(44,074)

 

-

Increase in liability for investment  contracts

 

167,525

 

167,525

 

-

Changes in working capital:

 

 

 

 

 

 

 

Decrease/(increase) in trade and other receivables

 

(433)

 

(314)

 

(122)

Increase in trade and other payables

4,193

 

1,567

 

2,629

Taxes paid

 

 

(999)

 

-

 

(999)

 

 

 

 

 

 

 

 

Net cash flows from operating activities

 

29,431

 

17,324

 

12,107

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchase of intangible assets

 

 

(277)

 

-

 

(277)

Purchase of property, plant & equipment

(161,923)

 

(161,278)

 

(645)

Investment in employee benefit trust

(250)

 

-

 

(250)

Receipts from sale of property, plant & equipment

 

148,191

 

148,191

 

-

Net cash flows from acquisitions

 

(669)

 

-

 

(669)

 

 

 

 

 

 

 

 

Net cash flows from investing activities

 

(14,928)

 

(13,087)

 

(1,841)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Equity dividends paid

(2,413)

 

-

 

(2,413)

Net proceeds from issue of ordinary shares

27

 

-

 

27

Net decrease in borrowings

(21,274)

 

(18,116)

 

(3,158)

Interest paid

(504)

 

-

 

(504)

 

 

 

 

 

 

Net cash flows from financing activities

(24,164)

 

(18,116)

 

(6,048)

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

(9,661)

 

(13,879)

 

4,218

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the year

447,510

 

426,055

 

21,455

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the year

437,849

 

412,176

 

25,673

                 

 

 

 

 

 

 

 

 

 


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