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Curtis Banks Group PLC  -  CBP   

Interim Results

Released 07:00 06-Sep-2018

RNS Number : 9180Z
Curtis Banks Group PLC
06 September 2018
 

 

 

 

 

 

 

 

 

                                  

Curtis Banks Group plc

("Curtis Banks", the "Group")

Interim results for the 6 months to 30 June 2018

 

 

 

Curtis Banks Group PLC, one of the UK's leading SIPP providers, is pleased to announce its interim results for the 6 months to 30 June 2018.

 

Highlights

 

·     Operating Revenue increased by 7.5% to £23.0m (2017: £21.4m)

 

·     Adjusted profit before tax1 increased by 16% to £5.8m (2017: £5.0m)

 

·     Adjusted operating margin2 increased to 26.2% (2017: 24.7%)

 

·     Profit before tax increased by 17% to £4.8m (2017: £4.1m)

 

·     Adjusted diluted EPS increased by 16% to 8.33p (2017: 7.18p)

 

·     Gross organic growth in own SIPP numbers of 3,512 with total SIPPs administered now 77,552

 

·     Assets under administration increased by 9% to £25.1bn (2017: £23.1bn)

 

·     Interim dividend of 2.0p per share (2017: 1.5p)

 

·    Will Self takes over as Group CEO in January 2019, with Rupert Curtis maintaining an active role as Founder and Senior Adviser 

 

·     Jane Ridgley to join the Board in January 2019 as Chief Operating Officer

 

 

Highlights and key performance indicators for the period include:

 

 

Unaudited six month period ended 30 June 2018

Unaudited six month period ended 30 June 2017


Audited year ended 31 December 2017

Financial

 

 

 

Operating Revenue

£23.0m

£21.4m

£43.6m

Adjusted Profit1

£5.8m

£5.0m

£10.7m

Profit before Tax

£4.8m

£4.1m

£5.9m

Adjusted Operating Margin2

26.2%

24.7%

25.8%

 

 

 

 

Diluted EPS

7.05p

5.84p

9.26p

 

 

 

 

Diluted EPS on Adjusted profit (applying an effective tax rate)

8.33p

7.18p

15.38p

 

 

Operational Highlights

Number of SIPPs Administered

77,552

74,900

76,474

Assets under Administration

£25.1bn

£23.1bn

£24.7bn

Total organic new own SIPPs in period

3,512

4,534

8,719

 

1 Profit before tax, amortisation and non- recurring costs

2The ratio of operating profits before amortisation and non-recurring costs to operating revenues

 

 

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

 

 

"We made good progress during the first half of the year and these results show encouraging growth in profits during a period in which we concentrated on completing our consolidation activities and preparing the launch of our new SIPP proposition.

We have focused on further investment in the business to support continued organic growth and build on our position as the UK's largest dedicated SIPP provider.  This has involved developing a new sales team and a new SIPP proposition, both of which will be operating in the second half of this year. 

We are well positioned to grow the business and are also proactively exploring possible acquisitions. The investments we are making across the business put us in good stead for the future, broadening our penetration of the SIPP market and creating further shareholder value.

As this is my final set of results as Chief Executive I would like to thank all of our valued shareholders for their continued support, and I am very pleased to have a strong successor in  Will Self who will start in this position in January 2019. I am delighted to confirm  that I will remain actively involved as a senior adviser to the business."

 

Analyst Presentation:

There will be a presentation on Thursday 6 September 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 jake.thomas@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 & Joint Broker)

+44 (0) 20 7418 8900

Guy Wiehahn

 

Rishi Shah

 

 

 

N+1 Singer (Joint Broker)

+44 (0) 20 7496 3000

Mark Taylor

 

Rachel Hayes 

 

 

 

Camarco             

+44 (0) 20 3757 4984

Ed Gascoigne-Pees

 

Hazel Stevenson

Jane Glover

 

 

 

 

LEI Code:  213800LYP7YTVDXRMP40

 

 

Notes to Editors:

 

Curtis Banks administers over 77,000 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

 

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon publication of this announcement, this inside information is now considered to be in the public domain.

 

 

 

 

Overview

 

 

Curtis Banks Group PLC ("Curtis Banks" or "the Group") is one of the United Kingdom's leading administrators of self-invested pension products, 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.

 

At 30 June 2018 the Group administered circa £25.1bn (2017: £23.1bn) of pension assets on behalf of over 77,500 (2017: 74,900) active customers. Approximately 567 staff are employed across its head office in Bristol and our regional offices in Ipswich and Dundee.

 

On 25 May 2016 the Group completed its largest acquisition to date, the purchase of Suffolk Life Group Limited, a large and long established provider of SIPPs. The period since then has been one of consolidation, alignment and building a strong platform for the future expansion of the business. A single management structure is in place under the Curtis Banks brand. A new single SIPP proposition is being developed for launch by the end of 2018, supported by a new enhanced Group Sales function. Property legal and management services have been launched and the Group is actively exploring acquisition opportunities.

 

The Executive Directors have proven experience in the pensions market and operate a business that focuses on a service-driven proposition for the administration of flexible SIPPs. The Group's products are distributed by authorised and regulated financial advisers, targeted towards pension savers who wish to take full advantage of the features and flexibility offered in the UK's modern and changing pension regime. Long standing relationships with key distributors result in high levels of repeat business and demonstrate satisfaction with products and services provided.

 

The Group is focussed on continuing to deliver increased value to both customers and shareholders in the years ahead.

 

 

Note: The Group includes an insurance company, Suffolk Life Annuities Ltd, which provides SIPPs through non-participating individual insurance contracts. Due to Suffolk Life Annuities Limited's status as an insurance company, the consolidated results for the whole Group are required to include insurance policyholder assets and liabilities as well as the assets and liabilities and profits attributable to our shareholders. Notes 8 and 9 to the financial statements illustrate the split between policyholder and shareholder assets and liabilities and cash flows. 

 

 

 

 

 

 

Chairman's Statement

 

 

Operationally, we have expanded further into the UK's commercial property market with the launch of two new companies: Rivergate Legal Limited which offers a range of legal services to SIPP, SSAS and open market customers relating to commercial property transactions and Templemead Property Solutions Limited which will provide valuation services and negotiate other professional services on behalf of Curtis Banks Group customers.  In February, we launched our new corporate branding which brings one consistent identity to all businesses within the Group, a key strategic objective following the acquisition of Suffolk Life. We are working on a new Group website, which reflects this new brand identity and have brought forward work to upgrade our front-end portal for our customers. This will improve the customer and adviser experience and will be completed during 2018.

We are pleased that the total number of SIPPs administered by the Group now is 77,552, reflecting an increase of 3,512 in own SIPP numbers in the period. This is a result of continued new organic growth as well as stable attrition rates.

Dividends

Your Board has agreed an interim dividend of 2.0p per share (2017: 1.5p) to be paid on 15 November 2018 to shareholders on the register at the close of business on 12 October 2018.  The shares will be marked ex-dividend on 11 October 2018. It is expected that a final dividend will be recommended in respect of the current financial year.

Summary and Outlook

We are well positioned to grow the business organically and are actively seeking new acquisition opportunities. Ongoing regulatory pressure on SIPP operators, and increased capital requirements for businesses, means consolidation opportunities are still present. The business is well funded with cash surpluses of approximately £9 million at the half year and we will continue to look at compatible opportunities to supplement organic growth.

Our position in the market is strong and we intend to consolidate our status as the SIPP operator of choice for independent financial advisers. The investments we are making across the business puts us in good stead for the future, broadening our penetration of the SIPP market and creating further shareholder value.

 

 

Chris Macdonald

Chairman

5 September 2018

 

 

 

Operational Review

 

Summary

 

The first half of 2018 has seen us deliver strong and profitable growth.  This has arisen as a result of continued organic growth in SIPPs and with the benefit of enhanced interest income. The Group has also benefited from the efficiencies that we implemented in the business in 2017 and into 2018, including the rationalisation of our office network to three sites.

 

We have achieved an improved adjusted profit margin of 26.2% (2017: 24.7%) for the first 6 months of this year and we are on track to deliver further improvements to the operating margin in the second half of this year.

 

Our products and sales strategy

 

The growth in the overall SIPP market continues to be strong, with SIPPs the product of choice for pension transfers. We are keen to maximize our share of this market and a key focus for us is the launch of our new SIPP proposition for the Group, backed by an enhanced sales team.

 

We have focused our new SIPP proposition on "mid and full SIPP" products, sold by regulated financial advisers. These are SIPPs backed by a high quality personal service, allowing customers full flexibility on investment choice and benefit options. Fund sizes tend to be larger and the target customer tends to be higher net worth and wanting a superior quality product. Fee levels are higher and this strategy plays to our strengths as experienced providers of service-driven products. The new product will be launched by the end of this year on our Navision Platform and we are confident that it will significantly increase our organic growth levels. In the interim we are closing some legacy and low fee products in order to focus our attention on our target market.

 

We have seen good levels of new business in our target market over the first half of the year, evidencing our focus on this sector. Levels of new SIPPs are down on last year due to a number of industry wide factors. Across the industry there has been a widely acknowledged slowdown in new pension transfers largely considered to be caused by the wider economic uncertainty. More specifically we have seen some advisers retrench from the pension transfer sector where elements of their business were exposed to defined benefit transfers as well as increased regulatory scrutiny of all regulated transfer activities. 

 

The new proposition as highlighted above will be supported by our new Group sales team structure.  We have a target of seven Business Development Managers (BDMs) to be in place across the Group by the end of this year and have already hired four, with a National Sales Manager recently appointed as part of this initiative. In addition, we already have in place a number of Key Account Directors and a sales support network. This represents a significant enhancement to our previous sales functions and all current new recruits bring with them a wealth of industry experience. 

 

The new SIPP proposition, supported by the enhanced sales structure, will be an exciting catalyst to our organic business growth and is on track for delivery in Q4. We are confident that, whilst our investment into this proposition will increase our cost base, it will begin to deliver good results in 2019 and beyond and enhance our position as the leading dedicated SIPP provider.

 

We have also progressed with the development of enhanced property services to provide an in-house capability to those customers with SIPPs invested in our portfolio of over 6,000 commercial properties, who currently contract with third parties for legal, management, inspection and valuation services.  Our legal services company, Rivergate Legal Limited, was authorised by the Solicitors' Regulatory Authority in May of this year, followed more recently by Templemead Property Solutions Limited receiving approval from the Royal Institute of Chartered Surveyors. Both will contribute to operating revenue in the second half of this year.

 

 

SIPP Numbers

 

At the period end the number of SIPPs administered increased to 77,552. 3,512 own new SIPPs were added and attrition rates on own SIPPs remained in line from previous years. More detail is set out in the table below.

 

 

Full SIPPs

Mid SIPPs

eSIPPs

Total own SIPPs

Third Party Administered

Total

As at 30 June 2018

20,281

25,597

23,157

69,035

8,517

77,552

As at 31 December 2017

20,539

24,682

22,193

67,414

9,060

76,474

Annualised gross organic growth rate*

3.60%

13.26%

13.56%

10.42%

0.77%

9.28%

SIPPs added organically

370

1,637

1,505

3,512

35

3,547

SIPPs lost through attrition

-628

-722

-541

-1,891

-578

-2,469

Annualised attrition rate*

6.12%

5.85%

4.88%

5.61%

12.76%

6.46%

 

 

*Growth and attrition percentage rates are annualised and are based on the 6 months' worth of SIPPs added organically or lost through attrition to 30 June 2018.

Growth rates in the "mid and full SIPP" remain strong although lower than in previous periods. We expect this to continue during the transitional period until we launch our new product when the revised features and enlarged sales team will help to counter the industry wide challenges described above. We are nevertheless very pleased to be maintaining our overall financial performance during this period.

The impact of attrition rates on Third Party Administered SIPPs is ameliorated as a large proportion of these fees are fixed or guaranteed minimums.

We are grateful to our professional introducers for their continued support.

Acquisitions

 

As one of the UK's leading SIPP providers we are well positioned to continue our role as a consolidator in the SIPP market and inorganic growth is an important strand of our strategy.  As part of our capital management, we have available cash funds of approximately £9 million to help fund future acquisitions.  

 

We will continue to deploy a disciplined approach to acquisitions and consider each opportunity from both an earnings per share and return on investment perspective.  We have a strategy in place and are pursuing a number of opportunities. Acquisitions of SIPP businesses are becoming a more competitive process, but we continue to believe that attractive opportunities still exist and we remain the most experienced acquirer in the market place. 

 

Regulation

 

Our simple model of working with regulated financial advisers means that the Group is not subject to some of the increasing regulatory scrutiny that faces a number of the market participants in the wider pensions and wealth management industry.  Regulatory scrutiny of the SIPP market continues, but our business model, whereby we do not give any advice or provide the investments held within the SIPPs, positions us well within the complex regulatory environment facing the wider industry.

 

A recent area of media focus is on the underlying nature of some assets held within SIPPs and whether the assets are standard or non-standard, i.e. illiquid. This is largely a legacy issue for the industry, related to the acceptance of non-standard assets, and the Group has and continues to undertake robust due diligence on non-standard investments.

 

Other areas of regulatory and media focus are transfers from defined benefit schemes, and acceptance of business from unregulated introducers. The Group does not transact with unregulated introducers and monitors the quality of any defined benefit transfer business accepted, requiring a positive recommendation to transfer from a regulated adviser.

 

In-specie contributions and associated tax relief is an issue that HMRC is looking at closely and the outcome and impact on the industry are not known at this stage. We do not believe however that the net exposure arising from this will be material to the Group.

 

During the period we have successfully implemented a GDPR framework throughout the Group.

 

IT strategy

 

As announced in our last full year results, we have decided to materially upgrade our existing back office operating systems, our front end portal and to unify the Group with a single web presence. This will ensure that they are appropriate for the enlarged Group as we continue to grow and meet the needs of our customers. 

 

We have decided to reprioritise the front end portal and website work streams ahead of the work to upgrade the back office systems. A key factor in making this decision to reprioritise the work streams is that it enables us to maintain an implementation plan that is robust and delivers key customer enhancements linked to the launch of our new proposition. Our systems are stable, our IT strategy focuses on enhancing functionality and delivering operating line margin improvement, and this reprioritisation does not impact the timetable or overall anticipated costs and benefits of our IT Strategy.

 

People and culture

Our office rationalisation has resulted in a small decrease in the number of employees, but we anticipate employee numbers increasing over the next 12 months to match the continued growth of the business.  We value our people and the positive contribution they make to our culture and the performance of our business and have extended our long term incentive plan for key staff as one aspect of incentivising them and aligning their interest with shareholders.  

During the period we have recruited a new National Sales Manager, who has been tasked with helping to implement the new sales team structure that I outlined above. In addition, Jane Ridgley has been appointed as Chief Operating Officer for the whole Group.

I am extremely proud of the incredible contribution made by all our employees and thank them for their loyalty to the Group. 

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.

As this is my last formal statement as Chief Executive Officer, I would like to take the opportunity to thank everyone who has taken part in making Curtis Banks the success it is today and welcome Will Self to the role from the beginning of 2019. I am also pleased that Jane Ridgley will be joining the Board.

 

I am very proud of what we have achieved at Curtis Banks since we founded the business in 2009 and it has been a great privilege to have led and worked with such a capable team of people through such a successful period. I look forward to continuing to work with them in my new role in the business.

 

My thanks go to our Board, the senior management and everyone in Curtis Banks for making these achievements possible. I would also like to thank our shareholders for their support since we listed the Group in 2015.

 

The Group is well positioned for the considerable opportunities that lie ahead and I am confident that, under Will Self's leadership, Curtis Banks will continue to go from strength to strength.

 

 

Rupert Curtis

Chief Executive Officer

5 September 2018

 

 

 

 

Financial Review

Operational revenues of £23m in the six months ended 30 June 2018 have increased by 7.5% over the comparable period.

 

Fee revenue remains the predominant source of income for the Group with a strong emphasis on recurring annual fee income. In the six months ended 30 June 2018 annual fees represented 77% of the total income and 84% of this fee income is recurring.  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 recurring fee income of the Group is not directly affected by movements in financial markets.

 

Staff costs for the period totalled £10.9m compared to £10.4m for the six month period ended 30 June 2017.  Staff costs have increased partly due to annual pay reviews related to average earnings increases. In addition, the continued operation of the Executive Bonus Scheme and Long Term Incentive Plan (LTIP) for key members of staff, introduced in June 2017, has resulted in a H1 2018 impact of £568k compared to £nil in H1 2017. A further offering of the Save as You Earn option schemes for all staff members has also led to an increase in staff costs over the comparable period last year.  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.

 

Overall staff numbers have reduced to 567 as at 30 June 2018 compared to 597 as at 31 December 2017, the fall arising largely from the closure of the Market Harborough office in January 2018. This has resulted in a significant reduction in staff costs which, together with savings from internal staff restructuring, has helped to partly offset the increases noted above.

 

Staff costs in H2 2018 are likely to increase as we invest for the future with the enhancement of the Group sales team structure as set out in the operational review.

 

Integration Activities

 

A review of costs across the Group is continuing 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 continue our progress in improving the adjusted profit margin to our target run-rate of 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 customers and introducers of business. A number of these enhancements have already been actioned and the adjusted operating profit margin for the six months ended 30 June 2018 increased to 26.2% from 24.7% in the comparable period last year.

 

Financial Position

 

The statement of Financial Position as at 30 June 2018 shows a strong position with shareholder net assets increasing from £44.6m at 31 December 2017 to £46.2m as at 30 June 2018.

 

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 continue to be covered. As at the 30 June 2018 the Group had net shareholder cash (after debt) of £5.9m (2017: £3.6m).

 

 

Cash flows

 

Shareholder cash balances at period end were £21.9m compared to £22.8m at the end of the previous period to 30 June 2017. After regulatory capital requirements are taken into account at period end there were free shareholder cash balances of approximately £9m available.

 

The first half of the financial year has been cash depletive due to payments of the final dividend of £2.6m in May 2018, payment of redundancy and associated costs in January 2018 of £500k relating to the closure of the Market Harborough office, further loans of £500k to the Group Employee Benefit Trust and additional bonus payments in March 2018 of £500k above the level of those paid in 2017. Other than the payment of an interim dividend in November 2018, and any further loans to the employee benefit trust, none of these cash flows will recur in the second half of the year.

 

 

Suffolk Life Annuities Limited

 

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 Customer related assets and liabilities in Suffolk Life Annuities Limited 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 30 June 2018 showing the financial position of the Group excluding the policy holder assets and liabilities is included as supplementary information after the notes to the financial statements. An illustrative cash flow on the same basis has also been provided.

 

Non-recurring costs

 

Non-recurring costs for the six months ended 30 June 2018 of £0.4m comprise principally internal restructuring costs and further costs following acquisitions of businesses in prior years.

 

 

Systems Development

 

As previously noted, after a full review of our IT Infrastructure, the decision has been taken to upgrade the existing back office systems at Curtis Banks whilst also investing in new front end customer portals.

 

Costs associated with these upgrades will be capitalised and amortised in accordance with our normal accounting policy. Amortisation will commence once the upgrades are completed and fully operational.

 

 

Employee Benefit Trust

 

The Group operates an independent Employee Benefit Trust ("EBT") administered by Saffery Champness Registered Fiduciaries 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. During the period the Group lent a further £500,000 to the EBT to enable further acquisitions of shares to be made. As at 30 June 2018 the EBT held 274,275 shares in Curtis Banks Group plc funded by a total of £750,000 of loans 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. During the period 3,313 of the shares in the Company held by the EBT were used to satisfy share options exercised.

 

Earnings per Share

 

Fully diluted Earnings per Share ("EPS") based on adjusted profits after tax have increased by 16% in the six months ended 30 June 2018 from 7.18p for the six months ended 30 June 2017 to 8.33p. Based on the profit after tax the fully diluted EPS shows a 21% increase in the same period from 5.84p to 7.05p. With the historic granting of options, and further grants in the six months ended 30 June 2018, 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 30 June 2018 the total regulatory capital requirement across the Group was £12m and the Group had an aggregate surplus of £8.6m 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 £4.3m. The Group is currently assessing the impact of IFRS 16 (accounting for leases) on the regulatory capital requirement of the Group. This accounting standard becomes effective from 1 January 2019. All the regulated firms within the Group maintained surplus regulated capital throughout the period.  The two principal trading subsidiaries of the Group are regulated by the FCA and the capital adequacy rules of that organisation do not allow current year profits to contribute towards solvency requirements until such profits are audited or externally verified.

 

Paul Tarran

Chief Financial Officer

5 September 2018

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of comprehensive income

 

 

 

Unaudited 6 month period ended 30 June 2018

 

Unaudited 6 month period ended 30 June 2017

 

Audited year ended 31 December 2017

 

 

 

Before amortisation and non-recurring costs

Amortisation and non-recurring costs

Total

 

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

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

 

22,960

-

22,960

 

21,362

-

21,362

 

43,573

-

43,573

Policyholder investment returns

 

115,017

-

115,017

 

179,262

-

179,262

 

343,009

-

343,009

Revenue

 

 

137,977

-

137,977

 

200,624

 

200,624

 

386,582

-

386,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative expenses

 

 

(16,940)

-

(16,940)

 

(16,090)

-

(16,090)

 

(32,336)

-

(32,336)

Non-participating investment contract expenses

 

(17,299)

 

-

 

(17,299)

 

 

(17,872)

 

-

 

(17,872)

 

 

(34,560)

 

-

 

(34,560)

 

Changes in provisions: Non-participating investment contract liabilities

 

(97,718)

 

-

 

(97,718)

 

 

(161,390)

 

-

 

(161,390)

 

 

(308,449)

 

-

 

(308,449)

 

Policyholder total expenses

 

 

(115,017)

-

(115,017)

 

(179,262)

-

(179,262)

 

(343,009)

-

(343,009)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit before amortisation and non-recurring costs

 

6,020

-

6,020

 

5,272

-

5,272

 

11,237

-

11,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring costs

 

3

-

(357)

(357)

 

-

(364)

(364)

 

-

(3,754)

(3,754)

Amortisation and impairment

 

 

-

(706)

(706)

 

-

(561)

(561)

 

-

(1,131)

(1,131)

Operating profit         

 

 

6,020

(1,063)

4,957

 

5,272

(925)

4,347

 

11,237

(4,885)

6,352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

49

-

49

 

32

-

32

 

67

-

67

Finance costs

 

 

(228)

-

(228)

 

(298)

-

(298)

 

(562)

-

(562)

Profit before tax

 

 

5,841

(1,063)

4,778

 

5,006

(925)

4,081

 

10,742

(4,885)

5,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax

 

 

(972)

202

(770)

 

(985)

178

(807)

 

(1,565)

940

(625)

Total comprehensive income for the period

 

4,869

(861)

4,008

 

4,021

(747)

3,274

 

9,177

(3,945)

5,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of the company

 

 

 

 

4,004

 

 

 

3,269

 

 

 

5,222

Non-controlling interests

 

 

 

 

4

 

 

 

5

 

 

 

10

 

 

 

 

 

4,008

 

 

 

3,274

 

 

 

5,232

Earnings per ordinary share on net profit

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (pence)

 

4

 

 

7.46

 

 

 

6.10

 

 

 

9.75

Diluted (pence)

 

4

 

 

7.05

 

 

 

5.84

 

 

 

9.26

 

 

 

                             Condensed 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 January 2017 - audited

268

 

33,425

 

239

 

-

 

7,589

 

41,521

 

9

 

41,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income for the period

-

 

-

 

-

 

-

 

3,269

 

3,269

 

5

 

3,274

Share based payments

-

 

-

 

127

 

-

 

-

 

127

 

-

 

127

Ordinary shares bought by EBT

-

 

-

 

-

 

(250)

 

-

 

(250)

 

-

 

(250)

Ordinary dividends paid

-

 

-

 

-

 

-

 

(1,605)

 

(1,605)

 

(5)

 

(1,610)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 30 June 2017 - unaudited

268

 

33,425

 

366

 

(250)

 

9,253

 

43,062

 

9

 

43,071

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income for the period

-

 

-

 

-

 

-

 

1,953

 

1,953

 

5

 

1,958

Share based payments

-

 

-

 

365

 

-

 

-

 

365

 

-

 

365

Ordinary shares issued

1

 

26

 

-

 

-

 

-

 

27

 

-

 

27

Ordinary dividends paid

-

 

-

 

-

 

-

 

(803)

 

(803)

 

-

 

(803)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2017 - audited

269

 

33,451

 

731

 

(250)

 

10,403

 

44,604

 

14

 

44,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income for the period

-

 

-

 

-

 

-

 

4,004

 

4,004

 

4

 

4,008

Share based payments

-

 

-

 

215

 

-

 

-

 

215

 

-

 

215

Deferred tax on share based payments

-

 

-

 

-

 

-

 

395

 

395

 

-

 

395

Ordinary shares bought and sold by EBT

-

 

-

 

-

 

(498)

 

-

 

(498)

 

-

 

(498)

Ordinary dividends paid

-

 

-

 

-

 

-

 

(2,551)

 

(2,551)

 

(6)

 

(2,557)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 30 June 2018 - unaudited

269

 

33,451

 

946

 

(748)

 

12,251

 

46,169

 

12

 

46,181

                        

Condensed consolidated statement of financial position

 

 

 

Notes

 

Unaudited

30-Jun-18

£'000

 

Unaudited

30-Jun-17

£'000

 

Audited

31-Dec-17

£'000

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

5

 

43,910

 

46,937

 

44,593

Investment property

 

 

 

 

1,259,400

 

1,181,385

 

1,206,298

Property, plant and equipment

 

 

 

 

1,130

 

1,079

 

1,148

Investments

 

 

 

 

2,002,611

 

1,987,136

 

2,032,293

Deferred tax asset

 

 

 

 

648

 

-

 

124

 

 

 

 

 

3,307,699

 

3,216,537

 

3,284,456

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

 

 

19,879

 

17,382

 

16,687

Cash and cash equivalents

 

 

 

 

427,256

 

428,617

 

437,849

Current tax asset

 

 

 

 

17

 

-

 

310

 

 

 

 

 

447,152

 

445,999

 

454,846

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

3,754,851

 

3,662,536

 

3,739,302

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

13,103

 

13,606

 

12,658

Deferred income

 

 

 

 

18,600

 

10,810

 

24,374

Borrowings

 

 

 

 

30,597

 

25,183

 

29,444

Provisions

 

 

 

 

150

 

-

 

641

Deferred consideration

 

 

 

 

341

 

384

 

341

Current tax liability

 

 

 

 

-

 

785

 

-

 

 

 

 

 

62,791

 

50,768

 

67,458

Non-current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

 

58,800

 

70,668

 

64,584

Provisions

 

 

 

 

102

 

-

 

259

Deferred consideration

 

 

 

 

261

 

626

 

454

Non-participating investment contract liabilities

 

 

3,586,716

 

3,497,359

 

3,561,929

Deferred tax liability

 

 

 

 

-

 

44

 

-

 

 

 

 

 

3,645,879

 

3,568,697

 

3,627,226

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

3,708,670

 

3,619,465

 

3,694,684

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

46,181

 

43,071

 

44,618

 

 

 

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

 

 

Issued capital

 

 

 

 

269

 

268

 

269

Share premium

 

 

 

 

33,451

 

33,425

 

33,451

Equity share based payments

 

 

 

 

946

 

366

 

731

Treasury shares

 

 

 

 

(748)

 

(250)

 

(250)

Retained earnings

 

 

 

 

12,251

 

9,253

 

10,403

 

 

 

46,169

 

43,062

 

44,604

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

 

12

 

9

 

14

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

 

46,181

 

43,071

 

44,618

 

 

Approved by the Board and authorised for issue on 5 September 2018

Paul Tarran

Chief Financial Officer

                             

 

                             

Condensed consolidated statement of cash flows

 

 

 

Unaudited 6 month period ended

30-Jun-18

£'000

 

Unaudited 6 month period ended

30-Jun-17

£'000

 

Audited year ended

31-Dec-17

£'000

Cash flows from operating activities

 

 

 

 

 

 

 

Profit before tax

 

 

4,778

 

4,081

 

5,857

Adjustments for:

 

 

 

 

 

 

 

Depreciation

 

 

300

 

286

 

570

Amortisation and impairments

 

 

706

 

561

 

3,126

Interest expense

 

 

226

 

293

 

554

Share based payment expense

 

 

215

 

129

 

492

Fair value gains on financial investments

 

 

(24,728)

 

(82,770)

 

(156,046)

Additions of financial investments

 

(246,430)

 

(256,994)

 

(493,638)

Disposals of financial investments

 

300,841

 

277,540

 

542,304

Fair value gains on investment properties

 

 

(34,015)

 

(20,913)

 

(44,074)

Increase in liability for investment  contracts

 

24,792

 

102,955

 

167,525

Changes in working capital:

 

 

 

 

 

 

 

Decrease/(increase) in trade and other receivables

 

(3,367)

 

69

 

(433)

Increase/(decrease) in trade and other payables

(5,794)

 

(9,915)

 

4,193

Taxes paid

 

 

(625)

 

(524)

 

(999)

 

 

 

 

 

 

 

 

Net cash flows from operating activities

 

16,899

 

14,798

 

29,431

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchase of intangible assets

 

 

(23)

 

(56)

 

(277)

Purchase of property, plant & equipment

(77,768)

 

(71,346)

 

(161,923)

Receipts from sale of property, plant & equipment

58,401

 

59,717

 

148,191

Purchase of treasury shares

 

(498)

 

(250)

 

(250)

Net cash flows from acquisitions

 

(193)

 

(452)

 

(669)

 

 

 

 

 

 

 

 

Net cash flows from investing activities

 

(20,081)

 

(12,387)

 

(14,928)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Equity dividends paid

(2,557)

 

(1,610)

 

(2,413)

Net proceeds from issue of ordinary shares

-

 

-

 

27

Net decrease in borrowings

(4,651)

 

(19,427)

 

(21,274)

Interest paid

(203)

 

(267)

 

(504)

 

 

 

 

 

 

Net cash flows from financing activities

(7,411)

 

(21,304)

 

(24,164)

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

(10,593)

 

(18,893)

 

(9,661)

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

437,849

 

447,510

 

447,510

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the period

427,256

 

428,617

 

437,849

                 

 

 

Notes to the financial statements

 

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 interim condensed consolidated financial statements comprise the Company and its subsidiaries ("the Group") and have been prepared under the historical cost convention as modified by the revaluation of land and buildings, derivatives, financial assets and liabilities at fair value through profit and loss. The interim condensed consolidated financial statements have been presented in pounds sterling, with all values rounded to the nearest thousand pounds except when otherwise indicated, and were authorised for issue in accordance with a resolution of the directors on 5 September 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.

2               Basis of preparation and accounting policies

2.1            Basis of preparation

The interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting except for certain requirements in relation to financial instrument disclosure.  The board has considered the requirements of IAS 34 in relation to policyholder assets and liabilities and, given the unit-linked nature of these assets and liabilities, has concluded that revaluing policyholder financial instruments for the purposes of these interim financial statements would incur expense which is disproportionate to any potential benefits of doing so. Further, the board considers that the omission of updated valuations for policyholder financial instruments will not influence the economic decisions of users of these financial statements.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's financial statements for the year ended 31 December 2017, which were prepared in accordance with International Financial Reporting Standards adopted by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") of the IASB (together "IFRS") as adopted by the European Union, and in accordance with the requirements of The Companies Act 2006 applicable to companies reporting under IFRS.

The information relating to the six months ended 30 June 2018 and the six months ended 30 June 2017 is unaudited and does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2017 have been reported on by its auditor and delivered to the Registrar of Companies. The report of the auditor was unmodified and did not contain a statement under section 498(2) or (3) of The Companies Act 2006.

The interim condensed consolidated financial statements have been reviewed by the auditor and their report to the Board of Curtis Banks Group PLC is included within this interim report.

 

 

2               Basis of preparation and accounting policies - continued

2.2            Basis of consolidation

The interim condensed consolidated financial statements consolidate the financial statements of the Company and its subsidiaries up to 30 June each year.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.  The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.  All inter-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

The trading subsidiaries of Curtis Banks Group PLC as at 30 June 2018 were Curtis Banks Limited, Curtis Banks Investment Management Limited, Suffolk Life Annuities Limited, Suffolk Life Pensions Limited, Rivergate Legal Limited and Templemead Property Solutions Limited. The trading subsidiaries of Curtis Banks Group PLC as at 30 June 2017 were Curtis Banks Limited, Curtis Banks Investment Management Limited, Suffolk Life Annuities Limited and Suffolk Life Pensions Limited.

Certain trading subsidiaries of Curtis Banks Group PLC hold the entire issued share capital of a number of non-trading trustee companies. All of these companies are nominee companies for the pension products administered by the trading subsidiaries of Curtis Banks Group PLC and have been dormant or non-trading throughout the period and are expected to remain dormant or non-trading.

2.3            Significant accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2017 other than the adoption of the provisions IFRS9 in reviewing impairment on receivables.

New standards issued but not yet effective

The IASB and IFRIC have issued standards and interpretations with an effective date for periods starting on or after the date on which these financial statements start.  Except for IFRS 16 (accounting for leases) no other newly issued standards are expected to potentially have a material impact on the condensed consolidated interim financial statements and the consolidated financial statements to the Group. The potential impact of IFRS 16 is currently being evaluated.

Financial statements for the year ending 31 December 2018

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements will be consistent with those to be followed in the preparation of the Group's annual financial statements for the year ending 31 December 2018.

 

 

2               Basis of preparation and accounting policies - continued

2.4            Critical accounting judgements and key sources of estimation uncertainty        

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In preparing the financial statements the Group has selected and applied various accounting policies which are described in the notes to the financial statements. In order to apply these accounting policies the Group has made estimates and judgements concerning the future. Key areas of judgement and estimation uncertainty are disclosed below: 

Customer portfolios

Customer portfolios acquired are amortised over their estimated useful economic life (UEL) of 20 years.  This UEL is based upon Management's historical experience of similar portfolios.

Additionally, the Group reviews whether acquired customer portfolios are impaired at least on an annual basis. This comprises an estimation of future cash flows expected to arise from each customer portfolio, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset, together with an estimated rate of attrition for each portfolio. The estimation of future cash flows is derived by taking the current earnings before tax, interest, depreciation and amortisation ("EBITDA") margin of the relevant operating subsidiary and applying this against forecast revenue from the relevant customer portfolio.

Computer software

In capitalising the costs of computer software as intangible assets management judge these costs to have an economic value that will extend into the future and meet the recognition criteria under IAS 38. Computer software costs are then amortised over an estimated UEL on a project by project basis.

Additionally, the Group determines whether computer software is impaired at least on an annual basis. This requires an estimation of the value in use. In assessing value in use the estimated future cash flows expected to arise from the software are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset.

 

3               Non- recurring costs

Non-recurring costs comprise the following items:

 

 

Unaudited 6 month period ended

30-Jun-18

£'000

 

Unaudited 6 month period ended

30-Jun-17

£'000

 

Audited year ended 31-Dec-17

£'000

 

 

 

 

 

 

 

Set up costs associated with the take on of SIPPs

 

-

 

20

 

20

Exceptional legal fees

 

-

 

5

 

67

Redundancy & restructuring costs following acquisitions

308

 

95

 

1,143

Suffolk Life acquisition costs

 

-

 

46

 

72

European Pensions Management acquisition costs

 

49

 

198

 

328

Exceptional impairment charge

 

-

 

-

 

2,124

 

 

 

 

 

 

 

 

 

357

 

364

 

3,754

 

Redundancy & restructuring costs following acquisitions

During the six month period ended 30 June 2018, the Group restructured its sales team and reduced overlapping operational management.

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 Company 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.

European Pensions Management acquisition costs

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

 

4               Earnings per ordinary share

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

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 period 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:

 

Unaudited 6 month period ended

30-Jun-18

£'000

 

Unaudited 6 month period ended

30-Jun-17

£'000

 

Audited year ended 31-Dec-17

£'000

 

 

 

 

 

 

Net profit  available

to equity holders of the Group

4,004

 

3,269

 

5,222

Net profit before non-recurring costs and amortisation available to equity holders of the Group

5,841

 

5,006

 

10,742

 

 

 

 

 

 

 

Number

 

Number

 

Number

Weighted average number of ordinary shares:

 

 

 

 

 

Issued ordinary shares at start of period

53,807,346

 

53,599,769

 

53,599,669

Effect of shares held by Employee Benefit Trust

(130,869)

 

(99,155)

 

(78,941)

Effect of shares issued in current period

-

 

-

 

25,127

Basic weighted average number of shares

53,676,477

 

53,500,614

 

53,545,855

 

 

 

 

 

 

Effect of options exercisable at the reporting date

971,616

 

800,000

 

800,000

Effect of options not yet exercisable at the reporting date

2,133,896

 

1,666,350

 

2,044,484

 

 

 

 

 

 

Diluted weighted average number of shares

56,781,989

 

55,966,964

 

56,390,339

 

 

 

 

 

 

 

Pence

 

Pence

 

Pence

Earnings per share:

 

 

 

 

 

 

Basic

7.46

 

6.10

 

9.75

Diluted

7.05

 

5.84

 

9.26

 

 

 

 

 

 

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

 

 

 

 

 

 

Basic

8.81

 

7.49

 

16.20

Diluted

8.33

 

7.18

 

15.38

 

 

*The effective tax rate used is the current tax rate applicable to the accounting year. The current tax rate applicable for the year ending 31 December 2018 is 19.00% (2017: 19.25%).

5               Intangible assets

 

 

Goodwill

£'000

 

 

Customer portfolios

£'000

 

Computer software

£'000

 

 

Total

£'000

Cost

 

 

 

 

 

 

 

At 1 January 2017

28,903

 

18,430

 

3,116

 

50,449

Additions

-

 

4

 

52

 

56

 

 

 

 

 

 

 

 

At 30 June 2017

28,903

 

18,434

 

3,168

 

50,505

Additions

-

 

1

 

220

 

221

Disposals

-

 

(2)

 

(1,993)

 

(1,995)

 

 

 

 

 

 

 

 

At 31 December 2017

28,903

 

18,433

 

1,395

 

48,731

Additions

-

 

-

 

23

 

23

 

 

 

 

 

 

 

 

At 30 June 2018

28,903

 

18,433

 

1,418

 

48,754

 

 

 

 

 

 

 

 

Amortisation and impairments

 

 

 

 

 

 

 

At 1 January 2017

-

 

2,533

 

474

 

3,007

Charge for the period

-

 

460

 

101

 

561

 

 

 

 

 

 

 

 

At 30 June 2017

-

 

2,993

 

575

 

3,568

Charge for the period

-

 

462

 

108

 

570

 

 

 

 

 

 

 

 

At 31 December 2017

-

 

3,455

 

683

 

4,138

Charge for the period

-

 

462

 

244

 

706

 

 

 

 

 

 

 

 

At 30 June 2018

-

 

3,917

 

927

 

4,844

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

At 31 December 2016

28,903

 

15,897

 

2,642

 

47,442

At 30 June 2017

28,903

 

15,441

 

2,593

 

46,937

At 31 December 2017

28,903

 

14,978

 

712

 

44,593

At 30 June 2018

28,903

 

14,516

 

491

 

43,910

 

 

 

6               Dividends paid

 

Unaudited 6 month period ended

30-Jun-18

£'000

 

Unaudited 6 month period ended

30-Jun-17

£'000

 

Audited year ended 31-Dec-17

£'000

 

 

 

 

 

 

Ordinary dividends paid

2,551

 

1,605

 

2,408

 

 

 

 

 

 

 

2,551

 

1,605

 

2,408

 

 

 

 

 

 

 

A second interim dividend of 3p per ordinary share in respect of the year ended 31 December 2016 was paid on 12 May 2017.

An interim s dividend of 1.5p per ordinary share in respect of the year ended 31 December 2017 was paid on 15 November 2017.

A final share dividend of 4.75p per ordinary share in respect of the year ended 31 December 2017 paid on 18 May 2018.

7               Income tax

Tax is charged at 19.00% for the six months ended 30 June 2018 (30 June 2017: 19.25%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income of the six month period.

Current tax for current and prior periods is classified as a current liability to the extent that it is unpaid. Any amounts paid in excess of amounts owed are classified as a current asset.

 

8               Illustrative condensed consolidated statement of financial position as at 30 June 2018 split between insurance policy holders and the Group's shareholders

 

 

ASSETS

 

 

 

 

£'000

    

£'000

 

£'000

 

 

 

 

 

Group Total

 

Policyholder

 

Shareholder

Non-current assets

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

 

 

43,910

 

-

 

43,910

Investment property

 

 

 

 

1,259,400

 

1,259,359

 

41

Property, plant and equipment

 

 

 

 

1,130

 

-

 

1,130

Investments

 

 

 

 

2,002,611

 

2,002,611

 

-

Deferred tax asset

 

 

 

 

648

 

-

 

648

 

 

 

 

 

3,307,699

 

3,261,970

 

45,729

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

 

 

19,879

 

8,371

 

11,508

Cash and cash equivalents

 

 

 

 

427,256

 

405,327

 

21,929

Current tax asset

 

 

 

 

17

 

590

 

(573)

 

 

 

 

 

447,152

 

414,288

 

32,864

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

3,754,851

 

3,675,258

 

78,593

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

13,103

 

8,805

 

4,298

Deferred income

 

 

 

 

18,600

 

7,345

 

11,255

Borrowings

 

 

 

 

30,597

 

27,441

 

3,156

Provisions

 

 

 

 

150

 

-

 

150

Deferred consideration

 

 

 

 

341

 

-

 

341

 

 

 

 

 

62,791

 

43,591

 

19,200

Non-current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

 

58,800

 

45,951

 

12,849

Provisions

 

 

 

 

102

 

-

 

102

Deferred consideration

 

 

 

 

261

 

-

 

261

Non-participating investment contract liabilities

 

 

3,586,716

 

3,586,716

 

-

 

 

 

 

 

3,645,879

 

3,632,667

 

13,212

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

3,708,670

 

3,675,258

 

32,412

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

46,181

 

-

 

46,181

 

 

 

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

 

 

Issued capital

 

 

 

 

269

 

-

 

269

Share premium

 

 

 

 

33,451

 

-

 

33,451

Equity share based payments

 

 

 

 

946

 

-

 

946

Treasury shares

 

 

 

 

(748)

 

-

 

(748)

Retained earnings

 

 

 

 

12,251

 

-

 

12,251

 

 

 

46,169

 

-

 

46,169

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

 

12

 

-

 

12

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

 

46,181

 

-

 

46,181

 

 

 

 

9               Illustrative condensed consolidated statement of cash flows for the six month period ended 30 June 2018 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

 

 

4,778

 

-

 

4,778

Adjustments for:

 

 

 

 

 

 

 

Depreciation

 

 

300

 

-

 

300

Amortisation and impairments

 

 

706

 

-

 

706

Interest expense

 

 

226

 

-

 

226

Share based payment expense

 

 

215

 

-

 

215

Fair value gains on financial investments

 

 

(24,728)

 

(24,728)

 

-

Additions of financial investments

 

(246,430)

 

(246,430)

 

-

Disposals of financial investments

 

300,841

 

300,841

 

-

Fair value gains on investment properties

 

 

(34,015)

 

(34,015)

 

-

Increase in liability for investment  contracts

 

24,792

 

24,792

 

-

Changes in working capital:

 

 

 

 

 

 

 

Increase in trade and other receivables

 

(3,367)

 

(499)

 

(2,868)

Decrease in trade and other payables

(5,794)

 

(4,653)

 

(1,141)

Taxes paid

 

 

(625)

 

-

 

(625)

 

 

 

 

 

 

 

 

Net cash flows from operating activities

 

16,899

 

15,308

 

1,591

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchase of intangible assets

 

 

(23)

 

-

 

(23)

Purchase of property, plant & equipment

(77,768)

 

(77,486)

 

(282)

Receipts from sale of property, plant & equipment

58,401

 

58,401

 

-

Purchase of treasury shares

 

(498)

 

-

 

(498)

Net cash flows from acquisitions

 

(193)

 

-

 

(193)

 

 

 

 

 

 

 

 

Net cash flows from investing activities

 

(20,081)

 

(19,085)

 

(996)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Equity dividends paid

(2,557)

 

-

 

(2,557)

Net decrease in borrowings

(4,651)

 

(3,072)

 

(1,579)

Interest paid

(203)

 

-

 

(203)

 

 

 

 

 

 

Net cash flows from financing activities

(7,411)

 

(3,072)

 

(4,339)

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

(10,593)

 

(6,849)

 

(3,744)

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

437,849

 

412,176

 

25,673

 

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the period

427,256

 

405,327

 

21,929

                 

 

 


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