Regulatory Story
Go to market news section View chart   Print
RNS
Curtis Banks Group PLC   -  CBP   

Final Results

Released 07:00 20-Mar-2019

RNS Number : 3715T
Curtis Banks Group PLC
20 March 2019
 

 

Curtis Banks Group plc

("Curtis Banks", the "Company")

Final Results for 12 months to 31 December 2018

Strong financial and operating performance combined with margin enhancement

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 2018.

 

Highlights

 

·     Operating Revenue increased by 6% to £46.1m (2017: £43.6m)

 

·     Adjusted profit before tax increased by 13% to £12.1m (2017: £10.7m)

 

·     Adjusted operating margin2 increased to 27.1% (2017: 25.8%)

 

·     Profit before tax increased by 72% to £10.1m

 

·     Adjusted diluted EPS increased by 13% to 17.32p

 

·     Gross organic growth in own SIPP numbers of 9% with total administered now 77,739

 

·     Assets under administration increased by 0.4% to £24.8bn

 

·     Proposed final dividend of 6.00p (2017: 4.75p) making a full year payment of 8.00p (2017: 6.25p)

 

Highlights and key performance indicators for the year include:

 

 

2018

2017

 

Financial

 

 

 

Operating Revenue

£46.1m

£43.6m

 

Adjusted Profit before tax1

£12.1m

£10.7m

 

Profit before Tax

£10.1m

£5.9m

 

Adjusted Operating Margin2

27.1%

25.8%

 

Diluted EPS

14.45p

9.26p

 

Adjusted diluted EPS

17.32p

15.38p

 

 

 

 

 

Operational Highlights

 

 

 

 

Number of SIPPs Administered

77,739

76,474

 

Assets under Administration

£24.8bn

£24.7bn

 

Total organic new own SIPPs in year

5,838

8,719

 

Number of Properties Administered

6,231

6,031

 

 

 

1 Profit before tax, amortisation and non- recurring costs

2 The ratio of operating profit before net finance costs, amortisation and non-recurring costs to operating revenues

 

Commenting on the results, Will Self, CEO of Curtis Banks, said:

"In my first results as Chief Executive of the Group I am delighted to report another year of strong and profitable growth. The past year has seen the Company make significant investment to support further organic growth, building on the consolidation and integration prioritised over the last two years.  

We believe we are setting a high bar with the introduction of our new SIPP proposition. Coupled with our new distribution structure we are now well-placed to increase our organic growth of full and mid SIPPs over the next full reporting period. We are also well positioned to grow the business inorganically and are proactively exploring possible acquisitions.

In January our CFO Paul Tarran announced his decision to stand down from the Board. A process has begun to find his successor and Paul remains in his current role until this process is complete in order to ensure a smooth transition.

The SIPP market is undergoing an evolution and, as one of the UK's leading providers, we have entered 2019 in an extremely strong position and I am confident about our prospects for growth and our broadening capability to deliver enhanced services for our customers as well as our ability to deliver against our strategic objectives."

Analyst and Investor Presentation:

There will be a presentation on Wednesday 20th March 2019 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

 

For more information: 

Curtis Banks Group plc    

www.curtisbanks.co.uk

Will Self - Chief Executive Officer

+44 (0) 117 9107910

Paul Tarran - Chief Financial Officer

 

 

 

 

 

Peel Hunt LLP (Nominated Adviser & Broker)

+44 (0) 20 7418 8900

Guy Wiehahn

 

Rishi Shah

 

 

 

 

 

N+1 Singer

+44 (0) 20 7496 3000

Mark Taylor

 

Rachel Hayes

 

 

 

 

 

Camarco (Financial PR)

+44 (0) 20 3757 4984

Ed Gascoigne-Pees

 

Hazel Stevenson

 

Jane Glover

 

 

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 employs approximately 560 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 report the Curtis Banks Group final results for the year ended 31 December 2018. These results show solid growth in all financial KPI's over a transitional period in which we have made important operational developments.

I would like to start by thanking our former Chief Executive Officer Rupert Curtis for being instrumental in the evolution of the business over a number of years from founding the business to the successful IPO in 2015. I am delighted that he remains a strategic advisor to the business. I would also like to thank Paul Tarran following his announcement to step down by the end of the year. Paul has made an enormous contribution to the business over a number of years. The search for his successor has already begun.

Taking Rupert Curtis' place is our new Chief Executive Officer, Will Self. Will has been with the business since 2016 and with strong credentials, over 15 years' experience and a member of the Board since 2016, I believe he is very well positioned to lead the business through the next stage of its growth. I am also delighted that Jane Ridgley has now joined the Board. Jane is currently Chief Operating Officer for the Group and will continue in that role as an executive director of the Board.

The period under review has shown an increase in all key financial metrics. Operating revenue has increased by 6% from £43.6m to £46.1m compared to the same period last year, with adjusted profit before tax increasing by 13% from £10.7m to £12.1m. Adjusted operating margin increased to 27.1% (2017: 25.8%) and profit before tax increased 72% to £10.1m. Fully diluted earnings per share on these adjusted operating results (after tax) amounted to 17.32p per share (2017: 15.38p). It is extremely pleasing during this period of transition for the Group to be able to report both top line growth and margin improvement.

We have invested significantly in our products this year and launched 'Your Future SIPP' in February 2019. In a sense, this development is the culmination of the Suffolk Life integration, as the product combines the best features of both companies' services into one industry leading proposition. We have also invested in our sales team and digital portals throughout the year and I am confident that these enhancements, combined with our expansion into UK's commercial property market, will lead to greater top-line growth.

The total number of SIPPs currently administered by the Group now exceeds 77,000. This is 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 2.00p per share (2017: 1.50p per share) on 15 November 2018 and the Board proposes a final dividend of 6.00p per share (2017: 4.75p per share) which, if approved, will be paid to shareholders on the register at the close of business on 26 April 2019.  The shares will be marked ex-dividend on 25 April 2019 and the proposed dividend paid on 23 May 2019.  This will mean the total dividend paid in respect of the year ended 31 December 2018 will amount to 8.00p per share (2017: 6.25p).

Summary and outlook

 

We are well positioned to grow the business and we continue to actively seek appropriate acquisition opportunities. Following a year of successfully implementing change within the Group, we have entered 2019 in a strong position for the year ahead. We continue to invest in the business to ensure we stay industry leaders and are in a strong position to grow revenues and maximise stakeholder value.

 

Chris Macdonald

Chairman

19 March 2019

 

 

 

Chief Executive's Review

 

Business Review

 

My first review as Chief Executive of the Group reports that 2018 has been another year of strong and profitable growth, building on the foundations of consolidation and integration prioritised over the last two years.  It goes without saying that I would like to thank my predecessor Rupert Curtis who, along with Chris Banks and Paul Tarran, founded the business and helped build the industry leading Group that we have today. Their vision and belief in the SIPP market has enabled the Group to remain at the top of our sector and created a platform for the next stage of our journey.

One of the founding principles of the Group was to deliver high quality service. The Group remains a customer centric organisation, and I would also like to thank our hugely valued staff members who deserve recognition for the many and varied achievements over the last 12 months. Their success in meeting the challenges we present to them plays a vital role in delivering the increasing expectations of our customers at the same time as we evolve our business. The SIPP market is experiencing rapid change, and it is the hard work and dedication of each and every member of the business that enables us to deliver these final results for the year ended 31 December 2018.

We have focussed on adjusted operated margin as one of our key performance indicators, and I am pleased to report that this has further increased to 27.1% (2017: 25.8%). We remain confident that a 30% adjusted operating margin is sustainable with our current model. Adjusted profit before tax increased 13% to £12.1m (2017: £10.7m) as a result of strong revenue growth and further operational alignment within the Group.

2018 was a year of transition for some elements of the Group. We completed the delivery of our new brand, consolidating under a single identity and completing a journey that began internally with our staff, offices and culture. This has delivered a platform from which we can invest in and grow our market presence and reputation within our market. In April, we announced the appointment of Jane Ridgley to Chief Operating Officer of the Group. Jane brings a wealth of experience to the role, having previously held senior roles in Suffolk Life and Legal & General. She is a member of the Group Executive Committee and, as of January 2019, a member of the Board. Her extensive footprint within the company continues to drive cohesiveness within the Group's core operational teams and will engender enhanced collaboration.

In other areas of the Group we focussed on five key deliverables to provide the foundation required for us to deliver the next stage of our journey:

New single SIPP proposition - We have successfully launched our new SIPP product 'Your Future SIPP' which replaces the current range of products with a combined product offering the best features of the Curtis Banks and Suffolk Life SIPPs. It capitalises on our new brand, with a clear single market presence for our customers, and its enhanced digital functionality and customer focused service model is more efficient and appealing for both advisers and their clients.

New national sales function - Distributing 'Your Future SIPP' is our fully resourced, significantly enhanced sales team, headed by our Group Sales Director, Dave Stratton, a National Sales Manager and a team of seven Business Development Managers. Dedicated sales resource is also focussed on key adviser networks and investment partners to capitalise on other distribution channels.

Expanded commercial property expertise - We also have expanded further into the UK's commercial property market with the launch of two new companies. Rivergate Legal Limited offers a range of legal services to SIPP, SSAS and open market customers relating to commercial property transactions; and Templemead Property Solutions Limited provides valuation services and negotiates other professional services on behalf of Curtis Banks Group clients.

 

GDPR - During the period we also successfully implemented a GDPR framework throughout the Group without material financial or operational impact. As a Group we interact with a large number of external parties and I am pleased that this has been completed effectually.

 

IT Strategy - We continue to progress with the work to simplify our IT Infrastructure, as previously outlined. We launched our new website and secure portal, marking a material shift in and de-risking of our digital infrastructure. We now continue to explore the best routes to further exploit this investment.

 

Having successfully navigated a period in which we delivered both transitional and structural growth, we are well positioned to continue to grow the business and deliver against our strategic objectives.

 

Sales Growth

 

At the year end the number of SIPPs administered increased to 77,739 with 5,838 gross new own SIPPs added organically. Our two core areas of strategic focus, the Full SIPP and Mid SIPP both saw encouraging levels of new gross organic growth. Attrition rates on own SIPPs remain stable at 6.07%. The table below sets out more detail on SIPPs numbers and rates of attrition. 

 

Full SIPPs

Mid SIPPs

eSIPPs

Total own SIPPs

Third Party Administered

Total

2018 number

20,450

26,354

22,935

69,739

8,000

77,739

2017 number

20,539

24,682

22,193

67,414

9,060

76,474

Gross organic growth rate*

3.14%

12.43%

9.58%

8.66%

0.73%

7.72%

SIPPs added organically

644

3,068

2,126

5,838

66

5,904

SIPPs added through acquisitions

-

578

-

578

-

578

Conversions and reclassifications

507

(507)

-

-

-

-

SIPPs lost through attrition

(1,240)

(1,467)

(1,384)

(4,091)

(1,126)

(5,217)

Attrition rate *

6.04%

5.94%

6.24%

6.07%

12.43%

6.82%

 

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

 

Our strategic focus remains on the Full and Mid SIPP market where our expertise, charging model and customer service focus are concentrated in 'Your Future SIPP'. The Full SIPP market is relatively mature, with historic restrictions on annual contributions and annual allowances meaning that gross flow predominantly comes from existing SIPP customers. Many of these clients seek to add Commercial Property as an asset class or wish to move their existing SIPP to a new provider. Mid SIPPs continue to be the product of choice for pension consolidation and the first step for many pension customers from default funds into investment selection, therefore contributing material gross flow.

 

There have been some well publicised challenges, from which no provider has been immune, which have led to lower gross sales across the industry. The Defined Benefits ('DB') transfer review has impacted all Professional Advisers, spanning both 'DB' and Defined Contribution pension transfer advice. Liabilities arising from SIPPs holding non-standard assets have reduced confidence in the SIPP market, and the general economic environment has reduced consumers' focus on pension savings. All of these factors have been felt across the industry but we believe that our robust financial strength, quality of administration and our new proposition puts us at the forefront of the sector.

 

In spite of the above the overall SIPP market opportunity remains strong, with SIPPs still benefitting from the introduction of the pension freedoms and favoured as a way of allowing individuals to have greater access, control and responsibility over their pension savings. SIPPs are now being considered by a much larger group of consumers than ever before and are no longer perceived as reserved solely for those with large pension fund values.

 

 

'Your Future SIPP' - our new SIPP proposition

 

'Your Future SIPP' was launched following detailed adviser research and combines the best of the Curtis Banks and Suffolk Life SIPPs into one of the industry's leading propositions. Your Future SIPP accesses a high quality customer-focussed service model with specialised teams across the Group, and is competitively priced, with no application fees for online applications coupled with a tiered annual administration fee.

 

A new online portal has been launched that directly supports 'Your Future SIPP'. This will deliver efficiencies for advisers, reducing the time spent on administration. Advisers and clients will benefit from more digital functionality than before and it is accessible from desktop computers, tablets and mobiles. Other features include market access to virtually any investment solution, easy management of cash and automated adviser charging.

'Your Future SIPP' benefits from our highly experienced commercial property team, now enhanced by the legal and property management solutions within the Group offered by Rivergate Legal and Templemead Property Solutions, adding experience and value to customers with property investments.

We are still in the very early stages of the new proposition but believe our new proposition is market leading with a suite of features, flexibility and attractive pricing. Coupled with our new distribution structure we are now well-placed to increase our organic growth of Full and Mid SIPPs.

 

Acquisitions

 

Investing to add high quality assets is a core component of our future growth strategy. In December 2018, we announced the completion of the purchase of wealth manager Hargreave Hale's book of SIPPs. This comprised 578 SIPPs invested in assets valued at c £180 million. This SIPP book represented a good fit for our business model and marked the tenth asset purchase by Curtis Banks since the company was founded in 2009.

We remain disciplined in our approach to acquisitions where we consider each opportunity from both an earnings per share and return on investment perspective. We are committed to exploring further opportunities to add scale and expand our offering to greater numbers of clients.

 

Industry context and regulation

 

Regulatory scrutiny continues in the pension market. Our business model means that we only work with regulated financial advisers and do not give any advice or provide the investments held within our SIPPs. In addition our fee structures remain fair and transparent.

The issue of non-standard investments has received increased media attention. Whilst we acknowledge that these issues are significant within the wider industry, and that some uncertainty still persists, we do not consider them to be a material risk to our business. The Group continues to carry out robust due diligence on non-standard investments and our new product has a clear Schedule of Allowable Investments.

We have also taken a prudent approach to our legacy book, composed of our own SIPPs as well as a large number of historic acquisitions, and have undertaken a detailed review of this business. There are areas where we will need to take remedial action but these are limited.  Commercial Property remains a complex asset class and we are now undertaking a comprehensive data cleanse in this area. 

Our People and Culture

Our Chief Financial Officer, Paul Tarran, has notified the Board that he intends to stand down from the Board by the end of 2019. A process has begun to identify and recruit a successor as Chief Financial Officer, who can continue our journey to enhanced financial reporting and discipline while ensuring that the Group can capitalise on strategic growth opportunities. Paul will retain his current responsibilities until this process is complete to ensure a smooth transition.

We value our people and the positive contribution they make to our culture and the performance of our business. In late 2018 we appointed a new Group HR Director to lead us on defining a modern, forward looking people strategy. In doing so we are reviewing all elements of our culture from recruitment methodologies to long term incentives to ensure that all staff throughout the group are given the opportunity to develop and succeed.

Our wider strategy

 

The Group has considerable experience of administration of complex assets within a regulated environment coupled with management of complex data from multiple and diverse counterparties. We intend to formulate a strategy that delivers revenue growth and diversity in our areas of expertise. We have three areas of strategic focus:

·     Organic sales - supported by our new national sales function and market leading proposition

·     Acquisition opportunities - driving growth through additional books of business

·     Diversifying revenue streams - building on our core capabilities of complex administration and commercial property, and expanding our service into Legal and Property Management offerings

 

In addition to this we will continue to focus on our core operating models to ensure that our risks remain effectively managed, and that operational opportunities and efficiencies are realised and able to meet our future strategic ambitions.

The SIPP market is undergoing an evolution and, as one of the leading providers, we have looked to the future and created the new SIPP proposition that advisers asked for, supported by a nationwide adviser support network. We have broadened our appeal and capability to commercial property clients and will place structured focus on other strategic growth opportunities. We have entered 2019 in a strong position and I am confident about our prospects for growth and our broadening capability to deliver enhanced services for our customers.

 

Will Self

Chief Executive Officer

19 March 2019

 

 

 

 

 

 

 

 

 

Chief Financial Officer's Review

 

Results

 

A healthy Group financial performance for the year ended 31 December 2018 resulted in an increased adjusted profit before tax of £12.1m (2017: £10.7m), an increase of 13% over the previous year. Statutory profit before tax, which is stated after amortisation and non-recurring costs increased by 72% to £10.1m. Adjusted diluted EPS similarly increased by 13% to 17.32p, while diluted EPS on a statutory basis increased by 56% to 14.45p.

 

The  performance was achieved despite incurring upfront costs for laying the groundwork for enhanced future revenue generation through the new single Group wide product (as discussed in the Chief Executive's report), fully adopting the Curtis Banks brand and identity throughout the Group and expanding our sales team to provide nationwide coverage.

 

During the year costs were also incurred for the launch of the new companies to provide SIPP property valuation services ("Templemead Property Solutions Limited") and legal services ("Rivergate Legal Limited") to the 6,000+ commercial properties held by SIPPs & SSASs administered by the Group.

 

These results show an improvement in adjusted operating margin of 27.1% (2017: 25.8%). This has been achieved not only by the  revenue growth but also following efficiency gains made on closure of our Market Harborough office in early 2018, and cost saving measures achieved through further alignment and amalgamation of suppliers, technology, processes and staff departments within the Group.

 

Revenue

 

Operational revenues of £46.1m in 2018 (2017: £43.6m) increased by 6% over the comparable period, driven by further good organic growth in numbers of SIPPs held and increased interest income.

 

Fee revenue from SIPPs & SSASs remains the predominant source of fee income for the Group with 87% (2017: 84%) of these fees being recurring fixed annual fees. These fees are subject to contractual annual inflationary rises. A menu of additional fixed fees are charged depending on the transactional services provided on the products.

 

All SIPP & SSAS fees levied are fixed monetary amounts and are not a percentage based charge on the value of the underlying assets held within SIPPs and SSASs.  As a result the income of the Group is not affected by movements in financial markets and property values. This is a key differential that sets us apart from most of our competitors and provides an attractive product in terms of fees to higher value SIPPs.

 

 

Interest income on the margin on client funds remains a significant part of Group income. In the year ended 31 December 2018 £10.8m of the Group operating revenues were from interest margin (2017: £9.5m). Structural efficiencies in treasury management and the further strengthening of our relationships with deposit providers have led to the increase over last year in addition to favourable movements in base rates during the year.

 

 

Both Rivergate Legal Limited and Templemead Property Solutions Limited, since their launch in 2018, have positively contributed to revenue in 2018 and the further development of these companies is expected to drive higher operational revenues through 2019.

 

Expenses

 

The year ended 31 December 2018 saw administrative expenses increase by 4.0% to £33.6m from £32.3m.

 

Staff costs for the year increased by 4% to £21.9m (2017: £21.1m). Savings from the closure of the Market Harborough office were partly offset by recruitment in the second half of the year of an expanded Group wide sales team that achieves full national coverage of the UK. This coincided with the launch in early 2019 of our new Group product, 'Your Future SIPP', consistent with our strategy of investing for future organic growth.

 

Staff costs were also impacted by further share based payment awards under the Group's Long Term Incentive Plan and Save As You Earn option schemes, the annual pay review and required increases under auto enrolment of staff pension contributions. These measures however continue to contribute to improved levels of key staff retention and morale and provide the service levels to clients required from our introducers of business.

Staff numbers have decreased slightly to 558 as at 31 December 2018 (2017: 597), reflecting the closure of the Market Harborough office during the year offset by organic growth of staff numbers to service increasing  SIPP numbers and our expanded sales team to achieve nationwide coverage.

The Group continues to take steps to improve its adjusted operating margin through a combination of revenue enhancements, cost saving measures and operational improvements. The Group also reduced computer costs by £0.2m year on year through renegotiation of contracts with key suppliers, and further alignment of suppliers and services between each of the Group's offices.

Provisions as at 31 December 2017 of £0.9m relating to the closure of the Group's Market Harborough office were fully utilised during 2018. A tenant was procured in 2018 to occupy the office for the remaining lease period providing sub-let income equivalent to the head lease rental payable over the remainder of the lease.

Finance costs reduced by £0.1m year on year as the company continues to repay borrowings taken out to facilitate the Suffolk Life acquisition in 2016. The debt continues to be repaid in line with scheduled terms and conditions and the covenants required by the bank in respect of this gearing are well covered. Interest on the debt accrues at a rate of 2.25% plus LIBOR.

Non-Recurring costs

Non-recurring costs for the year have reduced significantly following the provisions last year for the closure of the Market Harborough Office and the expensing of exceptional IT impairment costs. 

Current year non-recurring costs have arisen from further restructuring costs within the Group, the costs associated with the acquisition of the Hargreave Hale book of SIPPs during the year and provisions arising as part of the consolidation and integration exercises undertaken over the past year.

As part of these exercises, management initiated a review of data records relating to properties held within SIPPs administered by the Group. Based on a detailed review of a sample of properties and extrapolation of the initial findings across the full population of relevant properties, the directors recognise that additional direct costs may be incurred in completing this data cleansing exercise, including from any potential remediation. A provision of £0.5m has been made for this matter, being the directors' best estimate of the direct costs the Group may have to bear.

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 investment 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. Assets in the SIPPs administered by the rest of the Group are held in trust and not under insurance contracts and therefore do not need to be included on the balance sheet. As the policies are non-participating contracts, the client related assets and liabilities in Suffolk Life Annuities Limited match. In addition the revenues, expenses and investment returns of the non-participating investment contracts are shown in the consolidated statement of comprehensive income. Again, these income, expense items and investment returns due to the policyholders are completely matched. An illustrative balance sheet as at 31 December 2018 showing the financial position of the Group excluding the policyholder assets and liabilities is included as supplementary unaudited information after the notes to the financial statements. An illustrative cash flow on the same basis has also been provided.

 

Employee Benefit Trust ("EBT")

 

The EBT set up during the previous year continues to be used to acquire shares in the Company in the market to satisfy future vesting of options and long term incentive awards. The EBT is funded by loans from the Group. As at 31 December 2018 the EBT held 263,790 shares in Curtis Banks Group plc. A further £0.5m was advanced to the EBT by the Company during the year. A number of options awarded under the Company's Save As You Earn schemes vested during the year and awards were made from the shares held by the EBT.

 

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.

 

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 2018 the total regulatory capital requirement across the Group was £11.6m and the Group had an aggregate surplus of £18.0m 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 £14.5m. All the regulated firms within the Group maintained surplus regulated capital throughout the year.

 

After taking into account the regulatory capital requirements set out above, assuming all these were required to be held in cash, the Group had surplus 'free' cash available of approximately £13m. 

Financial Position

The Group increased net assets by 12% to £49.7m as at 31 December 2018 (2017: £44.6m), and increased shareholder cash reserves from £25.7m to £28.0m over the same period.

As at 31 December 2018, the Group had net shareholder cash (after debt) of £13.6m (2017: £8.1m).

The Group will have to adopt the provisions of IFRS 16, accounting for leases, for accounting periods commencing from 1 January 2019. We have evaluated the effect of this on our financial performance and this is not material.  We have also had confirmation from our principal lenders that the provisions of IFRS 16 do not need to be taken into account when calculating our banking covenants. We have also received confirmation from the FCA that at this point in time the provisions of IFRS 16 do not need to be taken into account in calculating our regulatory capital calculations.

 

 

 

Paul Tarran

Chief Financial Officer

19 March 2019

 

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

Year ended 31 December 2018

 

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

 

 

Notes            

£'000

£'000

£'000

 

£'000

£'000

£'000

Operating revenue

 

 

 

46,125

 

-

46,125

 

 

43,573

 

-

43,573

Policyholder investment returns

 

 

41,677

 

-

 

41,677

 

 

343,009

 

-

 

343,009

Revenue

 

2

 

87,802

 

-

87,802

 

 

386,582

 

-

386,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative expenses

 

 

 

(33,637)

 

-

(33,637)

 

 

(32,336)

 

 

(32,336)

Non-participating investment contract expenses

 

(34,477)

 

-

 

(34,477)

 

 

(34,560)

 

-

 

(34,560)

 

Changes in provisions: Non-participating investment contract liabilities

 

(7,200)

 

-

 

(7,200)

 

 

 

(308,449)

 

-

 

(308,449)

 

Policyholder total expenses

 

 

 

(41,677)

 

-

(41,677)

 

 

(343,009)

 

-

(343,009)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit before amortisation and non-recurring costs

 

 

12,488

 

-

 

12,488

 

 

11,237

 

-

 

11,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring costs

 

4

 

-

 

(748)

 

(748)

 

 

-

 

(3,754)

 

(3,754)

Amortisation

 

3

 

-

 

(1,268)

 

(1,268)

 

 

-

 

(1,131)

 

(1,131)

Operating profit         

 

 

 

12,488

 

(2,016)

10,472

 

 

11,237

 

(4,885)

6,352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

 

116

 

-

 

116

 

 

67

 

-

 

67

Finance costs

 

 

 

(467)

 

-

 

(467)

 

 

(562)

 

-

 

(562)

Profit before tax

 

 

 

12,137

 

(2,016)

 

10,121

 

 

10,742

 

(4,885)

 

5,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax

 

6

 

(2,294)

 

383

 

(1,911)

 

 

(1,565)

 

940

 

(625)

Total comprehensive income for the year

 

9,843

 

(1,633)

 

8,210

 

 

9,177

 

(3,945)

 

5,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of the company

 

 

 

 

 

 

 

8,204

 

 

 

 

 

 

5,222

Non-controlling interests

 

 

 

 

 

 

 

6

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

8,210

 

 

 

 

 

 

5,232

Earnings per ordinary share on net profit

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (pence)

 

7

 

 

 

 

15.30

 

 

 

 

 

9.75

Diluted (pence)

 

7

 

 

 

 

14.45

 

 

 

 

 

9.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Consolidated Statement of Financial Position

 

 

 

 

 

 

 

Group

Group

 

 

Notes

 

 

 

As at

31-Dec-18

£'000

 

As at

31-Dec-17

£'000

ASSETS

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

Intangible assets

 

 

8

 

 

 

44,110

 

44,593

Investment property

 

 

9

 

 

 

1,274,452

 

1,206,298

Property, plant and equipment

 

 

10

 

 

 

1,216

 

1,148

Investments

 

 

 

 

 

 

1,813,057

 

2,032,293

Deferred tax asset

 

 

 

 

 

 

595

 

124

 

 

 

 

 

 

 

3,133,430

 

3,284,456

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

 

 

 

 

18,055

 

16,687

Cash and cash equivalents

 

 

11

 

 

 

431,576

 

437,849

Current tax asset

 

 

 

 

 

 

243

 

310

 

 

 

 

 

 

 

449,874

 

454,846

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

 

 

3,583,304

 

3,739,302

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

 

 

 

15,204

 

12,658

Deferred income

 

 

 

 

 

 

24,601

 

24,374

Borrowings

 

12

 

 

 

30,005

 

29,444

Provisions

 

 

 

 

 

 

500

 

641

Deferred consideration

 

 

 

 

 

 

255

 

341

Current tax liability

 

 

 

 

 

 

991

 

-

 

 

 

 

 

 

 

71,556

 

67,458

Non-current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

 

12

 

 

 

56,525

 

64,584

Provisions

 

 

 

 

 

 

-

 

259

Deferred consideration

 

 

 

 

 

 

125

 

454

Non-participating investment contract liabilities

 

 

 

 

3,405,428

 

3,561,929

 

 

 

 

 

 

 

3,462,078

 

3,627,226

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

 

 

3,533,634

 

3,694,684

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

49,670

 

44,618

 

 

 

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

 

 

Issued capital

 

 

 

 

 

 

269

 

269

Share premium

 

 

 

 

 

 

33,451

 

33,451

Equity share based payments

 

 

 

 

 

 

1,357

 

731

Treasury shares

 

 

 

 

 

 

(716)

 

(250)

Retained earnings

 

 

 

 

 

 

15,295

 

10,403

 

 

 

 

 

49,656

 

44,604

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

 

 

 

14

 

14

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

 

 

 

49,670

 

44,618

 

Approved by the Board of Directors and authorised for issue on 19 March 2019.

 

Paul Tarran

Chief Financial Officer

 

 

Company Registration No. 07934492

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 2017

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

-

 

-

 

-

 

-

 

8,204

 

8,204

 

6

 

8,210

Share based payments

-

 

-

 

626

 

-

 

-

 

626

 

-

 

626

Ordinary shares bought and sold by EBT

-

 

-

 

-

 

(466)

 

-

 

(466)

 

-

 

(466)

Deferred tax on share based payments

-

 

-

 

-

 

-

 

310

 

310

 

-

 

310

Ordinary dividends declared and paid

-

 

-

 

-

 

-

 

(3,622)

 

(3,622)

 

(6)

 

(3,628)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2018

269

 

33,451

 

1,357

 

(716)

 

15,295

 

49,656

 

14

 

49,670

 

 

 

 

Consolidated Statement of Cash Flows

 

 

 

 

 

 

Group

 

 

 

 

 

Year ended 31 December

 

 

 

 

 

2018

      £'000

 

2017

£'000

Cash flows from operating activities

 

 

 

 

 

 

Profit before tax

 

 

 

 

10,121

 

5,857

Adjustments for:

 

 

 

 

 

 

 

Depreciation

 

 

 

 

596

 

570

Amortisation and impairments

 

 

 

 

1,268

 

3,126

Interest expense

 

 

 

 

467

 

554

Share based payment expense

 

 

 

 

626

 

492

Fair value losses/(gains) on financial investments

 

 

 

116,517

 

(156,046)

Additions of financial investments

 

 

 

 

(490,830)

 

(493,638)

Disposals of financial investments

 

 

 

 

593,549

 

542,304

Fair value gains on investment properties

 

 

 

(47,275)

 

(44,074)

(Decrease)/increase in liability for investment contracts

 

 

(156,498)

 

167,525

Changes in working capital:

 

 

 

 

 

 

 

Decrease/(increase) in trade and other receivables

 

247

 

(433)

Increase in trade and other payables

 

 

 

992

 

4,193

Taxes paid

 

 

 

 

(1,375)

 

(999)

Net cash flows received from operating activities

 

 

28,405

 

29,431

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchase of intangible assets

 

 

 

 

(785)

 

(277)

Purchase of property, plant and equipment

 

 

(202,089)

 

(161,923)

Purchase and sale of shares in the Group by the EBT

 

 

(466)

 

(250)

Receipts from sale of property, plant and equipment

 

 

180,546

 

148,191

Net cash flows from acquisitions

 

 

 

 

(421)

 

(669)

Net cash flows used in investing activities

 

 

(23,215)

 

(14,928)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Equity dividends paid

 

 

 

 

(3,628)

 

(2,413)

Net proceeds from issue of ordinary shares

 

 

 

-

 

27

Net decrease in borrowings

 

 

 

 

(7,538)

 

(21,274)

Interest paid

 

 

 

 

(297)

 

(504)

Net cash used in financing activities

 

 

(11,463)

 

(24,164)

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(6,273)

 

(9,661)

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

 

437,849

 

447,510

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the year

 

 

 

431,576

 

437,849

                   

 

Notes to the Financial Statements

 

1               Corporate information

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 31 December 2018 the Group administered circa £24.8bn (2017: £24.7bn) of pension assets on behalf of over 77,700 (2017: 76,500) active customers. Approximately 560 staff are employed across its head office in Bristol and regional offices in Ipswich and Dundee.

 

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 Limited, 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 15 and 16 to this Announcement illustrate the split between policyholder and shareholder assets and liabilities and cash flows. 

 

2               Revenue

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

 

 

                                        Year ended 31 December

 

 

 

 

 

2018

£'000

 

2017

£'000

 

 

 

 

 

 

 

Fees

 

 

 

35,352

 

34,073

Interest income

 

 

 

10,773

 

9,500

Policyholder investment returns

 

 

 

41,677

 

343,009

 

 

 

 

 

 

 

 

 

 

 

87,802

 

386,582

 

 

3             Profit for the year

Profit for the year is arrived at after:

 

 

                                        Year ended 31 December

 

 

 

 

 

2018

£'000

 

2017

£'000

Charging:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation of intangible assets

 

 

 

1,268

 

1,131

Depreciation of property, plant and equipment

 

 

 

596

 

570

Auditors remuneration:

 

 

 

 

 

 

- audit of the financial statements of the Group

 

 

 

234

 

177

- audit of the financial statements of the Company

 

 

 

56

 

29

- audit related assurance services

 

 

 

8

 

97

 

4             Non-recurring costs

Non-recurring costs include the following significant amounts:

 

 

                                        Year ended 31 December

 

 

 

 

 

2018

£'000

 

2017

£'000

 

 

 

 

 

 

 

Set up costs associated with the take on of SIPPs

 

 

 

-

 

20

Hargreave Hale acquisition costs

 

 

 

45

 

-

Exceptional legal fees

 

 

 

-

 

67

Redundancy & restructuring costs following acquisitions

 

 

156

 

1,143

Suffolk Life acquisition costs

 

 

 

-

 

72

European Pension Management acquisition costs

 

 

 

47

 

328

Exceptional impairment charge

 

 

 

-

 

2,124

Data Cleansing provision

 

 

 

500

 

-

 

 

 

 

 

 

 

 

 

 

 

748

 

3,754

Redundancy & restructuring costs following acquisitions

During the year ended 31 December 2018, the two existing sales teams within the Group were restructured into one to coincide with the launch of a new Group wide product in H1 2019.

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, the decision was taken to close the Group's office in Market Harborough and full provision was made for this in the financial statements for the year ended 31 December 2017

Exceptional impairment charge

During the year ended 31 December 2017 the Group 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 were written off as an exceptional impairment charge in the financial statements for the year ended 31 December 2017.

 

Data Cleansing Provision

 

As part of the consolidation and integration exercise undertaken in the past year management initiated a review of data records relating to properties held within SIPPs administered by the Group.

 

Based on a detailed review of a sample of properties and extrapolation of the initial findings across the full population of relevant properties, the directors recognise that additional direct costs will be incurred in completing this data cleansing exercise. These costs include incremental costs of completing the review, as well as some potential costs of remediation. A provision of £500,000 has been recognised for this matter, being the directors' best estimate of the direct costs the Group may have to bear.

 

In estimating the amount provided, the main areas of uncertainty include:

·      The number of properties within the population that may require remediation; and

·      The nature and financial impact of the remediation required

 

5               Directors and employees

 

                 

                                        Year ended 31 December

 

 

 

2018

£'000

 

2017

£'000

 

 

 

 

 

 

Wages and salaries

 

 

18,034

 

17,585

Social security costs

 

 

1,627

 

1,630

Other pension costs

 

 

1,413

 

1,337

Share-based incentive awards

 

 

626

 

492

 

 

 

21,700

 

21,044

 

 

 

 

 

 

 

 

 

2018

 

2017

The average number of employees during the year was:

 

 

Number

 

Number

 

 

 

 

 

 

Directors

 

 

6

 

7

Administration

 

 

552

 

571

 

 

 

558

 

578

 

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

 

 

                                        Year ended 31 December

 

 

 

 

2018

£'000

 

2017

£'000

Total emoluments paid to:

 

 

 

 

Directors

 

 

 

 

 

   Wages and salaries

 

 

1,876

 

1,411

   Social security costs

 

139

 

123

   Post-employment costs

 

33

 

21

   Share-based incentive awards

 

467

 

83

Key management personnel

 

 

 

 

   Wages and salaries

 

1,151

 

806

   Social security costs

 

135

 

93

   Post-employment costs

 

60

 

47

   Share-based incentive awards

 

130

 

184

 

 

3,991

 

2,768

Emoluments of highest paid director:

 

 

 

 

 

  Wages and salaries

 

 

377

 

468

  Pension contribution

 

 

13

 

8

 

 

 

390

 

476

 

 

6            Taxation  

 

                                    Year ended 31 December

 

 

 

 

2018

£'000

 

2017

£'000

 

 

 

 

 

 

 Current  tax

 

 

 

 

 

UK Corporation tax

 

 

2,072

 

791

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

Origination and reversal of temporary differences

 

 

(161)

 

(166)

 

 

 

1,911

 

625

 

 

 

 

 

 

 

 

 

 

 

 

Factors affecting the tax charge for the year

 

 

 

 

 

Profit before tax

 

 

10,121

 

5,857

 

 

 

 

 

 

Profit before tax multiplied by standard rate of UK Corporation tax of 19.00% (2017: 19.25%)

 

 

1,923

 

1,127

 

 

 

 

 

 

Effects of:

 

 

 

 

 

Adjustment to prior year

 

 

23

 

(305)

Non-deductible expenses

 

 

10

 

13

Other tax adjustments 

 

 

(45)

 

(210)

 

 

 

(12)

 

(502)

 

 

 

 

 

 

Total tax charge

 

 

1,911

 

625

 

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:

 

 

 

     2018

£'000

 

2017

£'000

 

 

 

 

 

Net profit available to equity holders of the Group

 

8,204

 

5,222

 

 

 

 

 

 

Net profit before tax, non-recurring costs (note 4) and amortisation (note 3) available to equity holders of the Group.

 

12,137

 

10,742

 

 

 

 

 

 

Weighted average number of ordinary shares:

 

 

           Number

 

Number

 

 

 

 

 

 

Issued ordinary shares at start of the year

 

 

53,809,146

 

53,599,669

Effect of shares issued in the current year

 

 

-

 

25,127

Effect of shares held by employee benefit trust

 

 

(201,622)

 

(78,941)

Basic weighted average number of shares

 

 

53,607,524

 

53,545,855

 

 

 

 

 

 

Effect of options exercisable at the reporting date

 

 

985,661

 

800,000

Effect of options not yet exercisable at the reporting date

 

 

2,165,288

 

2,044,484

Diluted weighted average number of shares

 

 

56,758,473

 

56,390,339

 

 

 

 

 

 

 

 

 

Pence

 

Pence

Earnings per share:

 

 

 

 

 

Basic

 

 

15.30

 

9.75

Diluted

 

 

14.45

 

9.26

 

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

 

 

 

 

 

Basic

 

 

18.34

 

16.20

Diluted

 

 

17.32

 

15.38

 

*In order to reduce the impact of accounting measures such as deferred tax, and the timing of tax reliefs, the effective tax rate matches the current tax rate applicable to the accounting year. The current tax rate applicable for the year ended 31 December 2018 was 19.00% (2017: 19.25%).

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

 

 

 

 

 

 

 

 

 

Additions

 

-

 

433

 

352

 

785

Disposals

 

-

 

-

 

(266)

 

(266)

 

 

 

 

 

 

 

 

 

At 31 December 2018

 

28,903

 

    18,866

 

     1,481

 

49,250

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

At 1 January 2017

 

-

 

2,533

 

474

 

3,007

 

 

 

 

 

 

 

 

 

Charge for the year

 

-

 

922

 

209

 

1,131

 

 

 

 

 

 

 

 

 

At 31 December 2017

 

-

 

3,455

 

683

 

4,138

 

 

 

 

 

 

 

 

 

Charge for the year

 

-

 

924

 

344

 

1,268

Disposals

 

-

 

         -

 

(266)

 

(266)

 

 

 

 

 

 

 

 

 

At 31 December 2018

 

-

 

4,379

 

761

 

5,140

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

At 1 January 2017

 

28,903

 

15,897

 

2,642

 

47,442

At 31 December 2017

 

28,903

 

    14,978

 

712

 

44,593

At 31 December 2018

 

28,903

 

    14,487

 

720

 

44,110

 

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.

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.

Additions in the year comprise the purchase by Curtis Banks Limited of a book of 578 SIPPs from Hargreave Hale Limited for cash consideration of £433,000, all of which was settled on the acquisition completion date of 10 December 2018. Acquisition related costs of £45,000 were incurred in relation to this which have been expensed as non-recurring costs.

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 2018 of 15 years and 7 months.

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.

 

 

9               Investment Property

 

Assets held at fair value

 

Group

                 

 

 

 

 

Year ended 31 December

 

 

 

 

 

2018

 

2017

 

 

 

 

 

£'000

 

£'000

Fair value

 

 

 

 

 

 

At 1 January

 

 

 

 

1,206,298

1,149,135

 

 

 

 

 

 

 

Additions

 

 

 

 

201,425

161,280

Disposals

 

 

 

 

(180,546)

(148,191)

Fair value gains

 

 

 

 

47,275

44,074

 

 

 

 

 

 

 

At 31 December

 

 

 

 

1,274,452

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

 

 

 

 

 

 

 

Additions

-

 

318

 

346

664

Disposals

(54)

 

(64)

 

(36)

(154)

 

 

 

 

 

 

 

At 31 December 2018

-

 

4,338

 

1,528

5,866

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Charge for the year

13

 

471

 

112

596

Disposals

(54)

 

(64)

 

(36)

(154)

 

 

 

 

 

 

 

At 31 December 2018

-

 

3,555

 

1,095

4,650

 

 

 

 

 

 

 

Carrying value

 

 

 

 

 

 

At 1 January 2017

26

 

909

 

138

1,073

At 31 December 2017

13

 

936

 

199

1,148

At 31 December 2018

-

 

783

 

433

1,216

 

11             Cash and cash equivalents

As at 31 December 2018 and 2017 cash and cash equivalents were as follows:

 

 

Group

 

 

As at 31 December

 

 

 

 

 

2018

£'000

 

2017

£'000

 

 

 

 

 

 

 

 

Cash at bank and in hand

 

 

 

 

28,018

 

25,673

Deposits with credit institutions

 

 

 

 

402,216

 

412,128

Cash equivalents

 

 

 

 

1,342

 

48

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

431,576

 

437,849

 

 

12             Borrowings

 

 

 

Group

 

 

 

As at 31 December

 

 

 

 

 

 

2018

£'000

 

2017

£'000

Current

 

 

 

 

 

 

 

 

Bank loans

 

 

 

 

 

30,005

 

29,444

 

 

 

 

 

 

30,005

 

29,444

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

 

Bank loans

 

 

 

 

 

56,525

 

64,584

 

 

 

 

 

 

56,525

 

64,584

 

 

 

 

 

 

 

 

 

Total borrowings

 

 

 

 

 

 

94,028

 

 

 

 

 

 

 

 

 

 

 

Bank borrowings

The bank borrowings are repayable as follows:

 

 

Group

 

 

As at 31 December

 

 

 

 

 

 

2018

£'000

 

2017

£'000

 

 

 

 

 

 

 

 

 

Within 1 year

 

 

 

 

 

30,005

 

29,444

Between 1 year and 5 years

 

 

 

 

 

38,306

 

44,158

After more than 5 years

 

 

 

 

 

18,219

 

20,426

 

 

 

 

 

 

86,530

 

 

94,028

 

 

Total borrowings of the Group include liabilities of £72,085,000 (2017: £76,464,000) secured by legal charge over certain properties held within non-participating investment contracts, and liabilities of £14,554,000 (2017: £17,666,000) secured on the shares of Curtis Banks Limited, Suffolk Life Pensions Limited and Suffolk Life Annuities Limited.

 

13             Dividends

 

 

Year to 31 December

 

 

 

 

2018

 

2017

 

 

 

 

£'000

 

£'000

 

 

 

 

 

 

 

Ordinary declared and paid

 

 

 

3,622

 

2,408

 

 

 

 

 

 

 

 

 

 

 

3,622

 

2,408

 

A final share dividend in respect of 2017 of 4.75p per share was declared and paid on 18 May 2018.

 

An interim share dividend in respect of 2018 of 2.00p per share was declared and paid on 15 November 2018.

 

14           Contingent liabilities

In specie contributions

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.

Data cleansing

As reported in note 4, management initiated a review of data records related to properties held within SIPPs administered by the Group. 

 

This review requires a case by case assessment of each of the properties within the population in order to assess whether any remedial action is required by the Group in respect of that property or the associated SIPP.

 

In addition to the provision of £500,000 for the estimated direct costs that the Group may incur in respect of this exercise, the directors consider that it is possible that the Group may also be exposed to indirect costs in the future, depending on the outcome of the case by case reviews.

 

The directors' best estimate of this contingent liability is £1.5m, however there are inherent uncertainties in this estimate including due to the sampling and extrapolation approach adopted so far, the quality of data and potential significant variations in the assumed liabilities payable to rectify individual SIPP positions.

 

This estimate will be reviewed regularly, and any changes or refinements will be reported as appropriate. The directors currently expect that the review will be completed by the end of 2019 with any potential material follow up actions completed by 2020.

 

 

 

 

 

15             Unaudited IFRS Consolidated Statement of Financial Position as at 31 December 2018 split between insurance policy holders and the Group's shareholders

 

 

 

2018

£'000

    

2018

£'000

 

2018

£'000

 

2017

£'000

ASSETS

 

Group Total

 

Policyholder

 

Shareholder

 

Shareholder

Non-current assets

 

 

 

 

 

 

 

 

Intangible assets

 

44,110

 

-

 

44,110

 

44,593

Investment property

 

1,274,452

 

1,274,411

 

41

 

40

Property, plant and equipment

 

1,216

 

-

 

1,216

 

1,148

Investments

 

1,813,057

 

1,813,057

 

-

 

-

Deferred tax asset

 

595

 

-

 

595

 

124

 

 

3,133,430

 

3,087,468

 

45,962

 

45,905

Current assets

 

 

 

 

 

 

 

 

Trade and other receivables

 

18,055

 

8,344

 

9,711

 

8,832

Cash and cash equivalents

 

431,576

 

403,558

 

28,018

 

25,673

Current tax asset

 

243

 

243

 

-

 

-

 

 

449,874

 

412,145

 

37,729

 

34,505

 

 

 

 

 

 

 

 

 

Total assets

 

3,583,304

 

3,499,613

 

83,691

 

80,410

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade and other payables

 

15,204

 

8,909

 

6,295

 

5,310

Deferred income

 

24,601

 

13,194

 

11,407

 

10,928

Borrowings

 

30,005

 

26,847

 

3,158

 

3,158

Provisions

 

500

 

-

 

500

 

641

Deferred consideration

 

255

 

-

 

255

 

341

Current tax liability

 

991

 

-

 

991

 

295

 

 

71,556

 

48,950

 

22,606

 

20,673

Non-current liabilities

 

 

 

 

 

 

 

 

Borrowings

 

56,525

 

45,235

 

11,290

 

14,406

Provisions

 

-

 

-

 

-

 

259

Deferred consideration

 

125

 

-

 

125

 

454

Non-participating investment contract liabilities

 

3,405,428

 

3,405,428

 

-

 

-

 

 

3,462,078

 

3,450,663

 

11,415

 

15,119

 

 

 

 

 

 

 

 

 

Total liabilities

 

3,533,634

 

3,499,613

 

34,021

 

35,792

 

 

 

 

 

 

 

 

 

Net assets

 

49,670

 

-

 

49,670

 

44,618

 

 

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

 

 

Issued capital

 

269

 

-

 

269

 

269

Share premium

 

33,451

 

-

 

33,451

 

33,451

Equity share based payments

 

1,357

 

-

 

1,357

 

731

Treasury shares

 

(716)

 

-

 

(716)

 

(250)

Retained earnings

 

15,295

 

-

 

15,295

 

10,403

 

 

49,656

 

-

 

49,656

 

44,604

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

14

 

-

 

14

 

14

 

 

 

 

 

 

 

 

 

Total equity

 

49,670

 

-

 

49,670

 

44,618

 

16             Unaudited  IFRS Consolidated Statement of Cash Flows as at 31 December 2018 split between insurance policy holders and the Group's shareholders

 

 

2018

£'000

Group Total

 

2018

£'000

Policyholder

 

2018

£'000

Shareholder

 

2017

£'000

Shareholder

Cash flows from operating activities

 

 

 

 

 

 

 

 

Profit before tax

 

10,121

 

-

 

10,121

 

5,857

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation

 

596

 

-

 

596

 

570

Amortisation and impairments

 

1,268

 

-

 

1,268

 

3,126

Interest expense

 

467

 

-

 

467

 

554

Share based payment expense

 

626

 

-

 

626

 

492

Fair value losses on financial investments

116,517

 

116,517

 

-

 

-

Additions of financial investments

 

(490,830)

 

(490,830)

 

-

 

-

Disposals of financial investments

 

593,549

 

593,549

 

-

 

-

Fair value gains on investment properties

(47,275)

 

(47,275)

 

-

 

-

Decrease in liability for investment  contracts

 

(156,498)

 

(156,498)

 

-

 

-

Changes in working capital:

 

 

 

 

 

 

 

 

Decrease/(increase) in trade and other receivables

 

247

 

1,019

 

(772)

 

(122)

Increase in trade and other payables

 

992

 

159

 

833

 

2,629

Taxes paid

 

(1,375)

 

-

 

(1,375)

 

(999)

 

 

 

 

 

 

 

 

 

Net cash flows from operating activities

28,405

 

16,641

 

11,764

 

12,107

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of intangible assets

 

(785)

 

-

 

(785)

 

(277)

Purchase of property, plant & equipment

(202,089)

 

(201,425)

 

(664)

 

(645)

Investment in employee benefit trust

 

(466)

 

-

 

(466)

 

(250)

Receipts from sale of property, plant & equipment

 

180,546

 

180,546

 

-

 

-

Net cash flows from acquisitions

 

(421)

 

-

 

(421)

 

(669)

 

 

 

 

 

 

 

 

 

Net cash flows from investing activities

(23,215)

 

(20,879)

 

(2,336)

 

(1,841)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Equity dividends paid

 

(3,628)

 

-

 

(3,628)

 

(2,413)

Net proceeds from issue of ordinary shares

 

-

 

-

 

-

 

27

Net decrease in borrowings

 

(7,538)

 

(4,380)

 

(3,158)

 

(3,158)

Interest paid

 

(297)

 

-

 

(297)

 

(504)

 

 

 

 

 

 

 

 

 

Net cash flows from financing activities

(11,463)

 

(4,380)

 

(7,083)

 

(6,048)

 

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(6,273)

 

(8,618)

 

2,345

 

4,218

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

437,849

 

412,176

 

25,673

 

21,455

Cash and cash equivalents at the end of the year

 

431,576

 

403,558

 

28,018

 

25,673

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
FR SFUEEUFUSELD
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Final Results - RNS