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RNS
Nucleus Financial Gp   -  NUC   

Interim Results

Released 07:00 10-Sep-2019

RNS Number : 7345L
Nucleus Financial Group PLC
10 September 2019
 

10 September 2019

Nucleus Financial Group Plc

("Nucleus" or the "Group")

Unaudited interim results for the six months ended 30th June 2019

 

Nucleus, a leading independent wrap platform provider, is pleased to announce its unaudited interim results for the six months ended 30 June 2019.

Financial highlights

£ million (unless otherwise stated)

Six months ended 30 June 2019

Six months ended 30 June 2018

Change

%

Period end AUA

15,332

14,339

6.9%

Average AUA2

14,725

13,849

6.3%

Revenue1

25.2

24.2

4.0%

Net revenue* 1

22.1

21.1

4.6%

Blended revenue yield (bps)* 1

30.2

30.8

(1.9%)

Adjusted EBITDA*

4.6

4.9

(5.8%)

Adjusted EBITDA margin (%)* 1

20.7

23.0

(10.0%)

Adjusted profit before tax*

4.2

4.6

(7.3%)

Profit after tax for the period

3.4

2.2

56.5%

Earnings per share

4.4p

2.8p

57.1%

Interim dividend declared

1.5p

1.4p

7.1%

 

·      AUA increased 6.9% year-on-year to £15.3bn compared to a FTSE All-Share Index reduction of 3.5% year-on-year

·      Net revenue grew by 4.6% in the period, with blended revenue yield down slightly as expected, as a result of the impact of tiered fees on larger portfolios

·      Adjusted EBITDA is in line with expectations at £4.6m following substantial planned investment in the product proposition during the period

·      Interim dividend of £1.1m declared equating to a payment of 1.5p per share

·      Strong balance sheet at 30 June 2019 with £17.0 million of cash and no borrowings

Operational highlights

·      Substantial investment in the core platform proposition throughout the first half of the year saw several significant new platform enhancements introduced including a material software upgrade, a Junior Isa product, improved phased drawdown capability, a new client portal and a new stockbroking service

·      1.9% increase in the number of active advisers from 1,357 to 1,383 over the last year

·      5.5% increase in customer numbers from 90,650 to 95,657 over the last year

 

David Ferguson, founder and CEO of Nucleus, commented:

"We anticipated that the change to our operating model in late 2018 would significantly accelerate our product development in future years and the first half of 2019 has borne this out. Substantial investment in the core platform has delivered improved efficiency, new functionality and new capabilities. We intend to continue developing our proposition to meet the needs of advisers and customers and expect this to give the platform an even wider market appeal over time."

 "Alongside the progress in our product roadmap we continue to grow assets, revenue, profits, customers and advisers, all against a challenging market backdrop and I am excited by what we can achieve."

"Financial performance is otherwise expected to develop as planned as we look beyond short-term headwinds and toward the future with confidence."

 

* Industry-specific financial performance measures.

Included within this results announcement are alternative measures that the directors believe help to inform the results and financial position of the group.

·      Blended revenue yield is calculated by dividing annualised net revenue by Average AUA.

·      Adjusted EBITDA and adjusted profit before tax exclude non-operating income, AIM admission costs and share-based payments, and include right of use (ROU) asset depreciation and ROU liability interest.

The definitions and calculation methods are included at the end of the document, where other technical terms are also defined.

1 The definition of net revenue has been revised to include product fees that were previously included within AUA related costs. The prior period has been restated.

2 2018 Average  AUA has been recalculated using the daily average method.

 

For further information please contact:

Nucleus Financial

Tel: +44 (0)131 226 9800

David Ferguson, CEO

 

Stuart Geard, CFO

 

Shore Capital (nominated adviser and broker)

Tel: +44 (0)20 7408 4090

Hugh Morgan

 

Edward Mansfield

 

Daniel Bush

 

Camarco (media enquiries)

Tel: +44 (0)20 3757 4994

Jennifer Renwick

 

Jake Thomas

 

 

Analyst presentation 

There will be an analyst presentation to discuss the results at 9:00am today, 10 September, at Vintry and Mercer, 19-20 Garlick Hill, London, EC4V 2AU. Analysts wishing to attend are asked to contact Jake Thomas on +44 (0)20 3781 8337 or jake.thomas@camarco.co.uk.

Forward-looking statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". By their nature, forward-looking statements involve known and unknown risks and uncertainties since they relate to future events and circumstances. Actual results may, and often do, differ materially from any forward-looking statements.

Any forward-looking statements in this announcement reflect Nucleus' view with respect to future events as at the date of this announcement. Save as required by law or by the AIM Rules for Companies, Nucleus undertakes no obligation to publicly revise any forward-looking statements in this announcement following any change in its expectations or to reflect events or circumstances after the date of this announcement.

Notes to editors

About Nucleus

Nucleus is a wrap platform founded in 2006 and built by advisers committed to altering the balance of power in the industry by putting the client centre stage. It provides independent wrap platform services to around 1,400 active adviser users and works with more than 870 financial adviser firms as at 30 June 2019. It is responsible for assets under administration (AUA) of £15.3bn on behalf of more than 95,000 customers.

The multi award-winning platform offers a range of custody, trading, payment, reporting, fee-handling, research and integration services across a variety of tax wrappers and more than 5,000 asset choices including cash, OEICs, unit trusts, offshore funds, structured products and listed securities, including ETFs and investment trusts and currently facilitates over 1.1 million client account transactions on average per month.

Nucleus has won CoreData's 'Best medium-sized platform' for the last eight years, the Schroders 'Platform of the year' award for the last three years and won 'Best platform' and 'Platform innovation' at the Money Marketing awards 2018.

 

 

 

 

 

 

 

Chief executive officer's report

Overview

Value for money is replacing transparency as the key suitability threshold for financial advice and regardless of the external environment, end-to-end customer costs in retail financial services are falling and will continue to fall. This will require platforms and other market participants to generate internal efficiencies or demonstrate an ability to generate efficiencies in other parts of the chain. These dynamics validate our long-established purpose of creating value through the strategic alignment of advisers and customers and we continue to invest to that end. The first half of 2019 has been our best ever in terms of improving efficiency and delivering new capabilities and we expect this to lead to an even wider market appeal for the Nucleus platform over time.

Alongside progress in our product roadmap we continued to grow the business in a challenging market and were pleased to be awarded CoreData's 'best medium platform' award for the eighth year in succession and to be shortlisted for Schroder's platform of the year and Money Marketing's company of the year awards.

Operational performance

Despite ongoing economic uncertainty and market volatility, we enjoyed a 6.9 per cent increase in assets under administration (AUA) to £15.3bn. Adviser and customer numbers also rose and we would expect these new customers to contribute further inflows as others have once the external environment settles.

Consistent with the wider sector, inflow performance was below expectations and we ended H1 with gross inflows of just under £1bn against £1.3bn in 2018, albeit reflecting a slight uptick in market share. Outflows increased slightly due to consolidation activity amongst adviser users, but we were successful in securing a new partnership with an IFA consolidator and are in discussions with others. These new relationships  are expected to provide more resiliency in net inflows while also presenting growth opportunities in their own right.

Platform and other operations have been stable through the first half of the year and we have been successful in launching a Junior Isa, new phased drawdown capability, a new client portal and many other platform enhancements, including meeting the new costs and charges disclosure requirements of Mifid II. This rate of change represents a planned and marked acceleration on previous years and is evidence that the remodelling of our outsourced relationships announced last November, is yielding positive results.

Financial performance and dividend

We are pleased to report a 4.6 per cent increase in net revenue to £22.1m and adjusted EBITDA for the period of £4.6m, the latter slipping slightly under 2018's £4.9m due to a substantial increase (to steady-state) in investment in product development through the period. On a reported basis, we increased profit after tax and earnings per share by 56.5 per cent and 57.1 per cent respectively.

Further details are contained in the chief financial officer's report but this performance, alongside a continuation of our regulatory capital surplus, means I am pleased to announce that the board has declared an interim dividend of 1.5p per share (an increase of 7.1 per cent on H1 2018), amounting to a total payment of £1.1m to be paid in October.

Our people

We have continued to evolve the shape of the organisation following the restructure of our outsourcing relationships in late 2018 and are moving toward a state in which all additional roles sit within our technology function. This is consistent with our ambition of building the most scalable advised platform in the UK, a goal that can only be achieved with a substantial dependency on technology for most operations. Alongside our technology, we aim to offer market-leading offline service and accordingly continue to invest in this area.

Overall people engagement remains strong and we continue to perform well in terms of gender pay gap and the number of women in senior positions.

Strategic development

Delivery in the first half of the year demonstrates the value we can unlock in having a direct relationship with Bravura, following the rearrangement of our outsourced relationships last November. In addition to delivering a material upgrade we have generated efficiencies and added new capabilities more effectively than ever before. We retain conviction that our blend of in-house development and data services sitting on top of Bravura's market-leading Sonata software will allow us to deliver the best combination of cost against agility, scalability and resilience over the medium and long-term.

The period has also allowed us to advance our understanding of the sources of return and other trends within customer portfolios and we continue to believe we can use this insight to generate new revenue streams, most likely starting in the first half of 2020. The FCA's PROD rules and the new costs and charges disclosure changes introduced as part of Mifid II will necessitate a new approach to portfolio management and we believe modern, customer-led and data-rich platforms such as ours will be best placed to meet these demands.

Outlook

Recently reported M&A activity among peers and technology providers which power this sector indicates a prolonged period of disruption due to further replatforming and the concentration risk associated with one of the major vendors. We believe this will create substantial opportunity for stable, well-run platforms operating on sound foundations such as Nucleus.

Accordingly, we will continue to invest in product development and in growth consistent with our strategy which aims to deliver operating leverage through scale over time. Overall, we believe the investments we are making to accelerate growth will generate improved inflow metrics in future periods.

Financial performance is otherwise expected to develop as planned as we look beyond short-term headwinds and toward the future with confidence.

 

 

David Ferguson

Founder and CEO

 

 

 

Chief financial officer's report

The first half of 2019, which started with market levels, and consequently AUA, at depressed levels, was characterised by continued uncertainty and market volatility and closed with no greater clarity on many of the issues concerning markets, advisers and customers.

Gross and net inflows, AUA and, by implication, revenue came under continued pressure as a result, requiring us to balance the need to respond to the challenging environmental conditions and the desire to increase the investment in growing our business to take advantage of the longer-term sectoral opportunity. This has resulted in a further period of satisfactory financial performance for Nucleus and we remain confident that our continued investment in our people, proposition and service will translate into a recovery of inflows and a return to our targeted level of top-line growth.

Financial key performance indicators

 

Six months ended June 2019

Year ended December 2018

Year ended December 2017

Year ended December 2016

Year ended December 2015

Group

£'000

£'000

£'000

£'000

£'000

AUA1

15,332,087

13,883,713

13,576,703

11,143,757

9,068,789

Gross inflows1

954,781

2,290,236

2,607,759

1,854,830

1,977,783

Net inflows1

245,726

1,193,502

1,668,237

970,263

1,229,625

Revenue

25,210

49,405

45,462

37,483

33,091

Net revenue1

22,087

43,154

39,361

32,407

28,166

Adjusted EBITDA1

4,570

8,304

6,248

5,141

4,637

Profit for the period after tax

3,372

4,756

4,111

3,387

4,300

Dividend paid

2,734

3,933

4,813

nil

nil

Adjusted EBITDA margin1

20.7%

19.2%

15.9%

15.8%

16.5%

1 Industry-specific financial performance measures. Included within this results announcement are alternative measures that the directors believe help to inform the results and financial position of the group.

 

Financial review

 

 

Six months ended 30 June 2019

Six months ended 30 June 2018

Year ended      31 December    2018

Group

 

£m

£m

£m

Opening AUA

 

13,884

13,577

13,577

Inflows

 

955

1,265

2,290

Outflows

 

(709)

(539)

(1,097)

Net inflows

 

246

726

1,193

Market movements

 

1,202

36

(886)

Closing AUA

 

15,332

14,339

13,884

Average AUA

 

14,725

13,849

14,124

 

 

 

 

Six months ended 30 June 2019

Restated 1,2

Six months ended 30 June 2018

Restated 2

Year ended 31 December 2018    

Group

£'000

£'000

£'000

Revenue

25,210

24,234

49,405

AUA related fees paid

(3,123)

(3,112)

(6,251)

Net revenue1

22,087

21,122

43,154

 

 

 

 

Staff costs

(7,312)

(7,016)

(14,142)

AUA related costs1

(4,959)

(5,626)

(11,131)

Other direct platform costs2

(1,057)

(624)

(1,522)

Platform development costs

(1,094)

(128)

(1,682)

Other costs2

(3,095)

(2,875)

(6,373)

 

 

 

 

Adjusted EBITDA*

4,570

4,853

8,304

Depreciation*

(350)

(277)

(585)

Adjusted EBIT

4,220

4,576

7,719

Interest income

27

3

11

Interest expense*

(1)

(1)

(7)

 

 

 

 

Adjusted profit before tax

4,246

4,578

7,723

 

 

 

 

Other income

8

11

22

AIM admission costs

-

(1,473)

(1,688)

Share-based payments

(74)

(69)

(404)

 

 

 

 

Statutory profit before tax

4,180

3,047

5,653

Taxation

(808)

(893)

(897)

Statutory profit after tax

3,372

2,154

4,756

 

 

 

 

Adjusted profit after tax

3,439

3,699

6,255

Basic and diluted EPS

4.4p

2.8p

6.3p

Blended revenue yield (bps)**1

30.2

30.8

30.6

Adjusted EBITDA margin

20.7%

23.0%

19.2%

1 The definition of net revenue has been revised and restated to include product fees that were previously included within AUA related costs

2 Platform-related mailing, bank charges, and errors and losses have been reclassified and restated from "other costs" to "other direct platform costs"

*Adjusted EBITDA excludes non-operating income, AIM admission costs and share-based payments, and includes ROU asset depreciation and ROU liability interest. It is included within the strategic report as the directors believe this is a better representation of the underlying performance of the business

**Blended revenue yield is calculated by dividing annualised revenue by Average AUA

 

 

Revenue

AUA at 30 June 2019 was £15.3bn, an increase of 6.9 per cent over the same point in the prior year and compares to a decrease in the FTSE All-share index of 3.5 per cent over the same period. The £1.4bn increase in AUA in the current year incorporates the impact of significant market movements of £1.2bn as well as net inflows of £246m, which were below expectations due, primarily, to a combination of the difficult external environment and the impact of increased outflows from a small number of firms that have been acquired by consolidators.

Average AUA of £14.7bn (up 6.3 per cent over the 6 months to 30 June 2018) reflects the impact of the recovery in markets from the position at the start of the year as well as the volatility within the period. This compares to a growth in net revenue of 4.6 per cent to £22.1m (2018 H1: £21.1m) and reflects a lower blended revenue yield of 30.2 basis points (2018 H1: 30.8 basis points and 2018 FY: 30.6 basis points) that was in line with our expectations. The blended revenue yield incorporates the impact of renegotiated contractual terms with Paradigm with effect from the beginning of the year, as well as the fee tiering structure applicable to large client portfolios.

Costs

The terms of our revised contractual arrangements with Genpact and Bravura took effect from November 2018 and include a number of adjustments to our cost base, primarily with regards to AUA related costs and other direct platform costs.

AUA related costs of £5.0m decreased by £0.7m (or 11.9 per cent) from the prior year, at an average cost of 6.8 basis points (2018 H1: 8.2 basis points). This reflects the contractual provisions within the restructured agreements as well as, to a lesser extent, the impact of service credits and the tiering benefits within a significant component of these costs. A similar result is anticipated in respect of this cost category in the second half of the year.

Other direct platform costs increased by £0.4m (from £0.6m to £1.0m), representing the costs of surround platform licence fees (£0.4m and marginally lower than in the prior year) and other platform-related costs such as correspondence, bank charges and remediation of £0.6m, which have been reallocated from 'other costs' to achieve better presentation of our total cost base. These costs increased by £0.4m, from £0.2m to £0.6m, largely due to our revised technology and administration relationships resulting in the responsibility for additional printing and postage costs and increased provisions for errors and compensation. Consistent with guidance given previously, we anticipate a significant increase in other direct platform costs in the second half of the year, as a consequence of Nucleus taking over the responsibility for platform hosting and production support from Genpact. The expected cost of these services, and other direct platform costs as a whole, remains consistent with our expectations.

Platform development costs of £1.1m were more in line with expectations and our stated plans, as the direct contractual relationship with Bravura and access to a dedicated Bravura development team allowed for the completion of a further platform upgrade in February, the delivery of substantial propositional, regulatory and other change, and investment in testing software and other tools. Given the positive momentum established in the first half of 2019, we will still seek to achieve our targeted expenditure on platform development of £3m per year.

Staff costs were £7.3m for the period, an increase of 4.2 per cent on the prior year. The number of full-time equivalent employees increased from 204 to 229 (an increase of 12.3 per cent) and from 218 at the start of the year, predominantly as a result of ongoing investment in our technology, change management, client servicing and operations teams. Total staff costs were below expectations, partly as a result of delayed recruitment (which in turn was largely in response to the challenging trading environment) and partly due to lower performance-related remuneration provisions.

Other costs increased by 7.6 per cent to £3.1m (2018 H1: £2.9m). These costs, which include the costs of our larger office premises, the incremental costs associated with being a quoted business, higher FSCS levies and the increased overhead costs attributable to the increasing size of the business, were in line with expectations.

IFRS 16 impact

With effect from 1 January 2019 the group implemented IFRS 16 Leases, the details and impact of which are set out in the changes in accounting policies note below. To provide a consistent and comparable indication of financial performance, adjusted EBITDA has been determined on a basis consistent with that applied in the 2018 annual report and financial statements. The required adjustment relates to IFRS 16-derived right of use (ROU) asset depreciation and ROU liability interest, which are included within other costs in the financial review.

Reconciliation of statutory to alternative performance measure

 

Six months ended 30 June 2019

Six months ended 30 June 2018

Year ended 31 December 2018   

 

Group

£'000

£'000

£'000

Depreciation

568

277

585

Finance costs

91

1

7

Depreciation and finance costs on a statutory basis

659

278

592

less:

 

 

 

ROU asset depreciation included in other costs

(218)

-

-

ROU liability interest included in other costs

(90)

-

-

Depreciation and finance costs per financial review

351

278

592

comprising:

 

 

 

Depreciation

350

277

585

Interest expense

1

1

7

 

Operating margin

Our operating margin (as reflected by the adjusted EBITDA margin) decreased against H1 2018, which benefitted from the unusually low level of platform development expenditure incurred in that period.

Dividend

During the first half of the year, we recommended and paid a final dividend in respect of the 2018 financial year of £2.7m (or 3.6 pence per share). This compares to a pre-admission dividend of £2.7m that was declared and paid in June 2018.

The directors have, in line with our dividend policy, declared an interim dividend of 1.5 pence per share. This dividend amounts to a total payment of £1.1m and will be paid on 18 October 2019 to shareholders on the register on 20 September 2019, with an ex-dividend date of 19 September 2019.

 

 

Cash flow

 

Although we continue to achieve a high conversion rate of operating profit to cash, this is not fully reflected in the movement in cash and cash equivalents during the period. This is primarily due to the build up and subsequent settlement of trade and other payables balances at the end of 2018 that related to the termination of the previous outsourced services ageement and the commencement of the revised contractual arrangements.

 

Group financial position

30 June 2019

31 December 2018

 

£'000

£'000

Cash and cash equivalents

17,056

17,672

Net assets

18,063

17,473

Capital adequacy ratio

14.8%

14.5%

Capital adequacy ratio - underlying

18.3%

20.6%

Excess capital - above 8% regulatory requirement

6,645

5,393

 

Financial position

 

Nucleus continues to be funded entirely by equity capital and has a high level of free cash. Surplus capital is comfortably in excess of minimum regulatory capital requirements and, together with regard for the forecasted liquidity requirements of the group, is assessed as sufficient to support the ongoing operations of the business (under both normal and stressed conditions), allow the planned investment in the platform, and deliver returns to shareholders in line with our dividend policy guidance.

The directors consider that the group has adequate resources to remain in operation for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the interim financial statements.

 

Stuart Geard
Chief financial officer

Consolidated statement of comprehensive income

 

 

 

Note

Unaudited     six months to 30 June 2019

£'000

 

Restated* Unaudited

six months to 30 June 2018

 £'000

Continuing operations

 

 

 

 

Revenue*

 

25,210

 

24,234

Cost of sales*

 

(10,233)

 

(9,490)

 

 

 

 

 

Gross profit

 

14,977

 

14,744

 

 

 

 

 

Other operating income

 

13

 

11

Administrative expenses

 

(10,746)

 

(11,710)

 

 

 

 

 

Operating profit

 

4,244

 

3,045

 

 

 

 

 

Finance income

 

27

 

3

Finance costs

 

(91)

 

(1)

 

 

 

 

 

Profit before income tax

 

4,180

 

3,047

 

 

 

 

 

Income tax

7

(808)

 

(893)

 

 

 

 

 

Profit for the period

 

3,372

 

2,154

 

 

 

 

 

Items that may be subsequently reclassified to profit or loss

 

-

 

-

 

 

 

 

 

Comprehensive income attributable to equity holders

 

3,372

 

2,154

 

 

 

 

 

Earnings per share (pence)

 

 

 

 

Basic

6

4.4

 

2.8

Diluted

6

4.4

 

2.8

 

 

*Details of the 2018 revenue presentation restatement are set out in note 1.

 

 

 

 

 

 

 

Consolidated statement of financial position

 

 

Note

Unaudited

30 June

2019

 

Audited

31 December

2018

 

 

£'000

 

£'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Right of use lease assets

 

3,734

 

-

Property, plant and equipment

 

1,820

 

2,029

Deferred tax

 

116

 

163

 

 

5,670

 

2,192

Current assets

 

 

 

 

Trade and other receivables

 

9,874

 

10,611

Investments in securities

 

123

 

84

Tax receivable

 

-

 

541

Cash and cash equivalents

 

17,056

 

17,672

 

 

27,053

 

28,908

 

 

 

 

 

Total assets

 

32,723

 

31,100

 

 

 

 

 

Equity

 

 

 

 

Shareholders' equity

 

 

 

 

Called up share capital

9

76

 

76

Capital redemption reserve

 

53

 

53

Share-based payment reserve

 

224

 

150

Treasury shares

 

(81)

 

(30)

Retained earnings

 

17,791

 

17,224

 

 

 

 

 

Total equity

 

18,063

 

17,473

 

 

 

 

 

Liabilities

 

 

 

 

Non-current liabilities

 

 

 

 

Lease liabilities

 

3,974

 

-

Financial liabilities

 

-

 

6

Provisions

3

48

 

32

Deferred tax

 

41

 

41

 

 

4,063

 

79

Current liabilities

 

 

 

 

Lease liabilities

 

516

 

-

Financial liabilities

 

-

 

87

Trade and other payables

 

8,540

 

12,134

Tax payable

 

763

 

740

Provisions

3

778

 

587

 

 

10,597

 

13,548

 

 

 

 

 

Total liabilities

 

14,660

 

13,627

 

 

 

 

 

Total equity and liabilities

 

32,723

 

31,100

The unaudited consolidated interim financial statements were approved and authorised for issue by the Board and were signed on its behalf on 9 September 2019.

 

 S J Geard

Director

Consolidated statement of changes in equity

 

 

 

 

Called up share capital

 

 

Retained earnings

 

 

Share premium

 

 

Treasury shares

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Balance at 1 January 2019

76

17,224

-

(30)

IFRS 16 conversion

-

(71)

-

-

 

 

 

 

 

Changes in equity

Other movements

 

-

-

-

 

-

Profit for the period

-

3,372

-

-

Dividend paid

-

(2,734)

-

-

Purchase of own shares

-

-

-

(51)

Share-based payments charge

-

-

-

-

 

 

 

 

 

Balance at 30 June 2019

76

17,791

-

(81)

 

 

 

 

 

 

 

 

 

 

 

Called up share capital

 

 

Retained earnings

 

 

Share premium

 

 

Treasury shares

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Balance at 1 January 2018

21

13,475

-

-

 

 

 

 

 

Changes in equity

Issue of share capital

 

50

(50)

-

 

-

Profit for the period

-

2,154

-

-

Dividends paid

-

(2,658)

-

-

Transfer on share conversion

-

2,426

-

-

Share-based payments charge

-

-

-

-

 

 

 

 

 

Balance at 30 June 2018

71

15,347

-

-

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity (continued)

 

 

 

Capital redemption reserve

Share-based payment reserve

 

 

Fair value reserve

 

 

 

Total equity

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Balance at 1 January 2019

53

150

-

17,473

IFRS 16 conversion

-

-

-

(71)

 

 

 

 

 

Changes in equity

 

 

 

 

Other movements

-

-

-

-

Profit for the period

-

-

-

3,372

Dividend paid

-

-

-

(2,734)

Purchase of own shares

-

-

-

(51)

Share-based payments charge

-

74

-

74

 

 

 

 

 

Balance at 30 June 2019

53

224

-

18,063

 

 

 

 

 

 

 

 

 

Capital redemption reserve

Share-based payment reserve

 

 

Fair value reserve

 

 

 

Total equity

 

£'000

£'000

£'000

£'000

 

 

 

 

 

Balance at 1 January 2018

1

2,646

39

16,182

 

 

 

 

 

Changes in equity

 

 

 

 

Issue of share capital

-

-

-

-

Profit for the financial period

-

-

-

2,154

Dividends paid

-

-

-

(2,658)

Transfer on share conversion

-

(2,426)

-

-

Share-based payments charge

-

69

-

69

 

 

 

 

 

Balance at 30 June 2018

1

289

39

15,747

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of cash flows

 

 

 

Note

Unaudited    six months to 30 June 2019

 £'000

 

Unaudited    six months to 30 June 2018 £'000

Cash flows from operating activities

 

 

 

 

Cash inflow from operations

4

2,782

 

4,445

Interest received

 

27

 

3

Interest paid

 

(91)

 

-

Income tax paid

 

(199)

 

(1,457)

 

 

 

 

 

Net cash inflow from operating activities

 

2,519

 

2,991

 

 

 

 

 

Cash flows from investing activities

Purchase of tangible fixed assets

 

(194)

 

(239)

Purchase of investments

 

(39)

 

-

 

 

 

 

 

Net cash outflow from investing activities

 

(233)

 

(239)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Dividends paid

 

(2,734)

 

(2,658)

Interest paid

 

-

 

(1)

Purchase of Treasury shares

 

(51)

 

-

Repayment of finance leases

 

-

 

(54)

Lease payments - principal

 

(115)

 

-

 

 

 

 

 

Net cash outflow from financing activities

 

(2,900)

 

(2,713)

 

 

 

 

 

(Decrease)/Increase in cash and cash equivalents

 

(614)

 

39

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

17,672

 

16,992

 

 

 

 

 

Effects of exchange rate changes

 

(2)

 

(3)

 

 

 

 

 

Cash and cash equivalents at end of period              

 

17,056

 

17,028

 

 

 

 

 

 

 

 

 

Notes to the consolidated interim financial statements

1. Accounting policies

Basis of preparation

The annual financial statements comply with International Financial Reporting Standards (IFRS) as adopted by the European Union. The consolidated interim financial statements comply with International Accounting Standard (IAS) 34 Interim Financial Reporting. They have been prepared under the going concern basis, under the historical cost convention as modified by the recognition of certain financial assets measured at fair value.

 

The consolidated interim financial statements are not the company's statutory accounts and are unaudited, but have been reviewed by the group's auditors, PricewaterhouseCoopers LLP, and their report is set out after the notes to the consolidated financial statements.

 

With the exception of the introduction of IFRS 16, effective from 1 January 2019, as detailed further in note 11, the same accounting policies, methods of calculation and presentation have been followed in the preparation of the consolidated interim financial statements for the six months to 30 June 2019 as were applied in the audited financial statements for the year ended 31 December 2018. Those statutory accounts which have been filed with the registrar of companies contained an unqualified audit report, did not reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report, and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.  

 

The directors consider that the group has adequate resources to remain in operation for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the interim financial statements.

 

Basis of consolidation

The consolidated interim financial statements comprise the financial statements of the company and all its subsidiary undertakings.

 

Subsidiaries are entities controlled by the company. Control is achieved where the group has existing rights that give it the current ability to direct the relevant activities that affect the returns and exposure or rights to variable returns from the entity. Subsidiaries are included in the consolidated financial statements of the group from the date control of the subsidiary commences until the date that control ceases. Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.

 

Uniform accounting policies have been applied across the group.

 

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee (the chief operating decision maker). The board tasks responsibility to the executive committee to assess the financial performance and the position of the group and make strategic decisions and allocate resources.

 

Nucleus' principal activities are the provision of wrap administration services and there is only one reportable and operating segment as defined under IFRS 8 Operating Segments. This is reviewed on a regular basis. It is considered appropriate that management review the performance of the group by reference to total results against budget.

 

The main financial performance measures are AUA on the platform, gross and net inflows, revenue, adjusted EBITDA, profit for the year, dividend paid, adjusted EBITDA margin, consolidated operating profit, consolidated profit after tax and consolidated net assets. These are disclosed in the chief financial officer's report, where non-GAAP financial performance measures are also identified and reconciled to GAAP measures.

 

Revenue

Revenue comprises fees earned by the group from the provision of a wrap platform service to UK financial advisers and their clients. Fees are recognised exclusive of Value Added Tax and net of large case discounts. They are recorded in the year to which they relate and can be reliably measured. Fees are calculated on a basis point rate applied on a daily basis to assets under administration on the platform. Performance obligations are satisfied as the wrap platform service is provided to customers. Accrued income represents fees that are collected in the following month.

 

New and amended standards adopted in the 2019 consolidated interim financial statements

The group adopted IFRS 16 Leases effective 1 January 2019. Details of the impact are set out in note 11 Changes in accounting policies below. Other new and amended standards did not have any impact on the group's accounting policies.

 

Critical accounting judgements and key sources of estimation uncertainty, and restatements

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. The critical accounting judgements and the key sources of estimation uncertainty are as follows:

 

Income taxes

The group is subject to income taxes. Judgement is required in determining the extent to which it is probable that taxable profits will be available in future against which deferred tax assets can be utilised. Based on forecasts, the group expects to materially recover its deferred tax assets within the next two years.

 

Share-based payments

The group assesses the fair value of shares under the LTIP scheme at the grant date using appropriate valuation models, depending upon the nature of the performance criteria. At the end of each reporting period, the company revises its estimate of the number of options and shares under the LTIP scheme that are expected to vest to reflect latest expectations on the group's ability to achieve the specified performance criteria and actual or anticipated leavers from the schemes. For non-market related performance criteria, the company recognises the impact of any revision to the prior year's estimates in the income statement, with a corresponding adjustment to equity.

 

Provisions

The group has recognised provisions in respect of client compensation, outsourced service and dilapidations. Further detail on these provisions, the rationale behind their recognition and the timing of future cash flow is included in note 3.

 

Restatement of revenue presentation and reclassifications to cost of sales

As part of the consideration of the impact of IFRS 15, management reviewed the principal and agency relationships relating to platform income. Management considered that separate revenue and cost presentation would more accurately reflect the revenue and cash flows arising from the contracts with customers. Platform related mailings, bank charges and errors and losses, which were previously disclosed in Administrative expenses, have been reclassified to Cost of sales. There is no impact on the reported profit or net assets of the group as a result of these restatements.

 

 

Six months to

30 June 2018

£'000

Adjustment

Restated

30 June  2018

£'000

Continuing operations

 

 

 

Revenue

21,645

2,589

24,234

Cost of sales

(6,697)

(2,793)

(9,490)

 

 

 

 

Gross profit

14,948

(204)

14,744

Other operating income

11

-

11

Administrative expenses

(11,914)

204

(11,710)

 

 

 

 

Operating profit

3,045

-

3,045

Profit for the financial period

2,154

-

2,154

 

 

 

 

2. Financial instruments

The principal financial instruments, from which financial instrument risk arises, are as follows:

 

·      Trade and other receivables

·      Cash and cash equivalents

·      Investments in securities

·      Trade and other payables

 

Financial assets and liabilities have been classified into categories that determine their basis of measurement and, for items measured at fair value, whether changes in fair value are recognised in the income statement or statement of other comprehensive income. In adopting IFRS 9 all previously classified loans and receivables were re-classified as financial assets at amortised cost, with no change to measurement, and all financial assets previously classified at fair value through other comprehensive income were reclassified as financial assets at fair value through profit and loss, as this is the residual category under IFRS 9. The following tables show the carrying values of assets and liabilities for each of these categories.

 

 

 

 

 

Financial assets at fair value through profit and loss

 

 

 

Financial liabilities at amortised cost

 

 

Financial assets at amortised cost

 

 

 

Total

 

 

£'000

£'000

£'000

£'000

At 30 June 2019

 

 

 

 

 

Financial assets

 

 

 

 

 

Investments in securities

 

123

-

-

123

Cash and cash equivalents

 

-

-

17,056

17,056

Trade and other receivables

 

-

-

9,873

9,873

 

Total financial assets

 

 

123

 

-

 

26,929

 

27,052

 

 

 

 

 

 

Non-financial assets

 

 

 

 

5,671

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

32,723

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

Lease liabilities

 

-

4,491

-

4,491

Trade and other payables

 

-

8,539

-

8,539

 

 

 

 

 

 

 

Total financial liabilities

 

 

-

 

13,030

 

-

 

13,030

 

 

 

 

 

 

Non-financial liabilities

 

 

 

 

1,630

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

14,660

 

 

 

 

 

Financial assets at fair value through profit and loss

 

 

 

Financial liabilities at amortised cost

 

 

 

Financial assets at amortised cost

 

 

 

 

 

Total

 

 

£'000

£'000

£'000

£'000

At 31 December 2018

 

 

 

 

 

Financial assets

 

 

 

 

 

Investments in securities

 

84

-

-

84

Cash and cash equivalents

 

-

-

17,672

17,672

Trade and other receivables

 

-

-

10,611

10,611

 

Total financial assets

 

 

84

 

-

 

28,283

 

28,367

 

 

 

 

 

 

Non-financial assets

 

 

 

 

2,733

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

 

31,100

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

Finance lease obligations

 

-

93

-

93

Trade and other payables

 

-

12,134

-

12,134

 

 

 

 

 

 

 

Total financial liabilities

 

 

-

 

12,227

 

-

 

12,227

 

 

 

 

 

 

Non-financial liabilities

 

 

 

 

1,400

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

 

13,627

 

 

Financial instruments measured at fair value - fair value hierarchy

The table below classifies financial assets that are categorised on the statement of financial position at fair value in a hierarchy that is based on significance of the inputs used in making the measurements.

 

Investments in securities are held for the benefit of platform functionality and are reported on a separate line in the statement of financial position. The assets are held at fair value with any gains or losses being taken to the income statement.

 

The following tables show the group's financial assets measured at fair value through profit and loss, classed according to the level of the fair value hierarchy.

 

 

 

Level 1

Level 2

Level 3

Total

 

£'000

£'000

£'000

£'000

At 30 June 2019

 

 

 

 

Investments in securities

123

-

-

123

 

 

 

 

 

At 31 December 2018

 

 

 

 

Investments in securities

84

-

-

84

 

 

Credit risk

The group holds the surplus of corporate cash balances over and above its working capital requirements on deposit with its corporate banking services providers, Royal Bank of Scotland plc, Bank of Scotland plc and Investec Bank plc. The group is therefore exposed to counterparty credit risk and a failure of any of these banks would impact the group's resources and its ability to meet its solvency and liquidity requirements. Credit risk is managed within the risk appetites set by the board on an annual basis.

 

The supply of wrap platform services to clients results in trade receivables which the management consider to be of low risk. Other receivables are likewise considered to be low risk. Management do not consider that there is any concentration of risk within either trade or other receivables.

 

Included in other receivables is a balance of cash prefunded on the wrap platform. Where these amounts are not received within normal operational timeframes, our experience is that the risk of non-recovery increases, and we provide to our expectation of most likely outcome. The provision as at 30 June 2019 was £168,828 (2018: £183,929).

 

Liquidity risk

The group's liquidity position is subject to a range of factors that may generate liquidity strain in the short or medium term. The group manages its liquidity risk through an ongoing evaluation of its working capital requirements against available cash balances and credit facilities.

 

Exposure to securities markets

The group's income is derived from a tiered basis point fee that is applied to client assets under administration. This income is exposed to the value of the underlying investment assets which can be affected by market movements. Although some of this risk is mitigated within components of the cost base, the group is ultimately exposed to volatility in its financial results because of market movements beyond its control.

 

Operational risk

The nature of the activities performed by the group is such that a degree of operational risk is unavoidable in relation to losses that could be incurred by the group or by others because of errors or omissions for which the group is ultimately liable.

 

Particular operational risks for the group are considered to be:

 

·      People risks - we consider that the two most significant risks are the risk of failure to attract and retain core skills and knowledge in the company, and people-related errors in core processes;

·      Operational control failures in core processes - there is always a risk of failure in core processes, either directly by the company and/or by third parties which would result in operational losses, poor client outcomes and reputational damage; and

·      Systems-related risks including cyber-attacks, data leakage and business continuity events.

 

 

The following tables show an analysis of the financial assets and financial liabilities by remaining expected maturities.

 

 

< 3 months

3-12 months

1-5 years

> 5 years

Total

 

£'000

£'000

£'000

£'000

£'000

At 30 June 2019

 

 

 

 

 

Financial assets

 

 

 

 

 

Cash and cash equivalents

17,056

-

-

-

17,056

Investments

-

123

-

-

123

Trade and other receivables

9,395

478

-

-

9,873

 

 

 

 

 

 

 

26,451

601

-

-

27,052

 

 

 

 

 

 

 

 

 

 

 

 

 

< 3 months

3-12 months

1-5 years

> 5 years

Total

 

£'000

£'000

£'000

£'000

£'000

At 31 December 2018

 

 

 

 

 

Financial assets

 

 

 

 

 

Cash and cash equivalents

17,672

-

-

-

17,672

Investments

-

84

-

-

84

Trade and other receivables

10,182

429

-

-

10,611

 

 

 

 

 

 

 

27,854

513

-

-

28,367

 

 

< 3 months

3-12 months

1-5 years

> 5 years

Total

 

£'000

£'000

£'000

£'000

£'000

At 30 June 2019

 

 

 

 

 

Financial liabilities

 

 

 

 

 

Trade and other payables

7,590

949

-

-

8,539

Lease liabilities

164

353

2,055

1,919

4,491

 

 

 

 

 

 

 

7,754

1,302

2,055

1,919

13,030

 

 

 

 

 

 

 

 

 

 

 

 

 

< 3 months

3-12 months

1-5 years

> 5 years

Total

 

£'000

£'000

£'000

£'000

£'000

At 31 December 2018

 

 

 

 

 

Financial liabilities

 

 

 

 

 

Trade and other payables

11,966

168

-

-

12,134

Finance lease obligations

87

-

6

-

93

 

 

 

 

 

 

 

12,053

168

6

-

12,227

 

 

 

3. Provisions

 

 

30 June    2019

31 December 2018

 

£'000

£'000

 

 

 

Client compensation

620

429

Outsourced service

158

158

Dilapidations

48

32

 

 

 

 

826

619

 

Analysed as follows:

 

 

Current

778

587

Non-current

48

32

 

 

 

 

826

619

 

 

 

Client compensation

Outsourced service

Dilapidations

 

Total

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

At 31 December 2018

 

429

158

32

619

 

 

 

 

 

 

Provided during period

 

270

-

16

286

Utilised during period

 

(19)

-

-

(19)

Unused amounts reversed during period

 

(60)

-

-

(60)

 

 

 

 

 

 

At 30 June 2019

 

620

158

48

826

 

Client compensation

The group remediates clients affected by errors on the platform and calculates any amounts due in line with guidance given by the Financial Ombudsman Service in respect of the type of client loss, distress and inconvenience for which clients should be compensated. Where actual trading losses are suffered by clients, these are calculated in accordance with Mifid II best execution rules to ensure clients are restored to the position they would have been in had the error or omission not been made. Amounts are provided and utilised against the administrative expenses line in the income statement and the majority of the outstanding issues are expected to be resolved in the next twelve months.

 

Outsourced service

As part of the commercial agreement with its outsourced BPO service provider, should any key performance criteria not be met, the group is entitled to receive a discount on the wrap administration fees charged. Where these are agreed, they are deducted from the invoiced fee and the net expense is charged through the income statement. Where these are uncertain or in dispute with the service provider, a provision is booked in recognition of the uncertainty regarding the outcome.

 

 

 

Dilapidations

The dilapidations provision relates to the group's new leasehold office premises at Greenside, Edinburgh. This is calculated using the Building Cost Information Service survey (part of the Royal Institution of Chartered Surveyors) of average settlement figures for offices, adjusted for inflation, and the square footage of the company's leasehold premises. The provision has been classified as non-current due to the likelihood of its utilisation at the end of the lease in 2027.

 

4. Reconciliation of profit before income tax to cash generated from operations

 

 

Six months to 30 June

2019

Six months to 30 June

2018

 

£'000

£'000

 

 

 

Profit before income tax

4,180

3,047

Depreciation

568

277

Share-based payments charge

74

69

Bad debt provision

116

15

Increase in trade and other receivables

(152)

(158)

Decrease in operational platform prefunding

774

877

Decrease in trade and other payables

(3,052)

(50)

Increase in other provisions

208

367

Interest paid

91

1

Interest received

(27)

(3)

Net exchange differences

2

3

 

 

 

 

2,782

4,445

 

Operational platform prefunding includes prefunding of client pension tax relief and temporary funding required under the client money and client assets rules.

 

5. Reconciliation of liabilities arising from financing activities

 

 

 

 

At 1 January 2018

 

Non-cash changes

 

 

Cash flows

At 30 June 2018

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Finance lease liabilities

 

200

(1)

(54)

145

 

 

 

 

 

 

 

 

 

At 1 January 2019

 

Non-cash changes

 

 

Cash flows

At 30 June 2019

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Lease liabilities

 

4,606

-

(115)

4,491

 

 

 

 

 

 

 

Lease liabilities, which includes items previously classified as finance lease liabilities, increased by £4,513k as a result of adopting IFRS 16 Leases effective 1 January 2019.
 

6. Earnings per share

Earnings per share has been calculated by dividing the total profit for the period by the weighted average number of ordinary shares in issue during the period.

 

 

Six months to 30 June 2019

Six months to 30 June 2018

 

£'000

£'000

 

 

 

Profit for the period

3,372

2,154

 

Weighted average number of ordinary shares (basic)

75,895,905

75,933,359

SIP scheme

37,455

-

LTIP scheme

90,794

-

Weighted average number of ordinary shares (diluted)

76,024,154

75,933,359

 

 

 

Six months to 30 June 2019

Six months to 30 June  2018

Basic/diluted earnings per ordinary share (pence)

4.4

2.8

 

 

 

 

The weighted average number of ordinary shares reflects the number of shares in issue following the listing of the Company on 26 July 2018.

               

The company grants long-term incentive awards in the form of nil-cost options over its ordinary shares to the executive directors and other persons discharging managerial responsibility under its newly established long-term incentive plan. The total number of shares over which the awards were granted was 1,840,702 of which 77,600 have lapsed. The vesting of each of the awards is subject to the satisfaction of performance conditions that have been set by the remuneration and HR committee. These conditions, which will be assessed over prescribed three-year periods, relate to the achievement of specific targets in relation to earnings per share, net-inflow of assets under administration and total shareholder return. Vesting will also normally be dependent on the continued employment of the participant within the group.

 

7. Income tax

Tax is charged at 19% for the six-month period ended 30 June 2019 (30 June 2018: 29%), representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income for the six-month period. The prior period tax rate reflects the effect of AIM admission costs not deductible for tax purposes.

 

8. Dividends

 

 

Six months to 30 June 2019

Six months to 30 June 2018

 

£'000

£'000

£0.01 ordinary share dividends* (2018: 142p per share)

-

1,577

£0.001 ordinary share dividends* (3.6p per share)

2,734

-

B ordinary share dividend (2018: 142p per share)

-

1,081

 

 

2,734

 

2,658

 

* The Employee share ownership trust waived its right to receive dividends during the year.

 

9. Share capital

 

30 June    2019

31 December 2018

 

£'000

£'000

Allotted, called up and fully paid

 

 

Ordinary shares of £0.001 each: 76,473,360

76

76

 

 

 

 

76

76

 

Employee benefits trusts hold a total of 587,913 shares (2018: 561,442)

 

 

10. Related party transactions

 

Entities with significant influence over the company

 

Transactions with Nucleus IFA Company Limited (NIFAC) and Sanlam UK Limited (Sanlam) were as follows:

 

 

Six months to 30 June 2019

Six months to 30 June  2018

 

£'000

£'000

NIFAC

 

 

Dividend paid to NIFAC by NFG

-

632

 

 

 

 

30 June      2019

31 December 2018

 

£'000

£'000

Amounts owed to NFG

15

42

 

 

 

 

Six months to 30 June 2019

Six months to 30 June  2018

 

£'000

£'000

Sanlam

 

 

Amounts charged by Sanlam in respect of the Onshore Bond

222

204

Dividends paid to Sanlam by NFG

1,437

1,418

 

 

 

 

30 June      2019

31 December 2018

 

£'000

£'000

Amounts owed to Sanlam in respect of board fees

42

176

Amounts owed to Sanlam in respect of fees for the Onshore Bond

38

72

Amounts owed to Sanlam in respect of tax collected from the Onshore Bond

650

97

 

 

 

On Nucleus' admission to AIM, NIFAC realised part of its shareholding in Nucleus and distributed the net proceeds together with its residual shareholding interest to its underlying shareholders. NIFAC no longer holds shares in Nucleus.

 

Subsidiaries

NFG owns 100% of the share capital of Nucleus Financial Services Limited, Nucleus IFA Services Limited and Nucleus IMX Limited.

 

Other related parties

During the period the company was charged £Nil (2018: £390,000) for services provided by Craven Street Capital Limited of which Angus Samuels is a director. As at the period end, there were no outstanding balances.  

11. Changes in accounting policies

 

IFRS 16 Leases

In adopting this standard, which became effective from 1 January 2019, the modified retrospective approach was used, resulting in the cumulative effect of application on 1 January 2019 being recognised through an adjustment to opening retained earnings. On adoption the group recognised lease liabilities in relation to previously classified operating property leases. The liability was measured at the present value of future lease payments, discounted using an estimated incremental borrowing rate of 4%. The associated right-of-use asset was measured on a retrospective basis as if the new standard had always applied. There were no changes relating to the recognition of finance leases. Use was made of the practical expedient which allows the continuation of the existing assessment as to whether a contract contains a lease for all ongoing contracts entered into before 1 January 2019.

 

 

31 December    2018

Effect of IFRS 16

1 January       2019

 

 

£'000

 

£'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Right of use lease assets

 

-

4,013

4,013

Property, plant and equipment

 

2,029

(112)

1,917

Deferred tax

 

163

-

163

 

 

2,192

3,901

6,093

 

 

 

 

 

Current assets

 

28,908

-

28,908

 

 

 

 

 

Total assets

 

31,100

3,901

35,001

 

 

 

 

 

Total equity

 

17,473

(71)

17,402

 

 

 

 

 

Liabilities

 

 

 

 

Non-current liabilities

 

 

 

 

Lease liabilities

 

-

4,217

4,217

Financial liabilities

 

6

(6)

-

Provisions

 

32

 

32

Deferred tax

 

41

-

41

 

 

79

4,211

4,290

 

Current liabilities

 

 

 

 

Lease liabilities

 

-

389

389

Financial liabilities

 

87

(87)

-

Trade and other payables

 

12,134

(541)

11,593

Tax payable

 

740

 

740

Provisions

 

587

-

587

 

 

13,548

(239)

13,309

 

 

 

 

 

Total liabilities

 

13,627

3,972

17,599

 

 

 

 

 

Total equity and liabilities

 

31,100

3,901

35,001

 

12. Events after the reporting period

There were no subsequent events that required adjustment to or disclosure in the financial statements for the period from 30 June 2019 to the date upon which the unaudited consolidated interim financial statements were available to be issued.

Independent review report to Nucleus Financial Group plc

               

Report on the  consolidated interim financial statements

Our conclusion

We have reviewed Nucleus Financial Group plc's consolidated interim financial statements (the "interim financial statements") in the interim report of Nucleus Financial Group plc for the 6 month period ended 30 June 2019. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for Companies.

 

What we have reviewed

The interim financial statements comprise:

·      the consolidated statement of financial position as at 30 June 2019;

·      the consolidated statement of comprehensive income for the period then ended;

·      the consolidated statement of cash flows for the period then ended;

·      the consolidated statement of changes in equity for the period then ended; and

·      the notes to the interim financial statements.

The interim financial statements included in the interim report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for Companies.

 

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

Responsibilities for the interim financial statements and the review

 

Our responsibilities and those of the directors

The interim report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements.

 

Our responsibility is to express a conclusion on the interim financial statements in the interim report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the AIM Rules for Companies and for no other purpose.  We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

 

 

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

 

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

Edinburgh

9 September 2019

 

Definitions and glossary of technical terms

 

The following definitions apply throughout this document:

Industry-specific financial

performance measures

Included within this results announcement are alternative measures that the directors believe help to inform the results and financial position of the group.

 

Adjusted

Denotes that a standard or defined financial performance measure is adjusted for non-recurring items, transactions that do not reflect the normal operating activities of the group and share based payments.

 

Adjusted EBITDA

Adjusted EBITDA excludes non-operating income, AIM admission costs and share-based payments, and include ROU asset depreciation and ROU liability interest.

Adjusted EBITDA margin

Adjusted EBITDA expressed as a percentage of net revenue.

 

Adjusted earnings per share (EPS)

Value of adjusted profit after tax divided by weighted average number of shares.

 

Adjusted profit after tax

The adjusted profit before tax less the adjusted profit before tax multiplied by the standard rate of corporation tax in the UK.

AUA

Assets under administration.

 

Average AUA

The average AUA balance for the period is calculated as the average of the end of day AUA balances during the period.

 

Blended revenue yield (bps)

Revenue is divided by the average assets under administration. For interim periods the revenue is annualised using the number of days in the period.

 

Capital adequacy ratio

A capital adequacy measure calculated by dividing regulatory capital over risk weighted exposures.

Capital adequacy ratio-underlying

Capital adequacy ratio that includes current year profits in the capital measure.

 

EBITDA

Earnings before interest, tax, depreciation and amortisation.

 

Gross inflows

Value of cash and assets received onto the platform.

 

Industry-specific financial-

performance measures

Included within this results announcement are alternative measures that the directors believe help to inform the results and financial position of the group.

 

Net inflows

 

Value of Gross inflows less Outflows.

Outflows

Value of cash and assets leaving the platform.

 

ROU asset/liability

Right of use asset/liability


 

Glossary

 

 

AIM Rules

The rules published by London Stock Exchange entitled "AIM Rules for Companies".

 

BPO

Business process outsourcing. The contracting of the operations and responsibilities of a specific business process to a third-party service provider.

 

Customers

The customers of Nucleus, whose assets are managed on the platform through a financial adviser.

 

Clients

The customers of financial advisers who are referred to as clients, whose assets are managed on the platform.

 

FCA

The Financial Conduct Authority.

 

FSCS

Financial Services Compensation Scheme

GDPR

The General Data Protection Regulation (Regulation (EU) 2016/679).

 

IFRS

International Financial Reporting Standards as adopted by the European Union.

 

Mifid II

The EU Markets in Financial Instruments Directive (2014/65/EU).

 

NIFAC

Nucleus IFA Company Limited

NFS

Nucleus Financial Services Limited.

 

"Nucleus" or the "Group"

The Company and its Subsidiaries.

 

LTIP

Long term incentive plan

PROD rules

Product Intervention and Product Governance Sourcebook rules

Sanlam

Sanlam UK Limited.

 

 

 

 

 

 

 

 

 

 

 


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.
 
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Interim Results - RNS