TIDMCBP
RNS Number : 6892Y
Curtis Banks Group PLC
08 September 2022
8 September 2022
Curtis Banks Group plc
Interim Results for the 6 Months to 30 June 2022
Curtis Banks Group PLC (AIM: CBP) ("Curtis Banks" or the
"Group"), one of the UK's leading SIPP providers, announces its
interim results for the 6 months to 30 June 2022.
Financial Highlights
-- Group revenue maintained at GBP32.2m (H1 2021: GBP32.3m1)
-- Pension administration revenue increased by 4.0% to GBP28.1m (H1 2021: GBP27.1m(1) )
-- FinTech revenue from external customers declined by 21.2% to GBP4.1m (H1 2021: GBP5.2m)
-- Group adjusted operating margin2 of 20.1% (H1 2021: 22.7%1)
-- Pension administration adjusted operating margin of 20.2% (H1 2021: 20.5%)
-- FinTech adjusted operating margin of 17.3% (H1 2021: 22.8%)
-- Adjusted profit before tax2 decreased by 12.4% to GBP6.0m (H1 2021: GBP6.9m1)
-- Loss before tax of GBP5.3m (H1 2021: Profit before tax of
GBP5.1m1), impacted by a GBP9.8m goodwill impairment charge
relating to Dunstan Thomas
-- Adjusted diluted EPS2 of 7.3p (H1 2021: 8.3p1)
-- Interim dividend of 2.5p per share (H1 2021: 2.5p)
Operational Highlights
-- Total core Mid and Full SIPPs, now 56,485 (June 2021: 55,620)
-- Annualised net growth2 of core Mid and Full SIPP at 1.9% (H1 2021: 2.3%)
-- Annualised gross organic growth(2) in core Mid and Full SIPP
numbers of 7.1% (H1 2021: 8.6%), with Mid SIPP annualised gross
organic growth at 9.3% (H1 2021: 12.1%)
-- Annualised attrition rate2 on core Mid and Full SIPPs of 5.3%
(2021: 6.3%) reflecting initiatives taken by management to improve
service levels across the Group
-- Assets under Administration ("AuA") increased by 3.1% to GBP37.1bn (June 2021: GBP36.0bn)
-- Dunstan Thomas continues to face revenue headwinds reflecting
a reduction in project activities and lower than expected new sales
in H1 2022
Key Performance Indicators Unaudited *As restated Audited year
six month period Unaudited six ended 31 December
ended 30 June month period ended 2021
2022 30 June 2021
Financial
Revenue1 GBP32.2m GBP32.3m GBP63.3m
Adjusted profit before tax2 GBP6.0m GBP6.9m GBP14.0m
(Loss) / Profit before tax1 (GBP5.3m) GBP5.1m GBP9.3m
Adjusted operating margin2 20.1% 22.7% 23.5%
Diluted EPS (11.2p) 6.3p 11.5p
Adjusted diluted EPS2 7.3p 8.3p 16.9p
Operational Highlights
Number of Mid and Full SIPPs
Administered 56,485 55,620 55,971
Assets under Administration GBP37.1bn GBP36.0bn GBP37.4bn
Total organic new Full & Mid
SIPPs 1,996 2,352 4,329
Annualised gross organic growth
in Full & Mid SIPPs 7.1% 8.6% 7.9%
Annualised attrition rate on
Full & Mid SIPPs 5.3% 6.3% 6.1%
Number of properties administered 9,006 9,131 9,065
1 As further detailed in note 2.4, results for the 6 months
ended 30 June 2021 have been restated to reflect a correction to
revenue generated from arrangement of property insurance for
properties held within SIPPs and SSASs administered by the
Group.
2 In addition to statutory IFRS performance measures, the Group
has presented a number of non-statutory alternative performance
measures ("APMs"). The Board believes that the APMs used give a
more representative view of the underlying performance of the Group
and enhance comparability of information between reporting periods.
APMs are identified in the definitions at the end of this
announcement.
David Barral, Executive Chairman of Curtis Banks, commented:
"Against a challenging macro-economic backdrop, Curtis Banks has
demonstrated the resilient nature of its business model. Group
revenue was maintained at GBP32.2m with our fixed fee model
providing protection against market volatility and inflation.
"Our core SIPP business remained stable and grew by 1.9% in H1
with strong underlying growth in in our core Mid and Full SIPP
products of 7.1%. Although our FinTech segment delivered lower than
expected results against challenging market conditions, we are
positive on the medium-term outlook for Dunstan Thomas to grow its
pipeline, while continuing to support the Group's wider technology
strategy.
"I would like to thank my colleagues for their ongoing hard work
and dedication during these challenging times. It is particularly
pleasing to report continued improvement in our service levels,
leading to a 50% reduction in complaints and a full percentage
point improvement in the attrition rate.
"Despite headwinds from market conditions, Curtis Banks has a
strong balance sheet with a material regulatory capital surplus
that provides good dividend cover, as well as benefitting from
additional upside from rising interest rates. My priority is now to
maximise the potential of the core SIPP business while unlocking
improved operating performance across the Group and building a
high-performing culture."
Analyst Presentation
An analyst briefing is being held today, 8 September at 09:30
BST via an online video conference facility. To register your
attendance, please contact curtisbanks@instinctif.com .
For more information, please contact:
Curtis Banks Group plc via Instinctif Partners
David Barral - Executive Chairman
Dan Cowland - Chief Financial Officer
Peel Hunt LLP (Nominated Adviser
& Joint Broker)
James Britton
Paul Shackleton +44 (0) 20 7418 8900
Singer Capital Markets Limited
(Joint Broker)
Mark Taylor
Rachel Hayes +44 (0) 20 7496 3000
Instinctif Partners (Financial curtisbanks@instinctif.com / +44
PR) (0) 20 7457 2020
Tim Linacre
Victoria Hayns
Joe Quinlan
Executive Chairman's Review
Summary
The results demonstrate that the Group has a fundamentally
solid, resilient business model despite the challenging macro
environment. Our core Mid and Full SIPP business achieved modest
growth of 1.9% (H1 2021 2.3%) with underlying sales growing 7.1%
gross in H1 2022 (H1 2021: 8.6%). Service recovery has driven a 50%
reduction in complaints volumes and a 1% improvement in annualised
attrition rates down to 5.3% (H1 2021: 6.3%).
Group revenues were maintained at GBP32.2m (H1 2022 restated:
GBP32.3m) underpinned by our fixed fee, inflation-linked pricing
model which provides resilience and protection against falling
markets. We have also benefited from rising interest rates and
expect the upward yield curve will continue to positively impact
interest on deposits in the next reporting period.
The FinTech segment has delivered lower than expected results in
the period, with revenues down 14.8% to GBP4.9m, reflecting a
reduction in project activity from one of its major clients and
lower new business in H1 2022.
The Group has delivered adjusted profit before tax of GBP6.0m
(H1 2021: GBP6.9m) and has a strong balance sheet and cashflow,
with prudent regulatory capital surplus providing good dividend
cover.
Our operating model is robust, however we recognise that more
needs to be done to extract the benefits of operating leverage that
will come through simplifying our technology and administration
systems.
SIPP Administration
Despite the challenging macro-economic backdrop, our core Mid
and Full SIPP products grew organically by 7.1% on a gross
annualised basis (H1 2021: 8.6%) reflecting continued positive
momentum. Our Mid SIPP product experienced particularly strong
gross organic growth of 9.3% (H1 2021: 12.1%) and net growth of
4.4% (H1 2021: 6.0%). In combination, the core Mid and Full SIPPs
products increased on an annualised basis by 1.9% to 56,485 (H1
2021: 55,620), which is at the bottom-end of our target range of
2-6% despite the challenging macro-economic backdrop. In H1 2022,
we added 1,996 new Mid and Full SIPPs across 260 adviser firms and
wealth managers, of which 87 were new relationships and 96% are
Your Future SIPPs.
Attrition levels were materially lower at 5.3% (H1 2021: 6.3%),
reflecting improving service levels across the business. We
continue to have an attractive and loyal client base and our
average case size of c.GBP460k is amongst the highest in the
industry with one-third of our clients having been with the
business for over 10 years.
The Talbot & Muir business we acquired in 2020 has also
demonstrated strong client retention and growth.
As at 30 June 2022, the total number of non-core SIPPs
administered decreased to 22,505 (H1 2021: 25,377), following the
ongoing managed reduction in these lower margin eSIPP and TPA
products in line with our expectations, and this will continue for
the medium-term.
Fintech business
The segment has performed below the Group's expectation in the
period, with revenues of GBP4.9m (H1 2021: GBP5.8m) due to
difficulty in securing material new external revenue and a
reduction in project activity from a key client. However, over 67%
of Fintech revenues are recurring in nature, reflecting the
financial strength from long-term licensing arrangements. The Board
remains focused on improving the performance of Dunstan Thomas's
third party business, and the sales pipeline for H2 2022 and FY23
remains strong with expectation of increased margins.
Dunstan Thomas continues to support the successful delivery of
Curtis Banks's own technology strategy, providing internal
efficiencies and enhancing our capabilities. CB Labs, established
in conjunction with Dunstan Thomas's technical expertise, has
delivered chatbots and a pension calculator for advisers, and the
additional projects will further strengthen our product offerings.
It is also prototyping a bank of technical concepts, including the
adoption of machine learning and integration of capabilities
directly on IFA platforms. As an integral part of the Group, we
expect to further leverage on Dunstan Thomas's expertise in FinTech
to help us continue to develop our propositions for advisers and
clients.
Target Operating Model
Although good progress had previously been made on the
consolidation of our back office administration systems, which had
a target date for completion of 2024, it has been a challenging
period given the level of regulatory change and organisational
activity across the Group. Whilst we have already delivered a
number of elements of the programme, the completion date of 2024 is
currently at risk.
We have made changes to the operations management structure to
improve efficiency and enhance accountability as we progress
towards our target operating model. We have also transitioned the
Dundee workforce to home based working resulting in the closure of
the Dundee office.
People, Culture and Environmental, Social and Governance ('ESG')
update
The delivery of our strategy is only possible with the right
people and culture underpinning it. I would like to thank my
colleagues once again for their hard work and energy through a
challenging period where they continue to deliver exceptional
service to our advisers and their clients.
In May 2022, Chris Macdonald (Chairman) and Jules Hydleman
(Non-Executive Director) retired from the board. Christopher Mills
and I have joined the Board as the new Non-Executive Director and
Chairman respectively.
In August 2022, Will Self stepped down as Chief Executive
Officer and Executive Director of the Group Board. I would like to
thank Will for the commitment that he has shown to the business and
the huge contribution that he has made throughout his time with the
Group. Executive searches are underway to find a successor to lead
the Group into the future, and in the interim, I have assumed the
role of Executive Chairman.
Earlier this year we launched the Group's purpose-led ESG
strategy, which set out our priorities and plans, particularly
around the issue of intergenerational fairness. As part of this a
second report from the Intergenerational Foundation sponsored by
the Group is due to be published in September 2022. The Foundation
will also start an independent review of our flagship Your Future
SIPP product which supports our work around the upcoming Consumer
Duty regulations.
In July 2022, we became the first FinTech firm to deliver
training on 'Unconscious bias in software' to Dunstan Thomas which
was a great first step to help the employees of our FinTech
subsidiary to better understand themselves, their assumptions about
the market place, their blind sides and their strengths when
producing software for clients to ensure that it is the best it can
be. We continue seek proactive opportunities for training within
the Group to ensure that all processes and procedures are
undertaken impartially.
We have considered our pricing decisions for more
environmentally friendly commercial properties in SIPPs. The first
steps to understand the efficiency of the properties held within
our SIPP portfolio has been completed. We are engaging with our
client base to proactively maintain compliance with Minimum Energy
Efficiency Standards (MEES) throughout our SIPP/SSAS Property
portfolios. Additionally, we have written to clients who may be
affected by upcoming MEES regulations, to notify them of their
options and request their instruction and cooperation.
Initial ESG KPIs have been defined and work is underway to
identify how we can capture and report the relevant data.
We will continue to honour our ongoing commitment to paid leave
for employees to conduct environmentally beneficial
initiatives.
Outlook
Revenue and profit margins are expected to increase in the
medium term as interest on deposits benefits from the upward yield
curve, and the continued enhancement of our product offering and
improvement in service levels.
Headwinds remain but an opportunity exists to further improve
the operating performance of the Group. In particular, the
management team will be focused on:
-- maximising the potential of the core SIPP business;
-- getting Dunstan Thomas back on track;
-- refining the systems strategy;
-- continuing to deliver service improvements for clients and advisers; and
-- strengthening the leadership team and building a high performing culture.
As part of my new role, I intend to fully assess how Curtis
Banks can address these challenges against the backdrop of an
evolving sector and market landscape. Depending on the timing of
appointment of a new CEO, either the new CEO or I will provide the
market with an update on how we are progressing against these areas
in due course.
David Barral
Executive Chairman
7 September 2022
Chief Financial Officer's Review
Results
Group financial performance for the six month period to 30 June
2022 resulted in an adjusted profit before tax of GBP6.0m (H1 2021
restated: GBP6.9m), generating an adjusted operating margin of
20.1% (H1 2021 restated: 22.7%). By segment, pension administration
achieved a largely consistent adjusted operating margin of 20.2%
(H1 2021 restated: 20.5%); while FinTech segment's adjusted
operating margin decreased to 17.3% (H1 2021: 22.8%). Adjusted
diluted EPS reduced to 7.3p (H1 2021 restated: 8.3p), while diluted
EPS on a statutory basis reduced to -11.2, i.e. a loss per share
(H1 2021 restated: 6.1p).
On a statutory basis, the loss before tax of GBP5.3m (H1 2021
restated: profit before tax of GBP5.1m) has been materially driven
by an impairment charge of GBP9.8m against the value of goodwill
relating to the acquisition of Dunstan Thomas, the business segment
that has experienced difficulty securing material new revenue flows
in the 6 months ended 30 June 2022, in addition to a reduction in
project activity from a key client during the period.
The challenging economic conditions of the first six months of
2022 has been reflected in the net growth in own Mid and Full SIPP
plan numbers of 1.9% being at the lower end of our target range.
The financial performance has been largely offset by an improvement
in interest income delivered by the yield curve steepening and a
reduction in regulatory costs incurred. In a challenging market
place, organic sales have remained robust (although marginally down
on H1 2021), and attrition in Full & Mid SIPPs has improved
compared to H1 2021.
While we are clearly aware of the uncertainty resulting from the
war in Ukraine and global inflation, we do not expect this
uncertainty and cost pressure to have a significant impact on the
Group's operations into the foreseeable future given the fixed fee
nature of our SIPP revenue and the lack of direct exposure from our
key suppliers and customers. We continue to monitor the situation
for any new developments that might warrant a change in this
assessment.
The Group reports certain Alternative Performance Measures
("APMs") which we believe provide greater clarity to stakeholders
over the Group's underlying performance and better enables them to
form a view on the Group's future prospects. The principal APMs
adopted are Adjusted Profit before Tax, Adjusted EPS and Adjusted
Operating Margin, and these are discussed in further detail
below.
Adjusting items are classified as such when the nature and
quantum of the income or expense is significant and arises from a
business event or activity that does not form part of usual day to
day operations. Examples of such items include acquisitions, any
subsequent re-measurement of contingent deferred consideration,
office relocations and restructuring activities.
The relevant reconciliation table is shown below for H1 2022
alongside comparatives:
GBP'000 6 month Restated Year ended
period ended 6 month 31 December
30 June period ended 2021
2022 30 June
2021
Revenue 32,186 32,286 63,307
Adjusted operating cost (25,732) (24,959) (48,402)
Adjusted operating profit 6,454 7,327 14,905
Adjusted operating margin 20.1% 22.7% 23.5%
Finance income 36 9 20
Interest expense (461) (452) (921)
-------------- -------------- -------------
Adjusted profit before tax 6,029 6,884 14,004
============== ============== =============
Adjusting items:
Dunstan Thomas acquisition costs - (15) (70)
Talbot & Muir acquisition costs - (62) (63)
Other M&A related costs 424 33 (1,401)
Movement on contingent consideration
relating to acquisitions 314 571 1,870
Discount unwind on contingent consideration (264) (580) (879)
Redundancy & restructuring costs (564) (185) (626)
In-specie contributions - (51) 76
Centralisation of pension administration
system (119) (123) (322)
Treasury solution implementation - - (45)
Data cleansing provision 64 - (288)
Adjusting items (146) (412) (1,748)
--------------------------------------------- -------------- -------------- -------------
Goodwill impairment (9,813) - -
Amortisation of acquired intangibles (1,418) (1,418) (2,934)
-------------- -------------- -------------
IFRS (loss) / profit before tax (5,348) 5,054 9,322
============== ============== =============
Taxation (2,092) (931) (1,603)
-------------- -------------- -------------
(Loss) / Profit after tax (7,440) 4,123 7,719
============== ============== =============
Adjusted EPS
Basic 7.3 8.4 17.1
Diluted 7.3 8.3 16.9
Revenues
Revenues of GBP32.2m in the six months ended 30 June 2022 were
marginally lower than the comparable period (H1 2021 restated:
GBP32.3m). Despite inflationary rises in fees levied, an increase
in interest income and net growth in Full and Mid SIPPs, the Group
saw a material reduction in Fintech revenue from Dunstan Thomas and
a reduction in transactional fee volumes. In addition, the Group
continued to progress its managed reduction in non-core eSIPP and
TPA products.
Fee revenue from SIPPs and SSASs remains the predominant source
of income for the Group with a strong emphasis on recurring annual
fee income. In the six months ended 30 June 2022, fee income
represented 71% of the total income and 89% of this fee income is
recurring (H1 2021: 87%). Interest income has seen a GBP1.1m
increase on the prior period comparative whilst the Fintech revenue
contribution from Dunstan Thomas has fallen by GBP1.1m.
SIPP fees are based on a recurring fixed monetary annual fee and
a menu of additional fixed fees depending on the services provided
to the SIPP. The annual fees for the Curtis Banks Mid and Full SIPP
products were amended as at 1(st) February 2021 and at the same
time we made a clear commitment to our clients as to how we will
share interest revenue with them and therefore remove any
discretion. All of the fees that are applied to our SIPP products
are subject to contractual annual inflationary rises linked to the
measurement of Average Weekly Earnings ("AWE").
Fees are not dependent on movements in the value of underlying
assets within the SIPP and as a result the recurring fee income of
the Group is not directly affected by the volatility in financial
markets. This is a key differential that sets us apart from most of
our competitors and provides an attractive product in terms of
competitive fees for higher value SIPPs. As the value of a SIPP
increases our product becomes increasingly affordable from a basis
points perspective.
The dramatic change in interest rates since December 2021 has
seen interest income increase to GBP5.3m for the period, compared
to GBP4.2m for H1 2021. Client deposits remained relatively stable
across the period and as at 30 June 2022 the Group held GBP1.022bn
(H1 2021: GBP1.052bn) of client deposits across a range of UK, PRA
regulated banking counterparties and managed the cash in line with
its mature Treasury Framework. As at the reporting date, the Group
is paying 0.28% on client cash held within their SIPPs and this is
expected to increase effective 1 October 2022 following further
increases to the Bank of England base rate and the level of
interest achieved on cash being deposited over the past
quarter.
Revenues generated by Dunstan Thomas were down GBP1.1m with the
challenging sales environment due to the COVID-19 pandemic
resulting in a lag and longer conversion from pipeline
opportunities to revenue crystallisation, further exacerbated by a
reduction of project income from a key client and the current
economic climate. The challenging first half performance has
resulted in a reduction of GBP0.3m to the total related contingent
consideration expected to be payable over the earn out period and a
corresponding credit to the consolidated statement of comprehensive
income. The remaining earn outs for the acquisitions of Talbot and
Muir and Dunstan Thomas are expected to be paid out in H1 2023,
therefore the full remaining contingent consideration balance now
resides in current liabilities and no balance is left within
non-current liabilities.
Expenses
The period ended 30 June 2022 saw administrative expenses,
excluding amortisation and impairment on acquired intangibles and
adjusting items, increase slightly to GBP25.5m (H1 2021:
GBP25.0m).
Strict cost discipline saw staff costs increase by just 1% to
GBP17.9m (2021: GBP17.7m) although with cost of living pressures it
is expected that these costs will see high single digit percentage
figure increases when reviewed towards the end of the year. This
will be offset by the inflationary increase of our SIPP product
pricing. As reported last year, staff costs in the period now also
include share based payment awards under the Group's Long Term
Incentive Plan and Save As You Earn ("SAYE") option schemes to all
Group companies, including Dunstan Thomas and Talbot Muir.
Overall headcount stood at 824 as at 30 June 2022 compared to
823 as at 30 June 2021.
Non-staff costs in aggregate grew to GBP7.8m from GBP7.3m in H1
2021, driven by higher professional fees and an increase in
compensation cost despite a decrease in complaint volumes due to
two individual high value financial detriment cases.
The Group continues to take steps to improve its adjusted
operating margin through a combination of revenue enhancements,
cost saving measures and operational improvements. We have made
good progress on our systems strategy but despite the progress made
to date, the original completion date of 2024 is at risk due to the
level of regulatory change and organisational activities.
Adjusting items
Adjusting items for the six months ended 30 June 2022 were a net
expense of GBP0.1m (H1 2021: net expense of GBP0.4m) and comprise
principally of internal restructuring costs and some of the
external costs associated with the acquisitions of Dunstan Thomas
and Talbot and Muir. A credit of GBP0.4m has been recognised in the
period described as other M&A related costs which relates to
contingency fees no longer payable on a potential corporate
transaction which did not subsequently proceed.
Accounting Policies
There have been no changes in accounting policies during the
period although t he unaudited results for the period ended 30 June
2021 have been restated to reflect a correction to revenue
generated from arrangement of property insurance for properties
held within SIPPs and SSASs administered by the Group. The impact
of this is described in note 2.4 to these financial statements.
Cash flows
Shareholder cash balances at period end were GBP24.8m compared
to GBP32.2m at the end of June 2021.
Net cash inflows from shareholder operating activities for the
period were GBP4.3m (H1 2021: GBP7.2m), the decrease was due to
exceptionally larger cash inflows in H1 2021 from the cash
attributable to the additional working capital introduced from
Dunstan Thomas and Talbot and Muir, a reduction in profit in the
period, offset by a reduction of tax paid in the period.
Net cash outflows from investing activities for the period were
GBP4.0m (H1 2021: GBP0.7m) which is largely attributable to the
deferred consideration paid on the Talbot and Muir acquisition, of
GBP2.7m, and the addition of intangible assets of GBP1.2m which
relate primarily to product development activity within Dunstan
Thomas and computer software.
Net cash outflows from financing activities increased to
GBP7.4m, from GBP6.8m in H1 2021, with the increase coming from
higher lease payments and interest costs.
Suffolk Life Annuities Limited
Part of the Group, 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 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 30 June 2022 showing the financial position of the Group
excluding the policyholder assets and liabilities is included as
supplementary information after the notes to the financial
statements. An illustrative cash flow on the same basis has also
been provided.
Capital Requirements
The Group's regulated subsidiary companies submit regular
returns to the FCA and the PRA relating to their capital resources.
At 30 June 2022 the total regulatory capital requirement across the
Group was GBP15.0m (30 June 2021: GBP15.1m) and the Group had an
aggregate surplus above this of GBP11.6m (30 June 2021: GBP15.7m)
across all regulated entities. The reduction of surplus is
primarily impacted by the increase in interest income receivable
over 90 days from the uplift of interest rate which is considered
illiquid asset. 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 and this has been maintained
throughout the period.
Financial Position
The statement of Financial Position as at 30 June 2022 reflects
shareholder net assets decreasing from GBP80.7m at 30 June 2021 to
GBP70.0m as at 30 June 2022 primarily as a result of the GBP9.8m
impairment charge taken during the current period and GBP4.3m
dividends paid.
As at 30 June 2022 the Group had net shareholder cash (after
debt) of GBP6.9m (30 June 2021: GBP10.4m).
Dan Cowland
Chief Financial Officer
7 September 2022
Condensed consolidated statement of comprehensive income
Unaudited *As restated Audited year
6 month period Unaudited ended 31 December
ended 30 June 6 month period 2021
2022 ended 30 June
2021
Total Total Total
Notes GBP'000 GBP'000 GBP'000
Revenue 32,186 32,286 63,307
Administrative expenses (27,030) (26,209) (52,205)
Impairment of goodwill 5 (9,813) - -
Policyholder investment
returns (173,653) 216,954 466,811
Non-participating investment
contract expenses (17,446) (17,090) (33,850)
Changes in provision:
non-participating investment
contract liabilities 191,099 (199,864) (432,961)
---------- ---------- ----------
Policyholder total - - -
--------- --------- ---------
Operating (loss) /
profit (4,657) 6,077 11,102
Finance income 36 9 20
Finance costs (727) (1,032) (1,800)
--------- --------- ---------
(Loss) / Profit before
tax (5,348) 5,054 9,322
Taxation (2,092) (931) (1,603)
--------- --------- ---------
Total comprehensive (loss)/income (7,440) 4,123 7,719
========= ========= =========
Attributable to:
Equity holders of the
company (7,440) 4,129 7,723
Non-controlling interest - (6) (4)
--------- --------- ---------
(7,440) 4,123 7,719
========= ========= =========
(Loss) / earnings per
share on net (loss)/profit
Basic (pence) (11.2) 6.2 11.6
Diluted (pence) (11.2) 6.1 11.5
*The unaudited results for the 6 months ended 30 June 2021 have
been restated to reflect a correction to revenue generated from
arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group. The adjustments made to
restate the 30 June 2021 comparatives, as further detailed in note
2.4, have not been subject to audit.
Condensed consolidated statement of changes in equity
Equity
share
Issued Share based Treasury Retained Non-controlling Total
capital premium payments shares earnings* Total* interest Equity*
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1
January
2021 -
audited 330 57,799 2,747 (741) 20,134 80,269 14 80,283
Comprehensive
income
for the
period - - - - 3,669 3,669 (6) 3,663
Restatement of
revenue* - - - - 568 568 - 568
Share based
payments - - 92 - - 92 - 92
Ordinary
shares bought
and sold by
EBT - - - 301 - 301 - 301
Ordinary
shares issued 2 288 - - - 290 - 290
Deferred tax
on share
based
payments - - - - (99) (99) - (99)
Ordinary
dividends
paid - - - - (4,338) (4,338) - (4,338)
---------
As at 30 June
2021
- unaudited 332 58,087 2,839 (440) 19,826 80,644 8 80,652
Comprehensive
income
for the
period - - - - 3,594 3,594 2 3,596
Share based
payments - - 1 - - 1 - 1
Deferred tax
on share
based
payments - - - - (6) (6) - (6)
Ordinary
shares bought
and sold by
EBT - - - (942) - (942) - (942)
Ordinary
dividends
paid - - - - (1,659) (1,659) - (1,659)
---------
As at 31
December
2021 -
audited 332 58,087 2,840 (1,382) 21,755 81,632 10 81,642
Comprehensive
loss
for the
period - - - - (7,440) (7,440) - (7,440)
Share based
payments - - 61 - - 61 - 61
Ordinary
shares bought
and sold by
EBT - - - 5 - 5 - 5
Ordinary - - - - - - - -
shares issued
Deferred tax
on share
based
payments - - - - 58 58 - 58
Ordinary
dividends
paid - - - - (4,321) (4,321) - (4,321)
As at 30 June
2022
- unaudited 332 58,087 2,901 (1,377) 10,052 69,995 10 70,005
======== ======== ========= ========= ========== ======== ================ ========
*The unaudited results for the 6 months ended 30 June 2021 have
been restated to reflect a correction to revenue generated from
arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group. The adjustments made to
restate the 30 June 2021 comparatives, as further detailed in note
2.4, have not been subject to audit.
Condensed consolidated statement of financial position
Unaudited *As restated Audited
30-Jun-22 Unaudited 31-Dec-21
GBP'000 30-Jun-21 GBP'000
Notes GBP'000
ASSETS
Non-current assets
Intangible assets 5 79,639 90,475 89,814
Investment property 1,346,912 1,214,551 1,316,468
Property, plant and equipment 7,885 9,395 8,636
Investments 1,959,405 2,137,522 2,224,965
3,393,841 3,451,943 3,639,883
------------ --------------- ------------
Current assets
Trade and other receivables 30,630 29,431 27,981
Cash and cash equivalents 401,294 401,110 410,133
Current tax asset 779 550 957
------------ --------------- ------------
432,703 431,091 439,071
------------ --------------- ------------
Total assets 3,826,544 3,883,034 4,078,954
------------ --------------- ------------
LIABILITIES
Current liabilities
Trade and other payables 19,915 20,915 20,853
Deferred income 33,340 30,533 29,960
Borrowings 51,364 42,079 46,832
Lease liabilities 911 837 964
Provisions 453 453 453
Contingent consideration 4,930 2,467 2,467
110,913 97,284 101,529
------------ --------------- ------------
Non-current liabilities
Borrowings 38,351 48,202 43,957
Lease liabilities 6,255 7,164 6,774
Provisions 66 7 178
Contingent consideration - 6,454 5,199
Non-participating investment
contract liabilities 3,596,355 3,639,582 3,836,211
Deferred tax liability 4,599 3,689 3,464
3,645,626 3,705,098 3,895,783
------------ --------------- ------------
Total liabilities 3,756,539 3,802,382 3,997,312
------------ --------------- ------------
Net assets 70,005 80,652 81,642
------------ --------------- ------------
Equity attributable to
owners of the parent
Issued capital 332 332 332
Share premium 58,087 58,087 58,087
Equity share based payments 2,901 2,839 2,840
Treasury shares (1,377) (440) (1,382)
Retained earnings 10,052 19,826 21,755
------------ --------------- ------------
69,995 80,644 81,632
Non-controlling interest 10 8 10
Total equity 70,005 80,652 81,642
------------ --------------- ------------
*The unaudited results for the 6 months ended 30 June 2021 have
been restated to reflect a correction to revenue generated from
arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group. The adjustments made to
restate the 30 June 2021 comparatives, as further detailed in note
2.4, have not been subject to audit.
Approved by the Board and authorised for issue on 7 September
2022.
Dan Cowland
Chief Financial Officer
Condensed consolidated statement of cash flows
*As restated
Unaudited Unaudited
6 month 6 month Audited
period ended period ended year ended
30-Jun-22 30-Jun-21 31-Dec-21
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
(Loss) / profit before
tax (5,348) 5,054 9,322
Adjustments for:
Depreciation 849 915 1,806
Amortisation and impairments 11,364 1,445 2,934
Finance costs 727 452 1,800
Share based payment expense 61 92 93
Fair value gains on movement
in contingent consideration (314) - (1,870)
Fair value losses / (gains)
on financial investments 240,241 (143,455) (213,701)
Additions of financial investments (340,591) (336,457) (647,479)
Disposals of financial investments 365,910 414,708 708,532
Fair value gains on investment
properties (33,147) (11,278) (120,416)
(Decrease)/increase in liability
for investment contracts (239,856) 54,278 250,904
Changes in working capital:
Increase in trade and other
receivables (2,650) (2,365) (1,330)
Increase in trade and other payables 2,196 5,323 5,017
Taxes paid (588) (1,324) (2,410)
Net cash flows from operating
activities (1,146) (12,612) (6,798)
-------------- -------------- ------------
Cash flows from investing
activities
Purchase of intangible
assets (1,189) (842) (1,670)
Purchase of property, plant & equipment (97) (169) (270)
Purchase of investment property (49,463) (52,176) (92,456)
Purchase and sale of shares
in the Group by the EBT 5 301 (641)
Receipts from sale of investment
property 52,166 57,506 105,009
Net cash flows from acquisitions (2,687) 9 (255)
Net cash flows used in investing
activities (1,265) 4,629 9,717
-------------- -------------- ------------
Cash flows from financing activities
Equity dividends paid (4,321) (4,338) (5,997)
Net proceeds from issue of ordinary
shares - 290 290
Net decrease in borrowings (1,074) (16,670) (16,114)
Principal elements of lease payments (572) (490) (762)
Interest paid (461) (277) (781)
Net cash flows used in financing
activities (6,428) (21,485) (23,364)
-------------- -------------- ------------
Net decrease in cash and cash
equivalents (8,839) (29,468) (20,445)
-------------- -------------- ------------
Cash and cash equivalents at the
beginning of the period 410,133 430,578 430,578
============== ============== ============
Cash and cash equivalents at the
end of the period 401,294 401,110 410,133
============== ============== ============
*The unaudited results for the 6 months ended 30 June 2021 have
been restated to reflect a correction to revenue generated from
arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group. The adjustments made to
restate the 30 June 2021 comparatives, as further detailed in note
2.4, have not been subject to audit.
Notes to the financial statements
1 Corporate information
Curtis Banks Group PLC ("the Company") is a public limited
company incorporated and domiciled in England and Wales, whose
shares are publicly traded on the AIM market of the London Stock
Exchange PLC. The interim condensed consolidated financial
statements were authorised for issue in accordance with a
resolution of the Directors on 7 September 2022.
The principal activity of the Group is that of the provision of
pension administration services principally for Self-Invested
Personal Pension schemes ("SIPPs") and Small Self-Administered
Pension schemes ("SSASs"). The Group is staffed by experienced
professionals who all have proven track records in this sector.
2 Basis of preparation and accounting policies
2.1 Basis of preparation
The interim condensed consolidated financial statements comprise
the Company and its subsidiaries ("the Group") and have been
prepared on a historical cost basis modified by revaluation of
financial assets and financial liabilities through profit and loss
where held at fair value, and are presented in pounds sterling,
with all values rounded to the nearest thousand pounds except when
otherwise indicated.
The interim condensed consolidated financial statements have
been prepared in accordance with UK adopted IAS 34 Interim
Financial Reporting except for certain requirements in relation to
financial instrument disclosure. The board has considered the
requirements of UK adopted IAS 34 in relation to policyholder
assets and liabilities and, given the unit-linked nature of these
assets and liabilities, has concluded that revaluing certain
policyholder financial instruments for the purposes of these
interim financial statements would incur expense which is
disproportionate to any potential benefits of doing so. Further,
the board considers that the omission of updated valuations for
these certain policyholder financial instruments will not influence
the economic decisions of users of these financial statements, as
all revenue and expenditure associated with these policyholder
assets and liabilities is due back to the policyholders under
non-participating investment contracts and therefore has nil impact
on shareholder equity.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's financial statements for the year ended 31 December 2021,
which were prepared in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the
Companies Act 2006 as applicable top companies reporting under
those standards.
The information relating to the six months ended 30 June 2022
and the six months ended 30 June 2021 is unaudited and does not
constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006. The Group's statutory
financial statements for the year ended 31 December 2021 have been
reported on by its auditor and delivered to the Registrar of
Companies. The report of the auditor was unmodified and did not
contain a statement under section 498(2) or (3) of The Companies
Act 2006.
The interim condensed consolidated financial statements have
been reviewed by the auditor and their report to the Board of
Curtis Banks Group PLC is included within this interim report.
2.2 Basis of consolidation
The interim condensed consolidated financial statements
consolidate the financial statements of the Company and its
subsidiaries up to 30 June each year.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using consistent
accounting policies. All inter-Group balances, income and expenses
and unrealised gains and losses resulting from intra-Group
transactions are eliminated in full.
The trading subsidiaries of Curtis Banks Group PLC as at 30 June
2022 were Curtis Banks Limited, Suffolk Life Pensions Limited,
Suffolk Life Annuities Limited, Rivergate Legal Limited, Dunstan
Thomas Group Limited, and Talbot and Muir Limited.
The trading subsidiaries of Curtis Banks Group PLC as at 30 June
2021 were Curtis Banks Limited, Suffolk Life Pensions Limited,
Suffolk Life Annuities Limited, Rivergate Legal Limited, Templemead
Property Solutions Limited, Dunstan Thomas Group Limited, Digital
Keystone Limited, Dunstan Thomas Holdings Limited, Dunstan Thomas
Consulting Limited, Platform Action Limited, and Talbot and Muir
Limited.
Certain trading subsidiaries of Curtis Banks Group PLC hold the
entire issued share capital of a number of non-trading trustee
companies. All of these companies are nominee companies for the
pension products administered by the trading subsidiaries of Curtis
Banks Group PLC and have been dormant or non-trading throughout the
period and are expected to remain dormant or non-trading.
2.3 Significant accounting policies
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
financial statements for the year ended 31 December 2021.
New standards issued but not yet effective
The IASB and IFRIC have issued standards and interpretations
with an effective date for periods starting on or after the date on
which these financial statements start. There are no newly issued
standards expected to potentially have a material impact on the
condensed consolidated interim financial statements and the
consolidated financial statements to the Group.
2.4 Prior year restatements
IFRS 15 Revenue from contracts with customers
The unaudited results for 6 months ended 30 June 2021 have been
restated to reflect changes to the measurement of progress in the
arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group.
Previously, the associated revenue was recognised on a
straight-line basis over the insurance policy term (1 year). At
FY21 year end, a reassessment of this contract identified an error
in the assessment used to measure progress of this contract at 30
June 2021, and that more progress had been made at 30 June 2021
than previously identified using the input method on cost incurred
of IFRS 15 Revenue from contracts with customers. The change was
adopted in FY21 and immaterial for the full year, therefore no
further adjustment is expected.
The impact of these adjustments on previously reported figures
is summarised in the two tables below:
Consolidated statement Originally reported As restated as at
of financial position as at 30 June 2021 30 June 2021 Movement
GBP'000 GBP'000 GBP'000
Trade and other
receivables 28,863 29,431 568
Current tax asset 658 550 (108)
Retained earnings 19,366 19,826 460
Net assets / Total
equity 460
===========
Consolidated statement Originally reported As restated for
of comprehensive for the 6 months the 6 months ended Movement
income ended 30 June 2021 30 June 2021 GBP'000
GBP'000 GBP'000
Revenue 31,718 32,286 568
Corporation tax (823) (931) (108)
Total comprehensive
income for the year 460
===========
Consolidated statement Originally reported As restated for
of cash flows for the 6 months the 6 months ended Movement
ended 30 June 2021 30 June 2021 GBP'000
GBP'000 GBP'000
Profit before tax 4,486 5,054 568
Increase in trade
and other receivables (1,797) (2,365) (568)
Net increase/(decrease) -
in cash and cash
equivalents
===========
The adjustment increased basic EPS from 5.5p to 6.2p, and
diluted EPS from5.5p to 6.1p.
2.5 Critical accounting judgements and key sources of estimation uncertainty
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. In preparing the financial statements the Group has
selected and applied various accounting policies which are
described in the notes to the financial statements. In order to
apply these accounting policies the Group has made estimates and
judgements concerning the future. The key sources of estimation
uncertainty are disclosed below:
Impairment assessment on the Cash Generating Units
The Group has established 4 cash generating units ('CGUs') that
are closely aligned to the Group's subsidiaries and their distinct
cash flows: namely Curtis Banks ('CB'), Suffolk Life ('SL') Dunstan
Thomas ('DT') and Talbot & Muir ('T&M'). There is goodwill
associated with the latter three CGUs that is not amortised, and
therefore these amounts are subject to annual impairment
assessment. The Curtis Banks CGU will be assessed for impairment if
indicators of impairment are identified. The definition of the CGUs
is the judgement applied.
Impairment assessments are performed by comparing the carrying
amount of the goodwill and intangible assets or investment
associated with the CGU, with the recoverable amount. Recoverable
amount is assessed through value in use which comprises an
estimation of future cash flows expected to arise from each CGU,
discounted to their present value using a pre-tax discount rate.
The following key assumptions are applied across all CGUs:
-- Latest forecasts as presented to the Board;
-- Pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
that asset (11.71%; FY21: 12.95% for CB, SL and T&M; 12.75% for
DT);
-- Terminal growth rate of 2% (FY21: 2.2%), being the long term inflation expectation in the UK;
-- Movement in net working capital, forecasted as a Group and
allocated to each CGU by weighted average operating profit
excluding adjusting items and acquired intangibles
amortisation.
The goodwill impairment assessment performed resulted in
headroom present in each of the relevant CGU other than Dunstan
Thomas:
Suffolk Life Talbot & Muir Dunstan Thomas
GBP'm 30/06/2022 31/12/2021 30/06/2022 31/12/2021 30/06/2022 31/12/2021
Value in use 128.9 93.7 33.3 27.8 16.7 29.7
Goodwill 28.9 28.9 9.8 9.8 17.1 17.1
Non-current
asset 8.3 8.2 8.5 9.4 9.4 10.0
----------- ----------- ----------- ----------- ----------- -----------
Headroom 91.7 56.6 15.0 8.6 (9.8) 2.6
----------- ----------- ----------- ----------- ----------- -----------
An impairment of goodwill associated within the Dunstan Thomas
CGU totalling GBP9,813k has been identified and recognised in the
financial statements for the six month period ended 30 June 2022
(2021: GBPnil). This has arisen following lower than expected
performance in the Dunstan Thomas CGU over the period, which has
led to a reduction in forecast estimates of future cash flows from
this CGU.
Sensitivity analysis was performed on the following stress
scenarios as at 30 June 2022 and the negative impact on headroom is
calculated as follows:
Suffolk Life Talbot & Muir Dunstan Thomas
GBP'm 30/06/2022 31/12/2021 30/06/2022 31/12/2021 30/06/2022 31/12/2021
1% increase in discount
rate (11.9) (8.0) (3.1) (2.4) (1.7) (2.5)
1% decrease in terminal
growth rate (8.0) (6.6) (2.1) (2.0) (1.1) (2.1)
10% reduction in
operating profit
budgeted and forecasted (11.8) (8.3) (3.2) (2.5) (1.9) (3.1)
Amongst the CGUs, Dunstan Thomas is most susceptible to the
stress scenarios, while the other two CGUs are robust against the
stress scenarios in isolation or in aggregate.
IFRS 9 impairment
Trade and other receivables are impaired based on the IFRS 9
simplified approach to measure expected credit losses using a
lifetime expected loss allowance for all trade receivables. The
loss allowances for trade and other receivables are based on
assumptions about risk of default and expected loss rates. The
Group uses judgement in making these assumptions and selecting the
inputs to the impairment calculation, based on the Group's past
history of shared credit risk characteristics, days past due,
existing market conditions, as well as forward looking estimates at
the end of each reporting period.
The loss rates are considered the key source of estimation
uncertainty because the impact of a change in these could result in
a material change in the expected credit loss. The Group determines
its loss rates by reference to the underlying level of liquidity in
each of the Group's clients' SIPPs because clients' fees are
normally settled directly from their SIPP cash holdings. A lower
level of liquidity in the SIPP, or indeed illiquidity, indicates
reduced credit quality in the related trade receivable balance.
Changes in macroeconomic factors may impact the Group's clients'
use of the SIPP and cause the level of liquidity in the SIPP to
increase or decrease. A 10% increase or decrease in loss rates
estimated at the period end would have the following impact:
Increase / (decrease) Effect on profit
in percentage before tax
Period ended 30 June 2022 rates GBP'000
Loss rate 10% (776)
Loss rate (10)% 408
Increase / (decrease) Effect on profit
in percentage before tax
Period ended 30 June 2021 rates GBP'000
Loss rate 10% (807)
Loss rate (10)% 430
The Group charges fixed fees for its services reducing its
exposure to changes in macroeconomic factors such as COVID-19 which
may otherwise impact a percentage basis point fee charging
model.
The Group continually assesses historical recovery data to help
determine how the underlying level of liquidity in the SIPPs fits
into each of the credit quality ratings. Future historical data
available may lead to changes in the estimated categorisation of
trade receivables gross carrying amounts and associated loss
allowance.
Where trade and other receivables have been outstanding for more
than six years, amounts are deemed to have no reasonable
expectation of recovery and are written off.
Contingent consideration payable on acquisitions
The Group has entered into certain acquisition agreements that
provide for contingent consideration to be paid. A financial
instrument is recognised for all amounts management anticipates
will be paid under the relevant acquisition agreement. This
requires management to make an estimate of the expected future cash
flows from the acquired business using forecasts that cover the
contingent consideration period, and determine a suitable discount
rate for the calculation of the present value of any contingent
consideration payments.
A material change to the carrying value might occur if the
acquired businesses achieve significantly more or less than their
target earnings. The key assumption used in determining the value
of these provisions is the forecast financial performance as
applied in the terms of the contingent consideration arrangement. A
10% increase or reduction in achievement of forecast contingent
consideration targets would increase or reduce the value of
contingent consideration payable required by GBP0.3m (2021:
GBP0.9m), which in turn would reduce or increase profit before
tax.
3 Operating segment reporting
The following tables present revenue and profit information
regarding the Group's operating segments for the six month periods
ended 30 June 2022 and 30 June 2021, and the year ended 31 December
2021.
Pension Consolidation
Unaudited Administration FinTech adjustments Consolidated
Period ended 30 June GBP'000 GBP'000 GBP'000 GBP'000
2022
Revenue
External customers 28,115 4,071 - 32,186
Internal customers - 860 (860) -
---------------- ---------- -------------- ---------------
28,115 4,931 (860) 32,186
---------------- ---------- -------------- ---------------
Administrative expenses
External customers 23,418 3,612 9,813** 36,843
Internal customers 319 465 (784) -
---------------- ---------- -------------- ---------------
23,737 4,077 9,029 36,843
---------------- ---------- -------------- ---------------
Operating profit /
(loss) 4,378 854 (9,889) (4,657)
As restated* Pension Consolidation
Unaudited Administration FinTech adjustments Consolidated
Period ended 30 June GBP'000 GBP'000 GBP'000 GBP'000
2021
Revenue
External customers 27,072 5,214 - 32,286
Internal customers - 573 (573) -
---------------- ---------- -------------- ---------------
27,072 5,787 (573) 32,286
---------------- ---------- -------------- ---------------
Administrative expenses
External customers 21,950 4,259 - 26,209
Internal customers 367 206 (573) -
---------------- ---------- -------------- ---------------
22,317 4,465 (573) 26,209
---------------- ---------- -------------- ---------------
Operating profit 4,755 1,322 - 6,077
*The unaudited results for period ended 30 June 2021 have been
restated to reflect a correction to revenue generated from
arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group. The adjustments made to
restate the 30 June 2021 comparatives, as further detailed in note
2.4, have not been subject to audit.
** The impairment charge on the goodwill from the acquisition of
Dunstan Thomas.
Pension Consolidation
Audited Administration FinTech adjustments Consolidated
Year ended 31 December GBP'000 GBP'000 GBP'000 GBP'000
2021
Revenue
External customers 53,407 9,900 - 63,307
Internal customers - 1,349 (1,349) -
---------------- ---------- -------------- ---------------
53,407 11,249 (1,349) 63,307
---------------- ---------- -------------- ---------------
Administrative expenses
External customers 43,866 8,339 - 52,205
Internal customers 813 390 (1,203) -
---------------- ---------- -------------- ---------------
44,679 8,729 (1,203) 52,205
---------------- ---------- -------------- ---------------
Operating profit 8,728 2,520 (146) 11,102
The following tables present a split of assets and liabilities
of the Group's operating segments as at 30 June 2022, 30 June 2021
and 31 December 2021.
Unaudited Pension
As at 30 Administration FinTech Corporate Policyholder Consolidated
June 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 63,965 10,091 56,479 3,696,009 3,826,544
Total liabilities 32,853 3,179 24,498 3,696,009 3,756,539
As restated* Pension
Unaudited As Administration
at 30 GBP'000 FinTech Corporate Policyholder Consolidated
June 2021 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 70,130 9,429 69,008 3,734,467 3,883,034
Total liabilities 32,711 3,537 31,667 3,734,467 3,802,382
*The unaudited results for period ended 30 June 2021 have been
restated to reflect a correction to revenue generated from
arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group. The adjustments made to
restate the 30 June 2021 comparatives, as further detailed in note
2.4, have not been subject to audit.
Audited Pension
As at 31 Administration FinTech Corporate Policyholder Consolidated
December 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 65,960 9,508 70,853 3,932,633 4,078,954
Total liabilities 32,793 3,113 28,773 3,932,633 3,997,312
Corporate assets and liabilities are not allocated to individual
operating segments as they are managed on a group basis.
Policyholder assets and liabilities are not allocated to individual
operating segments as all investment returns associated with these
are due back to policyholders under non-participating investment
contracts, alongside non-participating investment contract expenses
and changes in provisions for non-participating investment contract
liabilities, such that the impact on shareholder assets and
liabilities, and profit or loss, is nil.
4 Earnings per share
Basic earnings per share amounts are calculated by dividing net
profit for the period attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of
ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.
Changes in income or expense that would result from the
conversion of the dilutive potential ordinary shares are deemed to
be trivial, and therefore no separate diluted net profit is
presented. The following reflects the income and share data used in
the basic and diluted earnings per share computations:
*As restated
Unaudited Unaudited
6 month 6 month Audited
period ended period ended year ended
30-Jun-22 30-Jun-21 31-Dec-21
GBP'000 GBP'000 GBP'000
Net (loss) / profit available
to equity holders of the Group (7,440) 4,129 7,723
============== ============== ============
Number Number Number
Weighted average number of ordinary
shares:
Issued ordinary shares at start
of period 66,879,312 66,414,312 66,414,312
Effect of shares issued during
the period - 197,818 333,781
Effect of shares held by Employee
Benefit Trust (426,603) (155,401) (316,688)
Basic weighted average number
of shares 66,452,709 66,456,729 66,431,405
Effect of dilutive options 218,576 720,135 510,602
Diluted weighted average number
of shares 66,671,285 67,176,864 66,942,007
============== ============== ============
Pence Pence Pence
(Loss) / earnings per share:
Basic (11.2) 6.2 11.6
Diluted (11.2) 6.1 11.5
*As detailed in note 2.4, adjusted earnings per share on profit
before adjusting items and amortisation, less an effective tax
rate, for the unaudited six month period ended 30 June 2021 have
been restated to reflect a correction to revenue generated from
arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group.
5 Intangible assets
Internally
Client Computer Generated
Goodwill Brand portfolios software Software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2021 55,732 1,595 33,805 2,783 5,770 99,685
Additions - - - 309 533 842
--------- -----------
At 30 June
2021 55,732 1,595 33,805 3,092 6,303 100,527
Additions - - - 183 645 828
--------- -----------
At 31 December
2021 55,732 1,595 33,805 3,275 6,948 101,355
Additions - - - 594 595 1,189
At 30 June
2022 55,732 1,595 33,805 3,869 7,543 102,544
----------- --------- ------------- ---------- ----------- ----------
Amortisation
and impairments
At 1 January
2021 - 66 6,854 1,447 240 8,607
Charge for
the period - 80 938 130 297 1,445
At 30 June
2021 - 146 7,792 1,577 537 10,052
Charge for
the period* - 80 940 134 335 1,489
--------- -----------
At 31 December
2021 - 226 8,732 1,711 872 11,541
Charge for
the period - 80 940 169 362 1,551
Impairment 9,813 - - - - 9,813
At 30 June
2022 9,813 306 9,672 1,880 1,234 22,905
----------- --------- ------------- ---------- ----------- ----------
Net book value
At 31 December
2020 55,732 1,529 26,951 1,336 5,530 91,078
=========== ========= ============= ========== =========== ==========
At 30 June
2021 55,732 1,449 26,013 1,515 5,766 90,475
=========== ========= ============= ========== =========== ==========
At 31 December
2021 55,732 1,369 25,073 1,564 6,076 89,814
=========== ========= ============= ========== =========== ==========
At 30 June
2022 45,919 1,289 24,133 1,989 6,309 79,639
=========== ========= ============= ========== =========== ==========
Impairment charges totalling GBP9,813k against the intangible
asset relating to Goodwill within the Dunstan Thomas CGU have been
recognised during the period ended 30 June 2022 (2021: GBPnil).
This relates to lower than expected performance of the CGU in the
period and a consequent reduction in the estimate of future cash
flows expected from the CGU.
6 Dividends paid
Unaudited Unaudited
6 month period 6 month period Audited
ended ended year ended
30-Jun-22 30-Jun-21 31-Dec-21
GBP'000 GBP'000 GBP'000
Ordinary dividends paid 4,321 4,338 5,997
4,321 4,338 5,997
================ ================ ============
A final dividend of 6.5p per ordinary share in respect of the
year ended 31 December 2020 was paid on 4 June 2021.
An interim dividend of 2.5p per ordinary share in respect of the
year ended 31 December 2021 was paid on 12 November 2021.
A final dividend of 6.5p per ordinary share in respect of the
year ended 31 December 2021 was paid on 1 June 2022.
7 Taxation
Tax is charged at 19% for the six months ended 30 June 2022 (30
June 2021: 19%) representing the best estimate of the average
annual effective tax rate expected to apply for the full year,
applied to the pre-tax income of the six month period.
Current tax for current and prior periods is classified as a
current liability to the extent that it is unpaid. Any amounts paid
in excess of amounts owed are classified as a current asset.
Deferred tax liability has been updated based on the proposed
25% corporation tax increase from April 2023. This resulted in a
GBP1.2m increase in deferred tax liability compared to 31 December
2021 and a corresponding tax charge on the statement of
comprehensive income.
8 Contingent consideration
The Group estimates the fair value of the remaining contingent
consideration payable is GBP4.9m (30 June 2021: GBP8.9m). The
movement is mainly driven by the settlement of the first earn-out
for the acquisition of Talbot and Muir of GBP2.7m in H1 2022, the
revaluation of the remaining liability based on updated forecasts,
and discount unwind.
9 Illustrative condensed consolidated statement of financial
position as at 30 June 2022 split between insurance policyholders
and the Group's shareholders
30-Jun-22 30-Jun-22 30-Jun-22 30-Jun-21
GBP'000 GBP'000 GBP'000 GBP'000
ASSETS Group Policyholder Shareholder Shareholder
Total
Non-current assets
Intangible assets 79,639 - 79,639 90,475
Investment property 1,346,912 1,346,912 - -
Property, plant and
equipment 7,885 - 7,885 9,395
Investments 1,959,405 1,959,405 - -
3,393,841 3,306,317 87,524 99,870
---------- ------------- ------------ ------------
Current assets
Trade and other receivables 30,630 13,099 17,531 16,107
Cash and cash equivalents 401,294 376,468 24,826 32,163
Current tax asset 779 125 654 427
---------- ------------- ------------ ------------
432,703 389,692 43,011 48,697
---------- ------------- ------------ ------------
Total assets 3,826,544 3,696,009 130,535 148,567
---------- ------------- ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 19,915 11,455 8,460 8,690
Deferred income 33,340 16,464 16,876 16,350
Borrowings 51,364 46,857 4,507 4,063
Lease Liabilities 911 - 911 837
Provisions 453 - 453 453
Contingent consideration 4,930 - 4,930 2,467
110,913 74,776 36,137 32,860
---------- ------------- ------------ ------------
Non-current liabilities
Borrowings 38,351 24,878 13,473 17,741
Lease Liabilities 6,255 - 6,255 7,164
Provisions 66 - 66 7
Contingent consideration - - - 6,454
Non-participating investment
contract liabilities 3,596,355 3,596,355 - -
Deferred tax liability 4,599 - 4,599 3,689
---------- ------------- ------------ ------------
3,645,626 3,621,233 24,393 35,055
---------- ------------- ------------ ------------
Total liabilities 3,756,539 3,696,009 60,530 67,915
---------- ------------- ------------ ------------
Net assets 70,005 - 70,005 80,652
---------- ------------- ------------ ------------
Issued capital 332 332 332
Share premium 58,087 - 58,087 58,087
Equity share based payments 2,901 - 2,901 2,839
Treasury shares (1,377) - (1,377) (440)
Retained earnings 10,052 - 10,052 19,826
---------- ------------- ------------ ------------
69,995 - 69,995 80,644
Non-controlling interest 10 - 10 8
Total equity 70,005 - 70,005 80,652
---------- ------------- ------------ ------------
10 Illustrative condensed consolidated statement of cash flows
for the six month period ended 30 June 2022 split between insurance
policyholders and the Group's shareholders
30-Jun-22 30-Jun-21
GBP'000 30-Jun-22 30-Jun-22 GBP'000
Group GBP'000 GBP'000 Shareholder
Total Policyholder Shareholder
Cash flows from operating
activities
(Loss) / Profit before
tax (5,348) - (5,348) 5,054
Adjustments for:
Depreciation 849 - 849 915
Amortisation and impairments 11,364 - 11,364 1,445
Interest expense 727 - 727 452
Share based payment expense 61 - 61 92
Fair value gains on movement
in contingent consideration (314) - (314) -
Fair value losses on financial
investments 240,241 240,241 - -
Additions of financial
investments (340,591) (340,591) - -
Disposals of financial
investments 365,910 365,910 - -
Fair value gains on investment
properties (33,147) (33,147) - -
Increase in liability for
investment contracts (239,856) (239,856) - -
Changes in working capital:
Increase in trade and other
receivables (2,650) (264) (2,386) (1,702)
Increase/(decrease) in trade
and other payables 2,196 2,305 (109) 2,238
Taxes paid (588) - (588) (1,324)
Net cash flows from operating
activities (1,146) (5,402) 4,256 7,170
---------- -------------- ------------- -------------
Cash flows from investing
activities
Purchase of intangible
assets (1,189) - (1,189) (842)
Purchase of property, plant
& equipment (97) - (97) (169)
Purchase of investment property (49,463) (49,463) - -
Purchase and sale of shares
in the Group by the EBT 5 - 5 301
Receipts from sale of investment
property 52,166 52,166 - -
Net cash flows from acquisitions (2,687) - (2,687) 9
Net cash flows from investing
activities (1,265) 2,703 (3,968) (701)
---------- -------------- ------------- -------------
Cash flows from financing
activities
Equity dividends paid (4,321) - (4,321) (4,338)
Net proceeds from issue
of ordinary shares - - - 290
Net increase/(decrease)
in borrowings (1,074) 926 (2,000) (2,000)
Principal elements of
lease payments (572) - (572) (490)
Interest paid (461) - (461) (277)
Net cash flows from financing
activities (6,428) 926 (7,354) (6,815)
---------- -------------- ------------- -------------
Net increase/(decrease)
in cash and cash equivalents (8,839) (1,773) (7,066) (346)
---------- -------------- ------------- -------------
Cash and cash equivalents
at the beginning of the
period 410,133 378,241 31,892 32,509
========== ============== ============= =============
Cash and cash equivalents
at the end of the period 401,294 376,468 24,826 32,163
========== ============== ============= =============
11 Illustrative table of SIPP number movements over the six
month period ended 30 June 2022
Full SIPPs Mid SIPPs Total eSIPPs Third Party Total
Full and Administered
Mid SIPPs
As at 30 June 2022 20,701 35,784 56,485 16,976 5,529 78,990
----------- ---------- ----------- ------- -------------- --------
As at 31 December
2021 21,272 34,699 55,971 17,881 5,827 79,679
----------- ---------- ----------- ------- -------------- --------
SIPPs added organically 389 1,607 1,996 65 8 2,069
----------- ---------- ----------- ------- -------------- --------
Conversions and
reclassifications (327) 327 - - - -
----------- ---------- ----------- ------- -------------- --------
SIPPs lost through
attrition (633) (849) (1,482) (970) (306) (2,758)
----------- ---------- ----------- ------- -------------- --------
Annualised gross
organic growth rate* 3.7% 9.3% 7.1% 0.7% 0.3% 5.2%
----------- ---------- ----------- ------- -------------- --------
Annualised attrition
rate * 6.0% 4.9% 5.3% 10.8% 10.5% 6.9%
----------- ---------- ----------- ------- -------------- --------
(*Growth and attrition percentage rates are annualised and are
based on the 6 months' worth of SIPPs added organically or lost
through attrition to 30 June 2022)
Company Information
Directors
David Barral - Executive Chairman Appointed 26 May 2022
Dan Cowland - Chief Financial Officer
Jane Ridgley - Chief Operating Officer
Bill Rattray - Non-Executive Director
Jill Lucas - Non-Executive Director
Christopher Mills - Non-Executive Appointed 26 May 2022
Director
Will Self - Director
Registered Office
3 Temple Quay
Temple Back East
Bristol
BS1 6DZ
Registered Number
07934492
Nominated Adviser and Broker Joint Broker
Peel Hunt LLP Singer Capital Markets
Moor House 1 Bartholomew Lane
120 London Wall London
London EC2N 2AX
EC2Y 5ET
Independent Auditors
PricewaterhouseCoopers LLP
2 Glass Wharf
Temple Quay
Bristol
BS1 4RW
Registrars
Computershare PLC
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
Adjusted diluted EPS
This is calculated by taking adjusted profit before tax for the
financial period, deducting an effective tax rate of 19% (2021:
19%), and dividing the total by the diluted weighted average number
of shares in issue for the financial period.
Adjusted profit before tax
This is calculated by taking profit before tax for the financial
period and adding back amortisation and impairment on acquired
intangible assets, along with adjusting items.
Adjusted operating profit
This is calculated by taking operating profit for the financial
period and adding back amortisation and impairment on acquired
intangible assets, along with adjusting items.
Adjusted operating margin
This is calculated by taking operating profit for the financial
period and adding back amortisation and impairment on acquired
intangible assets, along with adjusting items, then dividing this
total by revenue for the financial period.
Annualised gross organic growth rate
A calculation derived by taking new SIPPs obtained in the financial
period from organic growth, dividing by the total number of months
in the financial period, and multiplying this by 12 to obtain
an annualised quantity of new SIPPs obtained. The annualised quantity
is then divided by the brought forward quantity of SIPPs held
to derive the annualised gross organic growth rate.
Annualised attrition rate
A calculation derived by taking SIPPs lost in the financial period
from attrition, dividing by the total number of months in the
financial period, and multiplying this by 12 to obtain an annualised
quantity of SIPPs lost. The annualised quantity is then divided
by the brought forward quantity of SIPPs held to derive the annualised
attrition rate.
AUA
Assets Under Administration
Full SIPP
A pension that facilitates the full range of investment solutions.
This can encompass anything that is permitted within a Mid SIPP,
plus others such as commercial property, directly-held investments,
specialist investments such as unlisted shares and unregulated
collectives, multiple cash deposit accounts, physical gold, National
Savings & Investments, or structured products.
Mid SIPP
A pension that facilitates the use of one (or more) streamlined
investment solution. For example, a discretionary fund manager,
or a fund platform/supermarket, or a stockbroker account, and
a cash deposit account if required.
Net shareholder cash (after debt)
This is calculated by taking shareholder only amounts as split
within the illustrative condensed consolidated statement of financial
position provided in the supplementary unaudited information for
cash and cash equivalents, and deducting borrowings.
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END
IR BDLLBLKLLBBE
(END) Dow Jones Newswires
September 08, 2022 02:01 ET (06:01 GMT)
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