TIDMCBP
RNS Number : 5946U
Curtis Banks Group PLC
07 April 2021
7 April 2021
Curtis Banks Group plc
("Curtis Banks" or the "Group")
Final Results for the 12 Months to 31 December 2020
Curtis Banks Group PLC is pleased to announce its final results
for the 12 months to 31 December 2020. These results represent the
full 12 month period including the fundraising and refinancing
activities in July 2020; 5 months contribution from Dunstan Thomas
and 2 months contribution from Talbot and Muir.
Financial Highlights
-- Operating revenue increased by 10% to GBP53.9m (2019: GBP48.9m)
-- Adjusted profit before tax(1) remained stable at GBP13.4m (2019: GBP13.4m)
-- Adjusted operating margin(2) decreased to 26.0% (2019: 28.1%)
-- Profit before tax decreased by 32% to GBP7.4m (2019: GBP10.9m)
-- Adjusted diluted EPS decreased by 8% to 17.9p (2019: 19.4p) (3)
-- Gross organic growth in own Mid and Full SIPP numbers of 7.8%
(2019: 7.5%) with total SIPPs, including third party administered,
now 82,224 (2019: 76,541)
-- Attrition rate on Mid and Full SIPPs decreased to 4.6% (2019: 5.7%)
-- Assets under Administration ("AuA") increased by 11% to GBP32.4bn (2019: GBP29.1bn)
-- Proposed final dividend of 6.5p (2019: 6.5p) making a full year payment of 9.0p (2019: 9.0p)
Operational Highlights
-- The Group reduced its overall sensitivity to interest rates
by increasing the annual SIPP administration fees payable on Mid
and Full SIPPs with effect from February 2021
-- The acquisition of two high-quality businesses in Talbot and
Muir and Dunstan Thomas supplemented the Group's core offering with
additional scale and technology solutions
-- The Group made solid progress on its five year system
strategy with the upgrade of the administration platform in
2020
-- The Group responded quickly to the COVID-19 pandemic to
implement its business continuity plan and limit the severity of
its impact on the business
-- Jill Lucas appointed to the Board as Independent
Non-Executive Director and Chair of Dunstan Thomas to maximise
technology-focused growth opportunities across the Group
Highlights and Key Performance Indicators:
2020 2019
Financial
Operating revenue GBP53.9m GBP48.9m
Adjusted profit before tax GBP13.4m GBP13.4m
(1)
Profit before tax GBP7.4m GBP10.9m
Adjusted operating margin (2) 26.0% 28.1%
Diluted EPS 9.5p 15.9p
Adjusted diluted EPS (3) 17.9p 19.4p
Operational
Number of SIPPs administered 82,224 76,541
Assets under Administration GBP32.4bn GBP29.1bn
Total organic new own SIPPs
in year 4,113 4,567
Attrition rates (Mid & Full
SIPP) 4.6% 5.7%
Number of properties administered 8,905 6,352
(1) Profit before tax, amortisation and non- recurring costs
(2) The ratio of operating profit before net finance costs,
amortisation and non-recurring costs to operating revenues.
(3) Adjusted to reflect impact of bonus factor within shares
issued during the year ended 31 December 2020.
Will Self, Chief Executive Officer of Curtis Banks, commented:
"Curtis Banks made strong progress in 2020. The business
effectively weathered the impact of the COVID-19 pandemic and made
good progress on a number of strategic initiatives to provide us
with a platform for future, long-term, sustainable growth.
Operating revenue grew by 10% to GBP53.9m, reflecting acquisitive
growth and steady performance in our core business of Mid and Full
SIPPs, while Assets under Administration increased by 11% to
GBP32.4bn."
"The business demonstrated a high degree of resilience in 2020.
We completed the acquisitions of Talbot and Muir and Dunstan
Thomas, two high-quality businesses which provide us with
additional scale in our core line of business and the opportunity
for technological innovation further down the line, respectively.
We changed our fee model to ensure greater transparency to our
clients and a more robust, consistent income stream which reduces
our reliance on interest income. Our system strategy also continued
to be delivered at pace, with the upgrades to our administration
platform commencing last year."
"Looking ahead, we have a clear vision for long-term growth.
Curtis Banks is evolving from a primarily focused SIPP
administrator to a more holistic retirement group which provides
technology and complementary services to the advised retirement
market. We are confident that our efforts to diversify our core
offering and revenue streams can reach new areas of an
ever-increasing addressable market to provide the foundations for
growth in 2021 and beyond."
Analyst Presentation
An analyst briefing is being held at 09:30 BST on 7 April 2021
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
Will Self - Chief Executive Officer
Dan Cowland - Chief Financial Officer
Peel Hunt LLP (Nominated Adviser & Joint Broker) +44 (0) 20
7418 8900
James Britton
Rishi Shah
Nplus1 Singer Capital Markets Limited (Joint Broker) +44 (0) 20
7496 3000
Mark Taylor
Rachel Hayes
Instinctif Partners (Financial PR) curtisbanks@instinctif.com /
+44 78 3767 4600
Ross Gillam
Lewis Hill
Chairman's Statement
I am pleased to report the Curtis Banks Group results for the
year ended 31 December 2020. In spite of being impacted by COVID-19
the business showed a very high degree of resilience, completed two
excellent acquisitions, executed a successful fund raise and
changed its fee model to ensure greater transparency to our clients
and a more robust and consistent income. This puts the business in
a strong position for future growth.
2020 Review
The highlights of our financial results demonstrated solid
revenue growth, although operating profit softened as a result of
the impact of the COVID-19 pandemic on the business. Operating
revenue increased by 10% from GBP48.9m to GBP53.9m, reflecting
acquisitive growth and a steady performance in our core business of
Full and Mid SIPPs. Adjusted profit before tax remained stable at
GBP13.4m (2019: GBP13.4m).
The Group was impacted by the COVID-19 pandemic during 2020.
Management reacted quickly and effectively to implement its
business continuity plan and limit the severity on the business.
Our fixed, recurring fee model for our core products insulated the
Group from the worst effects of the pandemic and the business has
emerged from it in a robust position.
In spite of the obvious headwinds we remained focused on our
stated strategy for future growth. In July 2020, the Group
announced the acquisition of two high-quality businesses in Talbot
and Muir and Dunstan Thomas. Talbot and Muir, a provider of SIPPs
and SSAS products, has a strong reputation in the market and
reinforces the Group's position as a leading SIPP provider. At the
time of acquisition, Talbot and Muir delivered additional scale
through 6,600 plans and AuA of approximately GBP3.6bn.
Dunstan Thomas is a FinTech company which provides technology
and business solutions for wealth managers, platforms and
providers, with an established client base and track record of
repeat and recurring revenue. Dunstan Thomas will not only support
the successful delivery of the Group's technology strategy but will
also bring diversification by way of a broader product and service
offering to other markets. The use of technology in the retirement
market has historically been underutilised and we are excited about
the role Dunstan Thomas can play in spearheading additional growth
and development opportunities across the Group.
In November 2020, we took the decision to achieve a more
appropriate balance between fee income and interest income to
provide more transparency and greater certainty to our clients. We
increased the annual SIPP administration fee paid on Mid and Full
SIPPs with effect from 1 February 2021 and at the same time
provided the framework to distribute an element of future interest
related income to our clients. This change will materially reduce
the Group's overall sensitivity to interest rates and reinforce our
robust foundation for future growth through improved levels of
recurring revenues.
People and Culture
In January 2021, we were delighted to welcome Jill Lucas to
Curtis Banks as Non-Executive Director. Jill was also appointed as
Chair of Dunstan Thomas. Jill brings a wealth of experience to the
Group particularly in the field of technology and will bring
invaluable experience to the board. Prior to joining the Group,
Jill led technology transformation at Unilever and from 2012 until
2015 was Group Chief Information Officer for UK-based broker
Towergate Insurance. Since 2019, she has been a Non-Executive
Director for NS&I, the UK government-owned savings bank.
Jill's background in technology and experience in leadership
teams will be invaluable as we continue to develop our business. In
particular, her role as Chair of Dunstan Thomas will be crucial as
we look to integrate technology throughout the Group and maximise
opportunities for growth via increased collaboration and
integration.
I would also like to thank the board, the whole executive team
and staff at Curtis Banks for their endeavours and commitment to
the Group in a challenging external environment.
Dividend
We paid an interim dividend of 2.5p per share (2019: 2.5p) on 13
November 2020 and the Board proposes a final dividend of 6.5p per
share (2019: 6.5p) which, if approved by shareholders, will be paid
on 4 June 2021 to shareholders on the register at the close of
business on 7 May 2021. Total dividends for the year are therefore
9.0p per share (2019: 9.0p).
Outlook
We expect that challenging conditions will continue in the short
term, as new business generation is hampered by restrictions from
social distancing requirements. However, we remain well placed to
deliver further profitable growth in the medium term as we continue
to deliver efficiencies through systems integration. In the medium
term and beyond, we remain confident about the Group's growth
prospects. Our sensitivity to interest rates will materially reduce
and we have an opportunity to leverage the scale and technology
from the acquisitions of Talbot and Muir and Dunstan Thomas
respectively to grow the Group. Through the strength of our product
proposition and service, we are also well-placed to meet the
changing needs of clients to deliver organic growth in what is an
ever-increasing market.
In 2020, Curtis Banks started to evolve from a solely focussed
SIPP administrator to a more holistic retirement group which
provides technology and complementary services for the advised
retirement markets, including FinTech, legal and property services.
We have a clear vision and dedicated, first-rate management team
with a plan for execution in 2021 and beyond.
Chris Macdonald
Chairman
6 April 2021
Chief Executive Officer's Review
We made strong progress in 2020 to evolve Curtis Banks from a
predominantly SIPP administration business to a more holistic
retirement group providing multiple complementary services,
including FinTech, legal and property, for the advised retirement
market. We believe this provides a solid platform for future,
long-term, sustainable growth.
The external market dynamics and demographic trends play to our
strengths. Our product proposition and service means we offer
superior flexibility and optionality to meet the changing needs of
a growing number of retirement savers and we are proven in adapting
to, and remaining market leading with, ever-changing regulation in
the retirement market. Retail investment platforms continue to see
significant inflows, which we would expect in five to ten years'
time to provide a significant inflow of business for our model as
savers with more than GBP250,000 will benefit from our more cost
effective fixed fee model. Technology remains underutilised in the
pensions market and we are working to develop new products and
services that leverage technology for the benefit of our clients,
which includes our functional digital portal. The result is a large
and growing addressable market requiring a range of complementary
services - all of which can be met by Curtis Banks and underpins
our position.
Operational Review
In the first half of 2020, we focused on our response to the
COVID-19 pandemic. Following the outbreak of the first wave of the
pandemic in March 2020, we acted quickly to implement our business
continuity plan. The business felt some impact as the adviser
community were unable to meet end customers in-person during the
first lockdown, but productivity remained largely unaffected.
We have continued to progress our five year system strategy
which consists of a number of elements. As previously announced,
the development of a new digital portal completed in 2019. The
centralisation of commercial property administration progressed to
plan throughout 2020 and the upgrading of our administration
platform commenced in 2020. I am pleased to report that all
elements of the strategy continue to perform in line with the
project projections and the acquisition of Dunstan Thomas, our key
technology partner supporting the strategy, has further
strengthened our control over the success of the programme.
We measure SIPP per operational FTE to measure the efficiency of
our operations and also to provide reassurance around maintaining
the desired levels of client servicing. Upon conclusion of the
system strategy, and the introduction of our Target Operating
Model, we expect to see an increase in the number of SIPPs per
operational FTE.
At the year end the number of SIPPs administered increased to
82,224, this includes 4,113 new own SIPPs added organically plus
5,833 new SIPPs as a result of the acquisition of Talbot and Muir.
Delivering a gross organic growth rate of 7.8%. In our two core
areas of strategic focus, the Full SIPP saw gross organic growth of
3.2% which was a slight reduction on last year (2019: 3.4%). Our
Mid SIPP gross organic growth rate was 11.1%, slightly higher than
the previous year (2019: 10.8%). The table below sets out more
detail on SIPPs numbers and rates of attrition.
Full Mid SIPPs eSIPPs Total own Third Party Total
SIPPs SIPPs Administered
As at 31 December
2020 23,013 31,985 20,742 75,740 6,484 82,224
------- ---------- -------- ---------- -------------- --------
As at 31 December
2019 19,869 27,799 21,726 69,394 7,147 76,541
------- ---------- -------- ---------- -------------- --------
SIPPs added organically 628 3,072 413 4,113 9 4,122
------- ---------- -------- ---------- -------------- --------
SIPPs added through
acquisitions 3,496 2,337 - 5,833 - 5,833
------- ---------- -------- ---------- -------------- --------
Conversions and
reclassifications (116) 117 (1) - - -
------- ---------- -------- ---------- -------------- --------
SIPPs lost through
attrition (864) (1,340) (1,396) (3,600) (672) (4,272)
------- ---------- -------- ---------- -------------- --------
Gross organic growth
rate 3.2% 11.1% 1.9% 5.9% 0.1% 5.4%
------- ---------- -------- ---------- -------------- --------
Annualised attrition
rate 4.4% 4.8% 6.4% 5.2% 9.4% 5.6%
------- ---------- -------- ---------- -------------- --------
As we expand our proposition and services, we have diversified
our revenue streams - and will continue to do so. In November 2020,
we announced an increase to the annual SIPP administration fee paid
on the Mid and Full SIPPs with effect from 1 February 2021. This
decision was taken to reduce our reliance on interest income and as
part of a shift towards higher client fees which lead to higher
quality revenues. Our core line of business remains as the fixed
annual fees for SIPP and SSAS products, with 86% of revenues
expected to recur year on year. The high percentage of recurring
revenues provides the Group with resilience and a solid foundation
which allows us to continue to diversify our offering into other
areas of the market.
Our flagship product, Your Future SIPP, continues to perform
well and is one of the key drivers for organic growth of Full and
Mid SIPPs. Your Future SIPP delivers efficiencies for clients and
reduces the time spent on administration for advisers, clients and
our business.
Rivergate Legal Limited continues to perform in line with
expectations. Rivergate provides specialised and experienced advice
to SIPP and SSAS clients seeking to invest commercial property
within their pension portfolios. The business has remained focused
on the supply of commercial property and real estate services in
line with the Group's strategy. The total number of properties
administered by the Group has increased to 8,905 (2019: 6,352) and
we are confident that it will continue to grow into the medium
term.
Acquisitions
In July 2020, the Group announced the acquisitions of Talbot and
Muir, a provider of SIPPs and SSAS products, and Dunstan Thomas, a
FinTech provider delivering technology and business solutions for
wealth managers, platforms and providers. The acquisitions are in
line with our published growth strategy to seek further
value-enhancing, strategically aligned inorganic opportunities in
the advised retirement market, alongside continued organic growth
across all current business lines.
Talbot and Muir is a well-respected SIPP and SSAS provider and
administrator with strong levels of recurring revenues based on a
fixed fee model. Talbot and Muir delivers additional scale to the
Group's existing offering through 6,600 plans and AuA of
approximately GBP3.6bn, with 71 employees across offices in
Nottingham and Leeds, joining the Group.
Dunstan Thomas is a FinTech provider delivering technology and
business solutions for wealth managers, platforms and providers
with an established client base and track record of repeat and
recurring revenue. Curtis Banks has a long history of working with
Dunstan Thomas, who have been a technology supplier to the Group
for over five years. This acquisition will support the successful
delivery and execution of the Group's technology strategy.
Dunstan Thomas will also expand our own customer proposition
offering both existing and future clients access to a broader range
of products and services, while giving us the opportunity to take
our own product offering to other target markets. There are
long-term growth opportunities in leveraging technology to reach
new areas of the ever-increasing addressable advised retirement
market. Technology is still underutilised in the pensions market
and we will be working closely with Dunstan Thomas to develop new
products and services backed by technology that disrupt the market.
We also see immense scope for greater collaboration across the
Group's diverse offering, especially via Dunstan Thomas' technology
platform.
We are delighted to have acquired both Talbot and Muir and
Dunstan Thomas, having executed both transactions in the midst of a
global pandemic. We have started to integrate both businesses into
the Group and this process is running smoothly. We are confident
that both businesses will play a key role in diversifying and
expanding the Group's offering to drive growth in the next two to
three years.
People and Culture
During 2020, we were delighted to welcome colleagues from the
acquisitions of Talbot and Muir and Dunstan Thomas into the Curtis
Banks Group. We will be integrating both businesses into the Group
in time and we look forward to working alongside their Executive
teams on cross-group collaboration initiatives.
The COVID-19 pandemic has been a difficult time for us all. The
welfare of employees has remained the top priority for management
throughout the last 12 months. I wanted to take this opportunity to
pay tribute to the dedication and perseverance of colleagues at
Curtis Banks who seamlessly adapted to remote working conditions to
ensure that productivity levels remained high. I am proud to work
alongside them and I look forward to working with them to execute
the exciting growth plans we have laid out for 2021 and beyond.
Outlook
We made strong progress on several of our strategic objectives
in 2020. The system strategy continues at pace and is on track,
while the increase in the annual SIPP administration fee paid on
the Mid and Full SIPPs will reduce our reliance on interest income
and increase our focus on generating higher quality revenues. The
acquisitions of Talbot and Muir and Dunstan Thomas provide the
Group with additional scale in the SIPP market and exciting growth
opportunities to leverage technology to disrupt the advised
retirement market.
In the short and medium term we have set the following growth
objectives:
-- Organic Growth - to continue to focus on quality, advised
SIPP business driving long term recurring fee revenues utilising
our scalable operating model
-- Inorganic Growth - building on continued consolidation in the
marketplace, the Group will continue to focus on selective, high
quality acquisition opportunities to expand our client base
-- Diversification - building on the capability acquired in
2020, driving new products and services to a wider customer base
enhancing EPS in the medium term
We have a clear vision for long-term growth. Our evolution from
a single-track SIPP administration business to a provider of
multiple complementary services will diversify our core offering
and revenue streams to reach new areas of an ever-increasing
addressable market. We are confident that the Group is well placed
for growth in 2021.
Will Self
Chief Executive Officer
6 April 2021
Chief Financial Officer's Review
Results
A resilient financial performance for the year ended 31 December
2020 resulted in operational revenue increasing by 10% to GBP53.9m
(2019: GBP48.9m) and adjusted profit before tax of GBP13.4m (2019:
GBP13.4m). Adjusted diluted EPS decreased by 8% to 17.9p (2019:
19.4p), influenced by the issue of 11,904,762 new shares in July to
support the Group's acquisition strategy. Statutory profit before
tax, which is stated after amortisation and non-recurring costs,
was GBP7.4m (2019: GBP10.9m), which includes GBP3.5m of
non-recurring costs incurred during the year on previously
announced restructuring activities and acquisition related costs.
Diluted EPS on a statutory basis decreased by 40% to 9.5p (2019:
15.9p), impacted by the issuance of 11,904,762 ordinary shares in
July 2020.
The robust financial performance was achieved despite the
compound economic and political challenges of the UK's exit from
the European Union and then the COVID-19 pandemic which quickly
followed in March 2020. Like many other firms, the Group was not
immune from the unquestionable impact of these challenges, in
particular the prevailing COVID-19 restrictions which remain at our
reporting date, but I believe the results once again demonstrate
the resilience of our core business model and the strong levels of
recurring sterling fixed fees which we have long extolled the
virtues of.
The Group successfully completed two acquisitions during 2020.
The acquisition of Talbot and Muir in October 2020 increases the
number of high quality SIPPs under our administration and will
further increase the Group's ability to generate recurring
revenues. The acquisition of Dunstan Thomas in August 2020 has
introduced a new revenue stream into the Group and is a further
step in crystallising the Group's objective towards greater
diversification and the Board looks forward to exploring the
further opportunities that having a FinTech company within the
Group will bring. Both Talbot and Muir and Dunstan Thomas made a
positive contribution to the Group's revenue and earnings for part
of 2020, with a full contribution from each to be achieved in
2021.
We also took action to rebalance our revenue profile by
increasing the annual SIPP administration fee for our core SIPP
products and changing how we share with clients the interest on
SIPP bank account balances. These changes will result in clients
receiving an increased share of interest, while the quality of the
Group's revenue is improved due to the higher proportion generated
from recurring fees.
The Group measures its performance by reference to the
alternative profit measure of adjusted profit before tax as this is
considered to better reflect the underlying results of the business
by adjusting for those items which do not arise from the underlying
operations of the business.
Revenue
Operational revenues of GBP53.9m in 2020 (2019: GBP48.9m)
increased by 10% year on year, driven primarily by the part-year
contributions from Dunstan Thomas and Talbot and Muir but also
somewhat by the resilient organic growth in own Mid SIPP
numbers.
Fee revenue from SIPP products remains the predominant source of
fee income for the Group with 86% (2019: 84%) of these fees being
recurring fixed annual fees. These fees are subject to contractual
annual inflationary rises linked to average weekly earnings.
Additional fixed fees are charged depending on the transactional
services provided for each of the products.
All SIPP fees levied are fixed sterling charges and are not
dependent on the value of the underlying assets held within the
SIPP. As a result, the revenues generated by both Curtis Banks and
Talbot and Muir are insulated from the movements in financial
markets and/or commercial property values and are therefore subject
to less volatility than many of our peers. This is a key
differential that sets us apart from most of our competitors and
provides an attractively priced product in terms of fees applied on
higher value SIPPs. As the value of a SIPP increases our product
becomes increasingly affordable.
In the year ended 31 December 2020, GBP12.2m of the Group
operating revenue arose from interest margin (2019: GBP12.7m). The
Group operates a highly efficient treasury operation with diverse
partners and this enabled the Group to maintain impressive returns
despite the low interest environment which perpetuated for most of
the financial year and into 2021.
From 1 February 2021, the amount of interest paid to clients
will no longer be set on a discretionary basis by the Group
following the changes announced in November 2020. The Group
believes that the new approach to sharing interest with clients is
more transparent and provides greater certainty to clients. The
amount of interest generated by the Group, and the amount shared
with our clients, is monitored via the Group Assets and Liabilities
Committee.
Expenses
The year ended 31 December 2020 saw administrative expenses
increase by 13% to GBP39.9m from GBP35.2m. 78% of this increase
related to our two acquisitions.
Staff costs for the year increased by 14% to GBP26.1m (2019:
GBP22.6m) and were influenced by salary inflation, referenced to
average weekly earnings, and the part year impact from the
acquisitions of Dunstan Thomas of GBP1.9m (2019: nil) and Talbot
and Muir of GBP0.4m (2019: nil).
Staff costs continue to reflect the cost of share based payment
awards under the Group's Long Term Incentive Plan and Save As You
Earn ("SAYE") schemes, as well as the commitment to the auto
enrolment of staff pension contributions. These measures continue
to reflect the importance of staff satisfaction to the Group and
contribute not only to improved levels of key staff engagement and
retention but also drive the provision of desired service levels to
clients which are demanded by our introducers of business.
Average staff numbers increased to 698 (2019: 572), primarily as
a result of the Group's acquisitions made in the year. This
represents the support provided for the organic growth in own Full
and Mid SIPPs achieved and to manage the migration of commercial
property administration to a centralised function.
The other material operating expense that the Group incurs is in
respect of IT and in 2020 this amounted to GBP3.1m (2019: GBP3.4m).
These reflect not only the costs of supporting the core IT
infrastructure across the Group's multiple office locations but
also the amount of investment in technological improvements to the
SIPP administration platform and the programme of these
improvements is expected to continue into 2024.
The cost of undertaking regulatory activity continues to
increase and for the year ended 31 December 2020 the Group spent
GBP1.7m (2019: GBP1.1m) on a combination of regulatory fees, levies
and insurance.
Finance costs relating to interest payable on bank loans
increased by GBP0.2m year on year following the re-negotiation of
the Group's increased term and revolving credit facilities during
the year. Borrowings continue to be repaid in line with scheduled
terms and the covenants required by the bank in respect of this
gearing are well covered. Interest on the debt currently accrues at
a rate of 2.25% over the London Interbank Offered Rate ("LIBOR")
although it is expected that LIBOR will be replaced by the end of
2021.
The Sterling Overnight Indexed Average ("SONIA") is expected to
replace LIBOR and we will work with our finance providers to ensure
our credit facilities are transitioned to the new benchmark at that
time.
The Group continues to take steps to improve its adjusted
operating margin through a combination of revenue enhancements and
operational efficiencies, balanced with the continued investment
back into the business and the provision of a high quality service
to our clients. The adjusted operating margin has decreased during
the year, impacted by the increase in non-controllable regulatory
costs and the pressure that the low interest environment had on
interest income. The Group has sought to mitigate its sensitivity
to interest income through an increase in annual fees on Mid and
Full SIPPs which were effective 1 February 2021.
Non-Recurring costs
Non-recurring costs for the year can be broadly categorised into
several core elements.
During the year ended 31 December 2020, the Group progressed its
strategy to deliver its Target Operating Model through the
centralisation of commercial property administration within one
office location. Redundancy costs associated with this decision as
well as costs associated with duplicated staff efforts while work
is transferred between offices have been included within
non-recurring costs, totalling GBP1,090,000 in the year ended 31
December 2020. The Group expects some further costs in early 2021
associated with the conclusion of this transition and will be
recognisable as non-recurring costs in the relevant accounting
period. Delivery of the Target Operating Model is ultimately seen
as the main driver of operational efficiencies which are expected
to be attainable once the broader investment in our system strategy
has been completed.
Costs of GBP1,518,000 associated with acquisitions, primarily in
relation to Dunstan Thomas and Talbot and Muir, were recognised
during the financial year as outside of the operating cost base of
the Group. A further cost of GBP151,000 was recognised in respect
of deferred contingent consideration for the book of business
acquired from Friends Life in 2015.
As has been widely reported in the wider industry press, HMRC
has challenged all SIPP providers on whether pension contributions
could be made in-specie. The Group has been in correspondence with
HMRC regarding processes and documentation in respect of in specie
contributions for some time. Following a favourable outcome for
HMRC in an appeal against the First-Tier Tribunal's ruling in
favour of another SIPP operator in a similar case, and having taken
further legal advice, the Group now considers it more likely than
not that some cost associated with this liability will be borne by
the Group and has recognised a provision of GBP403,000 to reflect
this.
As noted in our last annual financial statements, management had
initiated a review of data records relating to properties held
within SIPPs administered by the Group. Based on a detailed review
of a sample of properties and extrapolation of the initial findings
across the full population of relevant properties, the Directors
recognised that additional direct costs may be incurred in
completing this data cleansing exercise, including from any
potential remediation. The data cleansing exercise is continuing
with any residual remedial follow up actions to be completed during
2021. Of the original provision of GBP500,000 made at 31 December
2018, there is a remaining provision of GBP7,000 as at 31 December
2020. This is still considered to be adequate to cover any
remaining costs.
Finally, during the year ended 31 December 2020, the Group
invested in a new strategic treasury solution with a global
provider of back office operational cash management software. The
investment is designed to innovate and improve the Group's treasury
management function through provision of a system that provides a
multibank facility and this resulted in a non-recurring charge of
GBP286k.
Amortisation and impairment of intangible assets
Amortisation of the Group's intangible assets represented a
charge of GBP2,098,000 for the period. We have also taken a small
impairment charge of GBP344,000 against the value of certain SIPP
portfolios within intangible assets (2019: GBPnil). This follows a
regular review of estimated future cash flows expected from these
assets over their remaining useful economic lives and reflects
increased uncertainty over the longevity of the current low
interest rate environment.
Cash flows
Shareholder cash balances at year end were GBP32.5m compared to
GBP31.2m at the end of the previous financial year.
Net cash inflows from shareholder operating activities for the
period were GBP7.7m (2019: GBP13.8m net cash inflow), with the
decline in cash generation primarily attributable to a reduction in
profit before tax for the year and a higher amount of tax paid in
the year caused by a number of the Group's subsidiaries
transitioning into HMRC's QIP regime for very large companies.
A combination of the acquisitions made, the issue of shares and
the re-financing of borrowing facilities during the year saw
significant net cash outflows from investing activities and
significant net cash inflows from financing activities.
Accounting Policies
Accounting policies have been updated to capture the relevant
activities of the two acquisitions completed by the Group during
the year.
Suffolk Life Annuities
Part of the Suffolk Life Group of Companies, Suffolk Life
Annuities Limited, is an insurance company that writes SIPP
Products as insurance contracts. These are all non-participating
investment contracts and so the Group does not bear any insurance
risk. As the policyholder assets and liabilities are shown on the
balance sheet of Suffolk Life Annuities Limited, these also show on
the Group balance sheet on consolidation. Assets in the SIPPs
administered by the rest of the Group are held in trust and not
under insurance contracts and therefore do not need to be included
on the balance sheet. As the policies are non-participating
contracts, the client related assets and liabilities in Suffolk
Life Annuities Limited match. In addition the revenues, expenses
and investment returns of the non-participating investment
contracts are shown in the consolidated statement of comprehensive
income. Again, these income, expense items and investment returns
due to the policyholders are completely matched. An illustrative
balance sheet as at 31 December 2020 showing the financial position
of the Group excluding the policyholder assets and liabilities is
included as supplementary unaudited information after the notes to
this announcement. An illustrative cash flow on the same basis has
also been provided.
Employee Benefit Trust ("EBT")
The EBT continues to be used to acquire shares in the Group in
the open market to satisfy future vesting of options and long term
incentive awards. The EBT is funded by loans from the Group. As at
31 December 2020, the EBT held 261,276 shares in Curtis Banks Group
PLC (2019: 206,286). A number of options awarded under the
Company's SAYE schemes vested during the year and awards were made
from the shares held by the EBT.
The financial statements of the EBT are consolidated within the
overall Group financial statements and these shares are shown on
the balance sheet of the Group as Treasury Shares and are included
within total equity.
Capital requirements
The Group's four (2019: three) regulated subsidiary companies
submit regular returns to the FCA and the PRA relating to their
capital resources. At 31 December 2020 the total regulatory capital
requirement across the Group was GBP15.2m (2019: GBP13.2m) and the
Group had an aggregate surplus of GBP17.2m (2019: GBP11.5m) across
all regulated entities. In addition to this, it is Group internal
policy for regulated companies within the Group to hold at least
130% of their required regulatory capital and this has been
maintained throughout the year.
Three (2019: two) of the principal trading subsidiaries of the
Group are regulated by the FCA and are subject to the relevant
capital adequacy rules. The fourth (2019: third) regulated entity
Suffolk Life Annuities Limited ("SLA"), being an insurance company,
is subject to Solvency II rules and it's capital position is
determined by the Standard Formula as set out in the Solvency II
directives.
Full details of SLA's capital position are set out in the
Solvency and Financial Condition Report published on the Group's
website.
Financial Position
The Group increased net assets by 45% to GBP80.2m as at 31
December 2020 (2019: GBP55.5m), and increased shareholder cash
reserves from GBP31.2m to GBP32.5m over the same period.
In July 2020 the Group placed 11,904,762 shares, raising gross
proceeds of approximately GBP25m, to assist with the financing of
initial consideration for the acquisitions of Dunstan Thomas and
Talbot and Muir. At the same time, the Group re-negotiated its
borrowing facilities with Santander and put in place a GBP20m term
loan and a GBP10m rolling credit facility, GBP6m of which was drawn
upon.
As at 31 December 2020, the Group had net shareholder cash
(after debt) of GBP8.8m (2019: GBP19.9m).
The Group adopted the provisions of IFRS 16, accounting for
leases, for the accounting period commencing 1 January 2019. The
effect of this on our financial performance is not material
although the impact on the Group's balance sheet has been to
increase Non-current assets and Current/Non-current liabilities. It
should be noted that our principal lenders exclude the impact of
IFRS 16 when calculating our banking covenants. We have also
received confirmation previously from the FCA that the provisions
of IFRS 16 do not need to be taken into account in our regulatory
capital calculations.
Outlook
The Group's profitability is not directly linked to market
performance and therefore the growth in our SIPP numbers provides
more visibility and less volatility of earnings combined with the
discipline over our controllable cost base. In 2021 we expect the
combination of SIPP revenue growth and a full year contribution
from both of the Group's recent acquisitions to materially improve
top line growth and we will maintain careful cost discipline whilst
supporting our stated growth strategies.
Dan Cowland
Chief Financial Officer
6 April 2021
Consolidated statement of comprehensive income
Year ended 31 December 2020 Year ended 31 December 2019
Before amortisation Amortisation Before amortisation Amortisation
and non-recurring and non-recurring and non-recurring and
costs costs costs non-recurring
Total costs Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2 53,871 - 53,871 48,949 - 48,949
Administrative
expenses (39,885) (5,411) (45,296) (35,218) (2,470) (37,688)
Impairment on
client
portfolios - (344) (344) - - -
Policyholder
investment
returns* 125,231 - 125,231 365,815 - 365,815
Non-participating
investment
contract expenses (35,343) - (35,343) (33,943) - (33,943)
Changes in
provisions:
Non-participating
investment
contract
liabilities (89,888) - (89,888) (331,872) - (331,872)
--------- --------- ---------- ----------
Policyholder total - - - - - -
---------- -------------- --------- ------------
Operating profit 13,986 (5,755) 8,231 13,731 (2,470) 11,261
Finance income 83 - 83 145 - 145
Finance costs 7 (697) (188) (885) (523) - (523)
---------- -------------- -------- --------- ------------ --------
Profit before tax 13,372 (5,943) 7,429 13,353 (2,470) 10,883
Taxation 8 (2,793) 1,129 (1,664) (2,502) 469 (2,033)
---------- -------------- -------- --------- ------------ --------
Total comprehensive income
for the year 10,579 (4,814) 5,765 10,851 (2,001) 8,850
========== ============== ======== ========= ============ ========
Attributable to:
Equity holders of
the
company 5,765 8,850
Non-controlling - -
interests
-------- --------
5,765 8,850
======== ========
Earnings per
ordinary
share on net
profit
Basic (pence)** 9 9.7 16.2
Diluted (pence)** 9 9.5 15.9
The consolidated statement of comprehensive income has been
prepared on the basis that all operations are continuing
operations.
*Policyholder investment returns were previously presented
within revenue. Amounts for the current period and comparatives are
now represented alongside non-participating investment contract
expenses and changes in provisions for non-participating investment
contract liabilities to better reflect the fact that all such
returns are due back to policyholders under non-participating
investment contracts, and therefore have nil impact on shareholder
profit or loss.
**Adjusted to take into account impact of bonus factor within
shares issued during the year ended 31 December 2020, see note 9
for further detail.
Consolidated statement of financial position
Group
Group Notes As at As at
31-Dec-20 31-Dec-19
GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 10 91,166 43,427
Investment property 11 1,208,605 1,265,784
Property, plant and equipment 12 7,658 6,195
Investments 2,072,317 1,994,197
Deferred tax asset - 911
----------- -----------
3,379,746 3,310,514
----------- -----------
Current assets
Trade and other receivables 26,913 19,915
Cash and cash equivalents 13 430,578 421,547
Current tax asset 580 446
----------- -----------
458,071 441,908
----------- -----------
Total assets 3,837,817 3,752,422
----------- -----------
LIABILITIES
Current liabilities
Trade and other payables 18,895 15,608
Deferred income 26,995 26,192
Borrowings 14 53,533 28,215
Lease liabilities 672 719
Provisions 15 501 553
Contingent consideration 2,516 214
Current tax liability - 738
----------- -----------
103,112 72,239
----------- -----------
Non-current liabilities
Borrowings 14 53,370 48,911
Lease liabilities 5,201 3,915
Provisions 7 -
Contingent consideration 18 5,657 -
Non-participating investment
contract liabilities 3,585,307 3,571,904
Deferred tax liability 5,013 -
----------- -----------
3,654,555 3,624,730
----------- -----------
Total liabilities 3,757,667 3,696,969
----------- -----------
Net assets 80,150 55,453
----------- -----------
Equity attributable to owners
of the parent
Issued capital 330 271
Share premium 57,799 33,659
Equity share based payments 2,747 2,313
Treasury shares (741) (534)
Retained earnings 20,001 19,730
----------- -----------
80,136 55,439
Non-controlling interest 14 14
Total equity 80,150 55,453
----------- -----------
Approved by the Board of Directors and authorised for issue on 6
April 2021.
Dan Cowland
Chief Financial Officer
Company Registration No. 07934492
Consolidated statement of changes in equity
Group
Issued Share Equity Treasury Retained Total Non-controlling Total
capital premium share shares earnings GBP'000 interest equity
GBP'000 GBP'000 based GBP'000 GBP'000 GBP'000 GBP'000
payments
GBP'000
At 1 January
2019 269 33,451 1,357 (716) 15,295 49,656 14 49,670
Total
comprehensive
income
for the year - - - - 8,850 8,850 - 8,850
Share based
payments - - 956 - - 956 - 956
Ordinary
shares bought
and
sold by EBT - - - 182 - 182 - 182
Ordinary
shares issued 2 208 - - - 210 - 210
Deferred tax
on share
based
payments - - - - 147 147 - 147
Ordinary
dividends
declared
and paid - - - - (4,562) (4,562) - (4,562)
At 31 December
2019 271 33,659 2,313 (534) 19,730 55,439 14 55,453
Total
comprehensive
income
for the year - - - - 5,765 5,765 - 5,765
Share based
payments - - 434 - - 434 - 434
Ordinary
shares bought
and
sold by EBT - - - (207) - (207) - (207)
Ordinary
shares issued 59 24,140 - - - 24,199 - 24,199
Deferred tax
on share
based
payments - - - - (345) (345) - (345)
Ordinary
dividends
declared
and paid - - - - (5,149) (5,149) - (5,149)
At 31 December
2020 330 57,799 2,747 (741) 20,001 80,136 14 80,150
======== ======== ========= ========= ========= ======== ================ ========
Consolidated statement of cash flows
Group
Year ended 31 December
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 7,429 10,883
Adjustments for:
Depreciation 1,499 1,321
Amortisation and impairments 2,442 1,379
Interest expense 697 523
Share based payment expense 434 956
Fair value gains on financial investments (119,957) (232,848)
Additions of financial investments (631,200) (532,717)
Disposals of financial investments 673,037 584,425
Fair value losses on investment properties 60,751 12,469
Increase in liability for investment contracts 13,403 166,476
Changes in working capital:
(Increase)/decrease in trade and other receivables (2,737) (1,730)
(Decrease)/increase in trade and other payables (1,105) 1,990
Taxes paid (2,996) (2,454)
Net cash flows received from operating activities 1,697 10,673
------------ -----------
Cash flows from investing activities
Payments for intangible assets (986) (696)
Purchase of property, plant and equipment (591) (1,015)
Purchase of investment property (122,449) (125,848)
Purchase and sale of shares in the Group by the EBT (207) 182
Receipts from sale of investment property 118,877 122,047
Net cash flows from acquisitions (34,638) (166)
Net cash flows used in investing activities (39,994) (5,496)
------------ -----------
Cash flows from financing activities
Equity dividends paid (5,149) (4,562)
Net proceeds from issue of ordinary shares 24,199 210
Net increase/(decrease) in borrowings 29,595 (9,456)
Principal elements of lease payments (934) (933)
Interest paid (383) (465)
Net cash received from / (used in) financing activities 47,328 (15,206)
------------ -----------
Net increase/(decrease) in cash and cash equivalents 9,031 (10,029)
------------ -----------
Cash and cash equivalents at the beginning of the year 421,547 431,576
============ ===========
Cash and cash equivalents at the end of the year 430,578 421,547
============ ===========
1 Corporate information
Curtis Banks Group PLC ("Curtis Banks" or "the Group") has a
clear vision for long-term growth. The Group commenced trading in
2009 and has successfully developed, through a combination of
organic growth and acquisitions, into one of the largest UK
providers of self-invested pension products.
At 31 December 2020 the Group administered circa GBP32.4bn
(2019: GBP29.1bn) of pension assets on behalf of over 82,000 (2019:
76,000) active clients. More than 800 staff are employed across its
head office in Bristol and regional offices in Ipswich, Dundee,
Portsmouth, Nottingham and Leeds.
The Executive Directors have proven experience in the retail
savings, pensions and wealth markets and have established a
business that focuses on a service-driven proposition for the
administration of flexible SIPPs. The Group's core pension products
are primarily distributed by authorised and regulated financial
advisers, targeted towards pension savers who wish to take full
advantage of the features and flexibility offered in the UK's
modern and changing pension regime. Long standing relationships
with key distributors result in high levels of repeat business and
demonstrate satisfaction with products and services provided.
The Group is focussed on continuing to deliver value to both
customers and shareholders in the years ahead.
Note: The Group includes an insurance company, Suffolk Life
Annuities Limited, which provides SIPPs through non-participating
individual insurance contracts. Due to Suffolk Life Annuities
Limited's status as an insurance company, the consolidated results
for the whole Group are required to include insurance policyholder
assets and liabilities as well as the assets and liabilities and
profits attributable to our shareholders. Notes 20 and 21 to this
Announcement illustrate the split between policyholder and
shareholder assets and liabilities and cash flows.
2 Revenue
Revenue is wholly derived from activities undertaken within the
United Kingdom and comprises the following categories:
Year ended 31 December
2020 2019
GBP'000 GBP'000
Pension administration fees 36,856 36,268
FinTech services 4,793 -
Interest income 12,222 12,681
53,871 48,949
=============================== ===============================
3 Profit for the year
Profit for the year is arrived at after charging:
Year ended 31 December
2020 2019
GBP'000 GBP'000
Amortisation and impairment of
intangible assets 2,442 1,379
Depreciation of property, plant
and equipment 1,499 1,321
Auditors' remuneration:
- audit of the financial statements
of the Group 421 278
- audit of the financial statements
of the Company 70 50
- audit related assurance services 37 35
4 Operating segment reporting
The Group acquired FinTech provider Dunstan Thomas on 3 August
2020. Prior to this acquisition, all results were viewed as one
operating segment for the purposes of management decisions as all
operations were conducted within the UK and all material operations
were of the same nature and shared the same economic
characteristics including a similar customer base and nature of
product and services (i.e. pensions administration).
Following the acquisition of Dunstan Thomas during the year
ended 31 December 2020, the Group is now considered to have two
operating segments. Dunstan Thomas provides IT software
development, licences and consultancy services and, collectively,
these services are described in the Group's financial statements as
FinTech.
The following tables present revenue and profit information
regarding the Group's operating segments for the two years ended 31
December 2020 and 31 December 2019 respectively.
Year ended 31 December Pension Administration FinTech Consolidation Consolidated
2020 GBP'000 GBP'000 adjustments GBP'000
GBP'000
Revenue
External customers 49,078 4,793 - 53,871
Internal customers - 485 (485) -
----------------------- ---------- -------------- --------------
49,078 5,278 (485) 53,871
----------------------- ---------- -------------- --------------
Administrative expenses
External customers 36,830 3,055 - 39,885
Internal customers - 485 (485) -
----------------------- ---------- -------------- --------------
36,830 3,540 (485) 39,885
----------------------- ---------- -------------- --------------
Adjusted operating
profit 12,248 1,738 - 13,986
Adjusted operating
profit margin 25.0% 32.9% 26.0%
Year ended 31 December Pension Administration Consolidated
2019 GBP'000 GBP'000
Revenue
External customers 48,949 48,949
48,949 48,949
----------------------- --------------
Administrative expenses
External customers 35,218 35,218
35,218 35,218
----------------------- --------------
Adjusted operating profit 13,731 13,731
Adjusted operating profit
margin 28.1% 28.1%
Corporate costs
The Group's operating segments are managed together as one
business. Accordingly, certain corporate costs such as finance
income and expenses, non-recurring costs, gains and losses on the
disposal of assets, taxes, intangible assets and certain other
assets and liabilities are not allocated to individual segments as
they are managed on a group basis. Segment adjusted operating
profit or loss reflects the measure of segment performance reviewed
by the Board of Directors (the Chief Operating Decision Maker).
The following table reconciles the total segments adjusted
operating profit to statutory profit before tax:
Year ended 31 December
2020 2019
GBP'000 GBP'000
Total segments adjusted operating
profit 13,986 13,731
Amortisation and impairments (2,442) (1,379)
Non-recurring administrative expenses (3,313) (1,091)
Finance income 83 145
Finance costs (885) (523)
Profit before tax 7,429 10,883
=============================== ===============================
The following table presents a split of assets and liabilities
of the Group's operating segments for the year ended 31 December
2020. For the year ended 31 December 2019 the Group had only one
operating segment, being Pension Administration, and consequently
comparative information is disclosed in the Consolidated Statement
of Financial Position.
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.
Year ended 31 Pension Administration FinTech Corporate Policyholder Consolidated
December 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 63,241 8,079 75,041 3,691,456 3,837,817
Total liabilities 26,621 3,798 35,792 3,691,456 3,757,667
5 Non-recurring administrative expenses
Non-recurring administrative expenses include the following
significant items:
Year ended 31 December
2020 2019
GBP'000 GBP'000
Dunstan Thomas acquisition costs 769 -
Talbot and Muir acquisitions costs 561 -
Other acquisition related costs 151 61
Redundancy & restructuring costs 1,091 696
In-specie contributions 402 -
Treasury solution implementation 286 -
Data cleansing provision 53 -
Costs relating to directorate and senior
management
changes - 334
3,313 1,091
=============================== ===============================
Acquisition costs - Dunstan Thomas and Talbot and Muir
Two acquisitions were completed during the year: FinTech
provider Dunstan Thomas on 3 August 2020, and fellow SIPP provider
Talbot and Muir on 30 October 2020. The Group has incurred legal
and professional fees in connection with these transactions and, in
accordance with IFRS 3 Business Combinations, these have been
expensed and treated as non-recurring costs. The Group expects that
further costs may be recognised for these acquisitions over the
next three financial years in relation to fair value changes to the
amount of contingent consideration payable.
Other acquisition related costs
During the year, the Group incurred some final costs in relation
to deferred consideration payable on the client portfolio acquired
from Friends Life in 2015, together with final costs related to the
acquisitions of Hargreave Hale and European Pension Management
Ltd.
Redundancy & restructuring costs
During the year ended 31 December 2020 and 31 December 2019, the
Group progressed its strategy to deliver its Target Operating Model
and centralise commercial property administration within one office
location. Redundancy costs associated with this decision as well as
costs associated with duplicated staff efforts while work is
transferred between offices were included within non-recurring
costs.
In-specie contributions
As previously reported, the Group has been in correspondence
with HMRC regarding processes and documentation in respect of in
specie contributions. HMRC have alleged that incorrect procedures
were followed and is seeking to reclaim tax reliefs granted and
interest thereon. This is an industry wide issue affecting other
SIPP operators and has been challenged by the sector as a whole.
Following a favourable ruling for HMRC in a case affecting another
SIPP operator, and having taken further legal advice, the Directors
now consider it more likely than not that some cost associated with
this issue will be incurred by the Group. See provisions note 15
for further detail.
Treasury solution implementation
During the year ended 31 December 2020, the Group invested in a
new strategic treasury solution with a global provider of back
office operational cash management software. The investment is
designed to innovate and improve the Group's treasury management
function through provision of a system that provides a multibank
facility. Costs associated with this investment that did not meet
the criteria for capitalisation have been treated as non-recurring
cost.
Data cleansing provision
As part of the consolidation and integration exercise undertaken
during the year ended 31 December 2018 management initiated a
review of data records relating to commercial properties held
within SIPPs administered by the Group. A small amount of further
cost, over and above amounts previously provided, associated with
this process arose during the year ended 31 December 2020.
Costs relating to directorate and senior management changes
During the year ended 31 December 2019, the incumbent Chief
Financial Officer of the Group announced he was stepping down from
the role and a successor was recruited. An orderly handover of
responsibilities took place between the previous Chief Financial
Officer and the new Chief Financial Officer. Costs associated with
this transitional period incurred during the year ended 31 December
2019, including recruitment costs and costs of associated senior
staff changes, have been treated as non-recurring costs.
6 Directors and employees
Year ended 31 December
2020 2019
GBP'000 GBP'000
Wages and salaries 21,317 18,524
Social security costs 2,301 1,765
Other pension costs 2,015 1,704
Share-based incentive awards 434 956
------------------------------- -------------------------------
26,067 22,949
=============================== ===============================
2020 2019
The monthly average number of employees Number Number
during
the year was:
Directors 6 6
Administration 692 566
698 572
=============================== ===============================
Details of emoluments paid to the directors and key management
personnel of the Group are as follows:
Year ended 31 December
2020 2019
GBP'000 GBP'000
Total emoluments paid to:
Directors
Wages and salaries 1,487 1,280
Social security costs 220 146
Post-employment costs 20 37
Share-based incentive awards 202 427
Key management personnel
Wages and salaries 908 1,334
Compensation for loss of office - 126
Social security costs 136 173
Post-employment costs 60 67
Share-based incentive awards 80 177
------------------------------- -------------------------------
3,113 3,767
=============================== ===============================
Emoluments of highest paid director:
Wages and salaries 508 436
Pension contribution 7 9
------------------------------- -------------------------------
515 445
=============================== ===============================
Short term employee benefits include wages and salaries. Long
term employee benefits include share-based incentive awards.
7 Finance costs
Year ended 31 December
2020 2019
GBP'000 GBP'000
Operational cost
Interest payable on bank loans 523 382
Interest and finance costs on lease
liabilities 174 141
Non-recurring cost
Unwind of discount factor on contingent
consideration
relating to:
Acquisition of Dunstan Thomas 131 -
Acquisition of Talbot and Muir 57 -
885 523
============================= =============================
8 Taxation
Year ended 31 December
2020 2019
GBP'000 GBP'000
Domestic current year tax
UK Corporation tax 1,542 2,202
Deferred tax
Origination and reversal of temporary
differences 122 (169)
1,664 2,033
============================= =============================
Factors affecting the tax charge for
the year
Profit before tax 7,429 10,883
============================= =============================
Profit before tax multiplied by standard
rate of UK Corporation tax of 19%
(2019: 19%) 1,412 2,068
----------------------------- -----------------------------
Effects of:
Adjustment to prior year 117 (33)
Non-deductible expenses 177 10
Other tax adjustments (42) (12)
----------------------------- -----------------------------
252 (35)
Total tax charge 1,664 2,033
============================= =============================
9 Earnings per share
Basic earnings per share amounts are calculated by dividing net
profit for the year attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding
during the year.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of
ordinary shares that would be issued on the conversion of all the
dilutive potential ordinary shares into ordinary shares.
Changes in income or expense that would result from the
conversion of the dilutive potential ordinary shares are deemed to
be trivial, and therefore no separate diluted net profit is
presented.
The following reflects the income and share data used in the
basic and diluted earnings per share computations:
2020 2019
GBP'000 GBP'000
Net profit available to equity holders of
the Company 5,765 8,850
================= ===========
Net profit before tax, non-recurring costs
and amortisation available to equity holders
of the Company. 13,372 13,353
================= ===========
Weighted average number of ordinary shares: Number Number
Issued ordinary shares at start of the
year 54,142,346 53,807,346
Effect of shares issued during the year** 5,859,094 1,002,290
Effect of shares held by employee benefit
trust (296,835) (244,741)
Basic weighted average number of shares 59,704,605 54,564,895
Effect of dilutive options ** 886,707 1,216,778
Diluted weighted average number of shares 60,591,312 55,781,673
================= ===========
Pence Pence
Earnings per share:
Basic** 9.7 16.2
Diluted** 9.5 15.9
Earnings per share on net profit before
non-recurring costs and amortisation, less
an effective tax rate*:
Basic** 18.1 19.8
Diluted** 17.9 19.4
*In order to reduce the impact of accounting measures such as
deferred tax, and the timing of tax reliefs, the effective tax rate
matches the current tax rate applicable to the accounting year. The
current tax rate applicable for the year ended 31 December 2020 was
19% (2019: 19%).
** Both basic EPS and diluted EPS have been adjusted to reflect
the impact of a bonus factor within shares issued during the year
ended 31 December 2020. Diluted EPS for the year ended 31 December
2019 has been restated on the same basis in this announcement.
There is no impact to either the income statement or balance sheet
of the Group.
10 Intangible assets
Group
Internally
Client Computer Generated
Goodwill Portfolios Software Software Total
GBP'000 GBP'000 GBP'000 and Relationships GBP'000
GBP'000
Cost
At 1 January 2019 28,903 18,866 1,481 - 49,250
Additions - - 696 - 696
At 31 December
2019 28,903 18,866 2,177 - 49,946
Arising on acquisitions 20,682 17,435 - 11,078 49,195
Additions - - 606 380 986
At 31 December
2020 49,585 36,301 2,783 11,458 100,127
----------- ------------- ----------- ------------------- ----------
Amortisation and
Impairment
At 1 January 2019 - 4,379 761 - 5,140
Charge for the
year - 941 438 - 1,379
At 31 December
2019 - 5,320 1,199 - 6,519
Charge for the
year - 1,081 248 769 2,098
Impairment - 344 - - 344
At 31 December
2020 - 6,745 1,447 769 8,961
----------- ------------- ----------- ------------------- ----------
Net book value
At 1 January 2019 28,903 14,487 720 - 44,110
=========== ============= =========== =================== ==========
At 31 December
2019 28,903 13,546 978 - 43,427
=========== ============= =========== =================== ==========
At 31 December
2020 49,585 29,556 1,336 10,689 91,166
=========== ============= =========== =================== ==========
Goodwill
Goodwill totalling GBP28,903,000 arose on the acquisition of
Suffolk Life Group Limited and its subsidiaries on 25 May 2016.
Goodwill totalling GBP16,115,000 arose on the acquisition of
Dunstan Thomas Group Limited and its subsidiaries on 3 August 2020.
Goodwill totalling GBP4,567,000 arose on the acquisition of Talbot
and Muir Limited and its subsidiaries on 30 October 2020.
The Group tests goodwill for impairment annually or more
frequently if there are indications that goodwill might be
impaired. The recoverable amount of goodwill has been determined
based on value-in-use calculations using a discount rate
appropriate to the risk profile of the asset. These calculations
use operating cash flow projections based on financial budgets
approved by management covering a three year period, assuming
business then continues onwards after this period at a steady rate
for the purpose of the analysis.
Client Portfolios
Client portfolios represent individual client portfolios
acquired through business combinations and accounted for under the
acquisition method. The directors consider that there is no
impairment to assets as at the year end. The client portfolios are
being amortised over a period of 20 years.
The brought forward balance relates to the purchase by Curtis
Banks Limited, a subsidiary company, of the trade and assets of
Montpelier Pension Administration Services Limited on 13 May 2011,
the full SIPP business of Alliance Trust Savings Limited on 18
January 2013, the full SIPP business and certain assets of Pointon
York SIPP Solutions Limited on 31 October 2014, the full SIPP
business of Rathbones Pension & Advisory Services Limited on 31
December 2014, a book of full SIPPs from Friends Life PLC (now
Aviva PLC) on 13 March 2015 and a book of SIPPs from Hargreave Hale
Limited on 10 December 2018.
The brought forward balance also includes the purchase by
Suffolk Life Pensions Limited, a subsidiary company, of the trade
and assets of European Pensions Management Limited on 14 July 2016,
and books of SIPPs purchased from Pointon York SIPP Solutions
Limited on 9 November 2012, Pearson Jones PLC on 30 April 2013, and
Origen Investment Services Limited on 22 May 2013.
Client portfolios fair valued at GBP17,435,000 arose on
acquisition of Talbot and Muir Limited and its subsidiaries on 30
October 2020.
Impairment charges totalling GBP344,000 against the intangible
asset relating to client portfolios have been recognised during the
year (2019: GBPnil). This relates to changes in the estimate of
future cash flows expected on these assets over their remaining
useful economic lives owing to increased uncertainty over the
longevity of the current low interest rate environment.
The client portfolios are being amortised over a period of 20
years and have an average remaining expected useful economic life
as at 31 December 2020 of 14 years and 1 month.
Computer Software
Computer software comprises costs that meet the recognition
criteria under IAS 38 as Intangible Assets. General small computer
software costs are amortised over their useful economic life of
four years on a straight-line basis. Computer software costs for
significant projects are amortised over an estimated UEL on a
project by project basis.
Internally Generated Software
Internally generated software and relationships represents the
provisional and collective valuation of identifiable intangible
assets separate to goodwill arising on acquisition of Dunstan
Thomas by Curtis Banks Group PLC during the year ended 31 December
2020. Internally generated software and relationships are being
provisionally amortised over a period of between 5 and 7.5 years.
Please see business combinations note 17 to this announcement for
further detail.
11 Investment Property
Assets held at fair value
Group
Year ended 31 December
2020 2019
GBP'000 GBP'000
Fair value
At 1 January 1,265,784 1,274,452
Additions 122,449 125,848
Disposals (118,877) (122,047)
Fair value losses (60,751) (12,469)
At 31 December 1,208,605 1,265,784
==================== ====================
All investment properties have been valued at the year end by
reference to most recent professional valuations and this is
further adjusted by applying the corresponding property index
available. Investment properties held to cover the linked
policyholder business are included in non-participating investment
contract liabilities.
12 Property, plant and equipment
Assets held at cost
Group
Computer Office Total
Right equipment equipment,
of use fixtures &
assets fittings
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2019 - 4,338 1,528 5,866
Arising on transition to
IFRS 16 5,285 - - 5,285
Additions - 917 98 1,015
Disposals - (172) - (172)
At 31 December 2019 5,285 5,083 1,626 11,994
Arising from acquisitions 1,904 292 468 2,664
Additions - 570 21 591
At 31 December 2020 7,189 5,945 2,115 15,249
------------------ ------------------ --------------------- ------------------
Depreciation
At 1 January 2019 - 3,555 1,095 4,650
Charge for the year 695 459 167 1,321
Disposals - (172) - (172)
At 31 December 2019 695 3,842 1,262 5,799
Arising from acquisitions - 180 113 293
Charge for the year 763 547 189 1,499
At 31 December 2020 1,458 4,569 1,564 7,591
------------------ ------------------ --------------------- ------------------
Carrying value
At 1 January 2019 - 783 433 1,216
================== ================== ===================== ==================
At 31 December 2019 4,590 1,241 364 6,195
================== ================== ===================== ==================
At 31 December 2020 5,731 1,376 551 7,658
================== ================== ===================== ==================
13 Cash and cash equivalents
As at 31 December 2020 and 2019 cash and cash equivalents were
as follows:
Group Company
As at 31 December As at 31 December
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 32,509 31,228 4,411 1,330
Deposits with credit institutions 397,518 389,715 - -
Cash equivalents 551 604 - -
Cash and cash equivalents 430,578 421,547 4,411 1,330
========= ========= ========= =========
The Group considers potential expected credit losses on cash and
cash equivalents to be insignificant.
14 Borrowings
Group
As at 31 December
2020 2019
GBP'000 GBP'000
Current
Bank loans 53,533 28,215
53,533 28,215
--------- ---------
Non-current
Bank loans 53,370 48,911
53,370 48,911
--------- ---------
Total borrowings 106,903 77,126
========= =========
Bank borrowings
The bank borrowings are repayable as follows:
Group
As at 31 December
2020 2019
GBP'000 GBP'000
Within 1 year 53,533 28,215
Between 1 year and 5 years 42,531 31,793
After more than 5 years 10,839 17,118
106,903 77,126
========= =========
Bank borrowings of the Company are repayable between January
2021 and July 2025 and bear average coupons of 2.25% plus LIBOR per
annum.
Total borrowings of the Group include liabilities of
GBP83,147,000 (2019: GBP65,696,000) secured by legal charge over
certain properties held within non-participating investment
contracts, and liabilities of GBP23,756,000 (2019: GBP11,430,000)
secured on the shares of Curtis Banks Limited, Suffolk Life
Pensions Limited, Suffolk Life Annuities Limited, and Dunstan
Thomas Group Limited.
15 Provisions
As at 31 December
Other provision Restructuring In-specie Group
GBP'000 provision contributions Total
GBP'000 provision GBP'000
Provisions GBP'000
Balance as at 1 January
2019 500 - - 500
Amounts introduced - 307 - 307
Amounts utilised (254) - - (254)
Balance as at 31 December
2019 246 307 - 553
Amounts introduced 53 - 402 455
Amounts arising on
acquisitions 7 - - 7
Amounts utilised (292) (170) - (462)
Amounts released as
unutilised (7) (38) - (45)
Balance as at 31 December
2020 7 99 402 508
================= =============== =============== ==========
Other provision
As part of the consolidation and integration exercise undertaken
during the year ended 31 December 2018 management initiated a
review of data records relating to commercial properties held
within SIPPs administered by the Group. A provision of GBP500,000
was made for the estimated costs arising from this exercise.
Additionally, a contingent liability was recognised and remains
disclosed within note 19 to this announcement.
As at 31 December 2019, the Group had completed its review
enabling identification of the total number of cases potentially
requiring remediation, and as of 31 December 2020, the vast
majority of cases had been settled. There were no material
variances to the original estimate of future remaining direct costs
the Group expected to potentially bear.
Restructuring provision
During the year ended 31 December 2019, the Group progressed its
strategy to deliver its Target Operating Model by deciding to
centralise commercial property administration within one office
location. Redundancy costs associated with this decision, relating
to the year ended 31 December 2019, are included as amounts
introduced to the restructuring provision for that year. There were
no material variances to the original estimate of costs the Group
expected to potentially bear.
In-specie contributions provision
As previously reported, the Group has been in correspondence
with HMRC regarding processes and documentation in respect of in
specie contributions. HMRC have alleged that incorrect procedures
were followed and is seeking to reclaim tax reliefs granted and
interest thereon. This is an industry wide issue affecting other
SIPP operators and has been challenged by the sector as a whole.
Following a favourable ruling for HMRC in a case affecting another
SIPP operator, and having taken further legal advice, the Directors
now consider it more likely than not that some cost associated with
this issue will be incurred by the Group.
The total exposure for affected clients is estimated at GBP1.1m
inclusive of interest. However, in recognition of the possibility
that some clients may have insufficient assets to settle their
share of the cost, the Group has recognised a provision of GBP0.4m
and treated this amount as a non-recurring cost during the year
ended 31 December 2020.
16 Dividends
Year to 31 December
2020 2019
GBP'000 GBP'000
Ordinary dividend declared and paid 5,149 4,562
5,149 4,562
========== ==========
An interim share dividend in respect of the year ended 31
December 2020 of 2.50p per share was declared by reference to
audited distributable reserves as at 31 December 2019 and paid on
13 November 2020.
A final share dividend in respect of the year ended 31 December
2020 of 6.50p per share is proposed by reference to audited
distributable reserves as at 31 December 2020 and, if approved,
will be paid on 4 June 2021.
17 Business combinations
Acquisition of Dunstan Thomas
On 3 August 2020, Curtis Banks Group PLC completed the
acquisition of the entire share capital of Dunstan Thomas Group
Limited and its subsidiaries. Dunstan Thomas Group Limited holds
four wholly owned trading subsidiaries, Digital Keystone Limited,
Dunstan Thomas Holdings Limited, Dunstan Thomas Consulting Limited
and Platform Action Limited, all of which now form part of the
enlarged Group.
Dunstan Thomas Group Limited is a holding company. Dunstan
Thomas Holdings Limited, Digital Keystone Limited, Dunstan Thomas
Consulting Limited, and Platform Action Limited provide licences to
customers for financial technologies that have been developed in
house including Imago Illustrations and Integro CX Enterprise,
alongside training, consultancy and other development solutions to
the financial services market.
Initial consideration settled wholly in cash totalled GBP21.9m.
Variable deferred contingent consideration linked to post
acquisition EBITDA and estimated at approximately GBP3.9m is
payable after a three year earn-out period post acquisition.
The acquisition has been accounted for using the acquisition
method and in accordance with IFRS 3: Business Combinations.
GBP'000
Fair value of consideration payable 25,848
Less: Provisional fair value of net assets acquired (9,733)
Goodwill arising on acquisition (note 10) 16,115
--------
The goodwill recognised above is attributed to the expected
benefits from combining the assets and activities of Dunstan Thomas
with those of the Group. The primary components of this residual
goodwill comprise
- Cost savings generated through use of Dunstan Thomas to progress Group IT strategy
- Cost savings generated through economies of scale and enlarged Group purchasing power
- A skilled and knowledgeable workforce
- New opportunities available to the combined business, as a
result of Dunstan Thomas being part of an enlarged and more
diversified Group
We have undertaken a valuation of the acquired goodwill and
separately identifiable intangible assets, which comprise
internally generated software and customer relationships. The fair
value adjustments to reflect these assets have been measured
provisionally and collectively pending completion of an independent
valuation, which has been delayed as the impact of the covid-19
pandemic has required management to prioritise other commercial
matters.
Fair value of these intangible assets has been based on the
present value of expected future cash flows from these
relationships, and the assumptions used in this exercise have also
been used in determining the estimated useful economic life of each
asset for the purposes of amortisation.
The provisional amounts recognised in respect of the identified
assets acquired and liabilities assumed are set out in the
following table:
Carrying value Fair value adjustments Total
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 2,358 8,690 11,048
Property, plant and equipment 1,351 - 1,351
Current assets
Trade receivables 1,527 - 1,527
Other debtors 1,356 - 1,356
Prepayments & accrued income 546 - 546
Bank and cash 918 - 918
Current liabilities
Trade payables (645) - (645)
Taxes and social security costs (831) - (831)
Other payables (49) - (49)
Accruals (452) - (452)
Deferred income (1,159) - (1,159)
Lease liabilities (189) - (189)
Current tax liability (380) - (380)
Non-current liabilities
Deferred income (125) - (125)
Lease liabilities (1,084) - (1,084)
Deferred tax liability - (2,099) (2,099)
Net assets acquired 3,142 6,591 9,733
--------------- ----------------------- --------
Adjustments to finalise the fair values attributed to assets and
liabilities acquired will be made in the financial statements for
the year to 31 December 2021. If information obtained within one
year of the acquisition date about facts and circumstances that
existed at the acquisition date identifies adjustments to the above
amounts, or any additional provisions that existed at the
acquisition date, then the accounting for the acquisition will be
revised.
Acquisition costs totalled GBP0.8m and comprised legal and
professional fees, and due diligence work. In accordance with IFRS
3 Business Combinations, these costs have been expensed as
reflected in note 5 to this announcement as non-recurring cost.
The post-acquisition operating activity of Dunstan Thomas Group
Limited and its subsidiaries for the period from acquisition to the
end of 31 December 2020 generated net profits before tax of GBP1.5m
and after tax of GBP1.4m.
Operating revenues of GBP5.3m have been recognised in relation
to the acquisition of Dunstan Thomas Group Limited and its
subsidiaries for the period from acquisition to 31 December 2020.
The operating revenue as though the acquired business had been held
for the full year ended 31 December 2020 is estimated to be
GBP12.7m.
The net cash flows arising from this acquisition during the year
ended 31 December 2020 were as follows:
GBP'000
Net cash inflow from debt refinancing 15,630
Working capital utilised 6,305
--------
Total initial consideration paid to vendors 21,935
Cash acquired on acquisition (918)
Net cash outflow in the year ended 31 December 2020 21,017
--------
Acquisition of Talbot and Muir
On 30 October 2020, Curtis Banks Group PLC completed the
acquisition of the entire share capital of Talbot and Muir Limited
and its subsidiaries. The subsidiaries of Talbot and Muir Limited
are all non-trading trustee entities acting as bare trustee for
SIPP and SSAS pension assets and liabilities, all of which now form
part of the enlarged Group. Talbot and Muir is a provider of SIPP
and SSAS pension scheme administration services.
Initial consideration settled wholly in cash totalled GBP18.0m.
Variable deferred contingent consideration linked to post
acquisition EBITDA and estimated at approximately GBP4.1m is
payable over a two year earn-out period post acquisition.
The acquisition has been accounted for using the acquisition
method and in accordance with IFRS 3: Business Combinations.
GBP'000
Fair value of consideration payable 21,845
Less: fair value of net assets acquired (17,278)
Goodwill arising on acquisition (note 10) 4,567
---------
The goodwill recognised above is attributed to the expected
benefits from combining the assets and activities of Talbot and
Muir with those of the Group. The primary components of this
residual goodwill comprise
- Revenue synergies expected to be available to the Group as a result of the transaction
- Greater access to diverse distribution channels
- Cost savings generated through additional scale and the
purchasing power of the enlarged Group
- A skilled and knowledgeable workforce
- New opportunities available to the combined business, as a
result of Talbot and Muir being part of an enlarged Group
The fair value of the identifiable assets and liabilities
acquired are set out below:
Carrying value Fair value adjustments Total
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 3,145 14,290 17,435
Property, plant and equipment 1,020 - 1,020
Current assets
Trade receivables 870 (113) 757
Other debtors 1 - 1
Prepayments & accrued income 468 - 468
Bank and cash 4,193 - 4,193
Current liabilities
Trade payables (45) - (45)
Taxes and social security costs (322) - (322)
Accruals (218) - (218)
Deferred income (1,285) - (1,285)
Lease liabilities (106) - (106)
Deferred consideration (430) - (430)
Current tax liability (113) - (113)
Non-current liabilities
Lease liabilities (687) - (687)
Deferred tax liability (40) (3,350) (3,390)
Net assets acquired 6,451 10,827 17,278
--------------- ----------------------- --------
Acquisition costs totalled GBP0.6m and comprised legal and
professional fees, and due diligence work. In accordance with IFRS
3 Business Combinations, these costs have been expensed as
reflected in note 5 to this announcement as non-recurring cost.
The post-acquisition operating activity of Talbot and Muir
Limited and its subsidiaries for the period from acquisition to the
end of 31 December 2020 generated net profits before tax of GBP0.3m
and after tax of GBP0.2m.
Operating revenues of GBP1.0m have been recognised in relation
to the acquisition of Talbot and Muir Limited and its subsidiaries
for the period from acquisition to 31 December 2020. The operating
revenue as though the acquired business had been held for the full
year ended 31 December 2020 is estimated to be GBP6.0m.
The net cash flows arising from this acquisition during the year
ended 31 December 2020 were as follows:
GBP'000
Net cash inflow from equity financing 24,217
Amount retained as working capital (6,177)
--------
Total initial consideration paid to vendors 18,040
Cash acquired on acquisition (4,193)
Net cash outflow in the year ended 31 December 2020 13,847
--------
18 Contingent consideration
The Group and Company has entered into certain acquisition
agreements that provide for contingent consideration to be paid.
These agreements and the basis of calculation of the net present
value of the contingent consideration are summarised below. While
it is not possible to determine the exact amount of contingent
consideration (as this will depend on the performance of the
acquired businesses during the period), the Group estimates the
fair value of the remaining contingent consideration payable is
GBP8.2m (2019: GBP0.1m).
On 3 August 2020 the Group acquired Dunstan Thomas for total
maximum consideration of up to GBP27.5m, comprising initial
consideration of GBP21.9m in cash plus contingent consideration of
up to GBP5.6m payable in cash after three years post completion
date if certain financial targets based on growth in earnings
before interest, tax, depreciation and amortisation are met. The
Group estimates the fair value of the remaining contingent
consideration at 31 December 2020 to be GBP4.1m using forecasts
approved by the Board covering the contingent consideration
period.
On 30 October 2020 the Group acquired Talbot and Muir for total
maximum consideration of up to GBP25.25m, comprising initial
consideration of GBP18.0m in cash plus contingent consideration of
up to GBP7.25m payable in cash over a two year period post
completion if certain financial targets based on growth in earnings
before interest, tax, depreciation and amortisation are met. The
Group estimates the fair value of the remaining contingent
consideration at 31 December 2020 to be GBP4.1m using forecasts
approved by the Board covering the contingent consideration
period.
19 Contingent liabilities
Data cleansing
During the year ended 31 December 2018 management initiated a
review of data records related to properties held within SIPPs
administered by the Group.
This review required a case by case assessment of each of the
properties within the population in order to assess whether any
remedial action was required by the Group in respect of that
property or the associated SIPP.
The Directors' best estimate of this contingent liability is
GBP1.4m (31 December 2019: GBP2.3m). The decrease in estimate has
arisen following satisfactory resolution of a number of cases and
an overall reduction in the value of remaining cases and
uncertainty remaining.
There remain inherent uncertainties in the estimate due to the
potential for variations in the assumed action required to rectify
individual positions. This estimate continues to be reviewed
regularly, and any changes or refinements will be reported as
appropriate. The Directors currently expect that, with COVID-19
related working limitations and also additional forbearance having
been permitted in connection with the COVID-19 pandemic, any
potential material follow up actions will be completed by 2021.
20 Unaudited IFRS Consolidated Statement of Financial Position
as at 31 December 2020 split between insurance policy holders and
the Group's shareholders
2020 2020 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
ASSETS Group Total Policyholder Shareholder Shareholder
Non-current assets
Intangible assets 91,166 - 91,166 43,427
Investment property 1,208,605 1,208,605 - 42
Property, plant and
equipment 7,658 - 7,658 6,195
Investments 2,072,317 2,072,317 - -
Deferred tax asset - - - 911
------------ ------------- ------------ ------------
3,379,746 3,280,922 98,824 50,575
------------ ------------- ------------ ------------
Current assets
Trade and other receivables 26,913 12,243 14,670 9,509
Cash and cash equivalents 430,578 398,069 32,509 31,228
Current tax asset 580 222 358 -
------------ ------------- ------------ ------------
458,071 410,534 47,537 40,737
------------ ------------- ------------ ------------
Total assets 3,837,817 3,691,456 146,361 91,312
------------ ------------- ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 18,895 10,626 8,269 5,966
Deferred income 26,995 12,376 14,619 12,415
Borrowings 53,533 49,681 3,852 3,156
Lease liabilities 672 - 672 719
Provisions 501 - 501 553
Contingent consideration 2,516 - 2,516 214
Current tax liability - - - 738
------------ ------------- ------------ ------------
103,112 72,683 30,429 23,761
------------ ------------- ------------ ------------
Non-current liabilities
Borrowings 53,370 33,466 19,904 8,183
Lease liabilities 5,201 - 5,201 3,915
Provisions 7 - 7 -
Contingent consideration 5,657 - 5,657 -
Non-participating investment
contract liabilities 3,585,307 3,585,307 - -
Deferred tax liability 5,013 - 5,013 -
------------ ------------- ------------ ------------
3,654,555 3,618,773 35,782 12,098
------------ ------------- ------------ ------------
Total liabilities 3,757,667 3,691,456 66,211 35,859
------------ ------------- ------------ ------------
Net assets 80,150 - 80,150 55,453
------------ ------------- ------------ ------------
Equity attributable to owners
of the parent
Issued capital 330 - 330 271
Share premium 57,799 - 57,799 33,659
Equity share based payments 2,747 - 2,747 2,313
Treasury shares (741) - (741) (534)
Retained earnings 20,001 - 20,001 19,730
------------ ------------- ------------ ------------
80,136 - 80,136 55,439
Non-controlling interest 14 - 14 14
Total equity 80,150 - 80,150 55,453
------------ ------------- ------------ ------------
21 Unaudited IFRS Consolidated Statement of Cash Flows as at 31
December 2020 split between insurance policy holders and the
Group's shareholders
2020 2020 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Group Total Policyholder Shareholder Shareholder
Cash flows from operating
activities
Profit before tax 7,429 - 7,429 10,883
Adjustments for:
Depreciation 1,499 - 1,499 1,321
Amortisation and impairments 2,442 - 2,442 1,379
Interest expense 697 - 697 523
Share based payment expense 434 - 434 956
Fair value gains on financial
investments (119,957) (119,957) - -
Additions of financial
investments (631,200) (631,200) - -
Disposals of financial
investments 673,037 673,037 - -
Fair value losses on investment
properties 60,751 60,751 - -
Increase in liability for
investment contracts 13,403 13,403 - -
Changes in working capital:
(Increase)/decrease in
trade and other receivables (2,737) (1,214) (1,523) 113
(Decrease)/increase in
trade and other payables (1,105) (816) (289) 1,092
Taxes paid (2,996) - (2,996) (2,454)
Net cash flows from operating
activities 1,697 (5,996) 7,693 13,813
------------- -------------- ------------- -------------
Cash flows from investing
activities
Payments for intangible
assets (986) - (986) (696)
Purchase of property, plant
& equipment (591) - (591) (1,015)
Purchase of investment
property (122,449) (122,449) - -
Purchase and sale of shares
in the Group by the EBT (207) - (207) 182
Receipts from sale of investment
property 118,877 118,835 42 -
Net cash flows from acquisitions (34,638) - (34,638) (166)
Net cash flows from investing
activities (39,994) (3,614) (36,380) (1,695)
------------- -------------- ------------- -------------
Cash flows from financing
activities
Equity dividends paid (5,149) - (5,149) (4,562)
Net proceeds from issue
of ordinary shares 24,199 - 24,199 210
Net increase/(decrease)
in borrowings 29,595 17,360 12,235 (3,158)
Principal element of lease
payments (934) - (934) (933)
Interest paid (383) - (383) (465)
Net cash flows from financing
activities 47,328 17,360 29,968 (8,908)
------------- -------------- ------------- -------------
Net increase in cash and
cash equivalents 9,031 7,750 1,281 3,210
------------- -------------- ------------- -------------
Cash and cash equivalents
at the beginning of the
year 421,547 390,319 31,228 28,018
============= ============== ============= =============
Cash and cash equivalents
at the end of the year 430,578 398,069 32,509 31,228
============= ============== ============= =============
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(END) Dow Jones Newswires
April 07, 2021 02:00 ET (06:00 GMT)
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