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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Curtis Banks Group Plc | LSE:CBP | London | Ordinary Share | GB00BW0D4R71 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 349.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMCBP
RNS Number : 7732H
Curtis Banks Group PLC
15 March 2018
Curtis Banks Group plc
("Curtis Banks", the "Group")
Final Results for 12 months to 31 December 2017
Curtis Banks Group plc, one of the UK's leading SIPP providers, is pleased to announce its final results for the 12 months to 31 December 2017 in line with the audited accounts available on the Group's website.
Highlights
-- Operating revenue increased by 47% to GBP43.6m (2016: GBP29.7m) -- Adjusted operating profit(1) increased by 51% to GBP10.7m (2016: GBP7.1m) -- Adjusted operating margin increased to 25% (2016: 24%) -- Profit before tax increased by 31% to GBP5.9m -- Adjusted diluted EPS increased by 48% to 15.38p -- Strong gross organic growth in own SIPP numbers of 14% with total administered now 76,474 -- Assets under administration increased by 21% to GBP24.7bn -- Proposed final dividend of 4.75p (2016: 3p) making a full year payment of 6.25p (2016: 4p)
Highlights and key performance indicators for the year include:
Hot Features
Premium
Financial 2017 2016
Operating Revenue GBP43.6m GBP29.7m
Adjusted Operating GBP10.7m GBP7.1m
Profit
Profit before Tax GBP5.9m GBP4.5m
Adjusted Operating
Margin 25% 24%
Basic EPS 9.75p 7.23p
Diluted EPS 9.26p 7.02p
2017 2016
Basic EPS on Adjusted
Operating Profit
less an effective
tax rate 16.20p 10.67p
Diluted EPS on Adjusted
Operating Profit
less an effective
tax rate 15.38p 10.37p
Operational Highlights
Number of SIPPs
Administered 76,474 72,983
Assets under Administration GBP24.7bn GBP20.4bn
Total organic new
own SIPPs in year 8,719 6,236
(____________)
(1) Profit before tax, amortisation and non- recurring costs
Commenting on the results and prospects, Rupert Curtis, CEO of Curtis Banks, said:
"This year has been one of considerable progress for the Group with a strong increase in our operating revenues and adjusted operating profit. As a result and in accordance with our progressive dividend policy I am pleased to report a 56% proposed increase in our dividend for the year.
"We have undergone a period of consolidation following the acquisition of Suffolk Life and now have a single identity for the Group. Our new integrated Group Management Committee has built the foundations for us to operate more efficiently and to provide an even better service for our customers.
"The market opportunity for SIPP providers remains compelling. The key regulatory and demographic drivers of our organic growth persist and we are well positioned to continue our profitable growth."
Analyst Presentation:
There will be a presentation on Thursday 15 March 2018 at 9.30am for institutional investors and analysts at Peel Hunt LLP, Moor House, 120 London Wall, London EC2Y 5ET. Those wishing to attend should contact jane.glover@camarco.co.uk.
Copies of the audited accounts of the Group will be available on the Group website today.
For more information:
Curtis Banks Group plc www.curtisbanks.co.uk
Rupert Curtis - Chief Executive
Officer +44 (0) 117 9107910
Paul Tarran - Chief Financial
Officer
Will Self - Deputy Chief Executive
Officer
Peel Hunt LLP (Nominated Adviser +44 (0) 20 7418
& Broker) 8900
Guy Wiehahn
Rishi Shah
+44 (0) 20 3757
Camarco 4984
Ed Gascoigne-Pees
Hazel Stevenson
Jane Glover
LEI Code: 213800LYP7YTVDXRMP40
Notes to Editors:
Curtis Banks administers over 76,000 Self-Invested Pension Schemes, principally SIPPs and SSASs. The Group commenced trading in 2009 and has successfully developed, through a combination of organic growth and acquisitions, into one of the largest UK providers of these products. The Group currently employs approximately 570 staff in its head office in Bristol and regional offices in Ipswich and Dundee.
For more information - www.curtisbanks.co.uk
Chairman's Statement
I am pleased to present my first statement as Chairman of Curtis Banks for the year ended 31 December 2017. I would like to start by thanking my predecessor Chris Banks as previous Chairman of the Group for his contribution to the growth of the Group. Chris was a founder of the business and has been a major contributor in the growth of the business and we are delighted that he remains a strategic advisor to the business.
The year has been one of consolidation as we made the Suffolk Life business an integral part of the Curtis Banks Group and these results are our first full year results that include the full period's contribution of Suffolk Life which the Group acquired in 2016. We have enhanced our level of governance and management control, to meet the needs of the enlarged Group, and are well positioned to deliver our strategy in 2018 and thereafter. As a result of this transaction and the progress we have made in growing the rest of our business, our revenue and profitability have grown strongly compared to the prior year.
The period under review has shown operating revenue increasing by 47% from GBP29.7m to GBP43.6m compared to the same period last year, with adjusted operating profit increasing by 51% from GBP7.1m to GBP10.7m. Fully diluted earnings per share on these results (after tax) amounted to 15.38p per share (2016 - 10.37p) and on the statutory profits after tax diluted earnings per share are 9.26p (2016 - 7.02p). This is a good set of results particularly with the high levels of regulatory focus on SIPP providers and industry changes.
Our operating margin has continued to improve over the second half of the year and now stands at 25% for the full year. We expect to achieve further improvement in this margin in the medium term as we grow our top line and achieve operational efficiencies.
The year has seen us make substantial progress against our strategic objectives in order to ensure we realise the benefits of our acquisitions, market ourselves more efficiently and continuously look for ways to grow our revenues. We have launched a new group wide brand and have rationalised our office locations down to three sites in Bristol, Dundee and Ipswich. As part of our focus on growing revenues we are also enhancing our property administration services across the Group. We will continue to explore ways in which we can capture the opportunities within the SIPP administration industry and one of our major objectives for 2018 is the standardisation of our service offerings.
We announced in December that we completed our review of our operating systems and have decided to implement a material upgrade of the existing Curtis Banks operating system and to continue to use the Suffolk Life back office system. We are confident that this is the optimal solution in terms of cost, efficiency and risk.
The total number of SIPPs currently administered by the Group now exceeds 76,000 and this is as a result of continued new organic growth of all SIPPs and our attrition rates remaining stable with previous years.
Dividends
We paid an interim dividend of 1.5p per share (2016: 1.0p per share) on 15 November 2017 and the Board proposes a final dividend of 4.75p per share (2016: 3p per share) which, if approved, will be paid to shareholders on the register at the close of business on 27 April 2018. The shares will be marked ex-dividend on 26 April 2018 and the proposed dividend paid on 18 May 2018. This will mean the total dividend paid in respect of the year ended 31 December 2017 will amount to 6.25p per share reflecting a 56% increase in the operating profit from the enlarged group.
Summary and outlook
During the course of this year, the Group has made considerable progress against its strategic objectives. We have also enhanced our revenue generation capabilities and are excited about the prospects for offering enhanced property administration services across the organisation. With a strong market position, the continued growth of the SIPP industry, excellent staff, strong relationships with high quality professional introducers and a real focus on delivering value to clients and shareholders alike the board look forward to the future with confidence.
Chris Macdonald
Chairman
14 March 2018
Chief Executive's Review
Operational Review
2017 has been a successful year for us and I would like to start by thanking all our staff for their hard work and dedication over the last year which has made these results possible.
The year has been one of consolidation as we made the Suffolk Life business an integral part of the Curtis Banks Group. A Group Management Committee was created in April. This team comprises talented managers from both the original Curtis Banks and Suffolk Life teams and has removed any 'silo' effect of different business entities. The team now oversees the Group and manages the changes needed to improve service for our customers and increase our operating margins. Having a team acting with a common Group purpose has already yielded results, such as standardised operating procedures and aligned risk management.
We have rationalised our office network down to three sites in Bristol, Dundee and Ipswich. In January 2017 we closed our Chilmark office which was part of the acquisition of a book of 5,000 SIPPs in 2016. Post period end, in January 2018, we closed our Market Harborough office.
These significant changes are the most notable part of our work towards our five strategic objectives, which everyone in the business is focused on meeting. They are:
-- Meet changing customer needs - adapting to the changing needs of the UK population and regulatory environment to be the SIPP provider of choice.
-- Capitalise on the right opportunities for growth - Focus on profitable areas of organic market growth and selective acquisitions of well-aligned books or businesses, with a clear business identity.
-- Enhance revenue generation - extend proven revenue generation activities across the wider group and continually review fee income relative to the services provided.
-- Drive efficiency through technology - continue technology advances appropriate to the business to deliver improved margins through efficiency and improved service to customers.
-- Maintain a robust and sustainable business model - market leading governance, capitalisation and robust systems to ensure a sustainable long term business and confidence for our business partners, customers and shareholders.
We are now taking action to build on our foundations and deliver on our strategic objectives.
We have launched a new Group brand and a single objective of growing profitably by delivering the best SIPP in the market. There is now a common identity and culture across our Group, across all businesses and products, reflecting that all our customers can expect the same quality service-led approach that underpins our values.
SIPP Numbers and Revenues
Full Mid SIPPs eSIPPs Total Third Total
SIPPs own SIPPs Party
Administered
--------------- ------- ---------- ------- ----------- -------------- -------
2017 number 20,539 24,682 22,193 67,414 9,060 76,474
--------------- ------- ---------- ------- ----------- -------------- -------
2016 number 20,955 22,097 19,428 62,480 10,503 72,983
--------------- ------- ---------- ------- ----------- -------------- -------
Gross
organic
growth
rate* 3.39% 18.45% 20.22% 13.95% 0.75% 12.05%
--------------- ------- ---------- ------- ----------- -------------- -------
SIPPs
added
organically 711 4,079 3,929 8,719 79 8,798
--------------- ------- ---------- ------- ----------- -------------- -------
EPML data
cleanse - -250 - -250 - -250
--------------- ------- ---------- ------- ----------- -------------- -------
SIPPs
lost through
attrition -1,127 -1,244 -1,164 -3,535 -1,522 -5,057
--------------- ------- ---------- ------- ----------- -------------- -------
Attrition
rate* 5.38% 5.63% 5.99% 5.66% 14.49% 6.93%
--------------- ------- ---------- ------- ----------- -------------- -------
(*) Growth and attrition percentage rate based on opening SIPP numbers at the beginning of the year
At the year end the number of SIPPs administered increased to 76,474, adding a net 3,491 schemes. 8,798 new SIPPs were added and attrition rates on own SIPPs remained stable from previous years at 5.7%. We are grateful to our professional introducers for their continued support.
Our market and products
Customers with SIPPs invested in our 6,000 strong commercial property portfolio currently contract with third parties, who often do not have the related pension expertise, principally offering legal, management, inspection and valuation services. Extending our expertise to these services will enhance our customer proposition and diversify revenue generation.
We have formed a legal services company, Rivergate Legal Ltd, and an application has been submitted to the Solicitors Regulatory Authority for this company. In addition, we have formed a property management company, Templemead Property Solutions Ltd, and have submitted an application for RICS approval.
The Group has also recruited a Group Sales Director, Dave Stratton, previously Head of IFA Distribution at AXA Elevate. He has commenced work on restructuring and aligning the sales teams across the Group to build on our strong organic sales figures.
We are also developing a new SIPP proposition for the Group, to deliver a single suite of products across the Group and providing enhanced functionality. This will be our organic new business proposition and will also enhance the functionality of existing products.
Regulation
Regulatory scrutiny of the SIPP market continues, but our simple business model and our scale position us well within the complex regulatory environment facing the wider industry. A recent area of focus is that of the nature of the assets within SIPPs. The Group undertakes robust due diligence on non standard investments, and the nature of the investments we are prepared to accept into SIPPs puts the Group in a strong position.
HMRC action on in specie contributions is an issue affecting our industry and the outcome and impact are not known at this stage. We do not believe that the net exposure arising from this will be material to the Group.
IT strategy
During the year we continued to review our operating systems, to ensure that they are appropriate for the enlarged Group, providing the necessary functionality to enable the Group to provide an efficient and cost effective service to both IFAs and their customers.
This review was completed in December 2017 when we concluded that the most cost effective, appropriate and lowest risk solution is to implement a material upgrade of the existing back office operating system at Curtis Banks and to continue to use the Suffolk Life back office system as well. A material consideration in reaching this decision was the additional functionality provided by a new version of the Curtis Banks operating system, which only recently became available. We believe this is an effective solution for the foreseeable future based on our current strategy.
The upgrade of the systems at Curtis Banks is expected to commence in H2 2018. Costs associated with this upgrade will be capitalised and amortised in accordance with our normal accounting policy. Amortisation will commence once the upgrade is completed and fully operational.
People and culture
Operational efficiencies have allowed us to grow the business while maintaining staff numbers, delivering a positive contribution to our operating margin.
We value our people and the positive contribution they make to our culture and the performance of our business. We continue to place emphasis on staff engagement and wellbeing and have established a structured reward and recognition scheme and an employee forum that drives engagement and communication. We have also grown our corporate social responsibility activities, promoting our presence in our local communities and increasing our support for our people's own fundraising activities.
Rupert Curtis
Chief Executive Officer
14 March 2018
Chief Finance Officer's review
Financial Review
Operational revenues of GBP43.6m in 2017 have increased by 47% over the comparable period. This is through a combination of strong organic growth and the full year effect of the acquisition of the Suffolk Life Group of Companies in May 2016.
The operational revenue contribution from the Suffolk Life group of companies accounted for GBP22.5m of such revenue for the year ended 31 December 2017 compared to GBP10.4m in the seven months ended 31 December 2016. Operational revenues for the Group in the year ended 31 December 2017 excluding Suffolk Life grew by 8.6%.
Fee revenue remains the predominant source of income for the Group with a strong emphasis on recurring annual fee income. In the year ended 31 December 2017 annual recurring fees represented 84% of the total fee income. Fees are based on a recurring fixed monetary annual fee and a menu of additional fixed fees depending on the services provided to the SIPP. Fees are not dependent on movements in the value of underlying assets within SIPPs and as a result the income of the Group is not dependent on movements in financial markets.
Interest income remains part of Group income. In the year ended 31 December 2017 GBP9.5m of the Group operating revenues were from interest margin (2016 - GBP4.5m). The significant increase in this income from the previous year arose from the alignment in November 2016 of Suffolk Life banking systems with the virtual banking system operated at Curtis Banks. This allowed for funds to be placed on deposit with more attractive interest rates than previously. Future interest rate increases will not meaningfully impact Group operational revenue as clients will share in any uplift in bank base rate.
Administrative expenses of GBP32m for the Group increased by 44% compared to the previous year. This was largely a result of a full year of costs from the Suffolk Life Group of Companies. Suffolk Life administration costs for the year ended 31 December 2017 were GBP16.8m compared to GBP8.4m for the seven month period to 31 December 2016.
Staff costs for the year totalled GBP21.0m compared to GBP15.2m for the year ended 31 December 2016. Of this increase GBP4.8m related to the full year effect of the acquisition of Suffolk Life. In addition staff costs have increased due to annual pay reviews related to average wage earnings and, as set out in the report of the Remuneration Committee, the introduction during the year of an Executive Bonus Scheme and Long Term incentive Plan for key members of staff, as well as a further offering of the Save as You Earn option schemes for all staff members. Whilst such measures have a financial impact their introduction results in the retention and reward of key members of staff that is necessary to grow and develop the business.
Financial Review (continued)
Staff numbers have remained relatively static at 597 as at 31 December 2017 compared to 591 as at 31 December 2016, the slight increase arising from additional staff being recruited in the final quarter of the year to cover the imminent closure of Market Harborough office in January 2018.
Integration of the Suffolk Life operations was completed during the year and a full review of costs across the Group is taking place to identify areas where further cost efficiencies can be made as well as more efficient operational processing of the day to day SIPP administration activities. The objective of this review is to accelerate our progress in rebuilding the adjusted operating margin to 30%. This will be achieved by a combination of revenue enhancements, in year cost savings and operating improvements. These will not only benefit the Group but will also enhance the level and quality of services that are being provided to clients and introducers of business. A number of these enhancements have already been actioned.
The balance sheet as at 31 December 2017 shows a strong position with shareholder net assets increasing from GBP41.5m to GBP44.6m. Shareholder cash balances at year end were GBP25.7m compared to GBP21.5m at the end of the previous year and after regulatory capital requirements are taken into account at year end there were free shareholder cash balances of circa GBP9m available.
In 2016 the Group borrowed GBP23m for the acquisition of Suffolk Life. This comprised a GBP15m term loan repayable over 5 years and a revolving credit facility of GBP8m. Interest on this debt accrues at the rate of 2.25% plus LIBOR. The debt continues to be repaid in line with scheduled terms and the covenants required by the bank in respect of this gearing are well covered. As at year end the Group had net shareholder cash (after debt) of GBP8.1m (2016: GBP0.5m).
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 insurance policy contracts and so the Group does not bear any insurance risk. As the policyholder assets and liabilities are shown on the balance sheet of Suffolk Life Annuities Limited, these also show on the Group balance sheet on consolidation. As the policies are non-participating contracts, the Client related assets and liabilities in Suffolk Life Annuities match. In addition the revenues, expenses and investment returns of the non-participating insurance policy contracts are shown in the consolidated statement of comprehensive income. Again, these income, expense items and investment returns due to the policy holders are completely matched. The acquisition was accounted for in accordance with IFRS 3 Business Combinations. An illustrative balance sheet as at 31 December 2017 showing the financial position of the Group excluding the policy holder assets and liabilities is included as supplementary unaudited information after the Notes to the Accounts. An illustrative cash flow on the same basis has also been provided.
Financial Review (continued)
Non recurring costs
Non recurring costs for the year ended 31 December 2017 of GBP3.8m principally comprise:
-- An exceptional impairment charge of GBP2.1m following completion of an operating systems review, as was noted in last year's financial statements and subsequently reported.
-- Closure cost provisions of GBP0.9m relating to the rationalisation of offices during the year.
-- Restructuring costs of GBP0.6m following acquisitions of businesses in prior years.
During the year ended 31 December 2017 the Group completed the review of its operating systems following the acquisition of the Suffolk Life business in May 2016. As a result the Group concluded that the most cost effective, appropriate and lowest risk solution was, subject to contract, to implement a material upgrade of the existing back office operating system at Curtis Banks whilst retaining the current systems at Suffolk Life.
As a result of this decision costs of GBP2.1m incurred and capitalised on the initial development, installation, and evaluation and testing of an alternative system over recent years have now been written off as an exceptional impairment charge in the financial statements for the year ended 31 December 2017. Other than GBP0.1m, all of these costs were originally incurred in accounting periods up to and including the year to 31 December 2016.
During the year ended 31 December 2017 a review of all the office locations used by the Group was carried out. As a result of that review, and after full consultation with all relevant staff, the decision was taken to close the Group's office in Market Harborough. The closure was effective from the end of January 2018. Full provision has been made in the financial statements for the year ended 31 December 2017 for all the financial costs arising from the decision to close that office including redundancy payments, amounts due under onerous leases and cost of relocating the activities of that office to other Group locations. The benefits of the decision to close the Market Harborough will be reflected in the current year.
Restructuring costs arose from previous year's acquisitions, principally the acquisition of the business of European Pensions Management Limited in July 2016.
Financial Review (continued)
Systems Development
As noted above, and in the Chief Executive's Report, after a full review the decision has been taken to upgrade the existing systems at Curtis Banks whilst retaining existing systems at Suffolk Life.
The upgrade of the systems at Curtis Banks is expected to commence in H2 2018. Costs associated with this upgrade will be capitalised and amortised in accordance with our normal accounting policy. Amortisation will commence once the upgrade is completed and fully operational.
Employee Benefit Trust
During the year under review the Group set up an offshore Employee Benefit Trust ("EBT") to acquire shares in the Company in the market to satisfy future option and long term incentive awards. The EBT is funded by loans from the Group. As at 31 December 2017 the EBT had acquired 99,155 shares in Curtis Banks Group plc funded by a GBP250,000 loan from the Group. The financial statements of the EBT are consolidated within the overall Group financial statements and these shares are shown on the balance sheet of the Group as Treasury Shares and are included within total equity.
Earnings per Share
Fully diluted Earnings per Share ("EPS") based on adjusted operating profits have increased by 48% in the year ended 31 December 2017 from 10.37p to 15.38p. On the profit after tax the fully diluted EPS shows a 32% increase in the same period from 7.02p to 9.26p. With the granting of new options in the year ended 31 December 2017 under the various option schemes adopted by the Group diluted EPS is considered to be a more meaningful measure of performance for investors than basic EPS.
Capital requirements
The Group's regulated subsidiary companies submit regular returns to the FCA and the PRA relating to their capital resources. At 31 December 2017 the total regulatory capital requirement across the Group was GBP11.4 m and the Group had an aggregate surplus of GBP13.1m across all regulated entities. In addition to this it is Group internal policy for regulated companies within the Group to hold at least 130% of their required regulatory capital resulting in the aggregate surplus reducing to GBP9m. All the regulated firms within the Group maintained surplus regulated capital throughout the year.
Paul Tarran
Chief Financial Officer
14 March 2018
Curtis Banks Group PLC
Consolidated statement of comprehensive income
Year ended 31 December 2017 Year ended 31 December 2016
---------------------------------------------------------------- --------------------------------------------------------------
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
Operating revenue 43,573 - 43,573 29,731 - 29,731
Policyholder
investment
returns 2 343,009 - 343,009 261,639 - 261,639
---------- -------------- -------- ---------- ------------ --------
Revenue 386,582 - 386,582 291,370 - 291,370
Administrative
expenses 3 (32,336) - (32,336) (22,403) (22,403)
Non-participating
investment
contract
expenses (34,560) - (34,560) (18,268) - (18,268)
Changes in
provisions:
Non-participating
investment
contract
liabilities (308,449) - (308,449) (243,371) - (243,371)
---------- ---------- ---------- ----------
Policyholder total
expenses (343,009) - (343,009) (261,639) - (261,639)
---------- -------------- ---------- ------------
Operating profit
before
amortisation
and non-recurring
costs 11,237 - 11,237 7,328 - 7,328
Non-recurring
costs 4 - (3,754) (3,754) - (1,690) (1,690)
Amortisation - (1,131) (1,131) - (884) (884)
---------- -------------- -------- ---------- ------------ --------
Operating profit 11,237 (4,885) 6,352 7,328 (2,574) 4,754
Finance income 67 - 67 117 - 117
Finance costs (562) - (562) (381) - (381)
---------- -------------- -------- ---------- ------------ --------
Profit before
tax 10,742 (4,885) 5,857 7,064 (2,574) 4,490
Tax 6 (1,565) 940 (625) (1,126) 470 (656)
---------- -------------- -------- ---------- ------------ --------
Total comprehensive
income for the
year 9,177 (3,945) 5,232 5,938 (2,104) 3,834
========== ============== ======== ========== ============ ========
Attributable to:
Equity holders
of the company 5,222 3,829
Non-controlling
interests 10 5
-------- --------
5,232 3,834
======== ========
Earnings per
ordinary
share on net
profit
Basic (pence) 7 9.75 7.23
Diluted (pence) 7 9.26 7.02
The consolidated statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
Curtis Banks Group Plc
Consolidated statement of financial position
Group
----------------------
Notes 31-Dec-17 31-Dec-16
GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 8 44,593 47,442
Investment property 9 1,206,298 1,149,135
Property, plant and
equipment 10 1,148 1,073
Investments 2,032,293 1,924,913
Deferred tax asset 124 -
---------- ----------
3,284,456 3,122,563
---------- ----------
Current assets
Trade and other receivables 16,687 17,523
Cash and cash equivalents 11 437,849 447,510
Current tax asset 310 -
---------- ----------
454,846 465,033
---------- ----------
Total assets 3,739,302 3,587,596
---------- ----------
LIABILITIES
Current liabilities
Trade and other payables 12,658 12,138
Deferred income 24,374 21,993
Borrowings 12 29,444 38,329
Provisions 641 -
Deferred consideration 341 641
Current tax liability - 504
---------- ----------
67,458 73,605
---------- ----------
Non-current liabilities
Borrowings 12 64,584 77,194
Provisions 259 -
Deferred consideration 454 821
Non-participating investment
contract liabilities 3,561,929 3,394,404
Deferred tax liability - 42
---------- ----------
3,627,226 3,472,461
---------- ----------
Total liabilities 3,694,684 3,546,066
---------- ----------
Net assets 44,618 41,530
---------- ----------
Equity attributable
to owners of the parent
Issued capital 269 268
Share premium 33,451 33,425
Equity share based
payments 731 239
Treasury shares (250) -
Retained earnings 10,403 7,589
---------- ----------
44,604 41,521
Non-controlling interest 14 9
Total equity 44,618 41,530
---------- ----------
Approved by the Board and authorised for issue on 14 March 2018.
Paul Tarran
Chief Financial Officer
Company Registration No. 07934492
Curtis Banks Group Plc
Consolidated statement of changes in equity
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
2016 225 7,146 97 - 6,163 13,631 9 13,640
Total
comprehensive
income for
the year - - - - 3,829 3,829 5 3,834
Share based
payments - - 142 - - 142 - 142
Ordinary
shares issued 43 26,279 - - - 26,322 - 26,322
Ordinary
dividends
declared and
paid - - - - (2,403) (2,403) (5) (2,408)
---------
At 31 December
2016 268 33,425 239 - 7,589 41,521 9 41,530
Total
comprehensive
income for
the year - - - - 5,222 5,222 10 5,232
Share based
payments - - 492 - - 492 - 492
Ordinary
shares bought
by EBT - - - (250) - (250) - (250)
Ordinary
shares issued 1 26 - - - 27 - 27
Ordinary
dividends
declared and
paid - - - - (2,408) (2,408) (5) (2,413)
At 31 December
2017 269 33,451 731 (250) 10,403 44,604 14 44,618
======== ======== ========= ========= ========= ======== ================ ========
Curtis Banks Plc
Consolidated statement of cash flows
Group
Year ended 31 December
2017 2016
GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 5,857 4,490
Adjustments for:
Depreciation 570 519
Amortisation and impairments 3,126 884
Interest expense 554 387
Share based payment expense 492 142
Fair value gains on financial investments (156,046) (199,681)
Additions of financial investments (493,638) (328,511)
Disposals of financial investments 542,304 390,603
Fair value gains on investment properties (44,074) 25,038
Increase in liability for investment contracts 167,525 156,175
Changes in working capital:
Decrease/(increase) in trade and other receivables (433) (6,447)
Increase in trade and other payables 4,193 11,024
Taxes paid (999) (667)
Net cash flows received from operating activities 29,431 53,956
------------ -----------
Cash flows from investing activities
Purchase of intangible assets (277) (1,533)
Purchase of property, plant and equipment (161,923) (101,473)
Investment in employee benefit trust (250) -
Receipts from sale of property, plant and equipment 148,191 85,758
Net cash flows from acquisitions (669) 357,821
Net cash flows (used in)/received from investing activities (14,928) 340,573
------------ -----------
Cash flows from financing activities
Equity dividends paid (2,413) (2,408)
Net proceeds from issue of ordinary shares 27 26,322
Net increase/(decrease) in borrowings (21,274) 21,848
Interest paid (504) (411)
Net cash (used in)/received from financing activities (24,164) 45,351
------------ -----------
Net (decrease)/increase in cash and cash equivalents (9,661) 439,880
------------ -----------
Cash and cash equivalents at the beginning of the year 447,510 7,630
============ ===========
Cash and cash equivalents at the end of the year 437,849 447,510
============ ===========
The Group's Consolidated Statement of Cash Flows includes all cash and cash equivalent flows, including GBP412,175,567 (2016: GBP426,054,538) relating to policyholder non-participating investment contracts.
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 financial statements are presented in pounds sterling, with all values rounded to the nearest thousand pounds except when otherwise indicated. The financial statements were authorised for issue in accordance with a resolution of the Directors on 14 March 2018.
The principal activity of the Group is that of the provision of pension administration services principally for Self Invested Personal Pension schemes ("SIPPs") and Small Self-Administered Pension schemes ("SSASs"). The Group is staffed by experienced professionals who all have proven track records in this sector.
As a result of the acquisition of Suffolk Life in 2016, Suffolk Life Annuities Limited became a wholly owned subsidiary of the Group. This company is an insurance company that writes SIPP Products as insurance contracts. These are all non-participating insurance policy contracts and so the Group does not bear any insurance risk. As the policyholder assets and liabilities are shown on the balance sheet of Suffolk Life Annuities Limited, these will also show on the Group balance sheet on consolidation. As the policies are non-participating contracts, the Client related assets and liabilities in Suffolk Life Annuities match. In addition the revenues, expenses and investment returns of the non-participating insurance policy contracts are shown in the consolidated statement of comprehensive income. Again, these income, expense items and investment returns due to the policy holders equal each other. Note 15 and 16 to this Announcement shows for illustrative purposes the Group Balance Sheet and cash flows excluding policy holder assets and liabilities.
2 Revenue
Revenue is wholly derived from activities undertaken within the United Kingdom and comprises the following categories:
Year ended 31 December
2017 2016
GBP'000 GBP'000
Fees 34,073 25,214
Interest income 9,500 4,517
Policyholder investment
returns 343,009 261,639
386,582 291,370
=============================== ===============================
3 Profit for the year
Profit for the year is arrived at after:
Year ended 31 December
2017 2016
GBP'000 GBP'000
Charging:
Amortisation of intangible
assets 1,131 884
Depreciation of property,
plant and equipment 570 519
Auditors remuneration:
- audit of the financial
statements of the Group 177 162
- audit of the financial
statements of the Company 29 24
- audit related assurance
services 97 110
=============================== ===============================
4 Non-recurring costs
Non-recurring costs include the following significant items:
Year ended 31 December
2017 2016
GBP'000 GBP'000
Set up costs associated
with the take on of SIPPs 20 50
Exceptional legal fees 67 537
Redundancy & restructuring
costs following acquisitions 1,143 310
Suffolk Life acquisition
costs 72 735
European Pension Management
acquisition costs 328 58
Exceptional impairment 2,124 -
charge
3,754 1,690
=============================== ===============================
Redundancy & restructuring costs following acquisitions
During the year ended 31 December 2017 a full strategic review of all the office locations used by the Group was carried out. As a result of that review, and after full consultation with all relevant staff, the decision was taken to close the Group's office in Market Harborough. The closure was effective from the end of January 2018. Full provision has been made in the financial statements for the year ended 31 December 2017 for all the financial costs arising from the decision to close that office including redundancy payments, amounts due under onerous leases and cost of relocating the activities of that office to other Group locations.
Exceptional impairment charge
During the year ended 31 December 2017 the Group continued and completed the review if its operating systems following the acquisition of the Suffolk Life business in May 2016. As a result of this review the Group concluded that the most cost effective, appropriate and lowest risk solution was, subject to contract, to implement a material upgrade of the existing back office operating system at the Group.
As a result of this decision, costs of approximately GBP2.1 million incurred and capitalised on the initial development, installation, evaluation and testing of an alternative system over recent years have now been written off as an exceptional impairment charge in the financial statements for the year ended 31 December 2017. Other than GBP0.1m, all of these costs were originally incurred in accounting periods up to and including the year to 31 December 2016.
Exceptional legal fees
During the year ended 31 December 2016 the Group entered into an agreement to settle a potential legal claim by another business. The terms of settlement are confidential however no further costs are expected and the total cost included above includes all associated legal fees incurred.
Suffolk Life acquisition costs
The Group incurred a significant level of legal and professional fees in connection with the acquisition of Suffolk Life Group Limited and its subsidiaries during the year ended 31 December 2016. In accordance with IFRS 3 Business Combinations, these have been expensed and treated as non-recurring costs.
European Pension Management acquisition costs
The Group incurred considerable legal and professional fees in connection with the acquisition of the trade and assets of European Pension Management Limited during the year ended 31 December 2016. In accordance with IFRS 3 Business Combinations, these have been expensed and treated as non-recurring costs.
5 Directors and employees
Year ended 31 December
2017 2016
GBP'000 GBP'000
Wages and salaries 17,585 12,930
Social security costs 1,630 1,275
Other pension costs 1,337 900
Share-based incentive awards 492 142
------------------------------- -------------------------------
21,044 15,247
=============================== ===============================
The average number of employees 2017 2016
during the year was:
Directors 7 6
Administration 571 452
578 458
=============================== ===============================
Details of emoluments paid to the directors and
key management personnel are as follows:
Year ended 31 December
2017 2016
GBP'000 GBP'000
Total emoluments paid to:
Directors
Wages and salaries 1,411 787
Social security costs 123 95
Post-employment costs 21 21
Key management personnel
Wages and salaries 806 1,021
Social security costs 93 126
Post-employment costs 47 49
2,501 2,099
=============================== ===============================
Emoluments of highest paid
director
Wages and salaries 468 258
Pension Contributions 8 8
------------------------------- -------------------------------
476 266
=============================== ===============================
6 Taxation
Year ended 31 December
2017 2016
GBP'000 GBP'000
Domestic current period tax
UK Corporation tax 791 601
Deferred tax
Origination and reversal
of temporary differences (166) 55
625 656
============================= =============================
Factors affecting the tax
charge for the period
Profit before tax 5,857 4,490
============================= =============================
Profit before tax multiplied
by standard rate of UK Corporation
tax of 19.25% (2016: 20.00%) 1,127 898
----------------------------- -----------------------------
Effects of:
Adjustment to prior period (305) (234)
Non-deductible expenses 13 58
Other tax adjustments (210) (66)
----------------------------- -----------------------------
(502) (242)
Current tax charge 625 656
============================= =============================
7 Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
Changes in income or expense that would result from the conversion of the dilutive potential ordinary shares are deemed to be trivial, and therefore no separate diluted net profit is presented.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
2017 2016
GBP'000 GBP'000
Net profit and diluted net profit
available to equity holders of
the Group 5,222 3,829
================= =============
Net profit and diluted net profit
before non-recurring costs (note
6) and amortisation (note 5) available
to equity holders of the Group. 10,742 7,064
================= =============
Weighted average number of ordinary Number Number
shares:
Issued ordinary shares at start
of the year 53,599,669 44,954,769
Effect of shares issued in the
current year 25,127 8,031,907
----------------- -------------
Basic weighted average number
of shares 53,624,796 52,986,676
Effect of options exercisable
at the reporting date 800,000 533,333
Effect of options not yet exercisable
at the reporting date 2,044,484 991,959
----------------- -------------
Diluted weighted average number
of shares 56,469,280 54,511,968
================= =============
Pence Pence
Earnings per share:
Basic 9.75 7.23
Diluted 9.26 7.02
Earnings per share on net profit
before non-recurring costs and
amortisation, less an effective
tax rate: As restated*
Basic 16.20 10.67
Diluted 15.38 10.37
*The effective tax rate used in previous years was calculated using the formula "current tax charge / profit before tax". In order to reduce the impact of accounting measures such as deferred tax, and the timing of tax reliefs, the effective tax rate has been changed to match the current tax rate applicable to the accounting year. The current tax rate applicable for the year ended 31 December 2017 was 19.25% (2016: 20.00%).
8 Intangible assets
Group
Goodwill Client Computer Total
GBP'000 Portfolios Software GBP'000
GBP'000 GBP'000
Cost
At 1 January
2017 28,903 18,430 3,116 50,449
Additions - 5 272 277
Disposals - (2) (1,993) (1,995)
At 31 December
2017 28,903 18,433 1,395 48,731
---------- ------------ ---------- ----------
Amortisation
At 1 January
2017 - 2,533 474 3,007
Charge for
the year - 922 209 1,131
Disposals - - - -
At 31 December
2017 - 3,455 683 4,138
---------- ------------ ---------- ----------
Net book value
At 31 December
2016 28,903 15,897 2,642 47,442
========== ============ ========== ==========
At 31 December
2017 28,903 14,978 712 44,593
========== ============ ========== ==========
Goodwill
Goodwill arose on the acquisition of Suffolk Life Group Limited and its subsidiaries on 25 May 2016. The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill might be impaired. The recoverable amount of goodwill has been determined based on value-in-use calculations using a discount rate appropriate to the risk profile of the asset. These calculations use operating cash flow projections based on financial budgets approved by management covering a three year period, assuming business then continues onwards after this period at a steady rate for the purpose of the analysis.
Computer Software
Computer software contains costs that meet the recognition criteria under IAS 38 as Intangible Assets. General small computer software costs are amortised over their useful economic life of four years on a straight-line basis. Computer software costs for significant projects are amortised over an estimated UEL on a project by project basis.
Following completion of a review of a potential new operating system, and the resultant decision to retain and upgrade the existing system, intangible costs of approximately GBP2 million incurred and capitalised on the initial development, installation, evaluation and testing of an alternative operating system over recent years have been written off during the year ended 31 December 2017.
Client Portfolios
Client portfolios represent individual client portfolios acquired through business combinations and accounted for under the acquisition method. The directors consider that there is no impairment to assets as at the year end. The client portfolios are being amortised over a period of 20 years.
The brought forward balance relates to the purchase by Curtis Banks Limited, a subsidiary company, of the trade and assets of Montpelier Pension Administration Services Limited on 13 May 2011, the full SIPP business of Alliance Trust Savings Limited on 18 January 2013, the full SIPP business and certain assets of Pointon York SIPP Solutions Limited on 31 October 2014, the full SIPP business of Rathbones Pension & Advisory Services Limited on 31 December 2014, and a book of full SIPPs from Friends Life plc (now Aviva plc) on 13 March 2015.
The brought forward balance also includes the purchase by Suffolk Life Pensions Limited, a subsidiary company, of the trade and assets of European Pensions Management Limited on 14 July 2016, and books of SIPPs purchased from Pointon York SIPP Solutions Limited on 9 November 2012, Pearson Jones PLC on 30 April 2013, and Origen Investment Services Limited on 22 May 2013.
All acquisitions have been accounted for under the acquisition method of accounting.
The directors have considered the carrying value of the client portfolios and have concluded that no impairment is required. The client portfolios are being amortised over a period of 20 years and have an average remaining expected useful economic life as at 31 December 2017 of 16 years and 4 months.
9 Investment Property
Assets held at fair value
Group
Investment Properties Total
GBP'000 GBP'000
Fair value
At 1 January 2017 1,149,135 1,149,135
Arising on acquisitions - -
Additions 161,280 161,280
Disposals (148,191) (148,191)
Fair value gains 44,074 44,074
At 31 December 2017 1,206,298 1,206,298
====================== ==========
All investment properties have been valued at the year end by reference to most recent professional valuations and this is further adjusted by applying the corresponding property index available. Investment properties held to cover the linked policyholder business are included in non-participating investment contract liabilities.
10 Property, plant and equipment
Assets held at cost
Group
Leasehold Computer equipment Office equipment, fixtures & fittings Total
Improvements
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2017 54 3,606 1,093 4,753
Additions - 520 125 645
Disposals - (42) - (42)
At 31 December 2017 54 4,084 1,218 5,356
-------------- ------------------- -------------------------------------- --------
Depreciation
At 1 January 2017 28 2,697 955 3,680
Charge for the year 13 493 64 570
Disposals - (42) - (42)
At 31 December 2017 41 3,148 1,019 4,208
-------------- ------------------- -------------------------------------- --------
Carrying value
At 31 December 2016 26 909 138 1,073
============== =================== ====================================== ========
At 31 December 2017 13 936 199 1,148
============== =================== ====================================== ========
11 Cash and cash equivalents
As at 31 December 2017 and 2016 cash and cash equivalents were as follows:
Group Company
As at 31 December As at 31 December
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in
hand 437,849 447,510 2,318 458
========= ========= ========= =========
All cash at bank is held on overnight deposit. Cash at bank and in hand includes GBP48,000 (2016: GBP1,634,000) of cash equivalents held at fair value.
12 Borrowings
Group Company
As at 31 December As at 31 December
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Current
Bank loans 29,444 38,329 3,158 3,108
29,444 38,329 3,158 3,108
--------- --------- --------- ---------
Non-current
Bank loans 64,584 77,194 14,508 17,667
64,584 77,194 14,508 17,667
--------- --------- --------- ---------
Total borrowings 94,028 115,523 17,666 20,775
========= ========= ========= =========
Bank borrowings
The bank borrowings are repayable as follows:
Group Company
As at 31 December As at 31 December
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Within 1 year 29,444 38,329 3,158 3,108
Between 1 year and 5
years 44,158 51,922 14,508 17,667
After more than 5 years 20,426 25,272 - -
--------- ---------
94,028 115,523 17,666 20,775
========= ========= ========= =========
Bank borrowings of the Company mature between December 2018 and December 2021 and bear average coupons of 2.25% plus LIBOR per annum.
Total borrowings include liabilities of GBP76,464,000 (2016: GBP94,580,000) secured by legal charge over certain properties held within non-participating investment contracts, and liabilities of GBP17,666,000 (2016: GBP20,775,000) secured on the shares of Curtis Banks Limited, Suffolk Life Pensions Limited and Suffolk Life Annuities Limited.
13 Dividends
Year to 31 December
2017 2016
GBP'000 GBP'000
Ordinary interim declared
and paid 2,408 2,403
2,408 2,403
========== ==========
A second interim share dividend in respect of 2016 was declared and paid on 12 May 2017 of 3p per ordinary share.
An interim share dividend was declared and paid on 15 November 2017 of 1.5p per ordinary share.
14 Contingent liabilities
The Group has been in correspondence with HMRC regarding processes and documentation in respect of in specie contributions. HMRC have alleged that incorrect procedures were followed and is seeking to reclaim tax reliefs granted and interest thereon. This is an industry wide issue affecting other SIPP operators and is being challenged by the industry as a whole. It is not possible to determine when this matter will be resolved and the outcome and impact are not known at this stage. We do not believe that the net exposure arising from this will be material to the Group.
15. Illustrative IFRS Consolidated Statement of Financial Position as at 31 December 2017 split between insurance policy holders and the Group's shareholders
ASSETS GBP'000 GBP'000 GBP'000
Group Policyholder Shareholder
Total
Non-current assets
Intangible assets 44,593 - 44,593
Investment property 1,206,298 1,206,258 40
Property, plant and
equipment 1,148 - 1,148
Investments 2,032,293 2,032,293 -
Deferred tax asset 124 - 124
---------- ------------- ------------
3,284,456 3,238,551 45,905
---------- ------------- ------------
Current assets
Trade and other receivables 16,687 7,855 8,832
Cash and cash equivalents 437,849 412,176 25,673
Current tax asset 605 605 -
---------- ------------- ------------
455,141 420,636 34,505
---------- ------------- ------------
Total assets 3,739,597 3,659,187 80,410
---------- ------------- ------------
LIABILITIES
Current liabilities
Trade and other payables 12,658 7,348 5,310
Deferred income 24,374 13,446 10,928
Borrowings 29,444 26,286 3,158
Restructuring provision 534 - 534
Onerous lease provision 107 - 107
Deferred consideration 341 - 341
Current tax liability 295 - 295
---------- ------------- ------------
67,753 47,080 20,673
---------- ------------- ------------
Non-current liabilities
Borrowings 64,584 50,178 14,406
Onerous lease provision 259 - 259
Deferred consideration 454 - 454
Non-participating investment
contract liabilities 3,561,929 3,561,929 -
3,627,226 3,612,107 15,119
---------- ------------- ------------
Total liabilities 3,694,979 3,659,187 35,792
---------- ------------- ------------
Net assets 44,618 - 44,618
---------- ------------- ------------
Equity attributable
to owners of the parent
Issued capital 269 - 269
Share premium 33,451 - 33,451
Equity share based
payments 731 - 731
Treasury shares (250) - (250)
Retained earnings 10,403 - 10,403
---------- ------------- ------------
44,604 - 44,604
Non-controlling interest 14 - 14
Total equity 44,618 - 44,618
---------- ------------- ------------
16. Illustrative IFRS Consolidated Statement of Cash Flows as at 31 December 2017 split between insurance policy holders and the Group's shareholders
GBP'000
Group GBP'000 GBP'000
Total Policyholder Shareholder
Cash flows from operating
activities
Profit before tax 5,857 - 5,857
Adjustments for:
Depreciation 570 - 570
Amortisation and
impairments 3,126 - 3,126
Interest expense 554 - 554
Share based payment
expense 492 - 492
Fair value gains
on financial investments (156,046) (156,046) -
Additions of financial
investments (493,638) (493,638) -
Disposals of financial
investments 542,304 542,304 -
Fair value gains
on investment properties (44,074) (44,074) -
Increase in liability
for investment contracts 167,525 167,525 -
Changes in working
capital:
Decrease/(increase) in
trade and other receivables (433) (314) (122)
Increase in trade and other
payables 4,193 1,567 2,629
Taxes paid (999) - (999)
Net cash flows from operating
activities 29,431 17,324 12,107
---------- -------------- -------------
Cash flows from investing
activities
Purchase of intangible
assets (277) - (277)
Purchase of property, plant
& equipment (161,923) (161,278) (645)
Investment in employee
benefit trust (250) - (250)
Receipts from sale of
property, plant & equipment 148,191 148,191 -
Net cash flows from acquisitions (669) - (669)
Net cash flows from investing
activities (14,928) (13,087) (1,841)
---------- -------------- -------------
Cash flows from financing
activities
Equity dividends paid (2,413) - (2,413)
Net proceeds from issue
of ordinary shares 27 - 27
Net decrease in borrowings (21,274) (18,116) (3,158)
Interest paid (504) - (504)
Net cash flows from financing
activities (24,164) (18,116) (6,048)
---------- -------------- -------------
Net increase/(decrease)
in cash and cash equivalents (9,661) (13,879) 4,218
---------- -------------- -------------
Cash and cash equivalents
at the beginning of the
year 447,510 426,055 21,455
========== ============== =============
Cash and cash equivalents
at the end of the year 437,849 412,176 25,673
========== ============== =============
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFEEELFASEED
(END) Dow Jones Newswires
March 15, 2018 03:01 ET (07:01 GMT)
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