Nucleus Financial Gp – Preliminary results

Nucleus, a leading independent wrap platform provider, is pleased to announce its audited annual results for the year ended 31 December 2018.

Financial highlights

£ million (unless otherwise stated)	Year ended 31 Dec 2018	Year ended 31 Dec 2017	Change
Period end AUA	13,884	13,577	2.3%
Average AUA	14,124	12,441	13.5%
Revenue	49.4	45.5	8.7%
Net revenue* 1	43.2	39.4	9.6%
Blended revenue yield (bps)* 1	30.6	31.6	(3.2)%
Adjusted EBITDA*	8.3	6.2	32.9%
Adjusted EBITDA margin (%)* 1	19.2	15.9	20.8%
Adjusted profit before tax*	7.7	5.8	32.8%
Profit after tax for the year	4.8	4.1	15.7%
Earnings per share	6.3p	5.4p	16.7%
Dividend paid	3.9	4.8	(18.3)%

• Net revenue growth of 9.6% in the period, despite volatile markets, with blended revenue yield falling as expected, as a result of the full year effect of the platform fee reduction in July 2017
• Strong growth in adjusted EBITDA margin as a result of the operational leverage effect of revenue growth, as well as reduced external platform development expenditure
• Final dividend of 3.6p per share recommended, taking the full year dividends post-admission to AIM to 5p per share. 2017 dividend included a one-off distribution of accumulated profits
• Strong balance sheet at the year-end with £17.7 million of cash and no debt

Operational highlights

• Strategic unbundling of outsourced technology and BPO services to enhance control over platform technology and accelerate the rate of product development
• 6% increase in the number of active advisers from 1,317 to 1,396, over the last year
• 7% increase in customer numbers from 87,556 to 93,715, over the last year
• Successful admission to trading on AIM in July 2018
• Beta launch of ‘Nucleus Go’, a new online interface for advised clients
• Launch of a new Junior Isa product (post year-end)
• Implementation of functionality changes driven by new Mifid II regulation

David Ferguson, founder and CEO of Nucleus, commented:

“We were pleased to end last year having successfully completed two substantial strategic projects. Our July admission to AIM allowed us to mature our capital structure in accordance with our ambitions, and subsequent adjustments to our technology and BPO model have helped position us to become one of the most scalable and technology-led independent platforms in our market.”

“We expect the changes to our operating model to substantially accelerate our product development through 2019 and beyond and this has already been evidenced through a further Sonata upgrade and delivery of a new Junior Isa product in the first quarter following the reporting period.”

“It was also pleasing to see growth across most of our key performance indicators in the year, including growth in AUA, revenue, profit, customers, accounts and advisers using the platform. Despite the sector headwinds in the latter half of the year, we view the market outlook as positive for better quality advisers and those that provide services to those advisers and we are confident in our ability to deliver on our future plans.”

* Industry-specific financial performance measures.

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

• Blended revenue yield is calculated by dividing annualised revenue by Average AUA.
• Adjusted EBITDA and adjusted profit before tax excludes non-operating income, AIM admission costs and share based payments.

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

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