Final Results Year ended 31 December 2016
2016 Reporting Team Paul Tarran Rupert Curtis Will Self Group CFO Group CEO Group Deputy CEO • Over 30 years’ experience in the • 40 years’ experience in the SIPP and • Over 15 years’ experience in the financial services sector SSAS industry SIPP and SSAS industry • • • Previously Finance Director of Savoy Developed Curtis Banks Limited from CEO Suffolk Life Asset Management plc, a publicly inception in 2009 to one of the • Previously CCO Digital Savings, listed stockbroker, and a founding largest SIPP operators in the UK Legal & General director of IPS Pensions • Previously a director at IPS Pensions • Fellow of the Institute of Chartered Ltd and James Hay Accountants of England & Wales STRICTLY PRIVATE AND CONFIDENTIAL 2
Operational Highlights 2016 • 2016 results delivering in line with expectations • 86% overall growth in SIPP numbers, 16% gross organic growth • Acquisition of Suffolk Life from Legal & General for £45m – completed 25 May 2016 • £27m raised in equity placing • £15m, 5 year debt facility and £8.3m revolving credit facility • Full integration of European Pensions Management acquisition • Middle management strengthening programme completed STRICTLY PRIVATE AND CONFIDENTIAL 3
Opportunities • Maximise organic growth from a broader introducer network • Continued opportunities for quality acquisitions • Consolidation of existing acquisition books and businesses • Enhanced capability and lower costs through systems enhancements • Grow ownership of commercial property value chain from market leading position • Regulatory and legislative environment continues to drive organic growth and acquisition opportunities STRICTLY PRIVATE AND CONFIDENTIAL 4
About Curtis Banks Group A market leading SIPP administrator combining Transparent and focussed business model with stable strong organic growth with accretive acquisitions organic growth and no exposure to advice risks 72,000 SIPPs Sole focus on SIPP administration 600 staff Experienced leadership and management depth Non-advisory Strong cash generation with predictable earnings No direct to consumer distribution or risk Long term client relationships, typically 15 – 25 years Revenue driven by administration volume The largest dedicated SIPP provider in the UK, with Delivering on a strategic plan to yield over 6,000 commercial properties continued revenue growth and improved margins Full, mid and eSIPPs provided Clear plan for next stage of growth Third party administration and partnerships Targeting revenue growth All new business via intermediaries Enhanced capability for future organic and acquisitive growth Fixed fees, no investment exposure Realised benefits of past acquisitions STRICTLY PRIVATE AND CONFIDENTIAL 5
Our SIPP proposition Average annualised Primary use fee revenue 2016 21,060 Commercial property £1,046 complex assets, DFM Full SIPPs 23,277 Integrated DFM £302 3 rd party platform Mid SIPPs 18,143 Simple assets £124 integrated platform eSIPPs 10,503 £235 Other SIPP administration SIPP numbers as at 31 December 2016. Revenue excludes income from bank interest STRICTLY PRIVATE AND CONFIDENTIAL 6
Our Strategy MEET CHANGING CUSTOMER MAINTAIN A ROBUST AND 5 NEEDS SUSTAINABLE BUSINESS KEY KEY MODEL Market leading governance, capitalisation STRA RATEGIC Adapting to the changing needs of the UK and robust systems to ensure a population and regulatory environment to OBJ BJECT CTIVE VES sustainable long term business and be the SIPP provider of choice both pre confidence for our business partners, and post retirement. customers and shareholders. ENHANCE REVENUE DRIVE EFFICIENCY CAPITALISE ON THE RIGHT GENERATION THROUGH TECHNOLOGY GROWTH OPPORTUNITIES Extend proven revenue generation Continue technology advances Focus on profitable areas of organic activities across the wider group and appropriate to the business to deliver market growth and selective acquisitions continually review fee income relative to improved margins through efficiency and of well-aligned books or businesses, with the services provided. improved service to customers. a clear business identity. STRICTLY PRIVATE AND CONFIDENTIAL 7
SIPP market overview DEDICATED PROVIDERS INVESTMENT PLATFORMS COMPLEMENTARY PROVIDERS SIPP administration is the core revenue SIPP administration subsidised as part of SIPP administration is not core to the main generating business activity. investment proposition. revenue generating business. Most likely to offer full and mid SIPPs. Most likely to offer mid and eSIPPs. Most likely to offer full and mid SIPPs. 269,699 133,437 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Curtis Banks Dentons Hornbuckle Talbot & Muir Hargreaves AJ Bell James Hay Standard Life Barnett Mattioli Woods Xafinity Killik Pensions Lansdown Waddingham Source: Money Management SIPP survey October 2016. Curtis Banks figures as at 31 December 2016. All figures refer to number of SIPPs under administration. Not all SIPP providers disclose data and are included STRICTLY PRIVATE AND CONFIDENTIAL 8
Financial Highlights 2016 “Operating Financial Highlights adjusted profit before tax Changes over the year relative to the previous year: increased by 18%, to £7.1 million. A further • Increase in Revenue by 75% dividend of 3p per share has been declared” • Increase in Operating Adjusted Profit Before Tax 1 by 18% • Increase in profit before tax by 10% 2014 • Increase in Basic EPS by 1.5% 2015 • Second interim dividend of 3p per share to be paid making a total for the year of 4p per share 2016 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Operating adjusted profit before tax (£millions) 1 before amortisation and non-recurring costs STRICTLY PRIVATE AND CONFIDENTIAL 9
Final results for the year ended 31 December 2016 Audited year ended 31 Audited year ended 31 Audited year ended 31 Final results (£’000) December 2014 December 2015 December 2016 Revenue 10,081 16,999 29,731 Adjusted Operating Profit 1 3,619 6,006 7,064 Profit before tax 3,104 4,079 4,490 Adjusted Profit Margin 1 36% 35% 24% Adjusted Basic EPS 1 7.35p 11.46p 11.38p 1 before amortisation, non-recurring costs and interest STRICTLY PRIVATE AND CONFIDENTIAL 10
Profit and Loss Account 2016 Curtis Banks / Suffolk Life split Curtis Banks Suffolk Life Suffolk Life Profit and Loss (£’000) 2014 2015 2016 (12 months) (7 months) (Full year 2016) Revenue: Fee income 7,601 13,747 25,214 15,373 9,841 16,887 592 1 3,794 1 Interest income 2,480 3,252 4,517 3,925 Total revenue 10,081 16,999 29,731 19,298 10,433 20,681 Administrative expenses: Staff costs (4,494) (7,759) (15,420) (9,846) (5,574) Property costs (296) (628) (1,272) (656) (616) Operational costs (1,545) (2,488) (5,711) (3,481) (2,230) Total administrative expenses (6,335) (10,874) (22,403) (13,983) (8,420) Finance Costs (net) (127) (119) (264) (305) 41 Adjusted operating profits 3,619 6,006 7,064 5,010 2,054 Margin 36% 35% 24% 26% 20% Non Recurring Costs (106) (1,194) (1,690) (1,146) (544) Amortisation (409) (733) (884) (756) (128) Profit before tax 3,104 4,079 4,490 3,108 1,382 Tax (665) (983) (576) (474) (102) Total comprehensive income 2,439 3,096 3,914 2,634 1,280 1 Virtual banking revenue only commenced in November 2016. Full year 2016 assumes this was in place for the whole year with deposits at similar rates STRICTLY PRIVATE AND CONFIDENTIAL 11
Balance Sheet Balance Sheet (£m) 31 Dec 14 31 Dec 15 31 Dec 16 Intangible Assets 11.3 13.3 47.6 Property Plant and Equipment 0.7 1.5 1.1 Deferred Consideration (1.8) (2.5) (1.5) Deferred Income (3.8) (4.6) (9.9) Borrowings (4.4) (3.2) (21.0) Net Current Assets 0.5 1.6 3.8 Cash 2.7 7.6 21.5 Net Assets 5.2 13.7 41.6 Share Capital 1.6 7.4 33.7 Retained Earnings + Option Reserve 3.6 6.3 7.9 Shareholder’s Equity 5.2 13.7 41.6 STRICTLY PRIVATE AND CONFIDENTIAL 12
Cash flows Cash flows (£’000) 31 Dec 14 31 Dec 15 31 Dec 16 Profit before tax 3,104 4,079 4,490 Adjustments for non cash flow expenses 588 1,019 1,543 Adjustments for interest expenses 142 158 387 Changes in working capital and tax paid (997) (1,735) (2,210) Net cash flows from operating activities 2,837 3,521 4,210 Purchase of intangible assets - (220) (3,524) Purchase of property, plant and equipment (380) (1,091) (506) Consideration paid on business acquisitions (3,424) (1,129) (27,363) Net cash flows from investing activities (3,804) (2,440) (31,393) Equity dividends paid (179) (535) (2,408) Net proceeds from issue of ordinary shares - 5,771 26,322 Net movement in borrowings 1,472 (1,215) 17,505 Net interest paid (171) (171) (411) Net cash received from financing activities 1,122 3,850 41,008 Net increase in cash 155 4,931 13,825 STRICTLY PRIVATE AND CONFIDENTIAL 13
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