Interim Results

RNS Number : 6892Y

Curtis Banks Group PLC

08 September 2022

 

8 September 2022

Curtis Banks Group plc

Interim Results for the 6 Months to 30 June 2022

Curtis Banks Group PLC (AIM: CBP) ("Curtis Banks" or the "Group"), one of the UK's leading SIPP providers, announces its interim results for the 6 months to 30 June 2022.

Financial Highlights

· Group revenue maintained at £32.2m (H1 2021: £32.3m1)

· Pension administration revenue increased by 4.0% to £28.1m (H1 2021: £27.1m¹)

· FinTech revenue from external customers declined by 21.2% to £4.1m (H1 2021: £5.2m)

· Group adjusted operating margin2 of 20.1% (H1 2021: 22.7%1)

· Pension administration adjusted operating margin of 20.2% (H1 2021: 20.5%)

· FinTech adjusted operating margin of 17.3% (H1 2021: 22.8%)

· Adjusted profit before tax2 decreased by 12.4% to £6.0m (H1 2021: £6.9m1)

· Loss before tax of £5.3m (H1 2021: Profit before tax of £5.1m1), impacted by a £9.8m goodwill impairment charge relating to Dunstan Thomas

· Adjusted diluted EPS2 of 7.3p (H1 2021: 8.3p1)

· Interim dividend of 2.5p per share (H1 2021: 2.5p)

Operational Highlights

· Total core Mid and Full SIPPs, now 56,485 (June 2021: 55,620)

· Annualised net growth2 of core Mid and Full SIPP at 1.9% (H1 2021: 2.3%)

· Annualised gross organic growth² in core Mid and Full SIPP numbers of 7.1% (H1 2021: 8.6%), with Mid SIPP annualised gross organic growth at 9.3% (H1 2021: 12.1%)

· Annualised attrition rate2 on core Mid and Full SIPPs of 5.3% (2021: 6.3%) reflecting initiatives taken by management to improve service levels across the Group

· Assets under Administration ("AuA") increased by 3.1% to £37.1bn (June 2021: £36.0bn)

· Dunstan Thomas continues to face revenue headwinds reflecting a reduction in project activities and lower than expected new sales in H1 2022

Key Performance Indicators	Unaudited six month period ended 30 June 2022	*As restated Unaudited six month period ended 30 June 2021	Audited year ended 31 December 2021
Financial
Revenue1	£32.2m	£32.3m	£63.3m
Adjusted profit before tax2	£6.0m	£6.9m	£14.0m
(Loss) / Profit before tax1	(£5.3m)	£5.1m	£9.3m
Adjusted operating margin2	20.1%	22.7%	23.5%
Diluted EPS	(11.2p)	6.3p	11.5p
Adjusted diluted EPS2	7.3p	8.3p	16.9p
Operational Highlights
Number of Mid and Full SIPPs Administered	56,485	55,620	55,971
Assets under Administration	£37.1bn	£36.0bn	£37.4bn
Total organic new Full & Mid SIPPs	1,996	2,352	4,329
Annualised gross organic growth in Full & Mid SIPPs	7.1%	8.6%	7.9%
Annualised attrition rate on Full & Mid SIPPs	5.3%	6.3%	6.1%
Number of properties administered	9,006	9,131	9,065

1 As further detailed in note 2.4, results for the 6 months ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group.

2 In addition to statutory IFRS performance measures, the Group has presented a number of non-statutory alternative performance measures ("APMs"). The Board believes that the APMs used give a more representative view of the underlying performance of the Group and enhance comparability of information between reporting periods. APMs are identified in the definitions at the end of this announcement.

David Barral, Executive Chairman of Curtis Banks, commented:

"Against a challenging macro-economic backdrop, Curtis Banks has demonstrated the resilient nature of its business model. Group revenue was maintained at £32.2m with our fixed fee model providing protection against market volatility and inflation.

"Our core SIPP business remained stable and grew by 1.9% in H1 with strong underlying growth in in our core Mid and Full SIPP products of 7.1%. Although our FinTech segment delivered lower than expected results against challenging market conditions, we are positive on the medium-term outlook for Dunstan Thomas to grow its pipeline, while continuing to support the Group's wider technology strategy.

"I would like to thank my colleagues for their ongoing hard work and dedication during these challenging times. It is particularly pleasing to report continued improvement in our service levels, leading to a 50% reduction in complaints and a full percentage point improvement in the attrition rate.

"Despite headwinds from market conditions, Curtis Banks has a strong balance sheet with a material regulatory capital surplus that provides good dividend cover, as well as benefitting from additional upside from rising interest rates. My priority is now to maximise the potential of the core SIPP business while unlocking improved operating performance across the Group and building a high-performing culture."

Analyst Presentation

An analyst briefing is being held today, 8 September at 09:30 BST via an online video conference facility.  To register your attendance, please contact [e-mail] .

For more information, please contact:

Curtis Banks Group plc  David Barral - Executive Chairman Dan Cowland - Chief Financial Officer	via Instinctif Partners
Peel Hunt LLP (Nominated Adviser & Joint Broker) James Britton Paul Shackleton	[phone]
Singer Capital Markets Limited (Joint Broker) Mark Taylor Rachel Hayes	[phone]
Instinctif Partners (Financial PR)  Tim Linacre Victoria Hayns Joe Quinlan	[e-mail] / [phone]

Executive Chairman's Review

Summary

The results demonstrate that the Group has a fundamentally solid, resilient business model despite the challenging macro environment. Our core Mid and Full SIPP business achieved modest growth of 1.9% (H1 2021 2.3%) with underlying sales growing 7.1% gross in H1 2022 (H1 2021: 8.6%).  Service recovery has driven a 50% reduction in complaints volumes and a 1% improvement in annualised attrition rates down to 5.3% (H1 2021: 6.3%).

Group revenues were maintained at £32.2m (H1 2022 restated: £32.3m) underpinned by our fixed fee, inflation-linked pricing model which provides resilience and protection against falling markets.  We have also benefited from rising interest rates and expect the upward yield curve will continue to positively impact interest on deposits in the next reporting period.

The FinTech segment has delivered lower than expected results in the period, with revenues down 14.8% to £4.9m, reflecting a reduction in project activity from one of its major clients and lower new business in H1 2022.

The Group has delivered adjusted profit before tax of £6.0m (H1 2021: £6.9m) and has a strong balance sheet and cashflow, with prudent regulatory capital surplus providing good dividend cover.

Our operating model is robust, however we recognise that more needs to be done to extract the benefits of operating leverage that will come through simplifying our technology and administration systems.

SIPP Administration

Despite the challenging macro-economic backdrop, our core Mid and Full SIPP products grew organically by 7.1% on a gross annualised basis (H1 2021: 8.6%) reflecting continued positive momentum. Our Mid SIPP product experienced particularly strong gross organic growth of 9.3% (H1 2021: 12.1%) and net growth of 4.4% (H1 2021: 6.0%). In combination, the core Mid and Full SIPPs products increased on an annualised basis by 1.9% to 56,485 (H1 2021: 55,620), which is at the bottom-end of our target range of 2-6% despite the challenging macro-economic backdrop. In H1 2022, we added 1,996 new Mid and Full SIPPs across 260 adviser firms and wealth managers, of which 87 were new relationships and 96% are Your Future SIPPs.

Attrition levels were materially lower at 5.3% (H1 2021: 6.3%), reflecting improving service levels across the business. We continue to have an attractive and loyal client base and our average case size of c.£460k is amongst the highest in the industry with one-third of our clients having been with the business for over 10 years.

The Talbot & Muir business we acquired in 2020 has also demonstrated strong client retention and growth.

As at 30 June 2022, the total number of non-core SIPPs administered decreased to 22,505 (H1 2021: 25,377), following the ongoing managed reduction in these lower margin eSIPP and TPA products in line with our expectations, and this will continue for the medium-term.

Fintech business

The segment has performed below the Group's expectation in the period, with revenues of £4.9m (H1 2021: £5.8m) due to difficulty in securing material new external revenue and a reduction in project activity from a key client. However, over 67% of Fintech revenues are recurring in nature, reflecting the financial strength from long-term licensing arrangements. The Board remains focused on improving the performance of Dunstan Thomas's third party business, and the sales pipeline for H2 2022 and FY23 remains strong with expectation of increased margins.

Dunstan Thomas continues to support the successful delivery of Curtis Banks's own technology strategy, providing internal efficiencies and enhancing our capabilities. CB Labs, established in conjunction with Dunstan Thomas's technical expertise, has delivered chatbots and a pension calculator for advisers, and the additional projects will further strengthen our product offerings. It is also prototyping a bank of technical concepts, including the adoption of machine learning and integration of capabilities directly on IFA platforms. As an integral part of the Group, we expect to further leverage on Dunstan Thomas's expertise in FinTech to help us continue to develop our propositions for advisers and clients.

Target Operating Model

Although good progress had previously been made on the consolidation of our back office administration systems, which had a target date for completion of 2024, it has been a challenging period given the level of regulatory change and organisational activity across the Group. Whilst we have already delivered a number of elements of the programme, the completion date of 2024 is currently at risk.

We have made changes to the operations management structure to improve efficiency and enhance accountability as we progress towards our target operating model.  We have also transitioned the Dundee workforce to home based working resulting in the closure of the Dundee office.

People, Culture and Environmental, Social and Governance ('ESG') update

The delivery of our strategy is only possible with the right people and culture underpinning it. I would like to thank my colleagues once again for their hard work and energy through a challenging period where they continue to deliver exceptional service to our advisers and their clients.

In May 2022, Chris Macdonald (Chairman) and Jules Hydleman (Non-Executive Director) retired from the board. Christopher Mills and I have joined the Board as the new Non-Executive Director and Chairman respectively.

In August 2022, Will Self stepped down as Chief Executive Officer and Executive Director of the Group Board. I would like to thank Will for the commitment that he has shown to the business and the huge contribution that he has made throughout his time with the Group. Executive searches are underway to find a successor to lead the Group into the future, and in the interim, I have assumed the role of Executive Chairman.

Earlier this year we launched the Group's purpose-led ESG strategy, which set out our priorities and plans, particularly around the issue of intergenerational fairness. As part of this a second report from the Intergenerational Foundation sponsored by the Group is due to be published in September 2022. The Foundation will also start an independent review of our flagship Your Future SIPP product which supports our work around the upcoming Consumer Duty regulations.

In July 2022, we became the first FinTech firm to deliver training on 'Unconscious bias in software' to Dunstan Thomas which was a great first step to help the employees of our FinTech subsidiary to better understand themselves, their assumptions about the market place, their blind sides and their strengths when producing software for clients to ensure that it is the best it can be. We continue seek proactive opportunities for training within the Group to ensure that all processes and procedures are undertaken impartially.

We have considered our pricing decisions for more environmentally friendly commercial properties in SIPPs. The first steps to understand the efficiency of the properties held within our SIPP portfolio has been completed. We are engaging with our client base to proactively maintain compliance with Minimum Energy Efficiency Standards (MEES) throughout our SIPP/SSAS Property portfolios.  Additionally, we have written to clients who may be affected by upcoming MEES regulations, to notify them of their options and request their instruction and cooperation.

Initial ESG KPIs have been defined and work is underway to identify how we can capture and report the relevant data.

We will continue to honour our ongoing commitment to paid leave for employees to conduct environmentally beneficial initiatives.

Outlook

Revenue and profit margins are expected to increase in the medium term as interest on deposits benefits from the upward yield curve, and the continued enhancement of our product offering and improvement in service levels.

Headwinds remain but an opportunity exists to further improve the operating performance of the Group.  In particular, the management team will be focused on:

· maximising the potential of the core SIPP business;

· getting Dunstan Thomas back on track;

· refining the systems strategy;

· continuing to deliver service improvements for clients and advisers; and

· strengthening the leadership team and building a high performing culture.

As part of my new role, I intend to fully assess how Curtis Banks can address these challenges against the backdrop of an evolving sector and market landscape. Depending on the timing of appointment of a new CEO, either the new CEO or I will provide the market with an update on how we are progressing against these areas in due course.

David Barral

Executive Chairman

7 September 2022

Chief Financial Officer's Review

Results 

Group financial performance for the six month period to 30 June 2022 resulted in an adjusted profit before tax of £6.0m (H1 2021 restated: £6.9m), generating an adjusted operating margin of 20.1% (H1 2021 restated: 22.7%). By segment, pension administration achieved a largely consistent adjusted operating margin of 20.2% (H1 2021 restated: 20.5%); while FinTech segment's adjusted operating margin decreased to 17.3% (H1 2021: 22.8%). Adjusted diluted EPS reduced to 7.3p (H1 2021 restated: 8.3p), while diluted EPS on a statutory basis reduced to -11.2, i.e. a loss per share (H1 2021 restated: 6.1p).

On a statutory basis, the loss before tax of £5.3m (H1 2021 restated: profit before tax of £5.1m) has been materially driven by an impairment charge of £9.8m against the value of goodwill relating to the acquisition of Dunstan Thomas, the business segment that has experienced difficulty securing material new revenue flows in the 6 months ended 30 June 2022, in addition to a reduction in project activity from a key client during the period.

The challenging economic conditions of the first six months of 2022 has been reflected in the net growth in own Mid and Full SIPP plan numbers of 1.9% being at the lower end of our target range. The financial performance has been largely offset by an improvement in interest income delivered by the yield curve steepening and a reduction in regulatory costs incurred. In a challenging market place, organic sales have remained robust (although marginally down on H1 2021), and attrition in Full & Mid SIPPs has improved compared to H1 2021.

While we are clearly aware of the uncertainty resulting from the war in Ukraine and global inflation, we do not expect this uncertainty and cost pressure to have a significant impact on the Group's operations into the foreseeable future given the fixed fee nature of our SIPP revenue and the lack of direct exposure from our key suppliers and customers. We continue to monitor the situation for any new developments that might warrant a change in this assessment.

The Group reports certain Alternative Performance Measures ("APMs") which we believe provide greater clarity to stakeholders over the Group's underlying performance and better enables them to form a view on the Group's future prospects. The principal APMs adopted are Adjusted Profit before Tax, Adjusted EPS and Adjusted Operating Margin, and these are discussed in further detail below.

Adjusting items are classified as such when the nature and quantum of the income or expense is significant and arises from a business event or activity that does not form part of usual day to day operations. Examples of such items include acquisitions, any subsequent re-measurement of contingent deferred consideration, office relocations and restructuring activities.

The relevant reconciliation table is shown below for H1 2022 alongside comparatives:

£'000	6 month period ended 30 June 2022		Restated 6 month period ended 30 June 2021		Year ended 31 December 2021
Revenue	32,186		32,286		63,307
Adjusted operating cost	(25,732)		(24,959)		(48,402)
Adjusted operating profit	6,454		7,327		14,905
Adjusted operating margin	20.1%		22.7%		23.5%
Finance income	36		9		20
Interest expense	(461)		(452)		(921)
Adjusted profit before tax	6,029		6,884		14,004
Adjusting items:
Dunstan Thomas acquisition costs	-		(15)		(70)
Talbot & Muir acquisition costs	-		(62)		(63)
Other M&A related costs	424		33		(1,401)
Movement on contingent consideration relating to acquisitions	314		571		1,870
Discount unwind on contingent consideration	(264)		(580)		(879)
Redundancy & restructuring costs	(564)		(185)		(626)
In-specie contributions	-		(51)		76
Centralisation of pension administration system	(119)		(123)		(322)
Treasury solution implementation	-		-		(45)
Data cleansing provision	64		-		(288)
Adjusting items	(146)		(412)		(1,748)
Goodwill impairment	(9,813)		-		-
Amortisation of acquired intangibles	(1,418)		(1,418)		(2,934)
IFRS (loss) / profit before tax	(5,348)		5,054		9,322
Taxation	(2,092)		(931)		(1,603)
(Loss) / Profit after tax	(7,440)		4,123		7,719
Adjusted EPS
Basic	7.3		8.4		17.1
Diluted	7.3		8.3		16.9

Revenues

Revenues of £32.2m in the six months ended 30 June 2022 were marginally lower than the comparable period (H1 2021 restated: £32.3m). Despite inflationary rises in fees levied, an increase in interest income and net growth in Full and Mid SIPPs, the Group saw a material reduction in Fintech revenue from Dunstan Thomas and a reduction in transactional fee volumes. In addition, the Group continued to progress its managed reduction in non-core eSIPP and TPA products.

Fee revenue from SIPPs and SSASs remains the predominant source of income for the Group with a strong emphasis on recurring annual fee income. In the six months ended 30 June 2022, fee income represented 71% of the total income and 89% of this fee income is recurring (H1 2021: 87%). Interest income has seen a £1.1m increase on the prior period comparative whilst the Fintech revenue contribution from Dunstan Thomas has fallen by £1.1m.

SIPP fees are based on a recurring fixed monetary annual fee and a menu of additional fixed fees depending on the services provided to the SIPP. The annual fees for the Curtis Banks Mid and Full SIPP products were amended as at 1^st February 2021 and at the same time we made a clear commitment to our clients as to how we will share interest revenue with them and therefore remove any discretion. All of the fees that are applied to our SIPP products are subject to contractual annual inflationary rises linked to the measurement of Average Weekly Earnings ("AWE").

Fees are not dependent on movements in the value of underlying assets within the SIPP and as a result the recurring fee income of the Group is not directly affected by the volatility in financial markets. This is a key differential that sets us apart from most of our competitors and provides an attractive product in terms of competitive fees for higher value SIPPs. As the value of a SIPP increases our product becomes increasingly affordable from a basis points perspective.

The dramatic change in interest rates since December 2021 has seen interest income increase to £5.3m for the period, compared to £4.2m for H1 2021.  Client deposits remained relatively stable across the period and as at 30 June 2022 the Group held £1.022bn (H1 2021: £1.052bn) of client deposits across a range of UK, PRA regulated banking counterparties and managed the cash in line with its mature Treasury Framework. As at the reporting date, the Group is paying 0.28% on client cash held within their SIPPs and this is expected to increase effective 1 October 2022 following further increases to the Bank of England base rate and the level of interest achieved on cash being deposited over the past quarter.

Revenues generated by Dunstan Thomas were down £1.1m with the challenging sales environment due to the COVID-19 pandemic resulting in a lag and longer conversion from pipeline opportunities to revenue crystallisation, further exacerbated by a reduction of project income from a key client and the current economic climate. The challenging first half performance has resulted in a reduction of £0.3m to the total related contingent consideration expected to be payable over the earn out period and a corresponding credit to the consolidated statement of comprehensive income. The remaining earn outs for the acquisitions of Talbot and Muir and Dunstan Thomas are expected to be paid out in H1 2023, therefore the full remaining contingent consideration balance now resides in current liabilities and no balance is left within non-current liabilities.

Expenses

The period ended 30 June 2022 saw administrative expenses, excluding amortisation and impairment on acquired intangibles and adjusting items, increase slightly to £25.5m (H1 2021: £25.0m).

Strict cost discipline saw staff costs increase by just 1% to £17.9m (2021: £17.7m) although with cost of living pressures it is expected that these costs will see high single digit percentage figure increases when reviewed towards the end of the year. This will be offset by the inflationary increase of our SIPP product pricing. As reported last year, staff costs in the period now also include share based payment awards under the Group's Long Term Incentive Plan and Save As You Earn ("SAYE") option schemes to all Group companies, including Dunstan Thomas and Talbot Muir.

Overall headcount stood at 824 as at 30 June 2022 compared to 823 as at 30 June 2021.

Non-staff costs in aggregate grew to £7.8m from £7.3m in H1 2021, driven by higher professional fees and an increase in compensation cost despite a decrease in complaint volumes due to two individual high value financial detriment cases.

The Group continues to take steps to improve its adjusted operating margin through a combination of revenue enhancements, cost saving measures and operational improvements. We have made good progress on our systems strategy but despite the progress made to date, the original completion date of 2024 is at risk due to the level of regulatory change and organisational activities.  

Adjusting items

Adjusting items for the six months ended 30 June 2022 were a net expense of £0.1m (H1 2021: net expense of £0.4m) and comprise principally of internal restructuring costs and some of the external costs associated with the acquisitions of Dunstan Thomas and Talbot and Muir. A credit of £0.4m has been recognised in the period described as other M&A related costs which relates to contingency fees no longer payable on a potential corporate transaction which did not subsequently proceed.

Accounting Policies

There have been no changes in accounting policies during the period although t he unaudited results for the period ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group. The impact of this is described in note 2.4 to these financial statements.

Cash flows

Shareholder cash balances at period end were £24.8m compared to £32.2m at the end of June 2021.

Net cash inflows from shareholder operating activities for the period were £4.3m (H1 2021: £7.2m), the decrease was due to exceptionally larger cash inflows in H1 2021 from the cash attributable to the additional working capital introduced from Dunstan Thomas and Talbot and Muir, a reduction in profit in the period, offset by a reduction of tax paid in the period.

Net cash outflows from investing activities for the period were £4.0m (H1 2021: £0.7m) which is largely attributable to the deferred consideration paid on the Talbot and Muir acquisition, of £2.7m, and the addition of intangible assets of £1.2m which relate primarily to product development activity within Dunstan Thomas and computer software.

Net cash outflows from financing activities increased to £7.4m, from £6.8m in H1 2021, with the increase coming from higher lease payments and interest costs.

Suffolk Life Annuities Limited

Part of the Group, Suffolk Life Annuities Limited, is an insurance company that writes SIPP products as insurance contracts. These are all non-participating investment contracts and so the Group does not bear any insurance risk. As the policies are non-participating contracts, the client related assets and liabilities in Suffolk Life Annuities Limited match. In addition, the revenues, expenses and investment returns of the non-participating investment contracts are shown in the consolidated statement of comprehensive income. Again, these income, expense items and investment returns due to the policyholders are completely matched. An illustrative balance sheet as at 30 June 2022 showing the financial position of the Group excluding the policyholder assets and liabilities is included as supplementary information after the notes to the financial statements. An illustrative cash flow on the same basis has also been provided.

Capital Requirements

The Group's regulated subsidiary companies submit regular returns to the FCA and the PRA relating to their capital resources.  At 30 June 2022 the total regulatory capital requirement across the Group was £15.0m (30 June 2021: £15.1m) and the Group had an aggregate surplus above this of £11.6m (30 June 2021: £15.7m) across all regulated entities. The reduction of surplus is primarily impacted by the increase in interest income receivable over 90 days from the uplift of interest rate which is considered illiquid asset. In addition to this, it is Group internal policy for regulated companies within the Group to hold at least 130% of their required regulatory capital and this has been maintained throughout the period. 

Financial Position

The statement of Financial Position as at 30 June 2022 reflects shareholder net assets decreasing from £80.7m at 30 June 2021 to £70.0m as at 30 June 2022 primarily as a result of the £9.8m impairment charge taken during the current period and £4.3m dividends paid.

As at 30 June 2022 the Group had net shareholder cash (after debt) of £6.9m (30 June 2021: £10.4m).

Dan Cowland

Chief Financial Officer

7 September 2022

Condensed consolidated statement of comprehensive income

			Unaudited 6 month period ended 30 June 2022			*As restated Unaudited 6 month period ended 30 June 2021			Audited year ended 31 December 2021
			Total			Total			Total
	Notes		£'000			£'000			£'000
Revenue				32,186			32,286			63,307
Administrative expenses				(27,030)			(26,209)			(52,205)
Impairment of goodwill	5			(9,813)			-			-
Policyholder investment returns			(173,653)			216,954			466,811
Non-participating investment contract expenses			(17,446)			(17,090)			(33,850)
Changes in provision: non-participating investment contract liabilities			191,099			(199,864)			(432,961)
Policyholder total				-			-			-
Operating (loss) / profit				(4,657)			6,077			11,102
Finance income				36			9			20
Finance costs				(727)			(1,032)			(1,800)
(Loss) / Profit before tax				(5,348)			5,054			9,322
Taxation				(2,092)			(931)			(1,603)
Total comprehensive (loss)/income				(7,440)			4,123			7,719
Attributable to:
Equity holders of the company				(7,440)			4,129			7,723
Non-controlling interest				-			(6)			(4)
				(7,440)			4,123			7,719
(Loss) / earnings per share on net (loss)/profit
Basic (pence)				(11.2)			6.2			11.6
Diluted (pence)				(11.2)			6.1			11.5

*The unaudited results for the 6 months ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group. The adjustments made to restate the 30 June 2021 comparatives, as further detailed in note 2.4, have not been subject to audit.

Condensed consolidated statement of changes in equity

	Issued capital £'000		Share premium £'000		Equity share based payments £'000		Treasury shares £'000		Retained earnings* £'000		Total* £'000		Non-controlling interest £'000		Total Equity* £'000
As at 1 January 2021 - audited	330		57,799		2,747		(741)		20,134		80,269		14		80,283
Comprehensive income for the period	-		-		-		-		3,669		3,669		(6)		3,663
Restatement of revenue*	-		-		-		-		568		568		-		568
Share based payments	-		-		92		-		-		92		-		92
Ordinary shares bought and sold by EBT	-		-		-		301		-		301		-		301
Ordinary shares issued	2		288		-		-		-		290		-		290
Deferred tax on share based payments	-		-		-		-		(99)		(99)		-		(99)
Ordinary dividends paid	-		-		-		-		(4,338)		(4,338)		-		(4,338)
As at 30 June 2021 - unaudited	332		58,087		2,839		(440)		19,826		80,644		8		80,652
Comprehensive income for the period	-		-		-		-		3,594		3,594		2		3,596
Share based payments	-		-		1		-		-		1		-		1
Deferred tax on share based payments	-		-		-		-		(6)		(6)		-		(6)
Ordinary shares bought and sold by EBT	-		-		-		(942)		-		(942)		-		(942)
Ordinary dividends paid	-		-		-		-		(1,659)		(1,659)		-		(1,659)
As at 31 December 2021 - audited	332		58,087		2,840		(1,382)		21,755		81,632		10		81,642
Comprehensive loss for the period	-		-		-		-		(7,440)		(7,440)		-		(7,440)
Share based payments	-		-		61		-		-		61		-		61
Ordinary shares bought and sold by EBT	-		-		-		5		-		5		-		5
Ordinary shares issued	-		-		-		-		-		-		-		-
Deferred tax on share based payments	-		-		-		-		58		58		-		58
Ordinary dividends paid	-		-		-		-		(4,321)		(4,321)		-		(4,321)
As at 30 June 2022 - unaudited	332		58,087		2,901		(1,377)		10,052		69,995		10		70,005

*The unaudited results for the 6 months ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group. The adjustments made to restate the 30 June 2021 comparatives, as further detailed in note 2.4, have not been subject to audit.   

Condensed consolidated statement of financial position

			Notes		Unaudited 30-Jun-22 £'000		*As restated Unaudited 30-Jun-21 £'000		Audited 31-Dec-21 £'000
ASSETS
Non-current assets
Intangible assets			5		79,639		90,475		89,814
Investment property					1,346,912		1,214,551		1,316,468
Property, plant and equipment					7,885		9,395		8,636
Investments					1,959,405		2,137,522		2,224,965
					3,393,841		3,451,943		3,639,883
Current assets
Trade and other receivables					30,630		29,431		27,981
Cash and cash equivalents					401,294		401,110		410,133
Current tax asset					779		550		957
					432,703		431,091		439,071
Total assets					3,826,544		3,883,034		4,078,954
LIABILITIES
Current liabilities
Trade and other payables					19,915		20,915		20,853
Deferred income					33,340		30,533		29,960
Borrowings					51,364		42,079		46,832
Lease liabilities					911		837		964
Provisions					453		453		453
Contingent consideration					4,930		2,467		2,467
					110,913		97,284		101,529
Non-current liabilities
Borrowings					38,351		48,202		43,957
Lease liabilities					6,255		7,164		6,774
Provisions					66		7		178
Contingent consideration					-		6,454		5,199
Non-participating investment contract liabilities					3,596,355		3,639,582		3,836,211
Deferred tax liability					4,599		3,689		3,464
					3,645,626		3,705,098		3,895,783
Total liabilities					3,756,539		3,802,382		3,997,312
Net assets					70,005		80,652		81,642
Equity attributable to owners of the parent
Issued capital					332		332		332
Share premium					58,087		58,087		58,087
Equity share based payments					2,901		2,839		2,840
Treasury shares					(1,377)		(440)		(1,382)
Retained earnings					10,052		19,826		21,755
					69,995		80,644		81,632
Non-controlling interest					10		8		10
Total equity					70,005		80,652		81,642

*The unaudited results for the 6 months ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group. The adjustments made to restate the 30 June 2021 comparatives, as further detailed in note 2.4, have not been subject to audit.

Approved by the Board and authorised for issue on 7 September 2022.

Dan Cowland

Chief Financial Officer

Condensed consolidated statement of cash flows

				Unaudited 6 month period ended 30-Jun-22 £'000		*As restated Unaudited 6 month period ended 30-Jun-21 £'000		Audited year ended 31-Dec-21 £'000
Cash flows from operating activities
(Loss) / profit before tax				(5,348)		5,054		9,322
Adjustments for:
Depreciation				849		915		1,806
Amortisation and impairments				11,364		1,445		2,934
Finance costs				727		452		1,800
Share based payment expense				61		92		93
Fair value gains on movement in contingent consideration				(314)		-		(1,870)
Fair value losses / (gains) on financial investments				240,241		(143,455)		(213,701)
Additions of financial investments				(340,591)		(336,457)		(647,479)
Disposals of financial investments				365,910		414,708		708,532
Fair value gains on investment properties				(33,147)		(11,278)		(120,416)
(Decrease)/increase in liability for investment  contracts				(239,856)		54,278		250,904
Changes in working capital:
Increase in trade and other receivables				(2,650)		(2,365)		(1,330)
Increase in trade and other payables				2,196		5,323		5,017
Taxes paid				(588)		(1,324)		(2,410)
Net cash flows from operating activities				(1,146)		(12,612)		(6,798)
Cash flows from investing activities
Purchase of intangible assets				(1,189)		(842)		(1,670)
Purchase of property, plant & equipment				(97)		(169)		(270)
Purchase of investment property				(49,463)		(52,176)		(92,456)
Purchase and sale of shares in the Group by the EBT				5		301		(641)
Receipts from sale of investment property				52,166		57,506		105,009
Net cash flows from acquisitions				(2,687)		9		(255)
Net cash flows used in investing activities				(1,265)		4,629		9,717
Cash flows from financing activities
Equity dividends paid				(4,321)		(4,338)		(5,997)
Net proceeds from issue of ordinary shares				-		290		290
Net decrease in borrowings				(1,074)		(16,670)		(16,114)
Principal elements of lease payments				(572)		(490)		(762)
Interest paid				(461)		(277)		(781)
Net cash flows used in financing activities				(6,428)		(21,485)		(23,364)
Net decrease in cash and cash equivalents				(8,839)		(29,468)		(20,445)
Cash and cash equivalents at the beginning of the period				410,133		430,578		430,578
Cash and cash equivalents at the end of the period				401,294		401,110		410,133

*The unaudited results for the 6 months ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group. The adjustments made to restate the 30 June 2021 comparatives, as further detailed in note 2.4, have not been subject to audit.

Notes to the financial statements

1  Corporate information

Curtis Banks Group PLC ("the Company") is a public limited company incorporated and domiciled in England and Wales, whose shares are publicly traded on the AIM market of the London Stock Exchange PLC.  The interim condensed consolidated financial statements were authorised for issue in accordance with a resolution of the Directors on 7 September 2022.

The principal activity of the Group is that of the provision of pension administration services principally for Self-Invested Personal Pension schemes ("SIPPs") and Small Self-Administered Pension schemes ("SSASs").  The Group is staffed by experienced professionals who all have proven track records in this sector.

2  Basis of preparation and accounting policies

2.1  Basis of preparation

The interim condensed consolidated financial statements comprise the Company and its subsidiaries ("the Group") and have been prepared on a historical cost basis modified by revaluation of financial assets and financial liabilities through profit and loss where held at fair value, and are presented in pounds sterling, with all values rounded to the nearest thousand pounds except when otherwise indicated.

The interim condensed consolidated financial statements have been prepared in accordance with UK adopted IAS 34 Interim Financial Reporting except for certain requirements in relation to financial instrument disclosure.  The board has considered the requirements of UK adopted IAS 34 in relation to policyholder assets and liabilities and, given the unit-linked nature of these assets and liabilities, has concluded that revaluing certain policyholder financial instruments for the purposes of these interim financial statements would incur expense which is disproportionate to any potential benefits of doing so. Further, the board considers that the omission of updated valuations for these certain policyholder financial instruments will not influence the economic decisions of users of these financial statements, as all revenue and expenditure associated with these policyholder assets and liabilities is due back to the policyholders under non-participating investment contracts and therefore has nil impact on shareholder equity.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's financial statements for the year ended 31 December 2021, which were prepared in accordance with UK-adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006 as applicable top companies reporting under those standards. 

The information relating to the six months ended 30 June 2022 and the six months ended 30 June 2021 is unaudited and does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2021 have been reported on by its auditor and delivered to the Registrar of Companies. The report of the auditor was unmodified and did not contain a statement under section 498(2) or (3) of The Companies Act 2006.

The interim condensed consolidated financial statements have been reviewed by the auditor and their report to the Board of Curtis Banks Group PLC is included within this interim report.

2.2  Basis of consolidation

The interim condensed consolidated financial statements consolidate the financial statements of the Company and its subsidiaries up to 30 June each year.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.  The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.  All inter-Group balances, income and expenses and unrealised gains and losses resulting from intra-Group transactions are eliminated in full.

The trading subsidiaries of Curtis Banks Group PLC as at 30 June 2022 were Curtis Banks Limited, Suffolk Life Pensions Limited, Suffolk Life Annuities Limited, Rivergate Legal Limited, Dunstan Thomas Group Limited, and Talbot and Muir Limited.

The trading subsidiaries of Curtis Banks Group PLC as at 30 June 2021 were Curtis Banks Limited, Suffolk Life Pensions Limited, Suffolk Life Annuities Limited, Rivergate Legal Limited, Templemead Property Solutions Limited, Dunstan Thomas Group Limited, Digital Keystone Limited, Dunstan Thomas Holdings Limited, Dunstan Thomas Consulting Limited, Platform Action Limited, and Talbot and Muir Limited.

Certain trading subsidiaries of Curtis Banks Group PLC hold the entire issued share capital of a number of non-trading trustee companies. All of these companies are nominee companies for the pension products administered by the trading subsidiaries of Curtis Banks Group PLC and have been dormant or non-trading throughout the period and are expected to remain dormant or non-trading.

2.3  Significant accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2021.

New standards issued but not yet effective

The IASB and IFRIC have issued standards and interpretations with an effective date for periods starting on or after the date on which these financial statements start.  There are no newly issued standards expected to potentially have a material impact on the condensed consolidated interim financial statements and the consolidated financial statements to the Group.

2.4  Prior year restatements

IFRS 15 Revenue from contracts with customers

The unaudited results for 6 months ended 30 June 2021 have been restated to reflect changes to the measurement of progress in the arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group.

Previously, the associated revenue was recognised on a straight-line basis over the insurance policy term (1 year). At FY21 year end, a reassessment of this contract identified an error in the assessment used to measure progress of this contract at 30 June 2021, and that more progress had been made at 30 June 2021 than previously identified using the input method on cost incurred of IFRS 15 Revenue from contracts with customers. The change was adopted in FY21 and immaterial for the full year, therefore no further adjustment is expected.

The impact of these adjustments on previously reported figures is summarised in the two tables below:

Consolidated statement of financial position	Originally reported as at 30 June 2021 £'000	As restated as at 30 June 2021 £'000	Movement £'000
Trade and other receivables	28,863	29,431	568
Current tax asset	658	550	(108)
Retained earnings	19,366	19,826	460
Net assets / Total equity			460
Consolidated statement of comprehensive income	Originally reported for the 6 months ended 30 June 2021 £'000	As restated for the 6 months ended 30 June 2021 £'000	Movement £'000
Revenue	31,718	32,286	568
Corporation tax	(823)	(931)	(108)
Total comprehensive income for the year			460
Consolidated statement of cash flows	Originally reported for the 6 months ended 30 June 2021 £'000	As restated for the 6 months ended 30 June 2021 £'000	Movement £'000
Profit before tax	4,486	5,054	568
Increase in trade and other receivables	(1,797)	(2,365)	(568)
Net increase/(decrease) in cash and cash equivalents			-

The adjustment increased basic EPS from 5.5p to 6.2p, and diluted EPS from5.5p to 6.1p.

2.5  Critical accounting judgements and key sources of estimation uncertainty 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In preparing the financial statements the Group has selected and applied various accounting policies which are described in the notes to the financial statements. In order to apply these accounting policies the Group has made estimates and judgements concerning the future. The key sources of estimation uncertainty are disclosed below: 

Impairment assessment on the Cash Generating Units

The Group has established 4 cash generating units ('CGUs') that are closely aligned to the Group's subsidiaries and their distinct cash flows: namely Curtis Banks ('CB'), Suffolk Life ('SL') Dunstan Thomas ('DT') and Talbot & Muir ('T&M'). There is goodwill associated with the latter three CGUs that is not amortised, and therefore these amounts are subject to annual impairment assessment. The Curtis Banks CGU will be assessed for impairment if indicators of impairment are identified. The definition of the CGUs is the judgement applied.

Impairment assessments are performed by comparing the carrying amount of the goodwill and intangible assets or investment associated with the CGU, with the recoverable amount. Recoverable amount is assessed through value in use which comprises an estimation of future cash flows expected to arise from each CGU, discounted to their present value using a pre-tax discount rate. The following key assumptions are applied across all CGUs:

· Latest forecasts as presented to the Board;

· Pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset (11.71%; FY21: 12.95% for CB, SL and T&M; 12.75% for DT);

· Terminal growth rate of 2% (FY21: 2.2%), being the long term inflation expectation in the UK;

· Movement in net working capital, forecasted as a Group and allocated to each CGU by weighted average operating profit excluding adjusting items and acquired intangibles amortisation.

The goodwill impairment assessment performed resulted in headroom present in each of the relevant CGU other than Dunstan Thomas:

	Suffolk Life		Talbot & Muir		Dunstan Thomas
£'m	30/06/2022	31/12/2021	30/06/2022	31/12/2021	30/06/2022	31/12/2021
Value in use	128.9	93.7	33.3	27.8	16.7	29.7
Goodwill	28.9	28.9	9.8	9.8	17.1	17.1
Non-current asset	8.3	8.2	8.5	9.4	9.4	10.0
Headroom	91.7	56.6	15.0	8.6	(9.8)	2.6

An impairment of goodwill associated within the Dunstan Thomas CGU totalling £9,813k has been identified and recognised in the financial statements for the six month period ended 30 June 2022 (2021: £nil). This has arisen following lower than expected performance in the Dunstan Thomas CGU over the period, which has led to a reduction in forecast estimates of future cash flows from this CGU.

Sensitivity analysis was performed on the following stress scenarios as at 30 June 2022 and the negative impact on headroom is calculated as follows:

	Suffolk Life		Talbot & Muir		Dunstan Thomas
£'m	30/06/2022	31/12/2021	30/06/2022	31/12/2021	30/06/2022	31/12/2021
1% increase in discount rate	(11.9)	(8.0)	(3.1)	(2.4)	(1.7)	(2.5)
1% decrease in terminal growth rate	(8.0)	(6.6)	(2.1)	(2.0)	(1.1)	(2.1)
10% reduction in operating profit budgeted and forecasted	(11.8)	(8.3)	(3.2)	(2.5)	(1.9)	(3.1)

Amongst the CGUs, Dunstan Thomas is most susceptible to the stress scenarios, while the other two CGUs are robust against the stress scenarios in isolation or in aggregate.

IFRS 9 impairment

Trade and other receivables are impaired based on the IFRS 9 simplified approach to measure expected credit losses using a lifetime expected loss allowance for all trade receivables. The loss allowances for trade and other receivables are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group's past history of shared credit risk characteristics, days past due, existing market conditions, as well as forward looking estimates at the end of each reporting period.

The loss rates are considered the key source of estimation uncertainty because the impact of a change in these could result in a material change in the expected credit loss. The Group determines its loss rates by reference to the underlying level of liquidity in each of the Group's clients' SIPPs because clients' fees are normally settled directly from their SIPP cash holdings. A lower level of liquidity in the SIPP, or indeed illiquidity, indicates reduced credit quality in the related trade receivable balance.

Changes in macroeconomic factors may impact the Group's clients' use of the SIPP and cause the level of liquidity in the SIPP to increase or decrease. A 10% increase or decrease in loss rates estimated at the period end would have the following impact:

Period ended 30 June 2022		Increase / (decrease) in percentage rates	Effect on profit before tax £'000
Loss rate		10%	(776)
Loss rate		(10)%	408

Period ended 30 June 2021		Increase / (decrease) in percentage rates	Effect on profit before tax £'000
Loss rate		10%	(807)
Loss rate		(10)%	430

The Group charges fixed fees for its services reducing its exposure to changes in macroeconomic factors such as COVID-19 which may otherwise impact a percentage basis point fee charging model.

The Group continually assesses historical recovery data to help determine how the underlying level of liquidity in the SIPPs fits into each of the credit quality ratings. Future historical data available may lead to changes in the estimated categorisation of trade receivables gross carrying amounts and associated loss allowance.

Where trade and other receivables have been outstanding for more than six years, amounts are deemed to have no reasonable expectation of recovery and are written off.

Contingent consideration payable on acquisitions

The Group has entered into certain acquisition agreements that provide for contingent consideration to be paid. A financial instrument is recognised for all amounts management anticipates will be paid under the relevant acquisition agreement. This requires management to make an estimate of the expected future cash flows from the acquired business using forecasts that cover the contingent consideration period, and determine a suitable discount rate for the calculation of the present value of any contingent consideration payments.

A material change to the carrying value might occur if the acquired businesses achieve significantly more or less than their target earnings. The key assumption used in determining the value of these provisions is the forecast financial performance as applied in the terms of the contingent consideration arrangement. A 10% increase or reduction in achievement of forecast contingent consideration targets would increase or reduce the value of contingent consideration payable required by £0.3m (2021: £0.9m), which in turn would reduce or increase profit before tax.

3  Operating segment reporting

The following tables present revenue and profit information regarding the Group's operating segments for the six month periods ended 30 June 2022 and 30 June 2021, and the year ended 31 December 2021.

Unaudited Period ended 30 June 2022		Pension Administration £'000		FinTech £'000		Consolidation adjustments £'000		Consolidated £'000
Revenue
External customers		28,115		4,071		-		32,186
Internal customers		-		860		(860)		-
		28,115		4,931		(860)		32,186
Administrative expenses
External customers		23,418		3,612		9,813**		36,843
Internal customers		319		465		(784)		-
		23,737		4,077		9,029		36,843
Operating profit / (loss)		4,378		854		(9,889)		(4,657)

As restated* Unaudited Period ended 30 June 2021		Pension Administration £'000		FinTech £'000		Consolidation adjustments £'000		Consolidated £'000
Revenue
External customers		27,072		5,214		-		32,286
Internal customers		-		573		(573)		-
		27,072		5,787		(573)		32,286
Administrative expenses
External customers		21,950		4,259		-		26,209
Internal customers		367		206		(573)		-
		22,317		4,465		(573)		26,209
Operating profit		4,755		1,322		-		6,077

*The unaudited results for period ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group. The adjustments made to restate the 30 June 2021 comparatives, as further detailed in note 2.4, have not been subject to audit.

** The impairment charge on the goodwill from the acquisition of Dunstan Thomas.

Audited Year ended 31 December 2021		Pension Administration £'000		FinTech £'000		Consolidation adjustments £'000		Consolidated £'000
Revenue
External customers		53,407		9,900		-		63,307
Internal customers		-		1,349		(1,349)		-
		53,407		11,249		(1,349)		63,307
Administrative expenses
External customers		43,866		8,339		-		52,205
Internal customers		813		390		(1,203)		-
		44,679		8,729		(1,203)		52,205
Operating profit		8,728		2,520		(146)		11,102

The following tables present a split of assets and liabilities of the Group's operating segments as at 30 June 2022, 30 June 2021 and 31 December 2021.

Unaudited As at 30 June 2022		Pension Administration £'000		FinTech £'000		Corporate £'000		Policyholder £'000		Consolidated £'000
Total assets		63,965		10,091		56,479		3,696,009		3,826,544
Total liabilities		32,853		3,179		24,498		3,696,009		3,756,539

As restated* Unaudited As at 30 June 2021		Pension Administration £'000		FinTech £'000		Corporate £'000		Policyholder £'000		Consolidated £'000
Total assets		70,130		9,429		69,008		3,734,467		3,883,034
Total liabilities		32,711		3,537		31,667		3,734,467		3,802,382

*The unaudited results for period ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group. The adjustments made to restate the 30 June 2021 comparatives, as further detailed in note 2.4, have not been subject to audit.

Audited As at 31 December 2021		Pension Administration £'000		FinTech £'000		Corporate £'000		Policyholder £'000		Consolidated £'000
Total assets		65,960		9,508		70,853		3,932,633		4,078,954
Total liabilities		32,793		3,113		28,773		3,932,633		3,997,312

Corporate assets and liabilities are not allocated to individual operating segments as they are managed on a group basis. Policyholder assets and liabilities are not allocated to individual operating segments as all investment returns associated with these are due back to policyholders under non-participating investment contracts, alongside non-participating investment contract expenses and changes in provisions for non-participating investment contract liabilities, such that the impact on shareholder assets and liabilities, and profit or loss, is nil.

4  Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Changes in income or expense that would result from the conversion of the dilutive potential ordinary shares are deemed to be trivial, and therefore no separate diluted net profit is presented. The following reflects the income and share data used in the basic and diluted earnings per share computations:

	Unaudited 6 month period ended 30-Jun-22 £'000		*As restated Unaudited 6 month period ended 30-Jun-21 £'000		Audited year ended 31-Dec-21 £'000
Net (loss) / profit  available to equity holders of the Group	(7,440)		4,129		7,723
	Number		Number		Number
Weighted average number of ordinary shares:
Issued ordinary shares at start of period	66,879,312		66,414,312		66,414,312
Effect of shares issued during the period	-		197,818		333,781
Effect of shares held by Employee Benefit Trust	(426,603)		(155,401)		(316,688)
Basic weighted average number of shares	66,452,709		66,456,729		66,431,405
Effect of dilutive options	218,576		720,135		510,602
Diluted weighted average number of shares	66,671,285		67,176,864		66,942,007
	Pence		Pence		Pence
(Loss) / earnings per share:
Basic	(11.2)		6.2		11.6
Diluted	(11.2)		6.1		11.5

*As detailed in note 2.4, adjusted earnings per share on profit before adjusting items and amortisation, less an effective tax rate, for the unaudited six month period ended 30 June 2021 have been restated to reflect a correction to revenue generated from arrangement of property insurance for properties held within SIPPs and SSASs administered by the Group.

5  Intangible assets

	Goodwill £'000		Brand £'000		Client portfolios £'000		Computer software £'000		Internally Generated Software £'000		Total £'000
Cost
At 1 January 2021	55,732		1,595		33,805		2,783		5,770		99,685
Additions	-		-		-		309		533		842
At 30 June 2021	55,732		1,595		33,805		3,092		6,303		100,527
Additions	-		-		-		183		645		828
At 31 December 2021	55,732		1,595		33,805		3,275		6,948		101,355
Additions	-		-		-		594		595		1,189
At 30 June 2022	55,732		1,595		33,805		3,869		7,543		102,544
Amortisation and impairments
At 1 January 2021	-		66		6,854		1,447		240		8,607
Charge for the period	-		80		938		130		297		1,445
At 30 June 2021	-		146		7,792		1,577		537		10,052
Charge for the period*	-		80		940		134		335		1,489
At 31 December 2021	-		226		8,732		1,711		872		11,541
Charge for the period	-		80		940		169		362		1,551
Impairment	9,813		-		-		-		-		9,813
At 30 June 2022	9,813		306		9,672		1,880		1,234		22,905
Net book value
At 31 December 2020	55,732		1,529		26,951		1,336		5,530		91,078
At 30 June 2021	55,732		1,449		26,013		1,515		5,766		90,475
At 31 December 2021	55,732		1,369		25,073		1,564		6,076		89,814
At 30 June 2022	45,919		1,289		24,133		1,989		6,309		79,639

Impairment charges totalling £9,813k against the intangible asset relating to Goodwill within the Dunstan Thomas CGU have been recognised during the period ended 30 June 2022 (2021: £nil). This relates to lower than expected performance of the CGU in the period and a consequent reduction in the estimate of future cash flows expected from the CGU.

6  Dividends paid

	Unaudited 6 month period ended 30-Jun-22 £'000		Unaudited 6 month period ended 30-Jun-21 £'000		Audited year ended 31-Dec-21 £'000
Ordinary dividends paid	4,321		4,338		5,997
	4,321		4,338		5,997

A final dividend of 6.5p per ordinary share in respect of the year ended 31 December 2020 was paid on 4 June 2021.

An interim dividend of 2.5p per ordinary share in respect of the year ended 31 December 2021 was paid on 12 November 2021.

A final dividend of 6.5p per ordinary share in respect of the year ended 31 December 2021 was paid on 1 June 2022.

7  Taxation

Tax is charged at 19% for the six months ended 30 June 2022 (30 June 2021: 19%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income of the six month period.

Current tax for current and prior periods is classified as a current liability to the extent that it is unpaid. Any amounts paid in excess of amounts owed are classified as a current asset.

Deferred tax liability has been updated based on the proposed 25% corporation tax increase from April 2023. This resulted in a £1.2m increase in deferred tax liability compared to 31 December 2021 and a corresponding tax charge on the statement of comprehensive income.

8  Contingent consideration

The Group estimates the fair value of the remaining contingent consideration payable is £4.9m (30 June 2021: £8.9m). The movement is mainly driven by the settlement of the first earn-out for the acquisition of Talbot and Muir of £2.7m in H1 2022, the revaluation of the remaining liability based on updated forecasts, and discount unwind.

9   Illustrative condensed consolidated statement of financial position as at 30 June 2022 split between insurance policyholders and the Group's shareholders

		30-Jun-22 £'000		30-Jun-22 £'000		30-Jun-22 £'000		30-Jun-21 £'000
ASSETS		Group Total		Policyholder		Shareholder		Shareholder
Non-current assets
Intangible assets		79,639		-		79,639		90,475
Investment property		1,346,912		1,346,912		-		-
Property, plant and equipment		7,885		-		7,885		9,395
Investments		1,959,405		1,959,405		-		-
		3,393,841		3,306,317		87,524		99,870
Current assets
Trade and other receivables		30,630		13,099		17,531		16,107
Cash and cash equivalents		401,294		376,468		24,826		32,163
Current tax asset		779		125		654		427
		432,703		389,692		43,011		48,697
Total assets		3,826,544		3,696,009		130,535		148,567
LIABILITIES
Current liabilities
Trade and other payables		19,915		11,455		8,460		8,690
Deferred income		33,340		16,464		16,876		16,350
Borrowings		51,364		46,857		4,507		4,063
Lease Liabilities		911		-		911		837
Provisions		453		-		453		453
Contingent consideration		4,930		-		4,930		2,467
		110,913		74,776		36,137		32,860
Non-current liabilities
Borrowings		38,351		24,878		13,473		17,741
Lease Liabilities		6,255		-		6,255		7,164
Provisions		66		-		66		7
Contingent consideration		-		-		-		6,454
Non-participating investment contract liabilities		3,596,355		3,596,355		-		-
Deferred tax liability		4,599		-		4,599		3,689
		3,645,626		3,621,233		24,393		35,055
Total liabilities		3,756,539		3,696,009		60,530		67,915
Net assets		70,005		-		70,005		80,652
Issued capital		332				332		332
Share premium		58,087		-		58,087		58,087
Equity share based payments		2,901		-		2,901		2,839
Treasury shares		(1,377)		-		(1,377)		(440)
Retained earnings		10,052		-		10,052		19,826
		69,995		-		69,995		80,644
Non-controlling interest		10		-		10		8
Total equity		70,005		-		70,005		80,652

10  Illustrative condensed consolidated statement of cash flows for the six month period ended 30 June 2022 split between insurance policyholders and the Group's shareholders

		30-Jun-22 £'000 Group Total		30-Jun-22 £'000 Policyholder		30-Jun-22 £'000 Shareholder		30-Jun-21 £'000 Shareholder
Cash flows from operating activities
(Loss) / Profit before tax		(5,348)		-		(5,348)		5,054
Adjustments for:
Depreciation		849		-		849		915
Amortisation and impairments		11,364		-		11,364		1,445
Interest expense		727		-		727		452
Share based payment expense		61		-		61		92
Fair value gains on movement in contingent consideration		(314)		-		(314)		-
Fair value losses on financial investments		240,241		240,241		-		-
Additions of financial investments		(340,591)		(340,591)		-		-
Disposals of financial investments		365,910		365,910		-		-
Fair value gains on investment properties		(33,147)		(33,147)		-		-
Increase in liability for investment  contracts		(239,856)		(239,856)		-		-
Changes in working capital:
Increase in trade and other receivables		(2,650)		(264)		(2,386)		(1,702)
Increase/(decrease) in trade and other payables		2,196		2,305		(109)		2,238
Taxes paid		(588)		-		(588)		(1,324)
Net cash flows from operating activities		(1,146)		(5,402)		4,256		7,170
Cash flows from investing activities
Purchase of intangible assets		(1,189)		-		(1,189)		(842)
Purchase of property, plant & equipment		(97)		-		(97)		(169)
Purchase of investment property		(49,463)		(49,463)		-		-
Purchase and sale of shares in the Group by the EBT		5		-		5		301
Receipts from sale of investment property		52,166		52,166		-		-
Net cash flows from acquisitions		(2,687)		-		(2,687)		9
Net cash flows from investing activities		(1,265)		2,703		(3,968)		(701)
Cash flows from financing activities
Equity dividends paid		(4,321)		-		(4,321)		(4,338)
Net proceeds from issue of ordinary shares		-		-		-		290
Net increase/(decrease) in borrowings		(1,074)		926		(2,000)		(2,000)
Principal elements of lease payments		(572)		-		(572)		(490)
Interest paid		(461)		-		(461)		(277)
Net cash flows from financing activities		(6,428)		926		(7,354)		(6,815)
Net increase/(decrease) in cash and cash equivalents		(8,839)		(1,773)		(7,066)		(346)
Cash and cash equivalents at the beginning of the period		410,133		378,241		31,892		32,509
Cash and cash equivalents at the end of the period		401,294		376,468		24,826		32,163

11  Illustrative table of SIPP number movements over the six month period ended 30 June 2022

	Full SIPPs	Mid SIPPs	Total Full and Mid SIPPs	eSIPPs	Third Party Administered	Total
As at 30 June 2022	20,701	35,784	56,485	16,976	5,529	78,990
As at 31 December 2021	21,272	34,699	55,971	17,881	5,827	79,679
SIPPs added organically	389	1,607	1,996	65	8	2,069
Conversions and reclassifications	(327)	327	-	-	-	-
SIPPs lost through attrition	(633)	(849)	(1,482)	(970)	(306)	(2,758)
Annualised gross organic growth rate*	3.7%	9.3%	7.1%	0.7%	0.3%	5.2%
Annualised attrition rate *	6.0%	4.9%	5.3%	10.8%	10.5%	6.9%

^{*Growth and attrition percentage rates are annualised and are based on the 6 months' worth of SIPPs added organically or lost through attrition to 30 June 2022}

Company Information

Directors
David Barral - Executive Chairman Dan Cowland - Chief Financial Officer Jane Ridgley - Chief Operating Officer	Appointed 26 May 2022
Bill Rattray - Non-Executive Director
Jill Lucas - Non-Executive Director
Christopher Mills - Non-Executive Director	Appointed 26 May 2022
Will Self - Director
Registered Office
3 Temple Quay
Temple Back East
Bristol
BS1 6DZ
Registered Number
07934492
Nominated Adviser and Broker	Joint Broker
Peel Hunt LLP	Singer Capital Markets
Moor House	1 Bartholomew Lane
120 London Wall	London
London	EC2N 2AX
EC2Y 5ET
Independent Auditors
PricewaterhouseCoopers LLP
2 Glass Wharf
Temple Quay
Bristol
BS1 4RW
Registrars
Computershare PLC
The Pavilions
Bridgewater Road
Bristol
BS13 8AE

Adjusted diluted EPS

This is calculated by taking adjusted profit before tax for the financial period, deducting an effective tax rate of 19% (2021: 19%), and dividing the total by the diluted weighted average number of shares in issue for the financial period.

Adjusted profit before tax

This is calculated by taking profit before tax for the financial period and adding back amortisation and impairment on acquired intangible assets, along with adjusting items.

Adjusted operating profit

This is calculated by taking operating profit for the financial period and adding back amortisation and impairment on acquired intangible assets, along with adjusting items.

Adjusted operating margin

This is calculated by taking operating profit for the financial period and adding back amortisation and impairment on acquired intangible assets, along with adjusting items, then dividing this total by revenue for the financial period.

Annualised gross organic growth rate

A calculation derived by taking new SIPPs obtained in the financial period from organic growth, dividing by the total number of months in the financial period, and multiplying this by 12 to obtain an annualised quantity of new SIPPs obtained. The annualised quantity is then divided by the brought forward quantity of SIPPs held to derive the annualised gross organic growth rate.

Annualised attrition rate

A calculation derived by taking SIPPs lost in the financial period from attrition, dividing by the total number of months in the financial period, and multiplying this by 12 to obtain an annualised quantity of SIPPs lost. The annualised quantity is then divided by the brought forward quantity of SIPPs held to derive the annualised attrition rate.

AUA

Assets Under Administration

Full SIPP

A pension that facilitates the full range of investment solutions. This can encompass anything that is permitted within a Mid SIPP, plus others such as commercial property, directly-held investments, specialist investments such as unlisted shares and unregulated collectives, multiple cash deposit accounts, physical gold, National Savings & Investments, or structured products.

Mid SIPP

A pension that facilitates the use of one (or more) streamlined investment solution. For example, a discretionary fund manager, or a fund platform/supermarket, or a stockbroker account, and a cash deposit account if required.

Net shareholder cash (after debt)

This is calculated by taking shareholder only amounts as split within the illustrative condensed consolidated statement of financial position provided in the supplementary unaudited information for cash and cash equivalents, and deducting borrowings.

 

END

 

 

IR BDLLBLKLLBBE