Revenue up at Nucleus against uncertain backdrop

David Ferguson

Audited annual results for the year ended 31 December 2018, a year that saw Nucleus’ successful admission to trading on AIM in July, were described as positive, coming as they do 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 was reported in adjusted EBITDA margin as a result of the operational leverage effect of revenue growth, as well as reduced external platform development expenditure.

The results also reported a strong balance sheet at the year-end, with £17.7 million of cash and no debt.

Final dividend of 3.6p per share was recommended, taking the full year dividends post-admission to AIM to 5p per share - 2017 dividend included a one-off distribution of accumulated profits.

The year also saw a 6 per cent increase in the number of active advisers from 1,317 to 1,396, over the last year.

And customer number were up 7 per cent from 87,556 to 93,715, over 2017.

As well as joining AIM, 2018 saw the launch of ‘Nucleus Go’, a new online interface for advised clients, and of a new Junior ISA product, and the implementation of functionality changes driven by new Mifid II regulation.

David Ferguson, founder and CEO of Nucleus, said: “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.”

John Moore, senior investment manager at Brewin Dolphin Scotland, said: “It’s a relatively positive set of results from Nucleus Financial, given the volatile market environment in 2018. In its previous statement, the company said that advisers were feeling cautious and, although market values have recovered since then, it remains an uncertain backdrop – it seems likely that adviser sentiment will have deteriorated further. Yet, Nucleus has still delivered an increase in active users, a rise in revenues and a boost to profits. Key to the business’s future will be continuing to grow users, or acquiring other platforms and fintechs to drive economies of scale. In the short term at least, I suspect Nucleus will focus on the latter.”