As takeover looms...
Ferguson keen to open talks on future at Nucleus
It’s a wrap: David Ferguson’s firm will be acquired next week (pic: Terry Murden)
David Ferguson, founder and CEO of Nucleus Financial, the wrap platform, said he hopes to be part of the team that will take the business forward under its new owner.
Shareholders in the Edinburgh-based company are expected to formally approve the £145 million takeover by James Hay next Tuesday and Mr Ferguson said that will trigger “proper” talks over the shape of the business.
“I can’t say much about it at the moment, but we would like more success and I very much hope to be here for some time to come. I would hope members of the team, including myself, will be valued as part of the company, ” he said in a call with Daily Business.
He said recent concerns over the takeover raised by some employees are to be expected because of the uncertainty it creates. There is an ongoing dialogue, he said.
The takeover was triggered by the decision by South African financial services group Sanlam deciding to offload its controlling 52% shareholding.
Asked if he had tried to dissuade Sanlam from selling, Mr Ferguson said only that there had been “discussions over five or six years” with Sanlam about its stake in the business.
In its final set of results before the takeover Nucleus said net revenue grew by 1.6%, with a reduction in blended revenue yield as expected, and due to several factors including improved terms for a small number of large adviser firms.
However, the company saw profits fall by 46% to £3.2m during 2020 compared to £6m during 2019.
Adjusted EBITDA recovered strongly in H2 as markets reclaimed some of the lost ground in Q1 to finish the year at £5.7m with EBITDA margin following a similar pattern of outperformance in the second half of the year (H1 9.6%, H2 15.1%).
Assets under administration rose 7.9% to £17.4 billion compared to a FTSE All-Share Index decrease of 12.5% year-on-year.
A strong balance sheet was retained with £17.5m of cash, no borrowings and £9.6m of capital in excess of the group’s pillar I minimum regulatory requirement.
As a result of the offer the directors have resolved not to recommend a final dividend in respect of the 2020 financial year.
There was a 4.3% increase in customer numbers from 96,857 to 101,029, over the previous year.
Commenting on the results, Mr Ferguson said: “The Q4 2020 recovery in inflows has continued strongly through Q1 2021 with gross and net inflows already up on the whole of the prior quarter and taking us to increased AUA of £17.8bn (Q4 2020: £17.4bn) as at 21 March.
“With the last part of March (normally our busiest time of the year) still to come, I expect the coming days to round off our best ever quarter for new business activity.”