David Ferguson

The firm has published its audited annual results for the year ended 31 December 2020, revealing that its UA increased 7.9% year-on-year to £17.4bn despite the impact of the Covid-19 pandemic on investor sentiment and market volatility throughout the year.

This compared to a FTSE All-Share Index decrease of 12.5% year-on-year.

Nucleus Financial Group’s 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.

The firm’s adjusted EBITDA recovered strongly in H2 as markets reclaimed some of the lost ground in Q1 to finish the year at £5.7 million with EBITDA margin following a similar pattern of outperformance in the second half of the year (H1 9.6%, H2 15.1%).

A strong balance sheet was also retained with £17.5m of cash, no borrowings and £9.6m of capital in excess of the group’s pillar I minimum regulatory requirement.

Last month, the board of Nucleus Financial Group has announced that it has reached agreement on the terms of an offer by James Hay Holdings Limited for Nucleus for a total consideration valuing Nucleus at c. £144.6m.

As a result of the offer by James Hay Holdings the directors have resolved not to recommend a final dividend in respect of the 2020 financial year.

David Ferguson, founder and CEO of Nucleus, commented: “We entered 2020 in great shape and enjoyed a strong Q1 before the rapid development of Covid-19 and volatile markets saw inflows dip and AUA growth stall through the height of the pandemic. I’ve commented before on how our people adjusted brilliantly to maintain our online and offline services, and I would reiterate how magnificent they’ve been throughout this extraordinary period.

“Despite the environment, we kept investing in the things that matter to our users in the expectation that momentum would return, as it did through late summer and particularly through Q4. Net inflows increased by 42% year-on-year, meaning AUA increased by 7.9% to close the year at £17.4bn.

“Our continued investment in the business delivered several major product enhancements, we completed the acquisition of the relevant OpenWealth assets (welcoming 130 new staff into the business in the process), landed our first Enterprise firm and started the rollout of our new model portfolio service, Nucleus IMX, which since launch has the third highest net inflows of all DFMs on the platform, all while maintaining operations and service levels throughout the crisis.”

He added: “The positive AUA and inflow momentum flowed directly from our highest ever people engagement and our highest ever net promoter score (+41), each of which underscored our confidence in the growth prospects for the business.

“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.”