“Our fixed, recurring fee model has insulated the group from the worst of the effects of the pandemic, to date", comments Curtis Banks (CBP) chief executive Will Self in the SIPP (self-invested personal pension) provider’s interim results.
A glance at headline figures backs up the assertion. Compared with the first half of 2019, Curtis Banks’ top-line, adjusted operating profit margin, pre-tax profit and earnings per share numbers were all flat. On balance, activity was static too, with a small decline in the numbers of total and new SIPPs administered offset by an upturn in properties administered.
All of this begs the question why the market values the company almost a third lower than it did a year ago. Is there no virtue in resilience?
The answer partly lies in a £25m post-period placing. Ostensibly, this was to fund the acquisitions of smaller peer Talbot and Muir and fintech Dunstan Thomas, though the effect of issuing shares equal to 22 per cent of the group’s market capitalisation – and at 210p each – has crystallised a lower valuation.
Details on potential synergies from the businesses are not expected until well into 2021, but the early signs look positive. For a combined £38m, Curtis Banks has bought two firms expected to generate £5.8m in pro-forma cash profits this year.
Broker Peel Hunt forecasts adjusted earnings of 16p per share this year and 16.1p in 2021.
| CURTIS BANKS (CBP) | ||||
| ORD PRICE: | 219p | MARKET VALUE: | £145m | |
| TOUCH: | 212-228p | 12-MONTH HIGH: | 373p | LOW: 181p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 82p* | NET CASH: | £355m^ | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 24.5 | 5.45 | 8.4 | 2.5 |
| 2020 | 24.5 | 3.96 | 5.4 | 2.5 |
| % change | - | -27 | -36 | - |
| Ex-div: | 8 Oct | |||
| Payment: | 13 Nov | |||
| *Includes intangible assets of £43m, or 65p a share. ^Includes £4.3m of lease liabilities. | ||||
