Nucleus Financial (NUC) is not the only company to spot the opportunity in providing independent financial advisers (IFAs) with one-stop investment wrap platforms. Chief executive and founder David Ferguson counts around 20 peers in the UK marketplace, all of which are trying to replicate the operational gearing effect that has made IntegraFin (IHP) a £1.7bn company.
The model is relatively simple: build a competitive platform, then add as many IFAs, customers and assets under administration as possible. Against a fixed-cost base, the prospect for rising profits and operating margins is considerable.
Occasionally, the scheme works the other way. In the first half of 2020, tanking markets meant average assets under administration were just 4.4 per cent higher on the prior period, at £15.4bn. The combined cost of sales and administration was 12 per cent higher at £23.5m, thanks to further investment in technology and last August’s move to bring platform hosting in-house.
Ultimately, management expects the arrangement to be cost-neutral, though the immediate effect is a dented interim dividend. Reinstating that payment was described as an “easy decision” by chief financial officer Stuart Geard, though ongoing economic uncertainty means the board has kept 2019’s final distribution under review.
Consensus forecasts are for earnings of 4.95p per share this year, rising to 6.24p in FY2021.
| NUCLEUS FINANCIAL (NUC) | ||||
| ORD PRICE: | 136p | MARKET VALUE: | £104m | |
| TOUCH: | 135-140p | 12-MONTH HIGH: | 182p | LOW: 100p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 27.6p | NET CASH | £14.7m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 25.2 | 4.2 | 4.4 | 1.5 |
| 2020 | 25.1 | 1.6 | 1.6 | 1.0 |
| % change | -0.4 | -63 | -64 | -33 |
| Ex-div: | 17 Sep | |||
| Payment: | 16 Oct |
