Edinburgh fintech Nucleus Financial on track for best ever quarter for new business activity

Nucleus Financial Group, the Edinburgh-based fintech that recently received a £145 million takeover offer, is on track for its best ever quarter for new business activity despite “challenging market conditions”.

Releasing what are likely to be its final results as a listed business, the firm reported a 7.9 per cent increase in assets under administration to £17.4 billion. The year-on-year upturn for 2020 came despite the impact of the pandemic on investor sentiment and market volatility throughout the year.

The increase also compared favourably to a fall of 12.5 per cent in the FTSE All-Share Index.

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Net revenue grew by 1.6 per cent to £46 million while adjusted underlying earnings fell by 27.9 per cent to £5.7m.

Nucleus, which chief executive David Ferguson set up with the backing of a number of financial advice firms in 2006, has developed software platforms that enable financial advisers to provide online access to clients for investments across ISAs, pensions and bond accounts. Picture: Lisa Ferguson

Adjusted profit before tax came in at £5.1m, down from £7.3m a year earlier, or a fall of 29.8 per cent.

Last month, it emerged that Nucleus was set to disappear from the stock market after being acquired in a deal that will retain the firm’s capital base but lead to a “moderate reduction” in headcount.

The takeover by James Hay Holdings values the capital firm at some £144.6m and creates a financial adviser platform with around £45bn of assets under administration (AUA).

As a result of the takeover offer by James Hay Holdings, the directors have resolved not to recommend a final dividend in respect of the 2020 financial year. The board has already recommended the cash offer to shareholders.

The takeover move followed December’s revelation that the Scottish firm had received a number of takeover approaches.

Nucleus, which chief executive David Ferguson set up with the backing of a number of financial advice firms in 2006, has developed software platforms that enable financial advisers to provide online access to clients for investments across ISAs, pensions and bond accounts.

The “wrap platform” provider, which floated in 2018, is seen as one of the biggest successes of Scotland’s burgeoning fintech – financial technology – sector.

Releasing the 2020 financial results, Ferguson said: “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 per cent year-on-year, meaning AUA increased by 7.9 per cent to close the year at £17.4bn.”

He added: “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 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.”

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