Nucleus investors share first payout after bumper year

Backers of Nucleus Financial have been rewarded with a £4.3 million payout after the Edinburgh-based financial technology (fintech) business delivered its first-ever dividend.

Nucleus chief executive David Ferguson. Picture: Jane Barlow

It comes after a fifth consecutive year of profit and revenue increases at the wrap platform company, which has seen it become debt free with over £15m in cash reserves.

As well as the company’s main institutional shareholder – investment firm Sanlam UK – the company is owned by a number of financial adviser businesses and individual IFAs who will benefit from the payout.

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Around 75 members of staff and senior management who hold shares in the firm, regarded as one of Scotland’s most successful fintech businesses, will also receive cash payouts running into thousands of pounds in some cases. Nucleus is only the second wrap platform of its kind to have paid a dividend to shareholders.

David Ferguson, founder and chief executive, said paying a dividend was a “major milestone” for the business, which launched in 2006 and now employs 180.

“Not only is it testament to the strength of the underlying fundamentals of the business, but also the passion, dedication and hard work of every single person who has been involved over the past eleven years,” he said.

“We are investing more than ever in growth and product development and we have a bigger regulatory capital buffer than ever even after making this payment, so it felt the right time to pay a dividend.”

Last year profits before tax hit £4.3m, up 21 per cent from 2015. Assets under administration (AUA) reached £11.4 billion at the end of 2016, an increase of 23 per cent.

“Following five consecutive years of increasing revenues and profitability that has seen the business become debt free with over £15m in cash reserves, Nucleus is better positioned than ever before to take advantage of the significant growth opportunities in the platform sector,” said Ferguson.

“We believe we are poised to accelerate this progress even further by remaining fully committed to investing in next generation technology and enhancing a platform proposition that has been designed hand in hand with advisers.”

The firm has also seen a strong start to the current financial year. Half-year results showed gross inflows up by 44.8 per cent to £1.3bn, AUA up by 28 per cent to £12.8bn and revenues up 26.5 per cent to £19.5m. Earlier this month, AUA hit £13bn on the back of Nucleus’s IFA users performing well and relatively high stock markets.

The employees who are benefiting from the dividend acquired shares under a scheme which operated in the early years of the company and Ferguson said although such schemes in private companies are complicated by factors such as lack of liquidity he “would like to think we could open it up again”.