Curtis Bank A4 Cover.qxp 19/04/2018 13:11 Page 2
Annual Report and
Consolidated Financial Statements
for the year ended 31 December 2017
Curtis Bank A4 Cover.qxp 19/04/2018 13:11 Page 3
Contents
Company Information
Strategic Report
1 Operational, Financial Highlights and Key Performance Indicators
2 Our services and history
3
4
6
8
Chairman’s statement
Chief Executive’s review
Financial review
Principal risks and uncertainties
10
Corporate and social responsibility
Governance
11
Board of Directors
13 Directors’ report
14
15
Statement of Directors’ responsibilities
Corporate governance
17 Directors’ remuneration report
Financial Statements
20
25
26
27
28
29
30
31
Independent auditors’ report to the members of Curtis Banks Group PLC
Consolidated statement of comprehensive income
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated statement of cash flows
Company statement of cash flows
32 Notes to the financial statements
67
68
Company information
Supplementary unaudited information
Curtis Bank pp01-10.qxp 18/04/2018 15:58 Page 1
Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report
Operational, Financial Highlights and Key Performance Indicators
Curtis Banks Group plc, one of the UK’s leading SIPP providers, is pleased to announce its final results for the 12 months to
31 December 2017.
Highlights
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Operating Revenue increased by 47% to £43.6m (2016: £29.7m)
Adjusted operating profit increased by 51% to £10.7m (2016: £7.1m)
Adjusted operating margin increased to 25% (2016: 24%)
Profit before tax increased by 31% to £5.9m
Adjusted diluted EPS increased by 48% to 15.38p
Strong gross organic growth in own SIPP numbers of 14% with total administered now 76,474
Assets under administration increased by 21% to £24.7bn
Proposed final dividend of 4.75p (2016: 3p) making a full year payment of 6.25p (2016: 4p)
Highlights and key performance indicators for the year include:
2017
2016
Financial
Operating Revenue
Adjusted Operating Profit1
Profit before Tax
Adjusted Operating Margin
Basic EPS
Diluted EPS
Basic EPS on Adjusted Operating profit less an effective tax rate
Diluted EPS on Adjusted Operating profit less an effective tax rate
Operational Highlights
Number of SIPPs Administered
Assets under Administration
Total organic new own SIPPs in year
1 Profit before tax, amortisation and non-recurring costs
£43.6m
£10.7m
£5.9m
25%
9.75p
9.26p
16.20p
15.38p
76,474
£24.7bn
8,719
£29.7m
£7.1m
£4.5m
24%
7.23p
7.02p
10.67p
10.37p
72,983
£20.4bn
6,236
1
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
OUR SERVICES AND HISTORY
Curtis Banks Group PLC (“Curtis Banks” or “the Group”) is one
of the United Kingdom’s leading administrators of
self-invested pension products, principally SIPPs and SSASs.
The Group commenced trading in 2009 and has successfully
developed, through a combination of organic growth and
acquisitions, into one of the largest UK providers of these
products. At 31 December 2017 the Group administered
circa £24.7bn (2016: £20.4bn) of pension assets on behalf
of over 76,000 (2016: 72,000) active clients.
In May 2015 the shares of Curtis Banks (LON: CBP) were
admitted and listed on the London Alternative Investment
Market (“AIM”).
On 25 May 2016 the Group completed its largest acquisition
to date, the purchase of Suffolk Life Group Limited, a long
established provider of SIPPs operating through Suffolk Life
Pensions Limited and Suffolk Life Annuities Limited. The
Group now trades under the names Curtis Banks and Suffolk
Life. Approximately 600 staff are employed across its head
office in Bristol and regional offices in Ipswich and Dundee.
Curtis Banks Limited and Suffolk Life Pensions Limited, the
Group’s principal trading subsidiaries, are authorised by the
Financial Conduct Authority to provide trust based SIPP
products. Suffolk Life Annuities Limited is regulated by the
Prudential Regulatory Authority and the Financial Conduct
Authority to provide insurance based SIPP Products. The
latter company provides SIPPs through non-participating
individual insurance contracts. As such, it is regarded as an
insurance company for the purposes of regulatory and
statutory reporting. Due to Suffolk Life Annuities Limited’s
status as an insurance company, the consolidated results for
the whole Group also include insurance policyholder assets,
liabilities and returns.
The Executive Directors have proven experience in the
pensions market and have established a business that
focuses on a service-driven proposition for the
administration of flexible SIPPs. The Group’s products are
primarily distributed by authorised and regulated financial
advisers, targeted towards pension savers who wish to take
full advantage of the features and flexibility offered in the
UK’s modern and changing pension regime. Long standing
relationships with key distributors result in high levels of
repeat business and demonstrate satisfaction with products
and services provided.
The Group is focussed on continuing to deliver value to
both customers and shareholders in the years ahead.
2
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
CHAIRMAN’S STATEMENT
I am pleased to present my first
statement as Chairman of Curtis
Banks for the year ended
31 December 2017. I would like to
start by thanking my predecessor
Chris Banks as previous Chairman of
the Group for his contribution to the
growth of the Group. Chris was
a founder of the business and has been a major contributor
in the growth of the business and we are delighted that he
remains a strategic advisor to the business.
The year has been one of consolidation as we made the
Suffolk Life business an integral part of the Curtis Banks
Group and these results are our first full year results that
include the full period’s contribution of Suffolk Life which
the Group acquired in 2016. We have enhanced our level of
governance and management control, to meet the needs
of the enlarged Group, and are well positioned to deliver
our strategy in 2018 and thereafter. As a result of this
transaction and the progress we have made in growing the
rest of our business, our revenue and profitability have
grown strongly compared to the prior year.
The period under review has shown revenue increasing by
47% from £29.7m to £43.6m compared to the same period
last year, with adjusted operating profit increasing by 51%
from £7.1m to £10.7m. Fully diluted earnings per share on
these results (after tax) amounted to 15.38p per share
(2016 - 10.37p) and on the statutory profits after tax diluted
earnings per share are 9.26p (2016 - 7.02p). This is a good
set of results particularly with the high levels of regulatory
focus on SIPP providers and industry changes.
Our adjusted operating margin has continued to improve
over the second half of the year and now stands at 25% for
the full year. We expect to achieve further improvement in
this margin in the medium term as we grow our top line
and achieve operational efficiencies.
The year has seen us make substantial progress against our
strategic objectives in order to ensure we realise the
benefits of our acquisitions, market ourselves more
efficiently and continuously look for ways to grow our
revenues. We have launched a new group wide brand and
have rationalised our office locations down to three sites
in Bristol, Dundee and Ipswich. As part of our focus on
growing revenues we are also enhancing our property
administration services across the Group. We will continue
to explore ways in which we can capture the opportunities
within the SIPP administration industry and one of our
major objectives for 2018 is the standardisation of our
service offerings.
We announced in December that we completed our review
of our operating systems and have decided to implement
a material upgrade of the existing Curtis Banks operating
system and to continue to use the Suffolk Life back office
system. We are confident that this is the optimal solution in
terms of cost, efficiency and risk.
The total number of SIPPs currently administered by the
Group now exceeds 76,000 and this is as a result of
continued new organic growth of all SIPPs and our attrition
rates remaining stable with previous years.
Dividends
We paid an interim dividend of 1.5p per share (2016: 1.0p
per share) on 15 November 2017 and the Board proposes
a final dividend of 4.75p per share (2016: 3p per share)
which, if approved, will be paid to shareholders on the
register at the close of business on 27 April 2018. The shares
will be marked ex-dividend on 26 April 2018 and the
proposed dividend paid on 18 May 2018. This will mean the
total dividend paid in respect of the year ended
31 December 2017 will amount to 6.25p per share reflecting
a 56% increase in the operating profit from the enlarged
Group.
Summary and outlook
During the course of this year, the Group has made
considerable progress against its strategic objectives. We
have also enhanced our revenue generation capabilities
and are excited about the prospects for offering enhanced
property administration services across the organisation.
With a strong market position, the continued growth of the
SIPP industry, excellent staff, strong relationships with high
quality professional introducers and a real focus on
delivering value to clients and shareholders alike the board
look forward to the future with confidence.
Chris Macdonald
Chairman
14 March 2018
3
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
CHIEF EXECUTIVE’S REVIEW
Operational Review
2017 has been a successful year for
us and I would like to start by
thanking all our staff for their hard
work and dedication over the last
year which has made these results
possible.
The year has been one of
consolidation as we made the Suffolk Life business an
integral part of the Curtis Banks Group. A Group
Management Committee was created in April. This team
comprises talented managers from both the original Curtis
Banks and Suffolk Life teams and has removed any ‘silo’
effect of different business entities. The team now oversees
the Group and manages the changes needed to improve
service for our customers and increase our operating
margins. Having a team acting with a common Group
purpose has already yielded results, such as standardised
operating procedures and aligned risk management.
We have rationalised our office network down to three sites
in Bristol, Dundee and Ipswich. In January 2017 we closed
our Chilmark office which was part of the acquisition of
a book of 5,000 SIPPs in 2016. Post period end, in January
2018, we closed our Market Harborough office.
These significant changes are the most notable part of our
work towards our five strategic objectives, which everyone
in the business is focused on meeting. They are:
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Meet changing customer needs - adapting to the
changing needs of the UK population and regulatory
environment to be the SIPP provider of choice.
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Capitalise on the right opportunities for growth -
focus on profitable areas of organic market growth
and selective acquisitions of well-aligned books or
businesses, with a clear business identity.
Enhance revenue generation - extend proven revenue
generation activities across the wider group and
continually review fee income relative to the services
provided.
Drive efficiency through technology - continue
technology advances appropriate to the business to
deliver improved margins through efficiency and
improved service to customers.
Maintain a robust and sustainable business model -
market leading governance, capitalisation and robust
systems to ensure a sustainable long term business
and confidence for our business partners, customers
and shareholders.
We are now taking action to build on our foundations and
deliver on our strategic objectives.
We have launched a new Group brand and a single
objective of growing profitably by delivering the best SIPP
in the market. There is now a common identity and culture
across our Group, across all businesses and products,
reflecting that all our customers can expect the same
quality service-led approach that underpins our values.
SIPP Numbers and Revenues
Full SIPPs
Mid SIPPs
eSIPPs
Total own
SIPPs
Third Party
Administered
Total
2017 number
2016 number
Gross organic growth rate*
SIPPs added organically
EPML data cleanse
SIPPs lost through attrition
Attrition rate *
20,539
20,955
3.39%
711
–
(1,127)
5.38%
24,682
22,097
18.45%
4,079
(250)
(1,244)
5.63%
22,193
19,428
20.22%
3,929
–
(1,164)
5.99%
67,414
62,480
13.95%
8,719
(250)
(3,535)
5.66%
9,060 76,474
10,503 72,983
0.75% 12.05%
79 8,798
– (250)
(1,522) (5,057)
14.49% 6.93%
* Growth and attrition percentage rate based on opening SIPP numbers at the beginning of the year
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
CHIEF EXECUTIVE’S REVIEW continued
At the year end the number of SIPPs administered increased
to 76,474, adding a net 3,491 schemes. 8,798 new SIPPs
were added and attrition rates on own SIPPs remained
stable from previous years at 5.7%. We are grateful to our
professional introducers for their continued support.
Our market and products
Customers with SIPPs invested in our 6,000 strong
commercial property portfolio currently contract with
third parties, who often do not have the related pension
expertise, principally offering legal, management,
inspection and valuation services. Extending our expertise
to these services will enhance our customer proposition
and diversify revenue generation.
We have formed a legal services company, Rivergate Legal
Ltd, and an application has been submitted to the Solicitors
Regulatory Authority for this company. In addition, we have
formed a property management company, Templemead
Property Solutions Ltd, and have submitted an application
for RICS approval.
The Group has also recruited a Group Sales Director, Dave
Stratton, previously Head of IFA Distribution at AXA Elevate.
He has commenced work on restructuring and aligning the
sales teams across the Group to build on our strong organic
sales figures.
We are also developing a new SIPP proposition for the
Group, to deliver a single suite of products across the Group
and providing enhanced functionality. This will be our
organic new business proposition and will also enhance
the functionality of existing products.
Regulation
Regulatory scrutiny of the SIPP market continues, but our
simple business model and our scale position us well within
the complex regulatory environment facing the wider
industry. A recent area of focus is that of the nature of the
assets within SIPPs. The Group undertakes robust due
diligence on non-standard investments, and the nature of
the investments we are prepared to accept into SIPPs puts
the Group in a strong position.
HMRC action on in-specie contributions is an issue affecting
our industry and the outcome and impact are not known at
this stage. We do not believe that the net exposure arising
from this will be material to the Group.
IT strategy
During the year we continued to review our operating
systems, to ensure that they are appropriate for the
enlarged Group, providing the necessary functionality to
enable the Group to provide an efficient and cost effective
service to both IFAs and their customers.
This review was completed in December 2017 when we
concluded that the most cost effective, appropriate and
lowest risk solution is to implement a material upgrade of
the existing back office operating system at Curtis Banks
and to continue to use the Suffolk Life back office system as
well. A material consideration in reaching this decision was
the additional functionality provided by a new version of
the Curtis Banks operating system, which only recently
became available. We believe this is an effective solution
for the foreseeable future based on our current strategy.
The upgrade of the systems at Curtis Banks is expected to
commence in H2 2018. Costs associated with this upgrade
will be capitalised and amortised in accordance with our
normal accounting policy. Amortisation will commence
once the upgrade is completed and fully operational.
People and culture
Operational efficiencies have allowed us to grow the
business while maintaining staff numbers, delivering
a positive contribution to our operating margin.
We value our people and the positive contribution they
make to our culture and the performance of our business.
We continue to place emphasis on staff engagement and
wellbeing and have established a structured reward and
recognition scheme and an employee forum that drives
engagement and communication. We have also grown
our corporate social responsibility activities, promoting
our presence in our local communities and increasing our
support for our people’s own fundraising activities.
Rupert Curtis
Chief Executive Officer
14 March 2018
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
FINANCIAL REVIEW
Operational revenues of £43.6m in
2017 have increased by 47% over the
comparable period. This is through
a combination of strong organic
growth and the full year effect of the
acquisition of the Suffolk Life Group
of Companies in May 2016.
The operational revenue contribution
from the Suffolk Life group of companies accounted for
£22.5m of such revenue for the year ended 31 December 2017
compared to £10.4m in the seven months ended
31 December 2016. Operational revenues for the Group in the
year ended 31 December 2017 excluding Suffolk Life grew
by 8.6%.
Fee revenue remains the predominant source of income for
the Group with a strong emphasis on recurring annual fee
income. In the year ended 31 December 2017 annual recurring
fees represented 84% of the total fee income. Fees are based
on a recurring fixed monetary annual fee and a menu of
additional fixed fees depending on the services provided to
the SIPP. Fees are not dependent on movements in the value
of underlying assets within SIPPs and as a result the income of
the Group is not dependent on movements in financial
markets.
Interest income remains part of Group income. In the year
ended 31 December 2017 £9.5m of the Group operating
revenues were from interest margin (2016 - £4.5m). The
significant increase in this income from the previous year arose
from the alignment in November 2016 of Suffolk Life banking
systems with the virtual banking system operated at Curtis
Banks. This allowed for funds to be placed on deposit with
more attractive interest rates than previously. Future interest
rate increases will not meaningfully impact Group operational
revenue as clients will share in any uplift in bank base rate.
Administrative expenses of £32m for the Group increased by
44% compared to the previous year. This was largely a result of
a full year of costs from the Suffolk Life Group of Companies.
Suffolk Life administration costs for the year ended
31 December 2017 were £16.8m compared to £8.4m for
the seven month period to 31 December 2016.
Staff costs for the year totalled £21.0m compared to £15.2m for
the year ended 31 December 2016. Of this increase £4.8m
related to the full year effect of the acquisition of Suffolk Life. In
addition staff costs have increased due to annual pay reviews
related to average wage earnings and, as set out in the report
of the Remuneration Committee, the introduction during the
year of an Executive Bonus Scheme and Long Term incentive
Plan for key members of staff, as well as a further offering of the
Save as You Earn option schemes for all staff members. Whilst
such measures have a financial impact their introduction
6
results in the retention and reward of key members of staff that
is necessary to grow and develop the business.
Staff numbers have remained relatively static at 597 as at
31 December 2017 compared to 591 as at 31 December 2016,
the slight increase arising from additional staff being recruited
in the final quarter of the year to cover the imminent closure of
Market Harborough office in January 2018.
Integration of the Suffolk Life operations was completed
during the year and a full review of costs across the Group is
taking place to identify areas where further cost efficiencies
can be made as well as more efficient operational processing
of the day to day SIPP administration activities. The objective
of this review is to accelerate our progress in rebuilding the
adjusted operating margin to 30%. This will be achieved by
a combination of revenue enhancements, in year cost savings
and operating improvements. These will not only benefit the
Group but will also enhance the level and quality of services
that are being provided to clients and introducers of business.
A number of these enhancements have already been
actioned.
The balance sheet as at 31 December 2017 shows a strong
position with shareholder net assets increasing from £41.5m
to £44.6m. Shareholder cash balances at year end were £25.7m
compared to £21.5m at the end of the previous year and after
regulatory capital requirements are taken into account at year
end there were free shareholder cash balances of circa
£9m available.
In 2016 the Group borrowed £23m for the acquisition of
Suffolk Life. This comprised a £15m term loan repayable over
5 years and a revolving credit facility of £8m. Interest on this
debt accrues at the rate of 2.25% plus LIBOR. The debt
continues to be repaid in line with scheduled terms and the
covenants required by the bank in respect of this gearing are
well covered. As at year end the Group had net shareholder
cash (after debt) of £8.1m (2016: £0.5m).
Suffolk Life Annuities
Part of the Suffolk Life Group of Companies, Suffolk Life
Annuities Limited, is an insurance company that writes SIPP
Products as insurance contracts. These are all non-participating
insurance policy contracts and so the Group does not bear any
insurance risk. As the policyholder assets and liabilities are
shown on the balance sheet of Suffolk Life Annuities Limited,
these also show on the Group balance sheet on consolidation.
As the policies are non-participating contracts, the Client
related assets and liabilities in Suffolk Life Annuities match.
In addition the revenues, expenses and investment returns of
the non-participating insurance policy contracts are shown in
the consolidated statement of comprehensive income. Again,
these income, expense items and investment returns due to
the policy holders are completely matched. The acquisition
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
FINANCIAL REVIEW continued
was accounted for in accordance with IFRS 3 Business
Combinations. An illustrative balance sheet as at 31 December
2017 showing the financial position of the Group excluding
the policy holder assets and liabilities is included as
supplementary unaudited information after the notes to the
financial statements. An illustrative cash flow on the same basis
has also been provided.
Non recurring costs
Non recurring costs for the year ended 31 December 2017 of
£3.8m principally comprise:
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An exceptional impairment charge of £2.1m following
completion of an operating systems review, as was
noted in last year’s financial statements and
subsequently reported.
Closure cost provisions of £0.9m relating to the
rationalisation of offices during the year.
Restructuring costs of £0.6m following acquisitions of
businesses in prior years.
During the year ended 31 December 2017 the Group
completed the review of its operating systems following the
acquisition of the Suffolk Life business in May 2016. As a result
the Group concluded that the most cost effective, appropriate
and lowest risk solution was, subject to contract, to implement
a material upgrade of the existing back office operating system
at Curtis Banks whilst retaining the current systems at Suffolk
Life.
As a result of this decision costs of £2.1m incurred and
capitalised on the initial development, installation, and
evaluation and testing of an alternative system over recent
years have now been written off as an exceptional impairment
charge in the financial statements for the year ended
31 December 2017. Other than £0.1m, all of these costs were
originally incurred in accounting periods up to and including
the year to 31 December 2016.
During the year ended 31 December 2017 a review of all the
office locations used by the Group was carried out. As a result
of that review, and after full consultation with all relevant staff,
the decision was taken to close the Group’s office in Market
Harborough. The closure was effective from the end of January
2018. Full provision has been made in the financial statements
for the year ended 31 December 2017 for all the financial costs
arising from the decision to close that office including
redundancy payments, amounts due under onerous leases
and cost of relocating the activities of that office to other
Group locations. The benefits of the decision to close the
Market Harborough will be reflected in the current year.
Restructuring costs arose from previous year’s acquisitions,
principally the acquisition of the business of European
Pensions Management Limited in July 2016.
Systems Development
As noted above, and in the Chief Executive’s Report, after a full
review the decision has been taken to upgrade the existing
systems at Curtis Banks whilst retaining existing systems at
Suffolk Life.
The upgrade of the systems at Curtis Banks is expected to
commence in H2 2018. Costs associated with this upgrade will
be capitalised and amortised in accordance with our normal
accounting policy. Amortisation will commence once the
upgrade is completed and fully operational.
Employee Benefit Trust
During the year under review the Group set up an offshore
Employee Benefit Trust (“EBT”) to acquire shares in the
Company in the market to satisfy future option and long term
incentive awards. The EBT is funded by loans from the Group.
As at 31 December 2017 the EBT had acquired 99,155 shares
in Curtis Banks Group plc funded by a £250,000 loan from the
Group. The financial statements of the EBT are consolidated
within the overall Group financial statements and these shares
are shown on the balance sheet of the Group as Treasury
Shares and are included within total equity.
Earnings per Share
Fully diluted Earnings per Share (“EPS”) based on adjusted
operating profits have increased by 48% in the year ended
31 December 2017 from 10.37p to 15.38p. On the profit after
tax the fully diluted EPS shows a 32% increase in the same
period from 7.02p to 9.26p. With the granting of new options
in the year ended 31 December 2017 under the various option
schemes adopted by the Group diluted EPS is considered to
be a more meaningful measure of performance for investors
than basic EPS.
Capital requirements
The Group’s regulated subsidiary companies submit regular
returns to the FCA and the PRA relating to their capital
resources. At 31 December 2017 the total regulatory capital
requirement across the Group was £11.4m and the Group had
an aggregate surplus of £13.1m across all regulated entities. In
addition to this it is Group internal policy for regulated
companies within the Group to hold at least 130% of their
required regulatory capital resulting in the aggregate surplus
reducing to £9m. All the regulated firms within the Group
maintained surplus regulated capital throughout the year.
Paul Tarran
Chief Financial Officer
14 March 2018
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
PRINCIPAL RISKS AND UNCERTAINTIES
The risks to the Group have been fully assessed and
mitigated to every extent possible and a full risk register is
maintained. The principal risks are set out below that would
adversely affect the activities of the Group.
1. Dependence on key executives and
personnel
The Group’s future success may be substantially dependent
on the continued services and performance of its Executive
Directors and senior management and its ability to continue
to attract and retain highly skilled and qualified personnel.
Mitigation
To minimise this risk the Group seeks to recruit and
maintain high quality experienced staff by offering market
competitive packages. These packages are enhanced by the
addition of share based incentive and reward schemes for
all staff. In addition the Group offers structured training for
staff and works with staff to ensure that there is a favourable
work environment that attracts and retains staff.
2. Risks related to acquisitions
The material risks in relation to past and potential future
acquisitions include:
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Unanticipated litigation or claims against the Group.
Unexpected integration costs and unanticipated
diversion of management time and focus and other
resources leading to an inability to integrate on a
cost-effective and timely basis.
No assurance can be given that any businesses acquired will
achieve levels of profitability or earnings that will justify the
investment made by the Group.
Mitigation
To minimise this risk the Group carries out thorough
due diligence on all potential acquisitions using internal
expertise and external resources where considered
necessary. In the case of all acquisitions appropriate
warranties and indemnities are required from the vendors
and where possible consideration is partly deferred to cover
any potential issues arising from the acquisition. Where
possible insurance cover is arranged to cover past events
in businesses being acquired.
3. Regulatory risks
The Group’s operations are subject to authorisation from
the FCA and the PRA, and supervision from bodies such as
HMRC and The Pensions Regulator. In particular, certain
subsidiaries are subject to the FCA’s and PRA’s regulatory
capital requirements. It is possible that the FCA or the PRA
may increase the regulatory capital requirements applicable
to SIPP providers and change other regulatory requirements
from time to time that may increase the Group’s compliance
costs. HMRC changes to Pension Scheme legislation could
also adversely impact the Group’s business.
Mitigation
To minimise this risk Group compliance personnel closely
monitor all current and proposed regulations to ensure full
compliance and assess the effect of any future changes on
the Group. The Group is well funded and holds regulatory
capital in excess of current needs. Any changes in Pension
Scheme legislation are fully analysed and the Group’s
product offerings adapted to the new legislative
requirements.
4. Interest on client funds
The Group makes a margin on client cash by generating
interest income in excess of a pre-determined percentage
paid to clients. There is a risk that a change in prevailing
interest rates may materially reduce the margins earned in
respect of client monies held.
From time to time, the Group may lock into fixed rates of
interest on client funds that appear attractive. To the extent
that prevailing interest rates increase following the making
of such fixes, the margin to be paid by Curtis Banks to its
client’s increases and the interest turn received by the
Group reduces.
Mitigation
To minimise this risk the Group has a dedicated Treasury
function that continually monitors all client deposits and
the terms of those deposits to ensure any risks from
changing interest rates are minimised. This is partly
achieved by varying the maturity dates of term deposits.
8
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
PRINCIPAL RISKS AND UNCERTAINTIES continued
5. Reliance on Information Technology systems
The Group requires complex and extensive IT systems to
run its business. Delays in any modifications to its systems
or a failure of existing systems could lead to business
disruption with a resultant material adverse impact on the
Group. Significant system enhancements are currently
taking place.
7. Online security
The Group’s software and systems are at risk from computer
viruses, and other breaches of cyber security. While the
Group takes the security of its computer systems very
seriously computer viruses or breaches of cyber security
may cause the Group’s systems to suffer delays or other
service interruptions and result in claims against the Group.
Mitigation
To minimise this risk the Group carries out extensive testing
of all computer systems on a regular basis to ensure security
is maintained and also makes use of the latest technology
and software to ensure there is appropriate cyber security
in place.
Mitigation
To minimise this risk the Group has project teams that
continually evaluate and update current systems, and
implement new or enhanced systems where considered
necessary. A full risk assessment is carried out before
significant changes to systems. Business continuity is
assured by thorough full back up of data and
comprehensive data recovery procedures being in place.
6. Operational Risk and Internal control
systems
The Board believe that the Group has in place appropriate
regulatory, financial, management and internal controls
which are adequate to ensure that the Group meets its
regulatory obligations and its contractual commitments
to clients and other third parties, as well as appropriate
protections against detrimental activities such as fraud,
theft, misuse of funds, money laundering or other
unauthorised or criminal activities. Nevertheless, such
systems may prove inadequate. In the event that such
controls fail this may lead to a material adverse effect and
lead to claims against the Group.
Mitigation
All staff are fully trained and all processes fully documented
to ensure operational risk is at a minimum. The processes
are regularly tested by compliance personnel. There is full
segregation of duties wherever needed to mitigate as much
as possible any detrimental activities.
9
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Strategic report continued
CORPORATE AND SOCIAL RESPONSIBILITY
Sponsorships and partnerships with charities
and community organisations.
The Group actively encourages support of charities and
community organisations and activities. With three regional
offices there is adequate scope to carry this out this
support. In Bristol Curtis Banks are corporate sponsors of
Bristol Museum. All offices regularly hold fund raising events
for local charities or those charities where staff that have
connections or have had need of those charities. As well as
organising and funding the events, Curtis Banks also gives
further support through a contribution to the relevant
charity.
Staff initiatives and interaction
Management engage closely with staff to determine their
needs, and initiatives are implemented where these benefit
the majority of employees. Procedures are in place to
ascertain the views of staff on day to day operational
aspects of the business. These procedures are designed to
ensure the workforce are motivated and happy in their work
environment. Internal surveys are carried out on a regular
basis to assess staff satisfaction levels, and these are now
aligned across the Group. Newsletters containing
information about both group developments and social
events are provided to employees monthly. The Group
provides for formal employee forums at all locations at
which matters or concern to staff can be discussed and
communicated to senior management. Abridged minutes
from senior management meetings are also circulated. The
Group provides a save as you earn share option scheme for
the benefit of all employees to encourage active
participation in the future of the Group.
It is the aim of the group to employ a workforce which
reflects the diverse community within which it operates. In
addition, employees are expected to conduct business so as
to enhance the Group’s reputation and to safeguard against
unfair business practices. The Group strives to provide
a clean and safe working environment to all. Employees
are given regular opportunities to sit down with senior
management to discuss any concerns they have together
with regular team meetings, employee feedback surveys
and social events and this is key to delivering heightened
employee engagement.
Staff Training
Staff are actively encouraged to train and develop through
both structured and ‘on the job’ training above the core
requirements. Staff are supported in these, both financially
10
and through a dedicated training department. The Group
has an approved list of professional qualifications that staff
are sponsored to study towards, to help and motivate them
to progress up though the organisation. All vacancies are
filled internally whenever possible.
Employment of staff with disabilities
The Group’s approach to recruitment, promotion, training or
any other benefit will be on the basis of aptitude and ability
with all employees helped and encouraged to develop their
full potential in order to maximise the efficiency of the
group.
The development of all our employees is integral to our
corporate goals and we look to maximise individual
contribution at all levels by providing appropriate
opportunities for personal and professional development.
The Group aims to establish and maintain a culture that
values lifelong learning and development amongst our
employees. Training functions are equipped to meet any
special needs of individuals with disabilities and
consideration is given to the modification and adaptation
of facilities and provision of special aids or equipment.
The Group actively monitors recruitment, development and
promotion to ensure that the Group provides career
development opportunities to employees with disabilities
and the company remains satisfied that policy and practice
meets and in some cases exceeds statutory requirements.
For those employees who develop a disability during the
course of their employment, every effort is made to ensure
they remain with the Group by finding them suitable
alternative employment, whether through making
appropriate adjustments, retaining or redeployment, or,
where this is not possible, financial provision is made for
such employees through the operation of long-term
sickness cover.
On the behalf of the board
Paul Tarran
Chief Financial Officer
14 March 2018
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance
BOARD OF DIRECTORS
Rupert Curtis, Chief Executive Officer
Rupert has over 40 years’ experience in the SIPP and SSAS industry, making him one of the most
experienced executives in the sector. After working at a senior level in other businesses for many
years, Rupert founded Curtis Banks with Chris Banks in 2009 and has overseen its development into
one of the major SIPP and SSAS operators in the UK.
Paul Tarran, Chief Financial Officer
Paul has over 35 years’ experience in the financial services industry and was one of the founders of
Curtis Banks in 2009. Paul is responsible for the finance function for the Group and in addition
brings a wealth of experience in corporate matters to benefit the strategic development of the
Group. Paul is a Fellow of the Institute of Chartered Accountants in England & Wales.
Will Self, Deputy Chief Executive Officer
Will joined the board in August 2016 and has over 17 years of experience in the SIPP and SSAS
industry, he is also CEO of the Suffolk Life Group. Will was previously Chief Commercial Officer of
the Digital Savings Division (including Cofunds) of L&G and holds an MBA from Cranfield School of
Management.
Chris Macdonald, Non-Executive Chairman and Director
Chris was one of the founders of Brooks Macdonald Group plc where he was CEO until 2017. He is
a qualified Investment Manager and has worked in Investment Management and Financial Services
since the start of his career in 1982 and has won several Investment Management awards.
Chris is Chairman of Catley Lakeman Ltd, is an advisor to a number of Financial Services companies
and is an associate of the Institute of Continuing Professional Development.
11
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance continued
BOARD OF DIRECTORS continued
Bill Rattray, Non-executive Director and Chairman of the Audit Committee
Bill is Chief Financial Officer of Standard Life Aberdeen plc, one of the world’s largest investment
companies. Bill is a Chartered Accountant and brings strong financial skills and extensive
experience of the asset management industry, having previously served as Finance Director of
Aberdeen Asset Management PLC since 1991.
Jules Hydleman, Non-executive Director and Chairman of the Remuneration
Committee
Jules has over 15 years’ experience as a Non-executive Director and Chairman. Currently he holds
Chairmanships of Equip Holdings Limited, Gro-group International Limited and Cornwall Farmers
Co-operative. Previously Jules was Chairman of Innocent Drinks for 10 years from start up until
eventual exit.
12
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance continued
DIRECTORS’ REPORT
The directors present their annual report and consolidated
financial statements for the year ended 31 December 2017.
Business review
The principal activity of the Group continued to be that of
the provision of pension administration services principally
for Self-Invested Personal Pension schemes (“SIPPs”) and
Small Self-Administered Pension Schemes (“SSASs”). The
Group is staffed by experienced professionals who all have
proven track records in this sector.
The Company was incorporated in England & Wales
(registered no. 07934492).
An indication of likely future developments in the business,
corporate and social responsibility, and risk management of
the Group is included in the Strategic Report.
Results and dividends
The consolidated statement of comprehensive income for
the year is set out on page 25.
A second interim dividend in respect of 2016 results of
3p per share totalling £1,608,000 was proposed and paid on
12 May 2017. An interim dividend in respect of 2017 results
of 1.5p per share totalling £804,000 was proposed and paid
on 15 November 2017. A final dividend of 4.75p per share is
proposed and if approved will be paid to shareholders on
the register at the close of business on 27 April 2018. The
shares will be marked ex-dividend on 26 April 2018 and the
dividend paid on 18 May 2018.
Substantial Shareholders
At 1 March 2018 the Company had been notified of the
following interests (excluding directors) representing 3% or
more of its issued share capital:
Number of
Ordinary shares
Percentage
Holding
Liontrust Investment Partners LLP 6,461,674
2,233,445
Canaccord Genuity Group Inc
1,991,338
Pie Funds Management Ltd
12.01%
4.15%
3.70%
Directors
The following directors have held office since 1 January
2017 and up to the date on which the financial statements
were signed:
(Resigned 4 September 2017)
Christopher Banks
Rupert Curtis
Paul Tarran
Will Self
Chris Macdonald
Bill Rattray
Jules Hydleman
Directors’ indemnity
The directors had qualifying indemnity cover totalling
£10,000,000 during the year ended 31 December 2017.
Related party transactions
Details of related party transactions are given in note 32.
Annual General Meeting
The Annual General Meeting of the Company will be held
on 16 May 2018. The Notice of the Meeting is included with
this document and contains further information on the
business to be proposed at the meeting.
Auditors
The auditors, PricewaterhouseCoopers LLP, have indicated
their willingness to continue in office, and a resolution that
they be re-appointed will be proposed at the annual
general meeting.
Going concern
The directors have prepared the financial statements on
a going concern basis, as in their opinion the Group is able
to meet its obligations as they fall due. This opinion is based
on detailed forecasting for the following 12 months based
on current and expected market conditions together with
current performance levels.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance continued
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have prepared the Company and Group financial
statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European
Union and applicable law. Under Company law the directors
must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Company and the Group and the profit or loss
of the Company and the Group for that period.
In preparing the financial statements the directors are
required to:
l
l
l
l
select suitable accounting policies and then apply
them consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether IFRSs as adopted by the European
Union have been followed, subject to any material
departures disclosed and explained in the financial
statements; and
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s and Group’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Company and the Group and enable them to ensure that
the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the
assets of the Company and the Group and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
Statement of disclosure to auditors
So far as the directors are aware, there is no relevant audit
information of which the Group’s auditors are unaware.
Additionally, the directors have taken all the necessary steps
that they ought to have taken as directors in order to make
themselves aware of all relevant audit information and to
establish that the Group’s auditors are aware of that
information.
On the behalf of the board
Rupert Curtis
Chief Executive Officer
14 March 2018
14
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance continued
CORPORATE GOVERNANCE
The Board is committed to achieving high standards of
corporate governance, integrity and business ethics. Under
the AIM Rules the Group is not required to comply with the
provisions of the UK Corporate Governance Code issued by
the Financial Reporting Council in September 2012
(“the Code”). The Board has taken into consideration the
Guidance for Smaller Quoted Companies in the Code
produced by the Quoted Companies Alliance. The Board
will in due course be taking steps to apply the principles of
the Code in so far as they can be applied practically, given
the size of the Group and the nature of its operations.
The Board meets formally every three months and on other
occasions where specific transactions or events dictate the
need. In addition the Board has committees in order to
provide corporate governance and these also meet formally
on a quarterly basis. These committees comprise of only
the three Non-Executive directors with Executive directors
in attendance as required. Each of the committees are
governed by terms of reference that have been approved
by the Board.
Audit Committee
The audit committee is chaired by Bill Rattray with Chris
MacDonald and Jules Hydleman as the other members.
The key duties of the Committee are:
(a)
(b)
(c)
to monitor the integrity of the financial statements of
the Group, including its annual and half yearly reports,
preliminary results’ announcements and any other
formal announcement relating to its financial
performance, reviewing significant financial reporting
issues and judgements which they contain.
to keep under review the adequacy and effectiveness
of the Group’s internal financial controls and internal
control and risk management systems.
to review the adequacy and security of the Group’s
arrangements for its employees and contractors to
raise concerns, in confidence, about possible
wrongdoing in financial reporting or other matters.
(d) meet regularly with the external auditors, including
once at the planning stage before the audit and once
after the audit at the reporting stage to discuss their
remit and any issues arising from the audit. In addition
the Committee will review and approve the annual
audit plan and ensure that it is consistent with the
scope of the audit engagement, having regard to the
seniority, expertise and experience of the audit team.
The Committee will also agree the level of audit fee.
The Audit Committee has met four times during the
year under review with the external auditors being in
attendance at two of those meetings. During the year the
audit plan for the year ended 31 December 2017 was
reviewed and approved by the Audit Committee and
confirmed focus over the valuation of intangible assets and
investment in subsidiaries as key audit matters. In addition
the Committee approved the appointment of KPMG to
provide internal audit services, initially to Suffolk Life
Annuities Limited but with a view to these activities being
extended to the wider Group.
Risk and Compliance Committee
The Risk and Compliance committee is chaired by Chris
MacDonald with Bill Rattray and Jules Hydleman as the
other members.
The key duties of the Committee are:
(a)
(b)
(c)
to consider the Group’s appetite for risk, in particular
review and monitor the process undertaken by the
Group to set and adhere to the Group’s current risk
profile.
to ensure that Group has in place procedures and
mechanisms for the identification and control of all
fundamental risks including financial, legal, regulatory
and operational risks.
In relation to proposed strategic transactions
including acquisitions, disposals or joint ventures and
significant new business streams, products or
business partners, ensure that due diligence of the
proposition has been carried out, in particular on the
risk aspects and implications for the Group’s risk
appetite alongside the commercial and legal aspects.
The Risk and Compliance Committee has met four times
during the year under review and received presentations
from the Compliance Officer of the Group.
Internal control and risk management is monitored by the
Committee by the review of key risk and control
documentation, review of internal compliance reports and
discussions with Executive directors and Compliance staff.
Remuneration Committee
The Remuneration Committee is chaired by Jules Hydleman
with Bill Rattray and Chris MacDonald as the other
members. The key duties of the Committee are:
(a)
To determine and agree with the Board the framework
or broad policy for the remuneration of the Group’s
Chairman and the executive directors including
pension rights and compensation payments.
15
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance continued
CORPORATE GOVERNANCE continued
(b)
(c)
(d)
(e)
In determining such policy, to take into account all
factors which it deems necessary including relevant
legal and regulatory requirements and the provisions
and recommendations of the Corporate Governance
Guidelines for Small and Mid-Size Quoted Companies
published by the Quoted Companies Alliance
(QCA Code) and other relevant guidance.
(g)
(h)
To review the on-going appropriateness and
relevance of the overall remuneration policies in the
Group.
To approve the design of, and determine targets for,
any performance related pay schemes operated by
the Group and approve the total annual payments
made under such schemes.
To review the design of all share incentive plans for
approval by the board and shareholders. For any such
plans, determine each year whether awards will be
made, and if so, the overall amount of such awards,
the individual awards to executive directors, company
secretary and other senior executives and the
performance targets to be used.
To obtain reliable, up-to-date information about
remuneration in other companies of comparable
scale.
It is the policy of the Committee that all appointments
in the Group with a remuneration package of in
excess of £100,000 be reviewed and approved by the
Committee. Any changes to existing employees with
such packages are also reviewed and approved by the
Committee.
The Remuneration Committee has met four times during
the year under review. At those meetings the Committee
has considered various types of share option and bonus
schemes to be introduced by the Group to incentivise
employees. The Committee recommended to the Board the
introduction of an Executive Bonus Scheme and Long Term
Incentive Plan for all senior staff. The details of these
schemes, as far as they impact Directors, are set out in the
Directors remuneration report below. In addition share
options to retain certain key staff were recommended to
the Board as well as a further offering in 2017 to all staff of
a Save As You Earn Share option Scheme.
All these recommendations were approved by the Board.
The committee continuing to evaluate other incentive
based share option schemes for all employees and directors
and additional grants under the existing schemes.
(f ) Within the terms of the agreed policy and in
consultation with the Chairman and/or Chief
Executive as appropriate, to determine the total
individual remuneration package of the Chairman,
each executive director, the company secretary and
other senior executives including bonuses, incentive
payments and share options or other share awards.
16
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance continued
DIRECTORS’ REMUNERATION REPORT
Remuneration Policy
It is the policy of the remuneration committee to reward executive directors with packages that will retain, incentivise and
motivate. The packages are designed to be market competitive and are reviewed annually.
Current remuneration packages for Executive directors comprise:
(a)
(b)
(c)
(d)
(e)
Basic Annual salary
Pension contributions equivalent to 3% of basic salary
Benefits in kind comprising principally life assurance and car allowance
Performance based Annual bonus
Award of shares under a performance based Long Term Incentive Plan
The performance based annual bonus scheme provides for an Executive Director to earn a maximum annual bonus
equivalent to 100% of their basic annual salary. A percentage of the annual bonus entitlement is based on the financial
performance of the Group against budgets approved by the Board and a percentage based on individual performance.
Awards based under the Long Term Incentive Plan are in shares in the Company at nil value limited to maximum of 100%
of the Executive Directors salary in any one year and calculated using the market value of the shares in the Company at the
date of grant. The percentage vesting of the shares depends of the performance of the fully diluted Earnings per Share
(“EPS”) of the Group, based on the adjusted operating profit of the Group. To fully vest the average increase of the adjusted
EPS over a three year period has to average more than 8% per annum plus the annual increase in the Retail Price Index in the
respective year. There is partial vesting for increases of more than 2% plus the annual increase in the Retail Price Index. After
the shares vest the Executive Director is required to hold these for a minimum of two years before sale. In the event of the
Executive ceasing employment with the Company during the vesting period, except under such conditions as retirement or
illness, the grant of shares will lapse.
The Remuneration Committee continually reviews these elements of the Executive Remuneration packages to ensure that
appropriate annual and long term incentives are in place and that management’s interests are aligned with those of
shareholders.
Notice periods for Executive Directors
Service Agreements for Executive Directors are terminable by either party on twelve months written notice, with the Group
having the option to place the Executive on garden leave or to make a payment in lieu of notice.
The Service Agreements include restrictive covenants following the termination of employment for the period of six months
as regards non-competition and solicitation of staff and clients.
Non-Executive Directors
The Executive Directors are responsible for determining the fees of the Non-Executive Directors who do not receive
pension or other benefits from the Group. Service Agreements for Non-Executive Directors are terminable by either party on
three months written notice.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance continued
DIRECTORS’ REMUNERATION REPORT continued
Directors’ remuneration
Director
Christopher Banks*
Rupert Curtis
Paul Tarran
Will Self
Chris Macdonald
Bill Rattray
Jules Hydleman
Total
Basic salary
and fees
Pension
Bonus contributions
Benefits
86,667
–
279,000
182,757
210,000
133,260
193,375
133,260
66,500
50,000
50,000
–
–
–
–
8,400
6,300
6,531
–
–
–
5,333
6,000
7,500
7,244
–
–
–
Total emoluments
2017
£
2016
£
92,000
138,000
476,157
265,580
357,060
204,920
340,410
66,500
50,000
50,000
74,515
50,000
37,500
37,500
935,542
449,277
21,231
26,077
1,432,127
808,015
* resigned 4 September 2017.
Directors’ shareholdings
As at 31 December 2017, the interest of the Directors in the issued shares of the Company, as shown in its register
maintained under section 809 (2) and (3) of the Companies Act 2006 were:
Director
Christopher Banks*
Rupert Curtis
Paul Tarran
Chris Macdonald
Bill Rattray
Jules Hydleman
2017
2016
Number
%
Number
20,516,743
38.13
20,516,743
7,347,684
3,803,758
7,894
7,894
51,973
13.66
7,347,684
7.07
0.01
0.01
0.10
3,803,758
7,894
7,894
51,973
%
38.28
13.71
7.10
0.01
0.01
0.10
The following share options are currently held by Directors under the Long Term Incentive Plan (“LTIP”):
Number of
shares under
option at
31 December
2016
Granted
during the
year
Number of
shares under
option at
31 December
2017
Date of
grant
Exercise
price
Expiry date
Director
Rupert Curtis
26 October 2017
Paul Tarran
26 October 2017
Will Self
26 October 2017
–
–
–
–
100,174
100,174
0p 26 October 2020
73,043
73,043
73,043
73,043
246,260
246,260
0p 26 October 2020
0p 26 October 2020
18
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Governance continued
DIRECTORS’ REMUNERATION REPORT
The following share options are currently held by Directors under the Company Share Option Plan (“CSOP”):
Number of
shares under
option at
31 December
2016
Date of
grant
14 September 2016
15 December 2016
26 June 2017
11,235
535,996
–
547,231
Number of
shares under
option at
31 December
2017
11,235
535,996
535,996
1,083,227
Granted
during the
year
–
–
535,996
535,996
Director
Will Self
Will Self
Will Self
Exercise
price
Expiry date
267p
14 March 2018
201p 15 December 2019
260p
25 March 2020
Further information about the CSOP and LTIP share option schemes are contained within note 25.
Jules Hydleman
Chairman of the Remuneration Committee
14 March 2018
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Independent auditors’ report to the members of
Curtis Banks Group PLC
Report on the audit of the financial statements
Opinion
In our opinion, Curtis Banks Group PLC’s Consolidated Financial Statements and Company Financial Statements (the
“financial statements”):
•
•
•
give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2017 and of the
Group’s profit and the Group’s and the Company’s cash flows for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union and, as regards the Company’s
financial statements, as applied in accordance with the provisions of the Companies Act 2006; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Consolidated Financial Statements (the
“Annual Report”), which comprise: the Consolidated and Company Statement of Financial Position as at 31 December 2017;
the Consolidated Statement of Comprehensive Income; the Consolidated and Company Statement of Cash Flows and the
Consolidated and Company Statement of Changes in Equity for the year then ended; and the notes to the financial
statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
Our audit approach
Context
Curtis Banks Group PLC is an administrator of self-invested pension products in the United Kingdom. There have been no
significant changes in the business impacting the current financial year.
Overview
• Overall Group materiality: £537,000, based on 5% of profit before tax, amortisation and
non-recurring items.
Materiality
• Overall Company materiality: £367,000, based on 0.9% of net assets.
Audit scope
Areas of
focus
• The scope of our audit and the nature, timing and extent of audit procedures performed were
determined by our risk assessment, the financial significance of components and other
qualitative factors including history of misstatement through fraud or error.
• We concluded that the three principal trading entities (Curtis Banks Limited, Suffolk Life Pensions
Limited and Suffolk Life Annuities Limited) and the Group holding company (Curtis Banks Group
PLC) to be significant components for the Group audit and as such we performed audit
procedures on each of these components.
• Carrying value of intangible assets (Group)
• Carrying value of investment in subsidiaries (Company)
20
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Independent auditors’ report to the members of
Curtis Banks Group PLC continued
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether
there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Carrying value of intangible assets (Group)
The Group financial statements include intangible
assets arising from the acquisition of Suffolk Life
Group Limited during 2016, the acquisitions of client
portfolios and capitalised costs in relation computer
software.
The total intangible assets as of the year-end amount
to £44,593k within the consolidated Group accounts.
An impairment loss is recognised if the carrying
value of an asset is less than its recoverable value.
The recoverable amount is determined by estimating
the present value of future cash flows that are
expected to be derived from the assets.
We focused our audit procedures on the
assumptions adopted by management as part of
their impairment assessments.
Refer to page 15 (Corporate governance), page 32
(Accounting policies) and page 47 (Note 12 to the
financial statements).
Carrying value of investment in subsidiaries
(Company)
The Company financial statements include an
investment in subsidiary undertakings. This
investment is held at cost and must be impaired if
the recoverable amount falls below this value.
The assumptions used in the impairment assessment
can be subjective in particular, the assessment is
sensitive to changes in forecast net cash
contributions and discount rate used.
In addition, the Company made a capital
contribution in an Employee Benefit Trust (‘EBT’)
which purchases and holds shares in Curtis Banks
Group PLC for the employee share schemes.
Refer to page 15 (Corporate governance), page 32
(Accounting policies) and page 49 (Note 15 to the
financial statements)
The audit procedures we have performed to address this key audit matter are as
follows:
– We assessed the key assumptions which management have adopted in their
impairment assessment. This included:
• the relevant future expected cash flows from the business that are used to
support software assets and goodwill;
• the revenue and margin forecasts for each of the customer books including their
profit margins; and
• the discount rate assumption used in these calculations.
– We performed a sensitivity analysis over the assumptions used; and
– We assessed management’s forecasting ability by comparing previous forecasts to
actual past performance.
From our work carried out we found that the assumptions used were supported by the
evidence we obtained.
The audit procedures we have performed to address this key audit matter are as
follows:
– We considered whether the future forecast net cash flows arising within Suffolk Life
Group Limited were reasonable;
– We considered the discount rate assumption used in these calculations; and
– We reviewed management’s forecast of the EBT’s cash flows and future profitability.
We did this by comparing the cost of the shares purchased by the EBT to the
exercise price of existing employee share options.
From our work carried out we found that the assumptions used were supported by the
evidence we obtained.
21
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Independent auditors’ report to the members of
Curtis Banks Group PLC continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and
controls, and the industry in which they operate.
The scope of our audit and the nature, timing and extent of audit procedures performed were determined by our risk
assessment, the financial significance of components and other qualitative factors including history of misstatement
through fraud or error.
We concluded that the three principal trading entities (Curtis Banks Limited, Suffolk Life Pensions Limited and Suffolk Life
Annuities Limited) and the Group holding company (Curtis Banks Group PLC) are significant components for the Group audit
and as such we performed audit procedures on each of these components.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Company financial statements
Overall materiality £537,000 £367,000
How we determined it 5% of profit before tax, amortisation and 0.9% of net assets.
non-recurring items.
Rationale for the materiality We have selected this benchmark because it We consider the net assets of the Company to
benchmark is considered to be a key performance be an appropriate benchmark as the entity is
indicator of the Group by the Directors and principally a holding company and does not itself
to be a reflection of the underlying trade. Profit measures are therefore less relevant
performance of the trading business. to the financial reporting for this entity.
We have applied a higher materiality of £36.6m solely for the purpose of identifying and evaluating the effect of
misstatements that are likely only to lead to a reclassification between line items within the Statement of Financial Position
or the Statement of Comprehensive Income.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was between £99,000 and £510,000. Certain components
were audited to a local statutory audit materiality that was also less than our overall Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£27,000 (Group audit), £18,000 (Company audit) and £1.8m (in relation to the reclassifications described above) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Group’s and Company’s ability to continue to adopt the going concern basis of accounting for a period
of at least twelve months from the date when the financial statements are authorised for issue.
•
•
22
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Independent auditors’ report to the members of
Curtis Banks Group PLC continued
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s
and Company’s ability to continue as a going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also
to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report for the year ended 31 December 2017 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of
the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities set out on page 20, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give
a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
23
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Independent auditors’ report to the members of
Curtis Banks Group PLC continued
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
•
•
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
certain disclosures of directors’ remuneration specified by law are not made; or
the Company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Sue Morling (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
14 March 2018
24
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Financial Statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2017
Before
Year ended 31 December 2016
Before
Group
Notes
amortisation Amortisation
and non-
recurring
costs
£’000
and non-
recurring
costs
£’000
amortisation Amortisation
and non-
recurring
costs
£’000
and non-
recurring
costs
£’000
Operating revenue
Policyholder investment returns
Revenue
Administrative expenses
Non-participating investment
21
4
43,573
343,009
386,582
(32,336)
contract expenses
21
(34,560)
(308,449)
(343,009)
11,237
–
–
11,237
67
(562)
10,742
(1,565)
Changes in provisions:
Non-participating investment
contract liabilities
Policyholder total expenses
Operating profit before
amortisation and
non-recurring costs
Non-recurring costs
Amortisation
Operating profit
Finance income
Finance costs
Profit before tax
Tax
Total comprehensive income
for the year
Attributable to:
Equity holders of the company
Non-controlling interests
Earnings per ordinary share on
net profit
Basic (pence)
Diluted (pence)
6
5
9
8
10
11
11
Total
£’000
43,573
343,009
386,582
29,731
261,639
291,370
(32,336)
(22,403)
(34,560)
(18,268)
(308,449)
(243,371)
(343,009)
(261,639)
11,237
(3,754)
(1,131)
6,352
67
(562)
5,857
(625)
7,328
–
–
7,328
117
(381)
7,064
(1,126)
–
–
–
–
–
–
–
–
(3,754)
(1,131)
(4,885)
–
–
(4,885)
940
Total
£’000
29,731
261,639
291,370
(22,403)
(18,268)
(243,371)
(261,639)
7,328
(1,690)
(884)
4,754
117
(381)
4,490
(656)
–
–
–
–
–
–
–
–
(1,690)
(884)
(2,574)
–
–
(2,574)
470
9,177
(3,945)
5,232
5,938
(2,104)
3,834
5,222
10
5,232
9.75
9.26
3,829
5
3,834
7.23
7.02
The consolidated statement of comprehensive income has been prepared on the basis that all operations are continuing
operations.
The notes on pages 32 to 66 form part of these financial statements.
25
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Financial Statements continued
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Group
ASSETS
Non-current asset
Intangible assets
Investment property
Property, plant and equipment
Investments
Deferred tax asset
Current assets
Trade and other receivables
Cash and cash equivalents
Current tax asset
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Deferred income
Borrowings
Provisions
Deferred consideration
Current tax liability
Non-current liabilities
Borrowings
Provisions
Deferred consideration
Non-participating investment contract liabilities
Deferred tax liability
Total liabilities
Net assets
Equity attributable to owners of the parent
Issued capital
Share premium
Equity share based payments
Treasury shares
Retained earnings
Non-controlling interest
Total equity
The notes on pages 32 to 66 form part of these financial statements.
26
As at 31 December
2016
2017
£’000
£’000
Notes
12
13
14
15
22
17
18
19
20
22
20
22
21
22
23
24
24
24
24
26
44,593
1,206,298
1,148
2,032,293
124
3,284,456
16,687
437,849
310
454,846
3,739,302
12,658
24,374
29,444
641
341
–
67,458
64,584
259
454
3,561,929
–
3,627,226
3,694,684
44,618
269
33,451
731
(250)
10,403
44,604
14
44,618
47,442
1,149,135
1,073
1,924,913
–
3,122,563
17,523
447,510
–
465,033
3,587,596
12,138
21,993
38,329
–
641
504
73,605
77,194
–
821
3,394,404
42
3,472,461
3,546,066
41,530
268
33,425
239
–
7,589
41,521
9
41,530
Curtis Bank pp11-31.qxp 18/04/2018 15:59 Page 27
Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Financial Statements continued
COMPANY STATEMENT OF FINANCIAL POSITION
Company
ASSETS
Non-current assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Non-current liabilities
Borrowings
Total liabilities
Net assets
Equity attributable to owners of the parent
Issued capital
Share premium
Equity share based payments
Retained earnings
Total equity
Approved by the Board and authorised for issue on 14 March 2018.
Paul Tarran
Chief Financial Officer
Company Registration No. 07934492
The notes on pages 32 to 66 form part of these financial statements.
As at 31 December
2016
2017
£’000
£’000
Notes
15
17
18
19
20
20
23
24
24
24
57,266
57,266
56,524
56,524
15
2,318
2,333
41
458
499
59,599
57,023
108
3,158
3,266
14,508
14,508
17,774
41,825
41
3,108
3,149
17,667
17,667
20,816
36,207
269
268
33,451
33,425
731
7,374
239
2,275
41,825
36,207
27
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Financial Statements continued
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
share Non-
Issued Share based Treasury Retained controlling Total
capital premium payments shares earnings Total interest equity
Group £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2016 225 7,146 97 – 6,163 13,631 9 13,640
Total comprehensive income
for the year – – – – 3,829 3,829 5 3,834
Share based payments – – 142 – – 142 – 142
Ordinary shares issued 43 26,279 – – – 26,322 – 26,322
Ordinary dividends declared
and paid – – – – (2,403) (2,403) (5) (2,408)
At 31 December 2016 268 33,425 239 – 7,589 41,521 9 41,530
Total comprehensive income
for the year – – – – 5,222 5,222 10 5,232
Share based payments – – 492 – – 492 – 492
Ordinary shares bought by EBT – – – (250) – (250) – (250)
Ordinary shares issued 1 26 – – – 27 – 27
Ordinary dividends declared
and paid – – – – (2,408) (2,408) (5) (2,413)
At 31 December 2017 269 33,451 731 (250) 10,403 44,604 14 44,618
The notes on pages 32 to 66 form part of these financial statements.
28
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Financial Statements continued
COMPANY STATEMENT OF CHANGES IN EQUITY
Issued
capital
£’000
Share
premium
£’000
Equity share
based
payments
£’000
Retained
earnings
£’000
Company
At 1 January 2016
Total comprehensive income for the year
Share based payments
Ordinary shares issued
Ordinary dividends declared and paid
225
7,146
–
–
43
–
–
–
26,279
–
At 31 December 2016
268
33,425
Total comprehensive income for the year
Share based payments
Ordinary shares issued
Ordinary dividends declared and paid
–
–
1
–
–
–
26
–
At 31 December 2017
269
33,451
Total
£’000
9,496
2,650
142
26,322
(2,403)
36,207
7,507
492
27
(2,408)
41,825
97
–
142
–
–
239
–
492
–
–
731
2,028
2,650
–
–
(2,403)
2,275
7,507
–
–
(2,408)
7,374
The notes on pages 32 to 66 form part of these financial statements.
29
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Financial Statements continued
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation
Amortisation and impairments
Interest expense
Share based payment expense
Fair value gains on financial investments
Additions of financial investments
Disposals of financial investments
Fair value gains on investment properties
Increase in liability for investment contracts
Changes in working capital:
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Taxes paid
Net cash flows received from operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Investment in employee benefit trust
Receipts from sale of property, plant and equipment
Net cash flows from acquisitions
Net cash flows (used in)/received from investing activities
Cash flows from financing activities
Equity dividends paid
Net proceeds from issue of ordinary shares
Net increase/(decrease) in borrowings
Interest paid
Net cash (used in)/received from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Group
Year ended
31 December
2017
£’000
2016
£’000
5,857
4,490
570
3,126
554
492
(156,046)
(493,638)
542,304
(44,074)
167,525
(433)
4,193
(999)
29,431
519
884
387
142
(199,681)
(328,511)
390,603
25,038
156,175
(6,447)
11,024
(667)
53,956
(277)
(1,533)
(161,923)
(101,473)
(250)
148,191
(669)
(14,928)
(2,413)
27
(21,274)
(504)
(24,164)
–
85,758
357,821
340,573
(2,408)
26,322
21,848
(411)
45,351
(9,661)
439,880
447,510
437,849
7,630
447,510
The Group’s Consolidated Statement of Cash Flows includes all cash and cash equivalent flows, including £412,175,567
(2016: £426,054,538) relating to policyholder non-participating investment contracts.
The notes on pages 32 to 66 form part of these financial statements.
30
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Financial Statements continued
COMPANY STATEMENT OF CASH FLOWS
Company
Cash flows from operating activities
Profit before tax
Adjustments for:
Interest expense
Changes in working capital:
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash flows received from operating activities
Cash flows from investing activities
Net cash flows from acquisitions
Investment in employee benefit trust
Additional investment in subsidiaries
Net cash flows used in investing activities
Cash flows from financing activities
Equity dividends paid
Net proceeds from issue of ordinary shares
Net (decrease)/increase in borrowings
Interest paid
Net cash (used in)/received from financing activities
Net increase/(decrease) in cash and cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Company
Year ended
31 December
2017
£’000
2016
£’000
7,507
2,650
554
498
38
54
475
(12)
8,153
3,611
–
(45,000)
(250)
–
–
(4,000)
(250)
(49,000)
(2,408)
(2,403)
27
(3,158)
(504)
(6,043)
1,860
458
2,318
26,322
17,510
(414)
41,015
(4,374)
4,832
458
The notes on pages 32 to 66 form part of these financial statements.
31
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements
Corporate information
1.
Curtis Banks Group PLC (“the Company”) is a public limited company incorporated and domiciled in England and Wales,
whose shares are publicly traded on the AIM market of the London Stock Exchange PLC. The financial statements are
presented in pounds sterling, with all values rounded to the nearest thousand pounds except when otherwise indicated.
The financial statements were authorised for issue in accordance with a resolution of the Directors on 14 March 2018.
2.
Significant accounting policies
Basis of preparation
The financial statements comprise the financial statements of the Company and its subsidiaries (“the Group”) as at
31 December each year. The nature of the Group’s operations and its principal activities are set out in the Chief Executive’s
review.
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as
adopted by the European Union and in accordance with the IFRS Interpretations Committee (“IFRIC”) interpretations.
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings up to
31 December 2017.
The profits and losses of the Company and its subsidiaries are consolidated from the date of acquisition using the acquisition
method of accounting.
The trading subsidiaries of Curtis Banks Group PLC as at 31 December 2017 and 31 December 2016 were Curtis Banks
Limited, Suffolk Life Pensions Limited, Suffolk Life Annuities Limited and Curtis Banks Investment Management Limited.
Suffolk Life Annuities Limited provides SIPPs through non-participating individual insurance contracts. As such, it is regarded
as an insurance company for the purposes of regulatory and statutory reporting. Due to Suffolk Life Annuities Limited’s
status as an insurance company, the consolidated results for the whole Group include insurance policyholder assets,
liabilities and returns.
Certain trading subsidiaries of Curtis Banks Group PLC hold the entire issued share capital of a large number of non-trading
trustee companies. The accounts of these companies have not been consolidated into the Group accounts as they would be
immaterial to the Group’s position. All of these companies are nominee companies for the pension products administered
by the trading subsidiaries of Curtis Banks Group PLC and have been dormant throughout the period and are expected to
remain dormant.
Going concern
The Group is required to assess whether it has sufficient resources to continue its operations and to meet its commitments
for the foreseeable future. The directors have prepared the financial statements on a going concern basis, as in their opinion
the Group is able to meet its obligations as they fall due. This opinion is based on detailed forecasting for the following
12 months based on current and expected market conditions together with current performance levels.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing
control, potential voting rights currently exercisable are taken into account. The financial statements of trading subsidiaries
are included in the consolidated financial statements from the date that control commences until the date that control
ceases. The accounting policies of the subsidiaries have been changed when necessary to align them with the policies
adopted by the Group.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Business Combinations
Acquisition of subsidiaries and businesses are accounted for using the acquisition method. The cost of the business
combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange of control of the acquiree, plus any costs directly
attributable to the business combination. Any deferred consideration is included as part of the initial fair value, with
a corresponding liability being recognised. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet
conditions for recognition under IFRS 3 Business Combinations are recognised at their fair value at the acquisition date.
Segment Reporting
IFRS 8 Operating Segments requires segments to be identified on the basis of internal reports that are regularly reviewed by
the Chief Operating Decision Maker (“CODM”).
All results are viewed as one by the CODM for the purposes of management decisions. This is because all operations are
conducted within the UK and all material operations are of the same nature and share the same economic characteristics
including a similar customer base and nature of product and services (i.e. pensions administration). As a result, the Group
only has one reportable segment being pensions administration, the results of which are included within the financial
statements.
Foreign Currencies
The consolidated financial statements are presented in Pound Sterling which is the Group’s functional and presentational
currency. All foreign currency transactions and foreign currency balances relate to policyholder assets and liabilities.
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the Statement of
financial position date and the gains or losses on translation are included in the consolidated statement of comprehensive
income.
All foreign exchange gains or losses arising on policyholder transactions and balances have a net impact of £nil on the
consolidated statement of comprehensive income due to the legal structure of policyholder assets and liabilities as further
described in the accounting policy for non-participating investment contracts.
Pensions
The Group contributes to defined contribution schemes for the benefit of its employees. Contributions payable are charged
to the consolidated statement of comprehensive income in the year they are payable.
Research and development
Research expenditure is written off to the consolidated statement of comprehensive income in the year in which it is
incurred. Development expenditure is written off in the same way unless the directors are satisfied as to the technical,
commercial and financial viability of individual projects. In this situation, the expenditure is deferred and amortised over
a four year period during which the Group is expected to benefit.
Non-participating investment contracts
The Group’s long term business includes unit linked Self-Invested Personal Pension policies, also referred to as the
‘Policyholder Business’, wholly administered by Suffolk Life Annuities Limited, a subsidiary company. The liability of the Group
towards its policyholders is exactly equal to the value of policyholder assets held at all times.
Non-participating investment contract liabilities are measured at fair value by reference to the value of the underlying net
asset values of the assets held to cover investment contracts at the Statement of Financial Position date.
For non-participating investment contracts, premiums are not included in the consolidated statement of comprehensive
income but are reported as contributions to non-participating investment contract liabilities in the consolidated statement
of financial position. Investment income in respect of non-participating investment contracts are accounted for in
‘Investment return’. Investment income and investment return includes dividends, rental and interest income.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Non-participating investment contracts continued
Expenses and charges in respect of non-participating investment contracts are accounted for in ‘non-participating
investment contract expenses’. These expenses include investment management fees and interest payable.
Claims are not included in the consolidated statement of comprehensive income but are deducted from non-participating
investment contract liabilities.
Transfers out, annuity purchases and drawdowns are accounted for when the associated assets have been transferred out of
the Company. Acquisition costs comprising direct and indirect costs arising from the conclusion of non-participating
investment contracts are expensed on receipt of the inwards premium. There are no deferred acquisition costs.
Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase
or sell the assets, at their fair value less transaction costs. Investments carried at fair value are measured using a fair value
hierarchy, with values based on quoted bid prices where available.
Investment property held within non-participating investment contracts comprises land and buildings which are held for
long term rental yields and capital growth. It is carried at fair value with movements recognised in the consolidated
statement of comprehensive income.
Unquoted investments in property vehicles and direct holdings in investment property are valued by independent valuers
on the basis of open market value as defined in the appraisal and valuation manual of the Royal Institute of Chartered
Surveyors or by reference to the movement in a property index from the last purchase or valuation date. Valuation
techniques may include discounted cash flow calculations using net current rent, and estimated and terminal values; they
may also include yield methodology calculations using market rental values capitalised with a market capitalisation rate.
Both of these are then further validated against market transactions to produce a final valuation.
Revenue recognition
Operating revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary
course of the Group’s activity. Revenue is shown net of value added tax (“VAT”), returns, rebates and discounts and after
eliminating sales within the Group. The Group recognises revenue when the amount of the revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for
the Group’s activity as described below.
l
l
l
l
Set up, and initial transaction fees, as well as ad hoc transaction fees charged in relation to pension schemes are
recognised as the work is completed, net of VAT.
Annual renewal fees are invoiced in advance and spread, net of VAT, evenly over the year to which they relate, and held
as deferred income at the year end where the annual fee period spans multiple accounting periods.
Recurring fees which are received in arrears, including property annual fees and property acquisition fees, are accrued
over the period in which services are provided.
Any interest received in excess of that payable to clients is retained by the Group and is included within revenue. Interest
income receivable by the Group is recognised as it accrues.
Policyholder revenue comprises investment income and investment gains and losses on non-participating investment
contracts. Investment income includes dividends, rental and interest income. Dividends and distributions from collective
investment schemes are recognised on the date on which shares are quoted ex-dividend. Interest and rental income is
recognised on an accruals basis.
Investment gains and losses in the consolidated statement of comprehensive income comprise realised and unrealised
gains and losses. Realised gains and losses are calculated as the difference between the net sale proceeds and the original
cost or, if previously re-valued, the valuation at the last statement of financial position date. Unrealised gains and losses on
investments are calculated as the difference between the current valuation and the original cost or, if previously re-valued,
the valuation at the last statement of financial position date.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Intangible assets – Client Portfolios
Client portfolios are included in the statement of financial position at cost to the Group less accumulated amortisation and
provisions for impairment.
The carrying value of client portfolios is reviewed for impairment if events or circumstances change and indicate that the
carrying values may not be recoverable. In this event the values are written down to the recoverable amount. The carrying
value of client portfolios is also reviewed for impairment annually at each reporting date.
Client portfolios are amortised on a straight line basis over their estimated useful life of 20 years.
Intangible assets – Computer Software
Computer software is included in the statement of financial position at cost to the Group less accumulated amortisation and
provisions for impairment. The carrying value of computer software is reviewed for impairment if events or circumstances
change and indicate that the carrying values may not be recoverable. In this event the values are written down to the
recoverable amount. The carrying value of computer software is also reviewed for impairment annually at each reporting
date. Computer software is amortised on a straight line basis over its estimated useful life of 4 years.
Property, plant and equipment
Property, plant and equipment are included in the statement of financial position at cost to the Group less accumulated
depreciation and provisions for impairment.
The carrying value of property, plant and equipment is reviewed for impairment if events or circumstances change and
indicate that the carrying values may not be recoverable. In this event the values are written down to the recoverable
amount.
Property, plant and equipment is depreciated on a straight line basis at rates sufficient to write off the cost less estimated
residual values of individual assets over their estimated useful lives. The depreciation rates for the principal categories of
assets are as follows:
Leasehold improvements 25% straight line
Computer equipment 25% straight line
Office equipment 25% straight line
Fixtures & fittings 25% straight line
Motor vehicles 25% straight line
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets
to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the
asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of
the cash generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset for which the estimates of future cash flows have been
adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment
loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income
immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Investments
Non-current asset investments excluding those held under non-participating investment contracts are stated at cost less
provision for diminution in value.
Financial assets
Financial assets held under non-participating investment contracts are categorized either as fair value through profit and
loss, or as loans and receivables. All other financial assets are classified in the category of loans and receivables. The
classification depends on the purposes for which these assets were acquired. Management takes decisions concerning the
classification of its financial assets at initial recognition and reviews such classification for reliability at each reporting date.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for maturities greater than 12 months after the statement of
financial position date. These are classified as non-current assets. The Group’s financial assets comprise “non-current asset
investments”, “investment property”, “trade and other receivables” and “cash and cash equivalents” in the statement of
financial position.
Trade receivables
Trade receivables, defined as loans and receivables in accordance with IAS 39 ‘Financial Instruments: Recognition and
Measurement’, are recorded initially at fair value and are subsequently measured at amortised cost.
Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is
expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If
not, they are presented as non-current assets.
A provision for impairment of trade receivables is established when there is evidence that the Group will not be able to
collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference
between the assets’ carrying amount and the present value of future cash flows discounted at the effective interest rate. The
movement in the provision is recognised in the consolidated statement of comprehensive income.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank overdrafts.
Financial liabilities – Trade and other payables
Trade and other payables are recognised and initially measured at cost, due to their short term nature. All of the Group’s
trade payables are non-interest bearing.
Financial liabilities - Borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less attributable transaction
costs. After initial recognition interest bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest method.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Current and deferred income tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
consolidated statement of comprehensive income, because it excludes items of income or expense that are taxable or tax
deductible in other years and it further excludes items that are never taxable or tax deductible. The Group’s liability for
current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Current and deferred income tax continued
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the statement of financial position liability method. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised or the liability is
settled. Deferred tax is charged or credited in the profit or loss, except when it relates to items credited or charged in other
comprehensive income directly to equity, in which case the deferred tax is also dealt with in other comprehensive income.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be
made. If the effect is material, provisions are determined by discounting the expected future cash flows at an appropriate
pre-tax discount rate.
Non-recurring costs
Non-recurring costs are classified as such when the nature of the expense is significant and expected to be a ‘one off’
business event or activity that does not form part of usual day to day operations. Examples of such costs include acquisitions,
office relocations and restructuring. Where costs are classified as non-recurring due to their nature, these are described in full
within a note to the financial statements.
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of
any non-controlling interest in the acquiree and the acquisition and the acquisition date fair value of any previous equity
interest in the acquiree over the fair value of the identifiable net assets acquired. Goodwill impairment reviews are
undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. Any
impairment is recognised immediately as an expense and is not subsequently reversed.
Leases
Leases of property, plant and equipment which transfer substantially all the risks and rewards of ownership to the Group are
classified as finance leases. Finance leases are classified as a financial liability and measured at amortised cost. Finance leases
are capitalised at the inception of the lease at the lower of the fair value of the leased property, plant and equipment and the
present value of the minimum lease payments and depreciated over the term of the lease. The resulting lease obligations are
included in liabilities. Lease payments are apportioned between finance charges and reduction of the lease obligation so as
to achieve a constant rate of interest on the remaining balance of the liability.
All other leases are classified as operating leases. Rentals payable under operating leases, net of lease incentives, are charged
to the consolidated statement of comprehensive income on a straight-line basis over the year of the lease. Where property
lease contracts contain guaranteed minimum incremental rental payments, the total committed cost is determined and is
amortised on a straight-line basis over the life of the lease.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Share based payments
Curtis Banks Group PLC operates several share schemes under which certain employees of the Group receive part of their
remuneration for the financial year in the form of options to purchase shares in Curtis Banks Group PLC, the ultimate parent
Company.
These schemes are accounted for as equity-settled share-based payment transactions in accordance with IFRS 2.
The share options granted become exercisable at varying future dates. If certain conditions are met, following the vesting
period, employees and third parties will be eligible to exercise their option at an exercise price determined on the date the
share options are granted.
The fair value of Curtis Banks Group PLC’s share options is determined at the date of grant. This fair value is calculated by
applying the Black Scholes model. The model utilises inputs for the risk free rate, expected volatility in share price, dividend
yield and the current share price at fair value, which are factors determined on the date the share options are granted.
The share based payment charge to the consolidated statement of comprehensive income is calculated based on the
Group’s estimate of the number of options that will eventually vest.
The resulting staff costs under the share schemes are recognised pro rata in the consolidated statement of comprehensive
income to reflect the services rendered as consideration during the vesting period.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group
The following standards, interpretations and amendments to existing standards have been published by the IASB but are yet
to be endorsed by the EU or are not effective for the period presented in the financial statements and the Group has
decided not to early adopt them.
Standard
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 17 Insurance Contracts
IFRIC 22 Foreign Currency Transactions and Advance Consideration
IFRIC 23 Uncertainty over Income Tax Treatments
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
Amendments to IAS 40 Transfers of Investment Property
Amendments to IFRS 9 Prepayment Features with Negative Compensation
Amendments to IAS 28 Long-term Interests in Associates & Joint Ventures
Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Amendments to IFRS 2 Share based payments
Annual Improvements to IFRSs 2014-2016 Cycle
Effective date, annual period
beginning on or after
1 January 2018
1 January 2021
1 January 2018
1 January 2019
1 January 2018
1 January 2019
1 January 2018
1 January 2019
1 January 2019
1 January 2018
1 January 2018
1 January 2018
Except for IFRS 16, the directors anticipate that the adoption of these standards and interpretations and amendments in
future periods will have no material impact on the financial statements of the Group. The potential impact of IFRS 16 is
currently being evaluated. The Group is required to adopt IFRS 15 and IFRS 9 from 1 January 2018 and the estimated impact
of the adoption of these standards on the Group’s equity as at 1 January 2018 is £nil. The following specific considerations
have been made around the impact of IFRS 15 and IFRS 9:
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group continued
IFRS 15
IFRS 15 introduces a new five stage model for the recognition of revenue from contracts with customers replacing the
previous Standards IAS 11 Construction Contracts, IAS 18 Revenue and related IFRIC and SIC Interpretations. The reason for
clarifying the principles for recognising revenue are to:
–
–
–
–
–
Remove inconsistencies and weaknesses in previous revenue requirements
Provide a more robust framework for addressing revenue issues
Improve comparability of revenue recognition practices across entities
Provide more useful information to users of financial statements through improved disclosure requirements
Simplify the preparation of financial statements by reducing the number of requirements to which entities must refer
The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those
goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:
–
–
–
–
–
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Application of this model will depend on the facts and circumstances presented in a contract with a customer and will
require the exercise of judgement.
The Standard also includes a comprehensive set of disclosure requirements that will result in an entity providing users of
financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and
cash flows arising from the entity’s contracts with customers.
The Group has assessed the impact of applying this model and determined the impact on equity as at 1 January 2018 is £nil
as it believes that current accounting policies are in line with these principles. In determining this, the Group has made the
following key judgements against the five step model:
–
–
–
Step 1: The Group’s customers are deemed to be the underlying SIPP & SSAS members regardless of whether the Group
is providing services under a third party administration agreement.
Step 2: Performance obligations are understood to be the individual components of SIPP & SSAS administration as
detailed on the Group’s product’s terms and conditions and fee schedules. Annual renewal fees were deemed to
comprise multiple individual obligations. However, each of these obligations represented a continuous service over the
same annual period and could therefore be viewed collectively as one obligation for the purpose of revenue
recognition. Obligations under set up fees and transaction fees were deemed to be short term in nature (three months
or less).
Step 3: The transaction price was determined to be as included on the Group’s product’s terms and conditions and fee
schedules against each individual fee item which includes interest turn on client funds. Transaction prices for individual
components of the annual renewal fee were not determined as the combined set of obligations represented a
continuous service over the same annual period.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group continued
IFRS 15 continued
–
–
Step 4: The result of judgements made in Step 2 and Step 3 meant that transaction prices could be allocated in
substance to fee items included on the Group’s product’s terms and conditions and fee schedules, as these also wholly
reflected the individual performance obligations.
Step 5: The Group’s current revenue recognition policy already recognises revenue when (or as) performance obligations
are satisfied and further to the judgements made above, no change in revenue recognition is required.
IFRS 9
IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which
assets are managed and their cash flow characteristics. IFRS 9 contains three principal classification categories for financial
assets: measured at amortised cost, fair value through other comprehensive income (“FVOCI”) and fair value through profit
and loss (“FVTPL”). The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and
available for sale.
IFRS 9 largely retains the existing requirements in IAS 39 for the classification of financial liabilities. However, under IAS 39 all
fair value changes of liabilities designated as at FVTPL are recognised in profit or loss, whereas under IFRS 9 these fair value
changes are generally presented as follows:
–
–
The amount of change in the fair value that is attributable to changes in the credit risk of the liability is presented in OCI;
and
The remaining amount of change in the fair value is presented in profit or loss.
Based on its assessment, the Group believes the new classification requirements will have a net impact on equity as at
1 January 2018 of £nil. In determining this, the Group has considered the following factors:
-
-
-
The Group holds a wide variety of policyholder financial assets and liabilities. However, all gains or losses on policyholder
assets and liabilities are ultimately borne by the policyholder and therefore net impact on equity is £nil.
Shareholder financial assets and liabilities are all recognised under existing IAS 39 categories of loans and receivable and
available for sale, but none are recognised under held to maturity. The Group expects all existing shareholder financial
assets to be reclassified either to amortised cost or FVTPL under IFRS 9, with no impact on equity due to the simple
nature of these assets.
Shareholder liabilities that are classified as FVTPL such as the deferred consideration balance are exposed to minimal
credit risk and any change required to be presented through OCI rather than profit or less is expected to be minimal and
immaterial.
A further consideration with regards to the Group’s impairment provision against trade receivables is that IFRS 9 replaces
the current ‘incurred loss’ model in IAS 39 with a forward-looking ‘expected credit loss’ (“ECL”) model. This will require
considerable judgement about how changes in economic factors affect ECLs, which will be determined on
a probability-weighted basis.
The new impairment model applies to financial assets measured at amortised cost or FVOCI, except for investments in
equity instruments, and to contract assets. The Group therefore expects its trade receivables to be affected by the new
model requirements.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
2.
Significant accounting policies continued
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group continued
IFRS 9 continued
The Group has assessed existing financial assets as at 31 December 2017 and determined the new ECL model will not have
a material impact on equity as at 1 January 2018. In determining this, the Group has considered the following factors:
-
-
-
The Group’s shareholder financial assets and specifically the trade receivables balance do not contain any significant
financing components therefore a simplified approach can be taken to look at lifetime ECLs.
The time value of money is not expected to have a material impact on ECLs as the Group’s shareholder current financial
assets are all expected to be recoverable within one year, and the Group holds no shareholder non-current financial
assets.
The Group holds significant data about its customers’ individual holdings within their respective SIPPs and SSASs. This
data provides reasonable and supportable information about the past, current and future likelihood of recovering fees
due. An analysis of this data is already prepared in order to assess the current impairment provision in place under
IAS 39 against the Group’s trade receivables. The same data used under the ECL model indicates a similar provision is
required and therefore the expected net impact on equity as at 1 January 2018 is £nil.
IFRS 9 will require extensive new disclosures, in particular about credit risk and ECLs. The Group believes its current systems
and controls are sufficient to capture the required data.
Critical accounting judgements and key sources of estimation uncertainty
3.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
In preparing the financial statements the Group has selected and applied various accounting policies which are described in
the notes to the financial statements. In order to apply these accounting policies the Group has made estimates and
judgements concerning the future. Key areas of judgement and estimation uncertainty are disclosed below:
Client portfolios
Client portfolios acquired are amortised over their estimated useful economic life (UEL) of 20 years. This UEL is based upon
Management’s historical experience of similar portfolios.
Additionally, the Group reviews and judges whether acquired client portfolios are impaired at least on an annual basis. This
comprises an estimation of future cash flows expected to arise from each client portfolio, discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
that asset, together with an estimated rate of attrition for each portfolio. The estimation of future cash flows is derived by
taking the current earnings before tax, interest, depreciation and amortisation (“EBITDA”) margin of the relevant operating
subsidiary and applying this against forecast revenue from the relevant client portfolio.
Computer software
In capitalising the costs of computer software as intangible assets management judge these costs to have an economic
value that will extend into the future and meet the recognition criteria under IAS 38. Computer software costs are then
amortised over an estimated UEL on a project by project basis.
Additionally, the Group determines whether computer software is impaired at least on an annual basis. This requires an
estimation of the value in use. In assessing value in use the estimated future cash flows expected to arise from the software
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to that asset.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Revenue
4.
Revenue is wholly derived from activities undertaken within the United Kingdom and comprises the following categories:
Fees
Interest income
Policyholder investment returns
5.
Profit for the year
Profit for the year is arrived at after:
Charging:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Auditors remuneration:
– audit of the financial statements of the Group
– audit of the financial statements of the Company
– audit related assurance services
Non-recurring costs
6.
Non-recurring costs include the following significant items:
Set up costs associated with the take on of SIPPs
Exceptional legal fees
Redundancy & restructuring costs following acquisitions
Suffolk Life acquisition costs
European Pensions Management acquisition costs
Exceptional impairment charge
Year ended 31 December
2016
£’000
2017
£’000
34,073
9,500
25,214
4,517
343,009
261,639
386,582
291,370
Year ended 31 December
2016
£’000
2017
£’000
1,131
570
177
29
97
884
519
162
24
110
Year ended 31 December
2016
£’000
2017
£’000
20
67
1,143
72
328
2,124
3,754
50
537
310
735
58
–
1,690
Redundancy & restructuring costs following acquisitions
During the year ended 31 December 2017 a full strategic review of all the office locations used by the Group was carried out. As a
result of that review, and after full consultation with all relevant staff, the decision was taken to close the Group’s office in Market
Harborough. The closure was effective from the end of January 2018. Full provision has been made in the financial statements for
the year ended 31 December 2017 for all the financial costs arising from the decision to close that office including redundancy
payments, amounts due under onerous leases and cost of relocating the activities of that office to other Company locations.
42
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
6.
Non-recurring costs continued
Exceptional impairment charge
During the year ended 31 December 2017 the Group continued and completed the review if its operating systems following
the acquisition of the Suffolk Life business in May 2016. As a result of this review the Group concluded that the most cost
effective, appropriate and lowest risk solution was, subject to contract, to implement a material upgrade of the existing back
office operating system at the Group.
As a result of this decision, costs of approximately £2.1 million incurred and capitalised on the initial development,
installation, evaluation and testing of an alternative system over recent years have now been written off as an exceptional
impairment charge in the financial statements for the year ended 31 December 2017. Other than £0.1m, all of these costs
were originally incurred in accounting periods up to and including the year to 31 December 2016.
Exceptional legal fees
During the year ended 31 December 2016 the Group entered into an agreement to settle a potential legal claim by another
business. The terms of settlement are confidential however no further costs are expected and the total cost included above
includes all associated legal fees incurred.
Suffolk Life acquisition costs
The Group incurred a significant level of legal and professional fees in connection with the acquisition of Suffolk Life Group
Limited and its subsidiaries during the year ended 31 December 2016. In accordance with IFRS 3 Business Combinations,
these have been expensed and treated as non-recurring costs.
European Pensions Management acquisition costs
The Group incurred considerable legal and professional fees in connection with the acquisition of the trade and assets of
European Pensions Management Limited during the year ended 31 December 2016. In accordance with IFRS 3 Business
Combinations, these have been expensed and treated as non-recurring costs.
7.
Directors and employees
Wages and salaries
Social security costs
Other pension costs
Share-based incentive awards
The average number of employees during the year was:
Directors
Administration
Year ended 31 December
2016
£’000
2017
£’000
17,585
1,630
1,337
492
12,930
1,275
900
142
21,044
15,247
2017
7
571
578
2016
6
452
458
43
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Directors and employees continued
7.
Details of emoluments paid to the Directors and key management personnel are as follows:
Total emoluments paid to:
Directors
Wages and salaries
Social security costs
Post-employment costs
Key management personnel
Wages and salaries
Social security costs
Post-employment costs
Emoluments of highest paid director:
Wages and salaries
Pension contribution
8.
Finance costs
Interest payable on bank loans
9.
Finance income
Interest income
44
Year ended 31 December
2016
£’000
2017
£’000
1,411
123
21
806
93
47
787
95
21
1,021
126
49
2,501
2,099
468
8
476
258
8
266
Year ended 31 December
2016
£’000
2017
£’000
562
562
381
381
Year ended 31 December
2016
£’000
2017
£’000
67
117
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
10.
Taxation
Domestic current period tax
UK Corporation tax
Deferred tax
Origination and reversal of temporary differences
Factors affecting the tax charge for the period
Profit before tax
Profit before tax multiplied by standard rate of UK Corporation tax of 19.25% (2016: 20.00%)
Effects of:
Adjustment to prior period
Non-deductible expenses
Other tax adjustments
Current tax charge
Year ended 31 December
2016
£’000
2017
£’000
791
(166)
625
5,857
1,127
(305)
13
(210)
(502)
625
601
55
656
4,490
898
(234)
58
(66)
(242)
656
Earnings per share
11
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
Changes in income or expense that would result from the conversion of the dilutive potential ordinary shares are deemed to
be trivial, and therefore no separate diluted net profit is presented.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Earnings per share continued
11
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Net profit and diluted net profit available to equity holders of the Group
Net profit and diluted net profit before non-recurring costs (note 6) and amortisation (note 5)
available to equity holders of the Group.
Weighted average number of ordinary shares:
Issued ordinary shares at start of the year
Effect of shares issued in the current year
Basic weighted average number of shares
Effect of options exercisable at the reporting date
Effect of options not yet exercisable at the reporting date
Diluted weighted average number of shares
Earnings per share:
Basic
Diluted
Earnings per share on net profit before non-recurring costs and amortisation, less an
effective tax rate:
Basic
Diluted
2017
£’000
5,222
2016
£’000
3,829
10,742
7,064
Number
Number
53,599,669
44,954,769
25,127
8,031,907
53,624,796
52,986,676
800,000
533,333
2,044,484
991,959
56,469,280
54,511,968
Pence
Pence
9.75
9.26
7.23
7.02
As restated*
16.20
15.38
10.67
10.37
* The effective tax rate used in previous years was calculated using the formula “current tax charge/profit before tax”. In order to reduce the
impact of accounting measures such as deferred tax, and the timing of tax reliefs, the effective tax rate has been changed to match the
current tax rate applicable to the accounting year. The current tax rate applicable for the year ended 31 December 2017 was 19.25%
(2016: 20.00%).
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
12
Intangible assets
Group
Cost
At 1 January 2017
Additions
Disposals
At 31 December 2017
Amortisation
At 1 January 2017
Charge for the year
Disposals
At 31 December 2017
Net book value
At 31 December 2016
At 31 December 2017
Goodwill
£’000
Client
Portfolios
£’000
Computer
Software
£’000
28,903
18,430
–
–
5
(2)
28,903
18,433
–
–
–
–
2,533
922
–
3,455
3,116
272
(1,993)
1,395
474
209
–
683
Total
£’000
50,449
277
(1,995)
48,731
3,007
1,131
–
4,138
28,903
15,897
28,903
14,978
2,642
712
47,442
44,593
Goodwill
Goodwill arose on the acquisition of Suffolk Life Group Limited and its subsidiaries on 25 May 2016. The Group tests goodwill
for impairment annually or more frequently if there are indications that goodwill might be impaired. The recoverable
amount of goodwill has been determined based on value-in-use calculations using a discount rate appropriate to the risk
profile of the asset. These calculations use operating cash flow projections based on financial budgets approved by
management covering a three year period, assuming business then continues onwards after this period at a steady rate for
the purpose of the analysis.
Computer Software
Computer software contains costs that meet the recognition criteria under IAS 38 as Intangible Assets. General small
computer software costs are amortised over their useful economic life of four years on a straight-line basis. Computer
software costs for significant projects are amortised over an estimated UEL on a project by project basis.
Following completion of a review of a potential new operating system, and the resultant decision to retain and upgrade the
existing system, intangible costs of approximately £2 million incurred and capitalised on the initial development, installation,
evaluation and testing of an alternative operating system over recent years have been written off during the year ended
31 December 2017.
Client Portfolios
Client portfolios represent individual client portfolios acquired through business combinations and accounted for under the
acquisition method. The directors consider that there is no impairment to assets as at the year end. The client portfolios are
being amortised over a period of 20 years.
The brought forward balance relates to the purchase by Curtis Banks Limited, a subsidiary company, of the trade and assets
of Montpelier Pension Administration Services Limited on 13 May 2011, the full SIPP business of Alliance Trust Savings
Limited on 18 January 2013, the full SIPP business and certain assets of Pointon York SIPP Solutions Limited on 31 October
2014, the full SIPP business of Rathbones Pension & Advisory Services Limited on 31 December 2014, and a book of full SIPPs
from Friends Life plc (now Aviva plc) on 13 March 2015.
47
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Intangible assets continued
12
The brought forward balance also includes the purchase by Suffolk Life Pensions Limited, a subsidiary company, of the trade
and assets of European Pensions Management Limited on 14 July 2016, and books of SIPPs purchased from Pointon York
SIPP Solutions Limited on 9 November 2012, Pearson Jones PLC on 30 April 2013, and Origen Investment Services Limited on
22 May 2013.
All acquisitions have been accounted for under the acquisition method of accounting.
The directors have considered the carrying value of the client portfolios and have concluded that no impairment is required.
The client portfolios are being amortised over a period of 20 years and have an average remaining expected useful
economic life as at 31 December 2017 of 16 years and 4 months.
13
Investment Property
Assets held at fair value
Group
Fair value
At 1 January 2017
Arising on acquisitions
Additions
Disposals
Fair value gains
At 31 December 2017
Investment
Properties
£’000
Total
£’000
1,149,135
1,149,135
–
–
161,280
161,280
(148,191)
(148,191)
44,074
44,074
1,206,298
1,206,298
All investment properties have been valued at the year end by reference to most recent professional valuations and this is
further adjusted by applying the corresponding property index available. Investment properties held to cover the linked
policyholder business are included in non-participating investment contract liabilities.
48
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
14
Property, plant and equipment
Assets held at cost
Group
Cost
At 1 January 2017
Additions
Disposals
At 31 December 2017
Depreciation
At 1 January 2017
Charge for the year
Disposals
At 31 December 2017
Carrying value
At 31 December 2016
At 31 December 2017
15
Investments
Assets held at fair value
Total fair value as at 31 December 2017
Fair value
Equity and other variable-yield securities
Debt securities and other fixed-income securities
Total shares and securities
At cost
Leasehold
Improvements
£’000
Computer
equipment
£’000
Plant &
equipment
£’000
Total
£’000
54
–
–
54
28
13
–
41
26
13
3,606
1,093
4,753
520
(42)
125
–
645
(42)
4,084
1,218
5,356
2,697
493
(42)
955
64
–
3,680
570
(42)
3,148
1,019
4,208
909
936
138
199
1,073
1,148
Group
2017
£’000
2016
£’000
1,955,264
1,831,941
77,029
92,972
2,032,293
1,924,913
1,588,937
1,557,549
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
15
Investments continued
Movement in the year on total shares and securities
At beginning of the year
Arising on acquisition
Additions
Disposals
Unrealised gains
At end of the year
Group
2017
£’000
1,924,913
2016
£’000
–
–
1,787,324
493,638
328,511
(542,304)
(390,603)
156,046
199,681
2,032,293
1,924,913
The Group values all investments in line with an internal pricing policy. This policy states the valuation method to be applied
when valuing a security, based on the categorisation of the security in question.
Assets held at cost
Cost
At 1 January 2017
Additions
At 31 December 2017
Net book value
At 31 December 2016
At 31 December 2017
Company
£’000
56,524
742
57,266
56,524
57,266
Additions in the year comprise investment the Group’s employee benefit trust of £250,000, and equity share based payment
cost additions of £492,000.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Investments continued
15
The directors are satisfied that no impairment has occurred in the carrying value of the non-current asset investments at
31 December 2017. Details of the investments are as follows:
Name of entity
Curtis Banks Limited
Suffolk Life Group Limited
Suffolk Life Pensions Limited
Suffolk Life Annuities Limited
Curtis Banks Investment
Management Limited
Rivergate Legal Limited
Colston Trustees Limited
Montpelier Pension Trustees
Limited
Tower Pension Trustees Limited
SPS Trustees Limited
Crescent Trustees Limited
Final Pursuit Limited
Tower Pension (S-B) Trustees
Limited
Bridgewater Pension Trustees
Limited
Temple Quay Pension Trustees
Limited
Suffolk Life Trustees Limited
Suffolk Life (Spartan Estate)
Limited
SLA Property Company Limited
EPPL P1039 Limited
EPPL P1047 Limited
EPPL P1051 Limited
Registered
Office
Address
Indicator
Principal
activity
Country of
Incorporation
% of
Ordinary
Shares held
% of
Ordinary
by parent Shares held
by Group
Company
(A)
(B)
(B)
(B)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(C)
(A)
(A)
(B)
(B)
(B)
(B)
(B)
(B)
Provision of pension
administration services
England and Wales
100.00
100.00
Holding company
England and Wales
100.00
Provision of pension
administration services
Provision of pension
administration services
Provision of financial
advice
Provision of legal
services
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Scotland
Non-trading
England and Wales
Dormant
England and Wales
Non-trading
England and Wales
Dormant
England and Wales
Dormant
Dormant
Dormant
Dormant
England and Wales
England and Wales
England and Wales
England and Wales
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100.00
100.00
100.00
90.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51
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Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
15.
Investments continued
Name of entity
EPPL P1056 Limited
EPPL P1060 Limited
EPPL P1062 Limited
EPPL P1064 Limited
EPPL P1066 Limited
EPPL P1088 Limited
European Pensions Properties
Limited
Registered
Office
Address
Indicator
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Principal
activity
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Country of
Incorporation
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
% of
Ordinary
Shares held
% of
Ordinary
by parent Shares held
by Group
Company
–
–
–
–
–
–
–
100.00
100.00
100.00
100.00
100.00
100.00
100.00
The registered office address indicator included in the table above reflects the following current registered offices for each
company:
(A)
(B)
(C)
3 Temple Quay, Temple Back East, Bristol, BS1 6DZ
153 Princes Street, Ipswich, Suffolk, IP1 1QJ
Suite 3, West Port House, 144 West Marketgait, Dundee, DD1 1NJ
In the opinion of the directors, the aggregate value of the Group’s investment in subsidiary undertakings is not less than the
amount included in the statement of financial position. All subsidiaries, other than Curtis Banks Limited, Suffolk Life Pensions
Limited and Suffolk Life Annuities Limited are exempt from audit under the requirements of s479 of the Companies
Act 2006.
Fair value hierarchy
16
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained
from independent sources, while unobservable inputs reflects the Group’s view of market assumptions in the absence of
observable market information. The Group utilises techniques that maximise the use of observable inputs and minimise the
use of unobservable inputs.
The levels of fair value measurement bases are defined as follows:
Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted
prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the
measurement that is not based on observable market data (unobservable inputs).
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Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Fair value hierarchy continued
16.
The following table presents the Group’s financial investments and investment property by IFRS 13 hierarchy levels:
As at 31 December 2017
Equity and other variable-yield securities
Debt securities and other fixed-income securities
Investment property
Total
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
1,955,264
1,905,318
77,029
44,056
30,513
31,643
19,433
1,330
1,206,298
–
–
1,206,298
Total financial investments and investment property
3,238,591
1,949,374
62,156
1,227,061
There have been no significant transfers between level 1 and level 2 in 2017 (2016: £nil).
All non-participating investment contract liabilities included within note 21 are classified as level 2.
Level 3 assets where internal models are used comprise property and unquoted, the latter including investments in private
equity, property vehicles and suspended securities.
In many situations, inputs used to measure the fair value of an asset or liability may fall into different levels of the fair value
hierarchy. In these situations, the Group determines the level in which the fair value falls based upon the lowest level input
that is significant to the determination of the fair value. As a result, both observable and unobservable inputs may be used
in the determination of fair values that the Group has classified within level 3.
The Group determines the fair values of certain financial assets and liabilities based on quoted market prices, where
available. The Group also determines fair value based on estimated future cash flows discounted at the appropriate current
market rate. As appropriate, fair values reflect adjustments for counterparty credit quality, the Group’s credit standing,
liquidity and risk margins on unobservable inputs.
Where quoted market prices are not available, fair value estimates are made at a point in time, based on relevant market
data, as well as the best information about the individual financial instrument. Illiquid market conditions have resulted in
inactive markets for certain of the Group’s financial instruments. As a result, there is generally no or limited observable
market data for these assets and liabilities. Fair value estimates for financial instruments deemed to be in an illiquid market
are based on judgements regarding current economic conditions, liquidity discounts, currency, credit and interest rate risks,
loss experience and other factors. These fair values are estimates and involve considerable uncertainty and variability as
a result of the inputs selected and may differ significantly from the values that would have been used had a ready market
existed, and the differences could be material. As a result, such calculated fair value estimates may not be realisable in an
immediate sale or settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value
measurement technique could significantly affect these fair value estimates.
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Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
16.
Fair value hierarchy continued
Level 3 Investments
Fair value
At 1 January 2017
Net gains/(losses) for the year recognised in profit and loss
Purchases/Additions
Disposals
Transfers into level 3
Transfers out of level 3
At 31 December 2017
Equity and Debt securities
and other
fixed income
securities
£’000
other
variable-yield
securities
£’000
Investment
Property
£’000
1,149,135
44,074
161,280
(148,191)
–
–
180
(133)
–
–
1,283
–
1,330
1,206,298
13,172
(5,304)
–
–
13,766
(2,201)
19,433
Transfers out of level 3 relate to assets held for which observable inputs subsequently became available. Transfers into level 3
relate to assets formerly categorised as level 1 or level 2 assets. This is principally due to assets becoming illiquid meaning
that observable inputs are no longer available.
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that incorporate
assumptions that are not evidenced by prices from observable current market transactions in the same instrument and are
not based on observable market data. The following table shows the level 3 financial instruments carried at fair value as at
the balance sheet date, the valuation basis, main assumptions used in the valuation of these instruments and reasonably
possible increases or decreases in fair value based on reasonably possible alternative assumptions.
As at 31 December 2017
Assets
Suspended securities
Unquoted securities
Investment property
Valuation
Basis/
Technique
Note 1
Note 1
Note 2
Main
assumptions
Estimated
recoverable
amount
Price earning
multiple
Third party
property index
Reasonably possible
alternative assumptions
Increase in
fair value
2017
£’000
Decrease in
fair value
2017
£’000
380
659
(380)
(659)
Current
fair value
2017
£’000
7,592
13,171
1,206,298
60,315
(60,315)
1,227,061
61,354
(61,354)
1.
Values are based on estimate of market price. Sources used in deriving these estimates include the last traded price
between a buyer and a seller, brokers providing a matched bargain facility or a company’s audited financial statements,
if available.
2.
Valued using professional specialist property third party indexation data and indexation from the last valuation.
The Directors consider that the carrying value of financial instruments in the Group’s and Company’s financial statements is
equivalent to fair value.
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Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Fair value hierarchy continued
16.
The fair value of cash equivalents, trade receivables and trade payables approximate to their carrying values due to their
short-term nature.
The fair value of deferred consideration payable is split between creditors due within one year and creditors due in more
than one year. The total deferred consideration payable relates to a book of SIPPs acquired and is linked to a share of the fees
received over a five year period from the date of acquisition.
Any changes in value of assets held within non-participating investment contracts are offset by an equal and opposite
change in investment contract liabilities.
17
Trade and other receivables
Trade receivables
Prepayments and accrued income
Amounts owed by group undertakings
Other receivables
Group
As at 31 December
2016
2017
£’000
£’000
Company
As at 31 December
2016
2017
£’000
£’000
11,668
3,219
–
1,800
16,687
12,140
3,645
–
1,738
17,523
–
2
–
13
15
–
2
39
–
41
All of the trade receivables were non-interest bearing and receivable under normal commercial terms. The directors consider
that the carrying value of trade and other receivables approximates to their fair value. All trade receivables are fees due from
SIPPs and SSASs or due to policyholders in relation to their investments. Fees are taken from the assets of the respective
schemes of which the Group has control. If there are no assets in the scheme, payment of the fees is the responsibility of the
member who set the scheme up. As such, all debts should be recoverable over time. Certain trade and other receivables are
past due but have not been impaired. These relate to customers where there is no concern over their financial situation.
The nominal value of provisions relating to trade receivables was as follows:
Brought forward
Arising on acquisition
Charged in year
Released in year
Carried forward
As at 31 December
2016
2017
£’000
£’000
477
–
254
(28)
703
75
414
–
(12)
477
Trade receivables of £11,668,000 at 31 December 2017 (2016: £12,140,000) includes £7,853,000 (2016: £8,149,000) of
policyholder receivables under non-participating investment contracts. Since there is a direct link between the investments
and obligations for non-participating investment contracts, these policyholder receivables have not been included in the
ageing analysis since the Group is not directly exposed to the risks from these contracts.
55
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Trade and other receivables continued
17
The ageing profile of the trade receivables excluding policyholder that were not impaired were as follows:
As at 31 December 2016
As at 31 December 2017
Total
£’000
4,004
3,815
<90 days 90–180 days
£’000
£’000
>180 days
£’000
2,531
2,080
397
626
1,076
1,109
Cash and cash equivalents
18
As at 31 December 2017 and 2016 cash and cash equivalents were as follows:
Group
As at 31 December
2016
2017
£’000
£’000
Company
As at 31 December
2016
2017
£’000
£’000
Cash at bank and in hand
437,849
447,510
2,318
458
All cash at bank is held on overnight deposit. Cash at bank and in hand includes £48,000 (2016: £1,634,000) of cash
equivalents held at fair value.
19
Trade and other payables
Trade payables
Taxes and social security costs
Amounts owed to group undertakings
Other payables
Accruals
Group
As at 31 December
2016
2017
£’000
£’000
Company
As at 31 December
2016
2017
£’000
£’000
1,027
2,668
–
3,498
5,465
12,658
4,536
2,404
–
647
4,551
12,138
12
–
31
–
65
108
5
–
–
–
36
41
The fair value of trade and other payables approximates to book value at 31 December 2017.
Trade payables are non-interest bearing and are normally settled on 30 day terms.
56
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
20
Borrowings
Current
Bank loans
Non-current
Bank loans
Group
As at 31 December
2016
2017
£’000
£’000
Company
As at 31 December
2016
2017
£’000
£’000
29,444
29,444
64,584
64,584
38,329
38,329
77,194
77,194
3,158
3,158
14,508
14,508
3,108
3,108
17,667
17,667
20,775
Total borrowings
94,028
115,523
17,666
Bank borrowings
The bank borrowings are repayable as follows:
Within 1 year
Between 1 year and 5 years
After more than 5 years
Group
As at 31 December
2016
2017
£’000
£’000
Company
As at 31 December
2016
2017
£’000
£’000
29,444
44,158
20,426
38,329
51,922
25,272
3,158
14,508
–
3,108
17,667
–
94,028
115,523
17,666
20,775
Bank borrowings of the Company mature between December 2018 and December 2021 and bear average coupons of
2.25% plus LIBOR per annum.
Total borrowings include liabilities of £76,464,000 (2016: £94,580,000) secured by legal charge over certain properties held
within non-participating investment contracts, and liabilities of £17,666,000 (2016: £20,775,000) secured on the shares of
Curtis Banks Limited, Suffolk Life Pensions Limited and Suffolk Life Annuities Limited.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
21 Non-participating investment contract liabilities
(a)
Analysis of investment contract liabilities
Investment contract liability provisions for linked liabilities arising in connection with the above policies are detailed
below. There is no reinsurance amount (2016: £nil).
For each linked SIPP the Group provides, there is a separate internal fund. Where the Group provides a Trustee
Investment Plan or Group Managed Fund, there are a number of separate internal funds.
Movement in non-participating investment contract liabilities
As at 1 January 2017
Reserves in respect of new business
Amounts paid on surrenders and maturities during the year
Investment income
Expenses
As at 31 December 2017
These relate to:
Self-Invested Personal Pensions
Group Managed Funds – Trustee Investment Plans
Group Managed Funds
Trustee Investment Plans
As at 31 December 2017
Group
£’000
3,394,404
162,788
(303,712)
343,009
(34,560)
3,561,929
Group
£’000
2,593,639
72,727
82,930
812,633
3,561,929
Assets held to cover non-participating investment contracts are detailed under separate notes to the financial
statements.
(b)
Investment contract liabilities – investment income
Rents receivable
Interest receivable
Investment and other income
Realised gains on investments
Unrealised gains on investments
58
2017
£’000
78,249
3,329
38,370
24,528
2016
£’000
36,791
3,037
23,651
21,837
198,533
176,323
343,009
261,639
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
21 Non-participating investment contract liabilities continued
(c)
Investment contract liabilities – expenses
Investment management fees
Adviser fees
Management charges – administration
Bank fees and charges
Professional fees and sundries
Bad debts
Interest payable on bank loans and overdrafts
(d)
Reserves in respect of new business
Gross premiums
Periodic premiums relating to Self-Invested Personal Pensions
Single premiums relating to Self-Invested Personal Pensions
Single premiums relating to Group Managed Funds – TIPs
Single premiums relating to Group Managed Funds
Single premiums relating to Trustee Investment Plans
(e)
Amounts paid on surrenders and maturities during the year
Gross claims paid
Lump sums on death
Lump sums on pensions vesting
Income withdrawals
Annuities purchased
Transfers out
Surrenders of managed funds – Trustee Investment Plans
2017
£’000
10,297
341
6,803
145
14,031
583
2,360
34,560
2016
£’000
5,698
224
3,807
85
6,747
34
1,673
18,268
2017
£’000
2016
£’000
2,926
54,474
6,460
8,571
90,357
162,788
1,989
22,570
(690)
11,449
57,602
92,920
2017
£’000
2016
£’000
20,218
22,297
36,741
89
4,308
12,981
29,450
98
218,287
135,317
6,080
(2,038)
303,712
180,116
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
22
Provisions for liabilities
Deferred taxation
As a result of the taxation position set out in note 10, a deferred tax asset (2016: liability) has arisen as follows:
Brought forward provision
Arising on acquisition
Net change in temporary differences on plant and equipment
Carried forward (asset)/provision
The deferred tax asset (2016: liability) with respect to temporary differences is analysed as follows:
Temporary differences on plant and equipment
Group
As at 31 December
2017
£’000
2016
£’000
42
-
(166)
(124)
212
(225)
55
42
Group
As at 31 December
2017
£’000
2016
£’000
(124)
(124)
42
42
The deferred tax asset (2016: liability) assumes a future corporation tax rate of 19% will be applicable to the Group.
Restructuring provision
Provision for redundancy and restructuring costs arising on office closure
Onerous lease provision
Full provision for costs of onerous property lease arising on office closure
Group
As at 31 December
2017
£’000
2016
£’000
534
534
–
–
Group
As at 31 December
2017
£’000
2016
£’000
366
366
–
–
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
23
Share capital
Allotted, called up and fully paid
Ordinary shares of 0.5p each
Number of Ordinary shares
Brought forward
Issued during the year
Carried forward
Group & Company
As at 31 December
2017
£’000
2016
£’000
269
269
268
268
Number
Number
53,599,669
44,954,769
209,477
8,644,900
53,809,146
53,599,669
Ordinary shares are classified as equity. Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
The ordinary shares rank equally for voting purposes. On a show of hands each member shall have one vote and on a poll
each member shall have one vote per share held. Each ordinary share ranks equally for any dividend declared and rank
equally for any distribution made on a winding up.
There were no ordinary shares reserved for issue under options at 31 December 2017 (2016: nil).
24
Reserves
Share premium
This reserve was created on admission to trading on the Alternative Investment Market (“AIM”) and arises on the difference
between the placing price and the par value of Ordinary shares issued. Additions to the reserve in the year arise from
Ordinary share issues on 15 November 2017 and 21 December 2017 as described in note 23. Expenses directly relating to the
issue of new shares in the Company onto the AIM market have been deducted from the share premium account.
Equity share based payments
This reserve arises from share options granted by the Group to certain employees of the Group. Further details are disclosed
in note 25.
Retained earnings
Retained earnings comprise the cumulative realised gains and losses of the Group from each of the individual combined
entities.
As permitted by section 408 Companies Act 2006, the holding company’s profit and loss account has not been included in
these financial statements.
Treasury shares
The Group established an employee benefit trust (“EBT”) during the year ended 31 December 2017 in order to acquire
ordinary shares in the Company to satisfy awards under the Group’s share based payment schemes. At 31 December 2017,
the EBT held 99,155 ordinary shares in the Company, acquired for a total consideration of £250,000 with a market value of
£282,592. They are classified as treasury shares in the Consolidated Statement of Financial Position, their cost being deducted
from equity.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Equity share based payments
25
The weighted average exercise price for all options outstanding at 31 December 2017 was 174.38p (2016: 181.00p).
The weighted average exercise price for all options exercised during the year ended 31 December 2017 was 12.90p (2016:
10.11p).
The weighted average remaining contractual life of all unexercised share options as at 31 December 2017 was 6 years and
10 months (2016: 7 years and 9 months).
The total charge to the Consolidated statement of comprehensive income arising from equity-settled share-based payment
transactions for the year ended 31 December 2017 was £492,000 (31 December 2016: £142,000). The total increase in equity
arising from equity-settled share-based payment transactions for the year ended 31 December 2017 was £492,000
(31 December 2016: £142,000).
The following table sets out each of the Group’s equity share based payments in operation during the year ended
31 December 2017:
Number
of shares
under
option at
1 January
2017
Scheme
Date of
grant
EMI14
24/10/14
207,400
EMI15
08/04/15
800,000
28/06/16
601,408
SS16
SS17
Granted
Exercised
Lapsed
Number
of shares
under
option at
31 December
2017
Exercise
price
Latest
Exercise
Date
–
–
–
(205,600)
(1,800)
–
10.11p
n/a
–
–
800,000
62.54p
08/04/25
(2,077)
(473,034)
126,297
288.88p
01/02/20
30/05/17
–
675,195
CSOP16A 14/09/16
635,119
CSOP16B 15/12/16
535,996
CSOP17
26/06/17
LTIP17
26/10/17
–
–
–
–
535,996
393,943
–
–
–
–
–
(44,801)
630,394
213.60p
01/02/21
–
–
–
–
635,119
267.00p
14/09/26
535,996
201.00p
15/12/26
535,996
260.00p
25/06/27
393,943
0p
26/10/27
2,779,923
1,605,134
(207,677)
(519,635)
3,657,745
EMI14 & EMI15
The Group set up an EMI scheme during the year ended 31 December 2014 by which certain employees and key
management personnel of Curtis Banks Limited were able to subscribe to ordinary shares in the Company. As at the year end
31 December 2017, 1 employee of Curtis Banks Limited held options under the CSOP.
SS16 & SS17
The Group operates a Save As You Earn (“SAYE”) share option scheme under which almost all employees of the Group are
eligible to subscribe to ordinary shares in the Company following a 3 year contribution and vesting period. Grants under the
SAYE are expected to be provided to eligible employees annually.
CSOP16A, CSOP16B & CSOP17
During the year ended 31 December 2016, the Group set up a Company Share Option Plan (“CSOP”) share option scheme
under which certain key management of the Group are able to subscribe to ordinary shares in the Company. As at the year
end 31 December 2017, seven key management personnel of Suffolk Life Pensions Limited and one key management
personnel of Curtis Banks Limited held options under the CSOP. The CSOP17 is a performance based option grant.
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Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
25
Equity share based payments continued
LTIP17
During the year ended 31 December 2017, the Group set up a performance based Long Term Incentive Plan (“LTIP”) share
option scheme under which certain key management and senior management of the Group are able to subscribe to
ordinary shares in the Company. As at the year end 31 December 2017, eight key management personnel of the Group and
seven senior management personnel within the Group held options under the LTIP.
Share based payment expenses – all schemes
The fair values of all options at the date of grant were determined by using the Black Scholes model. Expected volatility was
based upon historical information about the Group’s share price, measured using the standard deviation of its monthly share
prices over the last three years (where data is available) and comparisons against similar entities at the date of grant. The
Company first listed on the Alternative Investment Market (“AIM”) in May 2015 and consequently less than three years of data
has been available for use in measuring the expected volatility of grants shown below. The model includes separate vesting
periods for each proportion of options based on their exercise dates. The fair values derived and model inputs for each grant
are reflected in the table below:
Scheme
Date of grant
Fair value per
option granted
Share price on
grant date
Risk free rate
of interest
Expected
volatility
Dividend
yield
EMI14
EMI15
SS16
SS17
CSOP16A
CSOP16B
CSOP17
LTIP17
24/10/14
08/04/15
28/06/16
30/05/17
14/09/16
15/12/16
26/06/17
26/10/17
2.13p
5.64p
58.76p
99.77p
45.58p
52.42p
63.54p
289.25p
10.11p
62.54p
302.50p
282.50p
267.00p
201.00p
260.00p
310.00p
0.50%
0.50%
0.50%
0.25%
0.25%
0.25%
0.25%
0.25%
35.00%
24.00%
29.00%
44.29%
39.01%
42.95%
43.41%
46.66%
0.00%
0.00%
1.00%
1.50%
1.00%
1.00%
1.50%
1.50%
26 Non-controlling interests
The non-controlling interests reflect the relevant amounts of the trading results and net assets or liabilities attributable to the
non-controlling shareholders in Curtis Banks Investment Management Limited (see note 15).
Share of net assets brought forward
Movement in the year – share of profits
Ordinary dividends declared
Share of net assets
As at 31 December
2017
£’000
2016
£’000
9
10
(5)
14
9
5
(5)
9
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Financial commitments
27
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Land and buildings
Within 1 year
Within 2 - 5 years
In more than 5 years
28
Pension costs – defined contribution
Contributions payable by the Group for the year
29 Dividends
Ordinary interim declared and paid
As at 31 December
2017
£’000
2016
£’000
895
1,809
–
2,704
891
2,358
–
3,249
Year to 31 December
2016
£’000
2017
£’000
1,352
900
Year to 31 December
2016
£’000
2017
£’000
2,408
2,403
A second interim share dividend in respect of 2016 was declared and paid on 12 May 2017 of 3p per ordinary share.
An interim share dividend was declared and paid on 15 November 2017 of 1.5p per ordinary share.
Financial risk management
30
Financial assets principally comprise trade and other receivables, cash and short-term deposits, which arise directly from its
operations. Financial liabilities principally comprise trade and other payables, deferred consideration and borrowings.
The main risks arising from financial instruments are interest rate risk, credit risk, and liquidity risk. Each of these risks is
discussed in detail below.
The Group monitors financial risks on a consolidated basis, with its financial risk management based upon sound economic
objectives and good corporate practice. No hedging transactions have taken place during the years presented.
Interest rate risk
Interest rate risk is the risk that the Group will sustain losses from adverse movements in interest bearing assets. There is an
exposure to interest rates on shareholder owned banking deposits held in the ordinary course of business. The value of
financial instruments on the Group’s consolidated statement of financial position exposed to interest rate risk was £25.68m
(2016: £21.46m) comprising cash and short-term deposits. This exposure is monitored to ensure that the Group is
maximising its interest earning potential within accepted liquidity and credit constraints. Cash at bank earns interest at
floating rates based on daily bank deposit rates. Short term deposits are also made for varying periods of between one day
and 12 months depending on the immediate cash requirements of the Group and earn interest at the respective term
deposit rates.
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Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Financial risk management continued
30
The Group had external borrowings attributable to shareholders at the year end of £17.56m (2016: £20.78m). The interest
rates attached to borrowings held include a floating rate based on the London Interbank Offered Rate (“LIBOR”). There is an
exposure on external borrowings therefore to interest rate risk.
The following table demonstrates the sensitivity to a 100bps (1%) change in interest rates on actual borrowings, with all
other variables held constant, on the Group’s profit before tax.
2017
£ Sterling
£ Sterling
2016
£ Sterling
£ Sterling
Increase/decrease
in basis points
Effect on profit
before tax
£’000
+100
–100
+100
–100
(183)
183
(143)
143
In addition, a source of revenue is based on the value of client cash under administration. The Group has an indirect
exposure to interest rate risk on these cash balances held for clients. The Group manages this risk through a central treasury
function which monitors client cash and interest rate movement on a monthly basis.
Credit risk
The Group trades only with third parties it recognises as being creditworthy. In addition, receivable balances are monitored
continually.
Credit risk from other financial assets of the Group, which comprise cash and cash equivalents, arises from default of the
counterparty, with a maximum exposure equal to the carrying amount of these instruments.
Given the nature of the Group’s operations, it does not have significant concentration of credit risk in respect of trade
receivables, with exposure spread over a large number of customers. An allowance for impairment of trade receivables is
made where there is an identified loss event, which based on previous experience, is evidence of a reduction in the
recoverability of the cash flows. Details of trade receivables and the associated provision for impairment are disclosed in
note 17.
The directors continue to monitor the strength of the banks used by the Group.
All of the banks currently used by the Group have long-term credit ratings of at least BBB+ (Fitch). This results in the Group
retaining the ability to further mitigate the counterparty risk on its own behalf and that of its customers.
Liquidity risk
This is the risk that the Group may be unable to meet its liabilities as and when they fall due. The Group monitors its risk to
a shortage of funds by considering the maturity of its financial assets (e.g. trade receivables, other financial assets) and
projected cash flows from operations. As part of these projections, the Group also monitors anticipated capital expenditure
and the expected timing of settlement of financial liabilities. The Group is a highly cash generative business and maintains
sufficient cash to fund its foreseeable trading requirements. Details on the maturity of the Group’s borrowings are disclosed
in note 20.
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Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Notes to the Financial Statements continued
Capital management
31
Certain subsidiaries of the Group are supervised in the UK by the Financial Conduct Authority (“FCA”) and, following the
acquisition of Suffolk Life Annuities Limited during the year ended 31 December 2016, the Prudential Regulation Authority
(“PRA”). The Group manages its capital through continuous review of the capital requirements of its regulated subsidiaries,
which are monitored by the Group’s management and reported monthly to the Board. The Group’s objectives when
managing capital are:
–
–
–
To comply with the regulatory capital requirements set by the FCA and the PRA
To safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
To maintain a strong capital base to support the development of its business.
Capital is defined as the total of share capital, share premium, retained earnings and other reserves. Total capital of the Group
as at 31 December 2017 was £44.60 million (2016: £41.52 million). The Group manages the capital structure and makes
adjustments to it in light of changes in economic conditions. The Group’s regulated subsidiary companies submit regular
returns to the FCA and the PRA relating to their capital resources. The regulated subsidiaries are limited in the distributions
that can be paid up to the Group by each of their individual capital resource requirements. Group internal policy is for
regulated companies within the Group to hold at least 130% of their required regulatory capital.
Related parties
32
At the year end, Curtis Banks Investment Management Limited owed £57,345 to Curtis Banks Limited (2016: £1,710) arising
as a result of expenses recharged. The total amount of expenses recharged by Curtis Banks Limited in the year amounted to
£108,841 (2016: £104,928). During the year ended 31 December 2017 Curtis Banks Limited received an ordinary dividend of
£45,000 from Curtis Banks Investment Management Limited (2016: £45,000).
At the year end, Curtis Banks Group PLC owed £31,285 to Curtis Banks Limited (2016: £38,888 due from Curtis Banks Limited).
This relates to expenses paid by Curtis Banks Limited on behalf of Curtis Banks Group PLC. The total amount of expenses
recharged by Curtis Banks Limited in the year amounted to £127,858 (2016: £97,336).
At the year end, Suffolk Life Pensions Limited was due £573 from Curtis Banks Limited (2016: £48,324 owed to Curtis Banks
Limited) arising as a result of expenses recharged between either entity. The total amount of expenses recharged by Curtis
Banks Limited in the year amounted to £202,742 (2016: £96,876). The total amount of expenses recharged by Suffolk Life
Pensions Limited in the year amounted to £40,739 (2016: £nil).
Contingent liabilities
33
The Group has been in correspondence with HMRC regarding processes and documentation in respect of in specie
contributions. HMRC have alleged that incorrect procedures were followed and is seeking to reclaim tax reliefs granted and
interest thereon. This is an industry wide issue affecting other SIPP operators and is being challenged by the industry as
a whole. It is not possible to determine when this matter will be resolved and the outcome and impact are not known at this
stage. We do not believe that the net exposure arising from this will be material to the Group.
Control
34
There is no one ultimate controlling party.
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Company Information
Directors
Rupert Curtis – Chief Executive Officer
Paul Tarran – Chief Financial Officer
Will Self – Deputy Chief Executive Officer
Chris Macdonald – Non-Executive Chairman and Director
Bill Rattray – Non-Executive Director
Jules Hydleman – Non-Executive Director
Founder & Strategic Advisor
Chris Banks
Company Secretary
Paul Tarran
Registered Office
3 Temple Quay
Temple Back East
Bristol
BS1 6DZ
Registered Number
07934492
Nominated Advisor and Broker
Independent Auditors
Solicitors
Registrars
Peel Hunt LLP
Moor House
120 London Wall
London
EC2Y 5ET
PricewaterhouseCoopers LLP
2 Glass Wharf
Bristol
BS2 0FR
Roxburgh Milkins
Merchants House North
Wapping Road
Bristol
BS1 4RW
Computershare
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
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Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Supplementary unaudited information
Illustrative IFRS Consolidated Statement of Financial Position as at 31 December 2017 split
between insurance policy holders and the Group’s shareholders
ASSETS
Non-current assets
Intangible assets
Investment property
Property, plant and equipment
Investments
Deferred tax asset
Current assets
Trade and other receivables
Cash and cash equivalents
Current tax asset
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Deferred income
Borrowings
Restructuring provision
Onerous lease provision
Deferred consideration
Current tax liability
Non-current liabilities
Borrowings
Onerous lease provision
Deferred consideration
Non-participating investment contract liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Issued capital
Share premium
Equity share based payments
Treasury shares
Retained earnings
Non-controlling interest
Total equity
68
£’000
Group Total
£’000
Policyholder
£’000
Shareholder
44,593
–
1,206,298
1,206,258
1,148
–
2,032,293
2,032,293
124
–
44,593
40
1,148
–
124
3,284,456
3,238,551
45,905
16,687
437,849
605
7,855
412,176
605
455,141
420,636
3,739,597
3,659,187
12,658
24,374
29,444
534
107
341
295
7,348
13,446
26,286
–
–
–
–
8,832
25,673
–
34,505
80,410
5,310
10,928
3,158
534
107
341
295
67,753
47,080
20,673
64,584
50,178
14,406
259
454
3,561,929
3,627,226
3,694,979
44,618
269
33,451
731
(250)
10,403
44,604
14
44,618
–
–
3,561,929
3,612,107
3,659,187
–
–
–
–
–
–
–
–
–
259
454
–
15,119
35,792
44,618
269
33,451
731
(250)
10,403
44,604
14
44,618
Curtis Bank pp32-70.qxp 18/04/2018 15:59 Page 69
Curtis Banks Group PLC
Annual Report and Consolidated Financial Statements for the year ended 31 December 2017
Supplementary unaudited information continued
Illustrative IFRS Consolidated Statement of Cash Flows as at 31 December 2017 split between
insurance policy holders and the Group’s shareholders
ASSETS
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation
Amortisation and impairments
Interest expense
Share based payment expense
Fair value gains on financial investments
Additions of financial investments
Disposals of financial investments
Fair value gains on investment properties
Increase in liability for investment contracts
Changes in working capital:
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Taxes paid
£’000
£’000
Group Total Policyholder Shareholder
£’000
5,857
570
3,126
554
492
–
–
–
–
–
(156,046)
(156,046)
(493,638)
(493,638)
542,304
542,304
(44,074)
(44,074)
167,525
167,525
(433)
4,193
(999)
(314)
1,567
–
5,857
570
3,126
554
492
–
–
–
–
–
(122)
2,629
(999)
Net cash flows from operating activities
29,431
17,324
12,107
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant & equipment
Investment in employee benefit trust
Receipts from sale of property, plant & equipment
Net cash flows from acquisitions
Net cash flows from investing activities
Cash flows from financing activities
Equity dividends paid
Net proceeds from issue of ordinary shares
Net decrease in borrowings
Interest paid
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
(277)
–
(161,923)
(161,278)
(250)
–
148,191
148,191
(669)
–
(277)
(645)
(250)
–
(669)
(14,928)
(13,087)
(1,841)
(2,413)
27
–
–
(21,274)
(18,116)
(504)
–
(2,413)
27
(3,158)
(504)
(24,164)
(18,116)
(6,048)
(9,661)
(13,879)
447,510
426,055
437,849
412,176
4,218
21,455
25,673
69
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CURTIS BANKS GROUP PLC
3 Temple Quay, Bristol BS1 6DZ l Tel: 0117 910 7910 l www.curtisbanks.co.uk