Annual Report and
Consolidated Financial Statements
For the year ended 31 December 2020
Your future, our focus.
curtisbanks.co.uk
CURTIS BANKS GROUP PLC 2020
STRATEGIC REPORT
Operational, Financial Highlights and
Key Performance Indicators 1
Our services and history 2
Chairman’s statement 3 – 4
Chief Executive Officer’s review 5 – 7
Chief Financial Officer’s review 8 – 11
Principal risks and uncertainties 12 – 16
Corporate and social responsibility 17 – 20
GOVERNANCE
Board of Directors 21 – 22
Directors’ report 23 – 25
Statement of Directors’
responsibilities 25
Chairman’s corporate
governance report 26 – 28
Corporate governance 29 – 31
Directors’ remuneration report 32 – 34
FINANCIAL STATEMENTS 36 – 91
Independent auditors’ report 36 – 44
Consolidated statement of
comprehensive income 45
Consolidated statement of
financial position 46
Company statement of
financial position 47
Consolidated statement of
changes in equity 48
Company statement of changes
in equity 49
Consolidated statement of cash flows 50
Company statement of cash flows 51
Notes to the financial statements 52 – 91
Company information 92
Supplementary unaudited
information 93 – 94
Company Registration
No. 07934492 (England and Wales)
Your future, our focus.
curtisbanks.co.uk
ST R AT EG I C R E P O RT
continued
Operational, Financial Highlights and
Key Performance Indicators
Curtis Banks Group PLC is pleased to announce its final results for the 12 months to 31 December 2020. These
results represent the full 12 month period including the fundraising and refinancing activities in July 2020;
5 months contribution from Dunstan Thomas and 2 months contribution from Talbot and Muir.
Highlights
•
Operating revenue increased by 10% to £53.9m (2019: £48.9m)
•
•
•
•
•
•
•
•
Adjusted profit before tax1 remained stable at £13.4m (2019: £13.4m)
Adjusted operating margin2 decreased to 26.0% (2019: 28.1%)
Profit before tax decreased by 32% to £7.4m (2019: £10.9m)
Adjusted diluted EPS decreased by 8% to 17.9p (2019: 19.4p)3
Gross organic growth in own Mid and Full SIPP numbers of 7.8% (2019: 7.5%) with total SIPPs, including
third party administered, now 82,224 (2019: 76,541)
Attrition rate on own Mid and Full SIPPs decreased to 4.6% (2019: 5.7%)
Assets under Administration (“AuA”) increased by 11% to £32.4bn (2019: £29.1bn)
Proposed final dividend of 6.5p (2019: 6.5p) making a full year payment of 9.0p (2019: 9.0p)
Highlights and key performance indicators for the year include:
2020 2019
Financial
Operating revenue £53.9m £48.9m
Adjusted profit before tax1 £13.4m £13.4m
Profit before tax £7.4m £10.9m
Adjusted operating margin2 26.0% 28.1%
Diluted EPS3 9.5p 15.9p
Adjusted diluted EPS3 17.9p 19.4p
Operational Highlights
Number of SIPPs administered 82,224 76,541
Assets under Administration £32.4bn £29.1bn
Total organic new own SIPPs in year 4,113 4,567
Attrition rates (Mid & Full SIPP) 4.6% 5.7%
Number of properties administered 8,905 6,352
1 Profit before tax, amortisation and non-recurring costs.
2 The ratio of operating profit before net finance costs, amortisation and non-recurring costs to operating revenues. See note 6 to the financial statements for further detail.
3 Adjusted to reflect impact of bonus factor within shares issued during the year ended 31 December 2020. See note 12 to the financial statements for further detail.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 1
ST R AT EG I C R E P O RT
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Our services and history
Curtis Banks Group PLC (“Curtis Banks” or “the Group”)
has a clear vision for long-term growth. 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
self-invested pension products. At 31 December 2020
the Group administered circa £32.4bn (2019: £29.1bn)
of pension assets on behalf of over 82,000 (2019:
76,000) 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 the purchase of
Suffolk Life Group Limited, a long established provider
of SIPPs operating through Suffolk Life Pensions Limited
and Suffolk Life Annuities Limited. During the year
ended 31 December 2020, the Group completed the
purchase of Dunstan Thomas, and Talbot and Muir. The
Group currently trades under the names Curtis Banks,
Suffolk Life, Dunstan Thomas and Talbot and Muir. More
than 800 staff are employed across its head office in
Bristol and regional offices in Ipswich, Dundee,
Portsmouth, Nottingham and Leeds.
Our stated strategic objective of increased
diversification saw the acquisition of Dunstan Thomas
in August 2020. The acquisition is a further step
forward in the Group’s evolution from a solely focused
SIPP and SSAS administrator to a provider of technology
and complementary services for the advised retirement
market, including FinTech, legal and property services.
Trading subsidiaries of the Group authorised by the
Financial Conduct Authority to provide trust based SIPP
products include Curtis Banks Limited, Suffolk Life
Pensions Limited, Suffolk Life Annuities Limited and
Talbot and Muir Limited. Suffolk Life Annuities Limited
is also regulated by the Prudential Regulatory Authority
as it 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
Suffolk Life Annuities Limited’s insurance policyholder
assets, liabilities and returns.
The Executive Directors have proven experience in the
retail savings, pensions and wealth markets and have
established a business that focuses on a service-driven
proposition for the administration of flexible SIPPs. The
Group’s core pension 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 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
continued
Chairman’s statement
Chris Macdonald
Chairman
Progressing towards ambitious goals
I am pleased to report the Curtis Banks Group results
for the year ended 31 December 2020. In spite of
being impacted by COVID-19 the business showed
a very high degree of resilience, completed two
excellent acquisitions, executed a successful fund
raise and changed its fee model to ensure greater
transparency to our clients and a more robust and
consistent income. This puts the business in a strong
position for future growth.
2020 Review
The highlights of our financial results demonstrated
solid revenue growth, although operating profit
softened as a result of the impact of the COVID-19
pandemic on the business. Operating revenue
increased by 10% from £48.9m to £53.9m, reflecting
acquisitive growth and a steady performance in our
core business of Full and Mid SIPPs. Adjusted profit
before tax remained stable at £13.4m (2019: £13.4m).
The Group was impacted by the COVID-19 pandemic
during 2020. Management reacted quickly and
effectively to implement its business continuity plan
and limit the severity on the business. Our fixed,
recurring fee model for our core products insulated
the Group from the worst effects of the pandemic and
the business has emerged from it in a robust position.
In spite of the obvious headwinds we remained focused
on our stated strategy for future growth. In July 2020,
the Group announced the acquisition of two high-quality
businesses in Talbot and Muir and Dunstan Thomas.
Talbot and Muir, a provider of SIPPs and SSAS products,
has a strong reputation in the market and reinforces the
Group’s position as a leading SIPP provider. At the time
of acquisition, Talbot and Muir delivered additional scale
through 6,600 plans and AuA of approximately £3.6bn.
Dunstan Thomas is a FinTech company which provides
technology and business solutions for wealth
managers, platforms and providers, with an
established client base and track record of repeat and
recurring revenue. Dunstan Thomas will not only
support the successful delivery of the Group’s
technology strategy but will also bring diversification
by way of a broader product and service offering to
other markets. The use of technology in the
retirement market has historically been underutilised
and we are excited about the role Dunstan Thomas can
play in spearheading additional growth and
development opportunities across the Group.
In November 2020, we took the decision to achieve
a more appropriate balance between fee income and
interest income to provide more transparency and
greater certainty to our clients. We increased the
annual SIPP administration fee paid on Mid and Full
SIPPs with effect from 1 February 2021 and at the
same time provided the framework to distribute an
element of future interest related income to our
clients. This change will materially reduce the Group’s
overall sensitivity to interest rates and reinforce our
robust foundation for future growth through improved
levels of recurring revenues.
People and Culture
In January 2021, we were delighted to welcome
Jill Lucas to Curtis Banks as Non-Executive Director.
Jill was also appointed as Chair of Dunstan Thomas.
Jill brings a wealth of experience to the Group
particularly in the field of technology and will bring
invaluable experience to the board. Prior to joining
the Group, Jill led technology transformation at
Unilever and from 2012 until 2015 was Group Chief
Information Officer for UK-based broker Towergate
Insurance. Since 2019, she has been a Non-Executive
Director for NS&I, the UK government-owned savings
bank.
Jill’s background in technology and experience in
leadership teams will be invaluable as we continue to
develop our business. In particular, her role as Chair of
Dunstan Thomas will be crucial as we look to integrate
technology throughout the Group and maximise
opportunities for growth via increased collaboration
and integration.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 3
ST R AT EG I C R E P O RT
continued
Chairman’s statement
continued
I would also like to thank the board, the whole
executive team and staff at Curtis Banks for their
endeavours and commitment to the Group in a
challenging external environment.
Dividend
We paid an interim dividend of 2.5p per share (2019:
2.5p) on 13 November 2020 and the Board proposes a
final dividend of 6.5p per share (2019: 6.5p) which, if
approved by shareholders, will be paid on 4 June 2021
to shareholders on the register at the close of business
on 7 May 2021. Total dividends for the year are
therefore 9.0p per share (2019: 9.0p).
Outlook
We expect that challenging conditions will continue
in the short term, as new business generation is
hampered by restrictions from social distancing
requirements. However, we remain well placed to
deliver further profitable growth in the medium term
as we continue to deliver efficiencies through systems
integration. In the medium term and beyond, we
remain confident about the Group’s growth prospects.
Our sensitivity to interest rates will materially reduce
and we have an opportunity to leverage the scale and
technology from the acquisitions of Talbot and Muir
and Dunstan Thomas respectively to grow the Group.
Through the strength of our product proposition and
service, we are also well-placed to meet the changing
needs of clients to deliver organic growth in what is an
ever-increasing market.
In 2020, Curtis Banks started to evolve from a solely
focussed SIPP administrator to a more holistic
retirement group which provides technology and
complementary services for the advised retirement
markets, including FinTech, legal and property
services. We have a clear vision and dedicated,
first-rate management team with a plan for execution
in 2021 and beyond.
Chris Macdonald
Chairman
6 April 2021
4 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
continued
Chief Executive Officer’s review
Will Self
Chief Executive Officer
We made strong progress in 2020 to evolve Curtis Banks
from a predominantly SIPP administration business to
a more holistic retirement group providing multiple
complementary services, including FinTech, legal and
property, for the advised retirement market. We
believe this provides a solid platform for future,
long-term, sustainable growth.
The external market dynamics and demographic trends
play to our strengths. Our product proposition and
service means we offer superior flexibility and
optionality to meet the changing needs of a growing
number of retirement savers and we are proven in
adapting to, and remaining market leading with,
ever-changing regulation in the retirement market.
Retail investment platforms continue to see significant
inflows, which we would expect in five to ten years’
time to provide a significant inflow of business for our
model as savers with more than £250,000 will benefit
from our more cost effective fixed fee model.
Technology remains underutilised in the pensions
market and we are working to develop new products
and services that leverage technology for the benefit
of our clients, which includes our functional digital
portal. The result is a large and growing addressable
market requiring a range of complementary services –
all of which can be met by Curtis Banks and underpins
our position.
Operational Review
In the first half of 2020, we focused on our response to
the COVID-19 pandemic. Following the outbreak of the
first wave of the pandemic in March 2020, we acted
quickly to implement our business continuity plan. The
business felt some impact as the adviser community
were unable to meet end customers in-person during
the first lockdown, but productivity remained largely
unaffected.
We have continued to progress our five year system
strategy which consists of a number of elements.
As previously announced, the development of a new
digital portal completed in 2019. The centralisation of
commercial property administration progressed to plan
throughout 2020 and the upgrading of our
administration platform commenced in 2020. I am
pleased to report that all elements of the strategy
continue to perform in line with the project
projections and the acquisition of Dunstan Thomas,
our key technology partner supporting the strategy,
has further strengthened our control over the success
of the programme.
We measure SIPP per operational FTE to measure the
efficiency of our operations and also to provide
reassurance around maintaining the desired levels of
client servicing. Upon conclusion of the system
strategy, and the introduction of our Target Operating
Model, we expect to see an increase in the number of
SIPPs per operational FTE.
At the year end the number of SIPPs administered
increased to 82,224, this includes 4,113 new own SIPPs
added organically plus 5,833 new SIPPs as a result of
the acquisition of Talbot and Muir. Delivering a gross
organic growth rate of 7.8%. In our two core areas of
strategic focus, the Full SIPP saw gross organic growth
of 3.2% which was a slight reduction on last year
(2019: 3.4%). Our Mid SIPP gross organic growth rate
was 11.1%, slightly higher than the previous year
(2019: 10.8%). The table below sets out more detail on
SIPPs numbers and rates of attrition.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 5
ST R AT EG I C R E P O RT
continued
Chief Executive Officer’s review
Total Third Party
Full SIPPs Mid SIPPs eSIPPs own SIPPs Administered Total
As at 31 December 2020 23,013 31,985 20,742 75,740 6,484 82,224
As at 31 December 2019 19,869 27,799 21,726 69,394 7,147 76,541
SIPPs added organically 628 3,072 413 4,113 9 4,122
SIPPs added through acquisitions 3,496 2,337 — 5,833 — 5,833
Conversions and reclassifications (116) 117 (1) — — —
SIPPs lost through attrition (864) (1,340) (1,396) (3,600) (672) (4,272)
Gross organic growth rate 3.2% 11.1% 1.9% 5.9% 0.1% 5.4%
Annualised attrition rate 4.4% 4.8% 6.4% 5.2% 9.4% 5.6%
As we expand our proposition and services, we have
diversified our revenue streams – and will continue to
do so. In November 2020, we announced an increase to
the annual SIPP administration fee paid on the Mid and
Full SIPPs with effect from 1 February 2021. This
decision was taken to reduce our reliance on interest
income and as part of a shift towards higher client
fees which lead to higher quality revenues. Our core
line of business remains as the fixed annual fees for
SIPP and SSAS products, with 86% of revenues expected
to recur year on year. The high percentage of recurring
revenues provides the Group with resilience and a
solid foundation which allows us to continue to
diversify our offering into other areas of the market.
Our flagship product, Your Future SIPP, continues to
perform well and is one of the key drivers for organic
growth of Full and Mid SIPPs. Your Future SIPP delivers
efficiencies for clients and reduces the time spent on
administration for advisers, clients and our business.
Rivergate Legal Limited continues to perform in line
with expectations. Rivergate provides specialised and
experienced advice to SIPP and SSAS clients seeking to
invest commercial property within their pension
portfolios. The business has remained focused on the
supply of commercial property and real estate services
in line with the Group's strategy. The total number of
properties administered by the Group has increased to
8,905 (2019: 6,352) and we are confident that it will
continue to grow into the medium term.
Acquisitions
In July 2020, the Group announced the acquisitions of
Talbot and Muir, a provider of SIPPs and SSAS products,
and Dunstan Thomas, a FinTech provider delivering
technology and business solutions for wealth
managers, platforms and providers. The acquisitions
are in line with our published growth strategy to seek
further value-enhancing, strategically aligned
inorganic opportunities in the advised retirement
market, alongside continued organic growth across
all current business lines.
Talbot and Muir is a well-respected SIPP and SSAS
provider and administrator with strong levels of
recurring revenues based on a fixed fee model. Talbot
and Muir delivers additional scale to the Group’s
existing offering through 6,600 plans and AuA of
approximately £3.6bn, with 71 employees across
offices in Nottingham and Leeds, joining the Group.
Dunstan Thomas is a FinTech provider delivering
technology and business solutions for wealth
managers, platforms and providers with an established
client base and track record of repeat and recurring
revenue. Curtis Banks has a long history of working
with Dunstan Thomas, who have been a technology
supplier to the Group for over five years. This
acquisition will support the successful delivery and
execution of the Group’s technology strategy.
Dunstan Thomas will also expand our own customer
proposition offering both existing and future clients
access to a broader range of products and services,
while giving us the opportunity to take our own
product offering to other target markets. There are
long-term growth opportunities in leveraging
technology to reach new areas of the ever-increasing
addressable advised retirement market. Technology is
still underutilised in the pensions market and we will
be working closely with Dunstan Thomas to develop
new products and services backed by technology that
disrupt the market. We also see immense scope for
greater collaboration across the Group’s diverse
offering, especially via Dunstan Thomas’ technology
platform.
We are delighted to have acquired both Talbot and
Muir and Dunstan Thomas, having executed both
transactions in the midst of a global pandemic. We
have started to integrate both businesses into the
Group and this process is running smoothly. We are
confident that both businesses will play a key role in
diversifying and expanding the Group’s offering to
drive growth in the next two to three years.
People and Culture
During 2020, we were delighted to welcome colleagues
from the acquisitions of Talbot and Muir and Dunstan
Thomas into the Curtis Banks Group. We will be
integrating both businesses into the Group in time and
we look forward to working alongside their Executive
teams on cross-group collaboration initiatives.
The COVID-19 pandemic has been a difficult time for
us all. The welfare of employees has remained the
top priority for management throughout the last
12 months. I wanted to take this opportunity to pay
tribute to the dedication and perseverance of
colleagues at Curtis Banks who seamlessly adapted to
remote working conditions to ensure that productivity
levels remained high. I am proud to work alongside
them and I look forward to working with them to
execute the exciting growth plans we have laid out for
2021 and beyond.
6 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
continued
Chief Executive Officer’s review
continued
Outlook
We made strong progress on several of our strategic
objectives in 2020. The system strategy continues at
pace and is on track, while the increase in the annual
SIPP administration fee paid on the Mid and Full SIPPs
will reduce our reliance on interest income and
increase our focus on generating higher quality
revenues. The acquisitions of Talbot and Muir and
Dunstan Thomas provide the Group with additional
scale in the SIPP market and exciting growth
opportunities to leverage technology to disrupt the
advised retirement market.
In the short and medium term we have set the
following growth objectives:
•
•
•
Organic Growth – to continue to focus on quality,
advised SIPP business driving long term recurring
fee revenues utilising our saleable operating
model
Inorganic Growth – building on continued
consolidation in the marketplace, the Group will
continue to focus on selective, high quality
acquisition opportunities to expand our client
base
Diversification – building on the capability
acquired in 2020, driving new products and
services to a wider customer base enhancing EPS
in the medium term
We have a clear vision for long-term growth. Our
evolution from a single-track SIPP administration
business to a provider of multiple complementary
services will diversify our core offering and revenue
streams to reach new areas of an ever-increasing
addressable market. We are confident that the Group
is well placed for growth in 2021.
Will Self
Chief Executive Officer
6 April 2021
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 7
ST R AT EG I C R E P O RT
continued
Chief Financial Officer’s review
Dan Cowland
Chief Financial Officer
Results
A resilient financial performance for the year ended
31 December 2020 resulted in operational revenue
increasing by 10% to £53.9m (2019: £48.9m) and
adjusted profit before tax of £13.4m (2019: £13.4m).
Adjusted diluted EPS decreased by 8% to 17.9p (2019:
19.4p), influenced by the issue of 11,904,762 new
shares in July to support the Group’s acquisition
strategy. Statutory profit before tax, which is stated
after amortisation and non-recurring costs, was £7.4m
(2019: £10.9m), which includes £3.5m of non-recurring
costs incurred during the year on previously announced
restructuring activities and acquisition related costs.
Diluted EPS on a statutory basis decreased by 40% to
9.5p (2019: 15.9p), impacted by the issuance of
11,904,762 ordinary shares in July 2020.
The robust financial performance was achieved despite
the compound economic and political challenges of the
UK’s exit from the European Union and then the
COVID-19 pandemic which quickly followed in March
2020. Like many other firms, the Group was not
immune from the unquestionable impact of these
challenges, in particular the prevailing COVID-19
restrictions which remain at our reporting date, but
I believe the results once again demonstrate the
resilience of our core business model and the strong
levels of recurring sterling fixed fees which we have
long extolled the virtues of.
The Group successfully completed two acquisitions
during 2020. The acquisition of Talbot and Muir in
October 2020 increases the number of high quality
SIPPs under our administration and will further
increase the Group’s ability to generate recurring
revenues. The acquisition of Dunstan Thomas in August
2020 has introduced a new revenue stream into the
Group and is a further step in crystallising the Group’s
objective towards greater diversification and the
Board looks forward to exploring the further
opportunities that having a FinTech company within
the Group will bring. Both Talbot and Muir and Dunstan
Thomas made a positive contribution to the Group’s
revenue and earnings for part of 2020, with a full
contribution from each to be achieved in 2021.
We also took action to rebalance our revenue profile
by increasing the annual SIPP administration fee for
our core SIPP products and changing how we share
with clients the interest on SIPP bank account
balances. These changes will result in clients receiving
an increased share of interest, while the quality of the
Group’s revenue is improved due to the higher
proportion generated from recurring fees.
The Group measures its performance by reference to
the alternative profit measure of adjusted profit
before tax as this is considered to better reflect the
underlying results of the business by adjusting for
those items which do not arise from the underlying
operations of the business.
Revenue
Operational revenues of £53.9m in 2020 (2019:
£48.9m) increased by 10% year on year, driven
primarily by the part-year contributions from Dunstan
Thomas and Talbot and Muir but also somewhat by the
resilient organic growth in own Mid SIPP numbers.
Fee revenue from SIPP products remains the
predominant source of fee income for the Group with
86% (2019: 84%) of these fees being recurring fixed
annual fees. These fees are subject to contractual
annual inflationary rises linked to average weekly
earnings. Additional fixed fees are charged depending
on the transactional services provided for each of the
products.
All SIPP fees levied are fixed sterling charges and are
not dependent on the value of the underlying assets
held within the SIPP. As a result, the revenues
generated by both Curtis Banks and Talbot and Muir
are insulated from the movements in financial markets
and/or commercial property values and are therefore
subject to less volatility than many of our peers. This
is a key differential that sets us apart from most of our
competitors and provides an attractively priced
product in terms of fees applied on higher value SIPPs.
As the value of a SIPP increases our product becomes
increasingly affordable.
In the year ended 31 December 2020, £12.2m of the
Group operating revenue arose from interest margin
8 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
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Chief Financial Officer’s review
continued
(2019: £12.7m). The Group operates a highly efficient
treasury operation with diverse partners and this
enabled the Group to maintain impressive returns
despite the low interest environment which
perpetuated for most of the financial year and
into 2021.
the covenants required by the bank in respect of this
gearing are well covered. Interest on the debt
currently accrues at a rate of 2.25% over the London
Interbank Offered Rate (“LIBOR”) although it is
expected that LIBOR will be replaced by the end
of 2021.
From 1 February 2021, the amount of interest paid to
clients will no longer be set on a discretionary basis by
the Group following the changes announced in
November 2020. The Group believes that the new
approach to sharing interest with clients is more
transparent and provides greater certainty to clients.
The amount of interest generated by the Group, and
the amount shared with our clients, is monitored via
the Group Assets and Liabilities Committee.
Expenses
The year ended 31 December 2020 saw administrative
expenses increase by 13% to £39.9m from £35.2m.
78% of this increase related to our two acquisitions.
Staff costs for the year increased by 14% to £26.1m
(2019: £22.6m) and were influenced by salary
inflation, referenced to average weekly earnings, and
the part year impact from the acquisitions of Dunstan
Thomas of £1.9m (2019: nil) and Talbot and Muir of
£0.4m (2019: nil).
Staff costs continue to reflect the cost of share based
payment awards under the Group’s Long Term
Incentive Plan and Save As You Earn (“SAYE”) schemes,
as well as the commitment to the auto enrolment of
staff pension contributions. These measures continue
to reflect the importance of staff satisfaction to the
Group and contribute not only to improved levels of
key staff engagement and retention but also drive the
provision of desired service levels to clients which are
demanded by our introducers of business.
Average staff numbers increased to 698 (2019: 572),
primarily as a result of the Group’s acquisitions made
in the year. This represents the support provided for
the organic growth in own Full and Mid SIPPs achieved
and to manage the migration of commercial property
administration to a centralised function.
The other material operating expense that the Group
incurs is in respect of IT and in 2020 this amounted to
£3.1m (2019: £3.4m). These reflect not only the costs
of supporting the core IT infrastructure across the
Group’s multiple office locations but also the amount
of investment in technological improvements to the
SIPP administration platform and the programme of
these improvements is expected to continue into 2024.
The cost of undertaking regulatory activity continues
to increase and for the year ended 31 December 2020
the Group spent £1.7m (2019: £1.1m) on a
combination of regulatory fees, levies and insurance.
Finance costs relating to interest payable on bank
loans increased by £0.2m year on year following the
re-negotiation of the Group’s increased term and
revolving credit facilities during the year. Borrowings
continue to be repaid in line with scheduled terms and
The Sterling Overnight Indexed Average (“SONIA”) is
expected to replace LIBOR and we will work with our
finance providers to ensure our credit facilities are
transitioned to the new benchmark at that time.
The Group continues to take steps to improve its
adjusted operating margin through a combination of
revenue enhancements and operational efficiencies,
balanced with the continued investment back into the
business and the provision of a high quality service to
our clients. The adjusted operating margin has
decreased during the year, impacted by the increase in
non-controllable regulatory costs and the pressure that
the low interest environment had on interest income.
The Group has sought to mitigate its sensitivity to
interest income through an increase in annual fees
on Mid and Full SIPPs which were effective
1 February 2021.
Non-Recurring costs
Non-recurring costs for the year can be broadly
categorised into several core elements.
During the year ended 31 December 2020, the Group
progressed its strategy to deliver its Target Operating
Model through the centralisation of commercial
property administration within one office location.
Redundancy costs associated with this decision as well
as costs associated with duplicated staff efforts while
work is transferred between offices have been
included within non-recurring costs, totalling
£1,090,000 in the year ended 31 December 2020. The
Group expects some further costs in early 2021
associated with the conclusion of this transition and
will be recognisable as non-recurring costs in the
relevant accounting period. Delivery of the Target
Operating Model is ultimately seen as the main driver
of operational efficiencies which are expected to be
attainable once the broader investment in our system
strategy has been completed.
Costs of £1,518,000 associated with acquisitions,
primarily in relation to Dunstan Thomas and Talbot
and Muir, were recognised during the financial year
as outside of the operating cost base of the Group.
A further cost of £151,000 was recognised in respect
of deferred contingent consideration for the book of
business acquired from Friends Life in 2015.
As has been widely reported in the wider industry
press, HMRC has challenged all SIPP providers on
whether pension contributions could be made
in-specie. The Group has been in correspondence with
HMRC regarding processes and documentation in
respect of in specie contributions for some time.
Following a favourable outcome for HMRC in an appeal
against the First-Tier Tribunal’s ruling in favour of
another SIPP operator in a similar case, and having
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 9
ST R AT EG I C R E P O RT
continued
Chief Financial Officer’s review
continued
taken further legal advice, the Group now considers it
more likely than not that some cost associated with
this liability will be borne by the Group and has
recognised a provision of £403,000 to reflect this.
As noted in our last annual financial statements,
management had initiated a review of data records
relating to properties held within SIPPs administered
by the Group. Based on a detailed review of a sample
of properties and extrapolation of the initial findings
across the full population of relevant properties, the
Directors recognised that additional direct costs may
be incurred in completing this data cleansing exercise,
including from any potential remediation. The data
cleansing exercise is continuing with any residual
remedial follow up actions to be completed during
2021. Of the original provision of £500,000 made at
31 December 2018, there is a remaining provision of
£7,000 as at 31 December 2020. This is still considered
to be adequate to cover any remaining costs.
Finally, during the year ended 31 December 2020, the
Group invested in a new strategic treasury solution
with a global provider of back office operational cash
management software. The investment is designed to
innovate and improve the Group’s treasury
management function through provision of a system
that provides a multibank facility and this resulted in
a non-recurring charge of £286k.
Amortisation and impairment of intangible
assets
Amortisation of the Group’s intangible assets
represented a charge of £2,098,000 for the period.
We have also taken a small impairment charge of
£344,000 against the value of certain SIPP portfolios
within intangible assets (2019: £nil). This follows
a regular review of estimated future cash flows
expected from these assets over their remaining useful
economic lives and reflects increased uncertainty over
the longevity of the current low interest rate
environment.
Cash flows
Shareholder cash balances at year end were £32.5m
compared to £31.2m at the end of the previous
financial year.
Net cash inflows from shareholder operating activities
for the period were £7.7m (2019: £13.8m net cash
inflow), with the decline in cash generation primarily
attributable to a reduction in profit before tax for the
year and a higher amount of tax paid in the year
caused by a number of the Group’s subsidiaries
transitioning into HMRC’s QIP regime for very large
companies.
A combination of the acquisitions made, the issue of
shares and the re-financing of borrowing facilities
during the year saw significant net cash outflows from
investing activities and significant net cash inflows
from financing activities.
Accounting Policies
Accounting policies have been updated to capture the
relevant activities of the two acquisitions completed
by the Group during the year.
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 investment 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. Assets in the SIPPs administered by the
rest of the Group are held in trust and not under
insurance contracts and therefore do not need to be
included on the balance sheet. As the policies are
non-participating contracts, the client related assets
and liabilities in Suffolk Life Annuities Limited match.
In addition the revenues, expenses and investment
returns of the non-participating investment contracts
are shown in the consolidated statement of
comprehensive income. Again, these income, expense
items and investment returns due to the policyholders
are completely matched. An illustrative balance sheet
as at 31 December 2020 showing the financial position
of the Group excluding the policyholder 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.
Employee Benefit Trust (“EBT”)
The EBT continues to be used to acquire shares in the
Group in the open market to satisfy future vesting of
options and long term incentive awards. The EBT is
funded by loans from the Group. As at 31 December
2020, the EBT held 261,276 shares in Curtis Banks
Group PLC (2019: 206,286). A number of options
awarded under the Company’s SAYE schemes vested
during the year and awards were made from the shares
held by the EBT.
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.
Capital requirements
The Group’s four (2019: three) regulated subsidiary
companies submit regular returns to the FCA and the
PRA relating to their capital resources. At 31 December
2020 the total regulatory capital requirement across
the Group was £15.2m (2019: £13.2m) and the Group
had an aggregate surplus of £17.2m (2019: £11.5m)
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 and this has been maintained
throughout the year.
10 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
continued
Chief Financial Officer’s review
continued
Three (2019: two) of the principal trading subsidiaries
of the Group are regulated by the FCA and are subject
to the relevant capital adequacy rules. The fourth
(2019: third) regulated entity Suffolk Life Annuities
Limited (“SLA”), being an insurance company, is
subject to Solvency II rules and it’s capital position is
determined by the Standard Formula as set out in the
Solvency II directives.
Full details of SLA’s capital position are set out in the
Solvency and Financial Condition Report published on
the Group’s website.
Financial Position
The Group increased net assets by 45% to £80.2m as
at 31 December 2020 (2019: £55.5m), and increased
shareholder cash reserves from £31.2m to £32.5m over
the same period.
In July 2020 the Group placed 11,904,762 shares,
raising gross proceeds of approximately £25m, to assist
with the financing of initial consideration for the
acquisitions of Dunstan Thomas and Talbot and Muir. At
the same time, the Group re-negotiated its borrowing
facilities with Santander and put in place a £20m term
loan and a £10m rolling credit facility, £6m of which
was drawn upon.
As at 31 December 2020, the Group had net
shareholder cash (after debt) of £8.8m (2019:
£19.9m).
The Group adopted the provisions of IFRS 16,
accounting for leases, for the accounting period
commencing 1 January 2019. The effect of this on our
financial performance is not material although the
impact on the Group’s balance sheet has been to
increase Non-current assets and Current/Non-current
liabilities. It should be noted that our principal lenders
exclude the impact of IFRS 16 when calculating our
banking covenants. We have also received
confirmation previously from the FCA that the
provisions of IFRS 16 do not need to be taken into
account in our regulatory capital calculations.
Outlook
The Group’s profitability is not directly linked to
market performance and therefore the growth in our
SIPP numbers provides more visibility and less
volatility of earnings combined with the discipline over
our controllable cost base. In 2021 we expect the
combination of SIPP revenue growth and a full year
contribution from both of the Group’s recent
acquisitions to materially improve top line growth and
we will maintain careful cost discipline whilst
supporting our stated growth strategies.
Dan Cowland
Chief Financial Officer
6 April 2021
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 11
ST R AT EG I C R E P O RT
continued
Principal risks and uncertainties
The risks faced by the Group have been fully assessed
and a robust governance and risk management
structure is in place. This includes a comprehensive
risk register, which is regularly reviewed and updated,
a dedicated risk monitoring and management system,
aCCelerate, provided by Chase Cooper and a number
of governance committee’s to provide dedicated focus
and attention on the key risks relevant to each
committee. Appropriate controls and mitigating
actions have been agreed and are regularly monitored
for the risks identified, with further actions identified
and tracked through to completion where the level of
residual risk remains above the target threshold set.
The principal risk categories that would adversely
affect the activities of the Group are set out below:
1.
Strategic risks
Strategic risks are those that are affected or
created by the Group’s business strategy and
strategic objectives, including risks in relation to
acquisitions.
The material risks in relation to completed and
potential future acquisitions include:
• Unanticipated litigation or claims against the
Group, leading to increased costs to deal with
and defend the claims along with the impact
upon management time and focus.
• Unexpected integration costs and
unanticipated diversion of management time
and focus and other resources leading to an
inability to integrate businesses in a cost-
effective and timely manner.
• The acquired businesses do not achieve the
levels of profitability or earnings required to
justify the investment made by the Group.
•
Levels of new business, transactional fees or
other income sources do not achieve the
expected levels to meet the level of revenue
expected by the Group.
Mitigation
The Group Risk, Audit & Compliance Committee
acts under a delegated authority from the Group
Board to manage the Group’s risks and ensure an
appropriate framework is in place for the
identification, assessment and management of
material risks. Relevant Group governance
committees monitor and track progress made and
potential impacts in relation to strategic
objectives. The Group carries out thorough due
diligence on all potential acquisitions using
internal expertise and external resources where
considered necessary. Appropriate warranties and
indemnities are obtained 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. A Commercial Forum is in place to
assess all aspects of commercial activity,
including expected and actual levels of new
business generated.
2. Regulatory risks
The Group operates in a highly regulated and
specialist industry and therefore is susceptible to
any significant regulatory or legislative policy
changes from a variety of regulatory bodies, or
from a change in the way existing legislation or
regulation is interpreted by a regulatory body.
Any changes will influence the overall framework
for the design, marketing and distribution of
products, the acceptance and administration of
business, and the regulatory capital that is
required to be held.
The key risk here is interpretation and
implementation by the Group of regulatory
change and what the new rules entail.
Judgements and decisions must be made to
ensure change is implemented and while detailed
internal assessment and analysis will be
undertaken and further external support
obtained as required from legal professionals,
trade bodies and others in the market, there will
always be a small residual risk of
misinterpretation of the intended or existing
rules. There is a risk that a significant regulatory
change may be introduced that would have a
detrimental impact upon the business model of
the Group. In addition, if unexpected regulatory
changes are introduced at short notice, or if the
implementation of regulatory change is not
managed in an effective manner, this could
impact the capital and regulatory position of the
Group in the short term.
Mitigation
An internal buffer of at least 130% of required
capital is maintained to ensure regulatory capital
requirements can be maintained in the event of
unexpected regulatory changes. A Group
Regulatory Change Committee is in place, which
is responsible for the initial identification and
review of new regulatory publications applicable
to the Group and for undertaking horizon
scanning for potential future regulatory
developments. The Group is also able to seek
external advice as required to support the
analysis and interpretation of regulatory change.
This includes external accountancy and legal
firms and the wider financial community via
membership of trade bodies. Ongoing compliance
monitoring and internal audit activity is
undertaken to review processes, procedures and
documentation to ensure this is in line with
regulatory and legislative requirements and
expectations. Significant regulatory changes are
implemented through a formal change project
management structure to provide assurance that
the requirements are implemented correctly and
within the required timescales.
12 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
continued
Principal risks and uncertainties
continued
3.
Interest on client funds
The Group updated its interest rate retention
policy in February 2021, providing greater
transparency for our clients. Interest received on
cash balances is used to help meet the annual
running costs of SIPP plans and, whilst previously
this has been shared with clients on a
discretionary basis in line with common industry
practice, we are now committed to how we share
the interest on SIPP bank account balances by
reference to the Bank of England bank rate. There
is a risk that a change in prevailing interest rates
or rates paid to clients may materially reduce the
margins earned in respect of client balances
administered.
From time to time, the Group may lock into fixed
term rates of interest on client balances that
appear attractive. To the extent that the Bank of
England bank rate decreases following the
commitment to such fixed terms, the amount of
interest shared by Curtis Banks to its client’s may
reduce the amount of interest retained by the
Group.
Mitigation
To minimise this risk the Group’s Asset and
Liability Committee 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. There will
always be a residual risk where the Group
commits to a quarterly interest rate to its clients
and there is a subsequent change in either the
Bank of England bank rate or the annualised rate
of interest return achieved by the Group
although this is not considered to be material.
4. COVID-19
As at the signing date these financial statements
there remains significant uncertainty over how
the current COVID-19 outbreak will unfold, and
what government measures will be maintained or
introduced. The main risks to the Group are
considered to be staff welfare and maintaining
continuity of service for our clients. All SIPP fees
levied are fixed sterling charges and are not a
percentage based charge on the value of the
underlying assets held within the SIPP, so the
Group is not directly affected by the recent
increase in volatility in the financial markets
arising from COVID-19.
Mitigation
The Group continually reviews guidance from the
UK government and the NHS and ensures that all
staff are kept regularly updated and fully
informed in order to reduce the risk of spreading
the virus. The Group has a comprehensive
Business Continuity Plan (“BCP”) that is reviewed
regularly and tested every year. The last test was
successfully conducted in October 2019, with
involvement of senior staff including the CEO and
COO. The BCP caters for a number of scenarios,
including those where high numbers of staff or
all staff are unable to access individual or
multiple offices. Current actions already
initiated under the BCP in relation to COVID-19
include:
• BCP team formed and meeting regularly to
oversee progress of preparations
• Restrictions implemented on non-essential
business travel
• Clear, regular guidance to staff in respect of
their responsibilities and roles
• Additional hygiene and sanitiser stations
installed in all office locations
•
Identifying and validating key process owners
• Widening remote access from core to all staff
•
‘Warming’ our disaster recovery site in
preparation for deployment should the need
arise
The Group is a financially sound business with
capital and liquidity well in excess of the
minimum regulatory requirements.
5. 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 the
Senior Management team and the Group’s ability
to continue to attract and retain highly skilled
and qualified individuals.
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 key
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.
6. 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. System enhancements are continually
being assessed and taking place.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 13
ST R AT EG I C R E P O RT
continued
Principal risks and uncertainties
continued
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 and the acquisition of our key
technology partner, Dunstan Thomas, will
strengthen this process. Business continuity is
assured by thorough full back up of data and
comprehensive data recovery procedures being in
place.
7. Operational Risk and Internal control
systems
Operational risk relates to the risk of loss
resulting from inadequate or failed internal
processes, people and systems, or from external
events. 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
The Group has a clear and robust governance
framework in place to manage and mitigate the
risk faced by the business. Within this structure,
the Group Operational Risk & Compliance
Committee has responsibility for managing the
operational risks faced by the business. This
delegation of authority, along with escalation of
key risks, provides clear oversight to the Group
Risk, Audit & Compliance Committee and Senior
Management of the key risks across the business.
The low tolerance towards operational risk is
embedded in the culture of the group, alongside
the desire to ensure fair customer outcomes are
achieved.
The Group operates a three lines of defence
model within this framework, with responsibility
and accountability for risk management assumed
by the following:
•
First line: Senior management and those
individuals in sales and operational roles are
responsible for managing risks, by developing
and maintaining effective internal controls to
mitigate risk. First line systems and controls
are in place to ensure business operations are
carried out in compliance with internal
policies and procedures.
•
Second line: The risk, compliance and
anti-money laundering functions overseen by
the Group Operational Risk & Compliance
Committee maintain a level of independence
from the first line. They are responsible for
providing oversight and challenge of the first
line’s day-to-day management, through
compliance monitoring and reporting of risks
to both Senior Management and the Group
Risk, Audit & Compliance Committee.
• Third line: Internal Audit are responsible for
providing independent assurance to both
Senior Management and the Group Risk, Audit
& Compliance Committee as to the
effectiveness of the Group’s governance, risk
management and internal controls.
A comprehensive risk register is maintained by
the Group, which identifies a number of
operational risks faced by the business and
identifies the controls currently in place to
mitigate these risks, along with any further
actions required to reduce the level of risk to the
agreed target level. Risk events are recorded and
appropriate root cause analysis undertaken to
identify and address potential systemic issues
and a range of relevant management information
is produced and regularly analysed to support the
measurement and tracking of operational risk.
Infrastructure security
Infrastructure is considered in relation to both
the environment for staff and the assets that
store data. The business model is heavily reliant
on the security and physical robustness of
IT systems and the reliability of the chosen
software providers. 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
The Group has an extremely low appetite toward
any compromise to either the staff that utilise
the infrastructure of the Group and the actual
infrastructure itself, and as such these risks are
closely monitored. The Group carries out
extensive testing of all computer systems on
a regular basis to ensure security is maintained
and it also makes use of the latest technology
and software to ensure there is appropriate
8.
14 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
continued
Principal risks and uncertainties
continued
cyber security in place. This includes the
interception and rejection of a high volume of
incoming emails. Cyber insurance is also in place
and includes provision to support the Group in
the timely recovery of impacted systems in the
event of a cyber incident occurring. Key
dependencies are regularly monitored and
assessed to ensure mitigation procedures are in
place should a major risk crystallise. There are
also controls in place to mitigate the people risk
to Group infrastructure, including measures such
as defining clear roles and responsibilities,
succession planning for middle-level staff and
ensuring competency for roles through relevant
training.
9. Non Standard Investments (“NSIs”)
Pension Schemes administered by the Group are
permitted under HMRC rules to hold certain NSIs
within them. Such investments are considered to
represent a higher level of risk than standard
investments, such as quoted equities. As high risk
investments, NSIs are potentially far more
volatile than standard investments and clients
may look to the Group, as their pension provider,
for compensation in the event that a NSIs fails or
suffers a significant decrease in value.
Mitigation
The proportion of the plans under administration
of the Group that hold NSIs is small and full due
diligence procedures are carried out on all NSI’s
before they are accepted into a pension scheme.
This will also incorporate consideration of the
circumstances of the individual looking to hold
the NSI within their pension scheme. The Group
has a clearly defined statement of allowable
assets, setting out the categories of NSIs which
may be accepted, subject to the completion of
appropriate due diligence, and those that will
not be considered at all. New business is
typically only accepted from regulated financial
advisers, who have a duty to ensure that any NSIs
that are recommended are suitable for the
relevant pension scheme. Once held, NSIs are
monitored annually by the Group’s technical
investments team to consider whether the NSI
remains acceptable. In addition, the Group
carries high levels of professional indemnity
insurance to protect against any claims.
10. Commercial Property
The Group acts as landlord for a large volume of
commercial properties held within Group pension
schemes. As the size of the commercial property
portfolio has increased over time, the Group has
been required to develop its systems and
controls to meet the needs of the portfolio as
they arise, including understanding the key risks
posed by becoming legal owner of the
commercial property assets on behalf of its
customers.
Mitigation
The Group regularly considers and assesses the
key risks posed by the commercial property
portfolio, and these are monitored as part of
Group Property Oversight Committee, acting
under delegated authority. This, along with
escalation of key risks, provides clear oversight
to Senior Management of the key risks across the
commercial property portfolio. The Group has
also sought external legal expertise to ensure the
documentation, and underlying responsibilities in
relation to a commercial property, are set out
and are clearly defined between the Group and
other involved parties (tenant, customer,
property manager, etc.) to prevent future legal
dispute. The nature of physical commercial
property is that all risks that are known are
considered, but the Group are aware that each
commercial property is unique and there will
exist some residual risks (such as legal,
unexpected cost or market risk) that cannot be
fully mitigated, and some will sit outside of the
control or remit of the Group responsibilities.
These have been accepted as an inherent risk to
continuing to offer commercial property
investment to customers, and is mitigated as far
as possible through a robust due diligence
process prior to accepting any property
investment. Monitoring of the commercial
property portfolio is conducted on an ongoing
basis to ensure there is minimal deterioration in
the quality of the portfolio, and to safeguard the
interests of customer’s investments.
11. Brexit
The UK has now left the EU but there remained
a significant level of uncertainty as the transition
period continued through to the end of 2020,
while the UK and EU negotiated the final
arrangements. The Group had carried out a full
review of the impact of Brexit on the Group and
the potential implications of a “no deal”
scenario. Curtis Banks is a UK based business and
the Group considers itself to be largely isolated
from many of the issues which other financial
institutions face, such as tariffs, passporting and
foreign exchange currency risks.
The review assessed the impact of a disorderly
exit from EU, which remained a possibility until
the end of the transition period. This included
consideration of the following:
• banking partners currently used by the Group
and the ability to continue to use these
partners
•
SIPP cash deposits and investments in the
EU and the ability to realise these
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 15
ST R AT EG I C R E P O RT
continued
Principal risks and uncertainties
continued
•
•
financial markets and currency movements
affecting investments within the SIPPs
SIPP members who have retired and are living
in the EU, and
• employees of the Group.
Mitigation
Action was taken to mitigate, to the fullest
extent possible, the risks arising from a
disorderly exit at the end of the transition period
and the Group concluded that the risks, based on
the understanding of the relevant legislation,
provisions and intentions, had been mitigated as
far as is reasonably possible.
The UK left the transition period on 31 December
2020 and whilst we continue to monitor Brexit-
related developments we do not believe this will
bring about any changes to the basis or nature of
services that we provide to the vast majority of
our clients.
16 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
continued
Corporate and social responsibility (“CSR”)
The Group is dedicated to ensuring an environment
where collaboration and growth of all staff is seen as
being part of the fabric of day to day office culture.
The Group encourages celebration of success on both
a corporate and personal level, and is actively
addressing key areas of focus including its
environmental and climate impact, employee
engagement, staff training and equal opportunities.
The Group has a CSR committee comprised of
members from all locations and a breadth of seniority
and some of the key activities for 2020 that both the
committee and the wider Group have contributed to
have been highlighted below, with further initiatives
planned for 2021 and beyond.
Environmental Focus
As a pension provider we understand the need to think
about the long-term and are well aware that climate
change impacts all of us. As such, any action that can
be taken to reduce our impact should be considered.
As a self-invested pension provider, we do not choose
the investments that our customers hold, but we can
make changes to our own operations to reduce our
corporate impact. Our target is to run our business in
a sustainable way, and a number of initiatives led by
senior management, staff and the in-house CSR team
have been undertaken during 2020 which increased our
recycling rate. These initiatives include:
•
•
•
•
Providing recycle bins at multiple convenient
locations throughout each office location
Having bags available in all offices so staff can
avoid single-use plastic bags at lunchtime
Being part of the Walkers Crisp Recycle Scheme
Recycling all electrical and lighting equipment
•
•
•
•
•
Providing sweet wrapper bins in the kitchens
Recycling bottles with a glass bin
Ensuring all of our confidential paper waste is
recycled by our third party provider
Being part of the Carbon Capture programme,
where our paper usage is converted to plant
trees
Encouraging staff to take a paid day out of the
office to work with a number of local charities to
provide a positive impact on the local
environment
Sponsorships and partnerships with charities
and community organisations
The Group actively encourages support of charities,
community organisations and activities, with each
office location supporting a local charity.
We continued to support three designated charities
from the Mental Health & Wellbeing sector in 2020
being Lighthouse in Ipswich, the Teenage Cancer Trust
in Bristol and the Dundee Wellbeing Works charity, and
we will continue this support until December 2022.
Following the sad passing of our friend and colleague
Greg Kingston during the year, we united across the
Group to focus our fundraising support for Parkinson’s
UK and SERV Suffolk & Cambridgeshire. We were
delighted to raise £10,000 in total, with £4,000 being
raised from the fundraising support of Curtis Banks
staff alone.
Along with raffles and other fundraising events, we
had a Mental Health & Awareness week and the
Group-wide October Active Challenge which was a big
In 2020 Curtis Banks is delighted to be sponsoring Victoria Evans of Sea Change Sport in her bid to break the world
record for a female solo row crossing of the Atlantic
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 17
ST R AT EG I C R E P O RT
continued
Corporate and social responsibility
continued
success. We encouraged staff to get out, to get active
and to record the miles they walked, ran, swam or
cycled each week. We then plotted the distance
covered each week as a Group and collectively staff
covered over 10,000 miles over the month of October.
All offices regularly hold events for their chosen local
charities and staff are encouraged to fundraise for
other charities that may have provided them, their
friends or family with support. As well as organising
and funding the events, Curtis Banks also provides
further support through an annual matching
contribution to the relevant charity by matching
employee fundraising by up to £250 per person.
Chris Read, the Chief Executive Officer of our new
subsidiary Dunstan Thomas, has spearheaded the
charity Singing Gorilla Projects. Singing Gorilla
Projects (“SGP”) funds and manages community-based
projects in remote parts of Uganda that improve the
welfare of communities and enriches the lives of
individuals. SGP builds and manages health facilities,
builds schools and sponsors children to continue their
schooling, and funds water delivery programmes with
water tanks, water filters and water pumping projects.
We look forward to supporting SGP further in 2021 and
beyond.
Staff initiatives and interaction
Management engage closely with staff to determine
their needs and initiatives are implemented where
these benefit the majority of employees. The Group
Management Team, which supports the Executive
Committee and Group Board, have implemented a
number of initiatives for staff of all levels and
continue to interact with, and listen to, feedback from
staff to ensure Curtis Banks is seen as a forward-
thinking and flexible employer. Newsletters containing
information about both Group developments and social
events are provided to employees on a regular basis
and personal achievements from staff are actively
shared, such as exam successes, promotions or
completion of personal challenges such as marathons
or other competitive events. The Group has an
established Employee Forum which supports staff in
matters of concern and can assist in communications
and matters with senior management. The business
provides a Save As You Earn (“SAYE”) share option
scheme for the benefit of all eligible employees to
encourage active participation and vested interest in
the continued success of the Group.
Staff Training
Staff are actively encouraged to train and develop
through both structured and ‘on the job’ training.
Staff are supported in these, both financially and
through a dedicated Learning and Development
department. The Group has an approved list of
professional qualifications that staff are sponsored to
study towards and are given study leave to help and
motivate them to progress their career within the
organisation.
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 their contribution to the business.
The development of all our employees is integral to
our corporate goals and we look to maximise individual
contribution at all levels within the organisation by
providing appropriate opportunities for personal and
professional development. Curtis Banks 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 the provision of special aids or equipment.
The Group actively monitors recruitment,
development and promotion to ensure that we provide
a fully inclusive culture with policies and practices
that exceed statutory requirements wherever possible.
Please see page 24 for further details on this policy.
Environmental Social and Governance
Reporting (“ESG”)
We recognise that our administration operations result
in emissions to air and water, and the generation of
waste. It is our aim and policy to do more than just
comply with legislation, and we continue to reduce
the environmental impacts of our business and operate
in an environmentally responsible manner.
This aim applies to all of the Group’s office locations,
including operational management, location
management and procurement. Will Self, our CEO,
manages the Board’s responsibility for ensuring that
sufficient resources are made available to enable the
business to achieve our Environmental & Sustainability
objectives, targets and policy implementation. This is
supported by the Chief Information Officer, who
assumes the regulatory responsibility for monitoring
Climate Risk exposure for Suffolk Life Annuities
Limited. The Group Management Team and location
site Office Management have the day to day
responsibility for ensuring that the requirements of
this policy are followed and that monitoring is carried
out to ensure effectiveness of the objectives. All Curtis
Banks employees are expected to support the aims and
objectives of the Curtis Banks Environmental &
Sustainability Policy.
Objectives:
The overall objectives of the policy are as follows:
•
•
Make efficient use of natural resources by
conserving energy and water, minimising waste
and implementing recycling initiatives wherever
possible
Meet our duty of care requirements in relation to
waste by ensuring the safe keeping,
transportation and disposal of waste
18 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
ST R AT EG I C R E P O RT
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Corporate and social responsibility
continued
•
•
•
•
•
•
•
•
•
Use recycled products constructed of recycled
materials whenever commercially justifiable
Keep work transport use to a minimum and to
encourage car sharing where appropriate
Wherever possible, work with suppliers that
recognise and reduce the environmental impact
of their products and transportation
Include environmental considerations during the
procurement process for new services and
equipment
Ensure staff are engaged and aware of the Curtis
Banks Group Environmental & Sustainability
objectives and how they can support and assist in
meeting these targets
Ensure that staff are updated with Environmental
information, such as Recycling initiatives and
Recycling incentive
Where possible adhere to the “waste hierarchy”
through prevention, reduction, re-use and
recycling
Use the most environmentally friendly cleaning
products whenever possible
Curtis Banks Group will meet any legal energy
management legislation requirements and
endeavour to meet best practice guidance
Targets:
To achieve our aims, we have set ourselves the
following targets:
•
•
•
•
•
•
To weigh, monitor and record all waste that
leaves our office locations. This is to include all
landfill, recycled and confidential waste,
batteries, fluorescent tubes, light bulbs, ink
cartridges and toner, corporate clothing and
IT equipment
To ensure air conditioning engineers complete
the FGAS register and that we have access to this
information, including the record of any lost
fugitive gases
Review Curtis Banks’ electricity and water
consumption in our offices, look to introduce
energy efficient systems and plant and
equipment to further reduce on-site electricity
and water usage
Ensure that where appropriate all contractors
taking waste from the site have the correct
waste transfer notes/waste carrier licenses and
that certification of safe destruction is issued
Actively promote and encourage a positive
recycling ethos across the Curtis Banks Group and
aim to recycle over 55% of all location waste
each year
All plant and equipment must be serviced
regularly to ensure that it is safe and working
efficiently and correctly
•
•
Ensure that our staff are engaged and given
regular Environmental initiative updates
Continually review environmental innovations
and where possible introduce these to further
improve environmental management
Monitoring & Auditing:
Progress against these objectives will be monitored
through:
•
•
•
•
•
Annual management review of this Environmental
& Sustainability policy and any associated
environmental procedures and processes carried
out by the location Office Management
Continual review of the procedures and processes
carried out across the entire Curtis Banks Group,
achieving a consistent approach across all
business areas
Staff encouraged to take an active responsibility,
to put forward ideas and to encourage colleagues
to recycle and to report any facility faults
immediately
Staff will be given regular Environmental updates
and always have the opportunity to put forward
new ideas and innovations
Reviewing all new legislation and best practice
guidance
Addressing the challenge of Climate Change
Group Initiatives:
The Group predominantly performs administration
duties around investments and consultancy to financial
services firms. The investments purchased, within the
limits of our Allowable Investment Schedule and
COBS 21, are held directly or by an investment
manager, nominee or third party custodian (being
a party that holds investments on behalf of our
investors’ SIPPs). The investment choices are made
between the client and their financial adviser, or in
a small minority of cases by the investor themselves,
and SLA does not give advice as part of its
administration duties. As such, we cannot significantly
influence the investment choices of our clients and
promote ESG or sustainable investments over other
industries or sectors.
However, where we are able to influence outcomes,
primarily in relation to our own corporate decisions
and direction, we demonstrate Corporate,
Environmental & Social Responsibility.
Streamlined Energy and Carbon Reporting
(“SECR”)
First time adoption
Curtis Banks Group is adopting SECR for the first time
in the year ended 31 December 2020. The Group has
elected 2020 as its reference year and as such is
presenting usage and output data for 2020 as a
stand-alone year in its first report. Subsequent years’
reporting is expected to include comparative data
from the reference year set against that of the
relevant reporting period.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 19
ST R AT EG I C R E P O RT
continued
Corporate and social responsibility
continued
Methodology
The Group has identified the areas relevant to its
contribution to greenhouse gases (GHGs) as being the
areas of business travel and electricity usage in office
premises. On this basis, the Group has collated data
relating to these areas for the full year ended
31 December 2020. The Group has used average engine
size and fuel consumption in order to arrive at an
imputed annual contribution to GHGs through
car mileage related to business travel. Data on
average GHGs per kWh has been sourced from monthly
invoice records, which has then been applied against
the Group’s actual kWh usage in order to arrive at
GHGs generated through office based operations. The
imputed GHGs have then been divided by annual gross
revenue in order to arrive at an intensity ratio for the
Group. The data and calculations are presented in the
table below:
Reference Year*
Global greenhouse gas emissions and energy use data for the period Year ended
1 January 2020 to 31 December 2020 31 December 2020
Energy consumption used to calculate emissions (kWh):
Energy consumption related to business travel
Business travel in private vehicle (miles travelled) 13,089
Calculated total CO2 emissions related to business travel - metric tonnes 0.2
Energy consumption related to office activities
Energy consumption used to calculate emissions (kWh) 906,768
Average CO2 per kwh – tonnes 0.000203
Calculated total CO2 emissions related to office electricity usage – metric tonnes 184.1
Total GHGs generated through all activities – tonnes CO2 184.3
Percentage of CO2 from office activities vs total 0.1%
Percentage of CO2 from business travel vs total 99.9%
Intensity ratio: Tonnes CO2e/Annual gross revenue 0.0000034
* Reference year and current year are the same in the year ended 31 December 2020 as this is the first year of adoption.
Interpretations and energy efficiency actions taken by
the Group
Due to the nature of the Group’s business operations,
there is not a great burden of business travel in terms
of carbon footprint. Per the table above, the greatest
source of CO2 generation in the business relates to
office based activities, primarily electricity usage in
office premises. Travel related emissions as a
percentage of the total equate to only 0.1% whereas
CO2 generated from office based activities equates to
99.9% of the total. As referred to in the ESG section on
pages [23 to 25], the Group has taken considerable and
ongoing measures in order to reduce C02 outputs
relating to office activities. Further information
around this is detailed on page [24]. Additional specific
energy efficiency actions taken across the Group are
detailed below:
•
•
Across all group office locations, the Group is
actively pursuing a strategy to reduce power
usage of our desktop hardware. We are expecting
to reduce power consumption of current desktop
computers by around 90% as well as decreasing
electrical and packaging waste in the long term.
These changes form part of an on-going strategy
for maintenance, ensuring that environmental
impacts are considered in our technology refresh
programme.
A working group was formed to ensure
compliance with the ESOS regulations. An
external third party was appointed to help
undertake the required tracking and reporting of
energy usage. The third party was provided with
the data they needed relating to the Group’s
travel energy, together with access to its
corporate offices. Display Energy Certificates for
the Ipswich and Bristol office have been
obtained, and a full report for Dundee (as Display
Energy Certificates do not apply in Scotland).
These will be included in the submission to the
Environment Agency and to those within the
business responsible for the energy used by our
buildings for consideration. Further work is
planned on ESOS in future as our understanding
evolves.
Installation of a new cooling & heating which is
30% more energy efficient at our office at
Ipswich
Reviewing the possibility of LED systems for lights
in our office at Ipswich
Encouraging employees to adopt cycling to work
by installing a fixed security cage and providing
D-locks for use at Ipswich
•
•
•
On behalf of the board
Dan Cowland
Chief Financial Officer
6 April 2021
20 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
G OV E R N A N C E
continued
Board of Directors
Will Self
Chief Executive Officer
Will joined the Board in August 2016 and has almost 20 years of experience
in the SIPP and SSAS industry. Will was CEO of the Suffolk Life Group prior
to acquisition by Curtis Banks Group PLC. Prior to that Will was Chief
Commercial Officer of the Digital Savings Division (including Cofunds) of
L&G and holds an MBA from Cranfield School of Management.
Dan Cowland
Chief Financial Officer
Dan is a Fellow of the ICAEW, having qualified as a Chartered Accountant
with Ernst & Young in 1997. Having worked in EY’s Banking and Capital
Markets group, Dan moved to the WestLB owned Panmure Gordon business
where he spent seven years in various finance roles, latterly as the Head of
Finance. Dan performed senior finance roles at Lehman Brothers,
Macquarie Bank and Shore Capital Stockbrokers before being appointed to
the Board of WH Ireland plc in March 2014 as Finance Director. Dan joined
Curtis Banks in July 2019 as the Group’s Chief Financial Officer.
Jane Ridgley
Chief Operating Officer
Jane Ridgley joined the Board on 18 January 2019. Jane has many years’
experience of working for Legal & General plc, working closely with
advisers to deliver their clients’ needs in a sales and operational capacity.
15 years’ experience working directly with IFAs led her to take a role as
Investment Development Director in 2009. She then progressed to Product
Director, responsible for the design and development of workplace savings,
investment and product proposition. Jane joined Suffolk Life as Operations
Director in September 2013. Her role expanded to cover Human Resources
in March 2016 before assuming the role of Chief Operating Officer for the
Curtis Banks Group in April 2018.
Chris Macdonald,
Non-Executive Chairman and Non-Executive 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, a Director of Millfield and is an adviser to
a number of financial services companies and is an associate of the
Institute of Continuing Professional Development. Chris brings experience
of involvement with an AIM listed company for many years and knowledge
of the challenges and responsibilities towards all stakeholders attached to
being a listed company as well as bringing financial services industry
experience to the Group.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 21
G OV E R N A N C E
continued
Board of Directors
continued
Bill Rattray
Non-Executive Director, Chairman of the Audit Committee and Chairman of
the Risk & Compliance Committee
Until 2019, Bill was Chief Financial Officer of Standard Life Aberdeen plc,
one of the world’s largest investment companies, having previously served
as Finance Director of Aberdeen Asset Management PLC since 1991. Bill is
a Chartered Accountant and brings strong financial skills and extensive
experience of the asset management industry, having spent significant
time as an Executive Director of a FTSE 100 company Bill brings a depth of
experience in dealing with shareholders and looking after their interests.
Jules Hydleman
Non-Executive Director and Chairman of the Remuneration Committee
Jules has over 16 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. Jules brings to the Board a ‘non-industry’ outlook to
the activities of the Group and with a background in sales and marketing
this provides valuable input. Jules also provides experience that focuses on
remuneration policies based on performance and targets.
Jill Lucas
Non-Executive Director and Chairman of Dunstan Thomas
Jill has spent all her career in technology, most latterly leading technology
transformation at Unilever, prior to which she served as Chief Information
Officer at both Towergate Insurance and Belron International. In her early
career, she undertook many technology leadership roles at Reuters (now
Thomson Reuters), Barclays and Sainsbury’s. Jill is currently a
Non-Executive Director at National Savings & Investments (NS&I) and
joined the Board of Curtis Banks in January 2021. Jill is also the Chair of
Dunstan Thomas.
22 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
G OV E R N A N C E
continued
Directors’ Report
The Directors present their annual report and audited
consolidated financial statements for the year ended
31 December 2020.
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. Information on financial risk management is
disclosed within note 32 to the financial statements.
Results and dividends
The consolidated statement of comprehensive income
for the year is set out on page 45.
A final dividend in respect of 2019 results of 6.50p per
share totalling £3,506,944 was proposed and paid on
8 June 2020. An interim dividend in respect of 2019
results of 2.50p per share totalling £1,642,134 was
paid on 13 November 2019. A final dividend of 6.50p
per share is proposed and, if approved, will be paid to
shareholders on the register at the close of business on
7 May 2021. The shares will be marked ex-dividend on
6 May 2021 and the dividend paid on 4 June 2021.
Substantial Shareholders
At 1st March 2021 the Company had been notified of the following interests representing 3% or more of its issued
share capital:
No. of Ordinary shares Percentage Holding
Chris Banks 14,651,142 22.06%
Chelverton Asset Management 5,250,000 7.90%
Liontrust Asset Management 4,941,862 7.44%
Canaccord Genuity Wealth Management 4,799,900 7.23%
Octopus Investments 4,702,523 7.08%
BlackRock Investment Management 3,883,877 5.85%
Unicorn Asset Management 3,785,515 5.70%
Paul Tarran 3,335,478 5.02%
Rupert Curtis 2,974,258 4.48%
Tellworth Investments 2,380,952 3.58%
Sally Curtis 2,336,000 3.52%
Directors
The following Directors have held office since
1 January 2020 and up to the date on which the
financial statements were signed:
Will Self
Jane Ridgley
Dan Cowland
Chris Macdonald
Bill Rattray
Jules Hydleman
Jill Lucas (appointed 19 January 2021)
Directors will seek re-election immediately following
appointment at the Company’s annual general meeting
and every three years thereafter.
Directors’ indemnity
The directors had qualifying third party indemnity
cover totalling £7,000,000 during the year ended
31 December 2020 and up to the date these financial
statements have been approved.
Related party transactions
Details of related party transactions are given in
note 37.
Annual General Meeting
The annual general meeting of the Company will be
held on 27 May 2021. The Notice of the Meeting is
included with this document and contains further
information on the business to be proposed at the
meeting.
Independent Auditors
The independent 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
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 23
G OV E R N A N C E
continued
Directors’ Report
continued
following 12 months based on current and expected
market conditions together with current performance
levels. The Directors have also considered the impact
of a number of severe but plausible events that could
impact the business, such as the COVID-19 pandemic,
and the Directors believe the Group is well placed to
manage these business risks successfully. The Group’s
detailed financial forecasts show that the Group
should continue to be cash generative, maintain
a surplus over its regulatory minimum capital
requirements and be able to operate within the its
current financing arrangements. Accordingly, the
Directors continue to adopt the going concern basis for
the preparation of the Financial Statements.
Section 172 of the Companies Act 2006
A Director of a company must act in the way they
consider, in good faith, would be most likely to
promote the success of a company for the benefit of
its members as a whole, and in doing so have regard
(amongst other matters) to:
Risk Management
The Group provides important products to its clients
in a regulated environment. As the Group grows, its
business and risk environment will become more
complex. It is vital therefore that the Directors
identify, evaluate, manage and mitigate the risks the
Group faces, and that Directors continue to evolve
their approach to risk management. For details of the
Group’s principal risks and uncertainties and how the
Directors mitigate them please see pages 12 to 16.
Our People
The Group is committed to being a responsible
business. Our behaviour is aligned with the
expectations of our people, clients, community and
society as a whole. People are at the heart of our
Group and, for our business to succeed, we need to
develop them and manage their performance, while
operating as efficiently as possible. We must ensure
that we share common values that inform and guide
our behaviour so we achieve our goals in the right way.
We are an equal opportunities employer and it is our
policy to ensure that all job applicants and employees
are treated fairly and on merit regardless of ethnicity,
sex, marital/civil partnership status, age, disability,
religious belief, pregnancy, maternity, gender
reassignment or sexual orientation.
Business Relationships
The Group’s strategy includes organic growth,
acquisition and diversification. To achieve this the
Group develops and maintains strong client and
supplier relationships. Culture, values and standards
underpin how the Group creates and sustains value
over the longer term and are key elements of how it
maintains a reputation for high standards of business
conduct. Please see the Group’s corporate governance
principles on page 26.
Community and Environment
The Group is dedicated to ensuring an environment
where collaboration and growth of all staff is seen as
being part of the fabric of day to day office culture.
Also, the Group encourages that any action that can
be taken to reduce its impact on the environment
should be considered. Please see more details of this
on pages 17 to 20.
Shareholders
The Board is committed to openly engaging with the
Group’s shareholders, as it recognises the importance
of a continuing effective dialogue, whether with major
institutional investors or with individual shareholders,
brokers or analysts. It is important to us that
shareholders understand the Group’s strategy and
objectives, so these must be explained clearly,
feedback heard and any issues or questions raised
properly considered. For further details on how we
engage with our shareholders please see page 28.
Regulators
The Group has an open and transparent relationship
with its regulators and engages with them both
directly and through a broad range of industry forums
and consultations. The Board encourages the
engagement with, and participation in, industry
associations and it is updated on legal and regulatory
developments on an ongoing basis.
Board oversight
The main methods by which the Directors exercise
their duties include the following:
• Board strategy days, which are held periodically,
to review the Group’s business model and
strategy to ensure the long term sustainability of
the Group and its ability to meet its stakeholder
needs;
• Quarterly Board meetings are held throughout
the year and additional meetings are convened
on an ad-hoc basis to address time critical
matters. Through the course of 2020 the Board
met frequently, and as required, to manage
corporate transactions and the response to the
COVID-19 pandemic;
• The Board’s risk management structure and
procedures set out in the Chairman’s Corporate
Governance report considers the potential
consequences of decision making over the
appropriate time horizons to manage any
potential risks to the Group or stakeholder
groups;
• The Board carries out its direct shareholder
engagement through the annual general meeting,
communicating with investors including those
staff holding shares in the Group.
• External assurance is obtained through external
audit and the internal audits undertaken by a
specialist independent firm.
Principal decision making
The Group comprises two operating segments, being
pension administration and FinTech, each of which has
its own governance structure in place and these are
brought together by the Group’s Executive Committee
(“ExCo”). The Group’s governance framework
24 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
G OV E R N A N C E
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Directors’ Report
continued
delegates the day-to-day operational responsibility to
ExCo which, along with the other Committees forming
part of the broader governance structure, has clearly
defined terms of reference which are reviewed and
approved on an annual basis.
The Board has a documented schedule of matters
reserved specifically for its decision. These matters
include the approval of the interim and year end
financial statements and the review and approval of
the annual budget. Other strategic matters include
decision making on corporate transactions
(acquisitions and disposals), material capital
expenditure and significant contractual commitments.
During the year, the Board made non-routine decisions
regarding the acquisition of Dunstan Thomas and
Talbot and Muir; as well an equity fundraising through
the issuance of ordinary share capital and the
re-negotiation of existing credit facilities with
Santander to help finance these acquisitions. These
acquisitions were strategically significant in respect of
the Group’s stated objectives to achieve growth
through both acquisition and diversification.
The Board also responded to the challenge of COVID-19
as it evolved throughout the year, reacting quickly and
effectively to implement its business continuity plan
and limit the severity on the business. The welfare of
our employees has been the top priority for the Group
throughout the period, whilst continuing to deliver a
continued level of service to our clients and introducer
community.
The Group has overcome the numerous challenges
experienced during the year and has remained
operational throughout, adapting processes and
communication channels to support client servicing as
required. In the first half of the year the Board
decided that it would not look to financially benefit
from any of the government initiatives available to
assist businesses through the pandemic, recognising
not only the economic burden placed on the UK
taxpayer but also the robustness and resilience of the
Group’s financial position which has enabled the Group
to overcome the difficult trading conditions and leave
its dividend unaffected.
Statement of directors’ responsibilities
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance
with applicable law and regulation.
Company law requires the directors to prepare
financial statements for each financial year. Under
that law the Directors have prepared the Group
financial statements in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006 and
international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union and Company financial
statements in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006.
Under company law, 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
group and company and of the profit or loss of the
group for that period. In preparing the financial
statements, the directors are required to:
• select suitable accounting policies and then
apply them consistently;
• state whether applicable international
accounting standards in conformity with the
requirements of the Companies Act 2006 and
international financial reporting standards
adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union
have been followed for the group financial
statements and international accounting
standards in conformity with the requirements of
the Companies Act 2006 have been followed for
the company financial statements, subject to any
material departures disclosed and explained in
the financial statements;
• make judgements and accounting estimates that
are reasonable and prudent; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Group and Company will
continue in business.
The Directors are also responsible for safeguarding the
assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group and Company's transactions and
disclose with reasonable accuracy at any time the
financial position of the Group and Company and
enable them to ensure that the financial statements
comply with the Companies Act 2006.
The Directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
In the case of each Director in office at the date the
Directors’ Report is approved:
• so far as the Director is aware, there is no
relevant audit information of which the Group
and Company’s auditors are unaware; and
• they have taken all the steps that they ought to
have taken as a Director in order to make
themselves aware of any relevant audit
information and to establish that the Group and
Company’s auditors are aware of that
information.
This confirmation is given in accordance with Section
418(2) of the Companies Act 2006.
On behalf of the board
Dan Cowland
Director
6 April 2021
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 25
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Chairman’s corporate governance report
Introduction
The Board is committed to maintaining high standards
of corporate governance, integrity and business ethics.
On 28 August 2018, the Board of Curtis Banks Group
PLC decided to fully adopt the QCA Corporate
Governance Code (2018 edition) (“the QCA Code”).
The Board believes that the QCA Code provides the
right governance framework for a group of our size in
which we can continue to develop our governance
model to support our business.
Corporate governance principles
The corporate governance principles contained in the
QCA Code are as follows:
1. Establish a strategy and business model which
promote long-term value for shareholders
2. Seek to understand and meet shareholder needs
and expectations
3. Take into account wider stakeholder and social
responsibilities and their implications for
long-term success
4. Embed effective risk management, considering
both opportunities and threats, throughout the
organisation
5. Maintain the board as a well-functioning,
balanced team led by the chair
6. Ensure that between them the Directors have the
necessary up-to-date experience, skills and
capabilities
7. Evaluate board performance based on clear and
relevant objectives, seeking continuous
improvement
8. Promote a corporate culture that is based on
ethical values and behaviours
9. Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the board
10. Communicate how the company is governed and
is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
Application of the QCA Code and required
disclosures in our annual report or on our
website
Application of the QCA Code requires us to apply the
principles set out above and also to publish certain
related disclosures; these can appear in our annual
report, be included on our website or we can adopt
a combination of the two approaches. Recommended
locations for each disclosure are specified in the QCA
Code and these have been followed.
As Chairman of Curtis Banks Group PLC, it is my
responsibility to lead the Board in ensuring that the
Group has in place good standards of corporate
governance. The Board believes that the QCA Code is
the most appropriate corporate governance code for
the Group, given the size of our business, and will
ensure the Group maintains good corporate
governance practices while allowing the business to
continue its entrepreneurial culture. The Board works
together to ensure that these corporate governance
standards are adhered to and the below sets out how
they are practically implemented.
The Board
The Board comprises three Executive Directors and
four Non-Executive Directors. Details of the Directors
and their strengths and experience are set out on
pages 21 to 22 of this Report.
All the Non-Executive Directors of the Group are
considered to be independent and are as follows:
• Chris Macdonald (Chairman)
• Bill Rattray (Senior Independent Director)
• Jules Hydleman
• Jill Lucas
There are no grounds to question the independence of
any of the above Non-Executive Directors.
Non-Executive Directors are expected to devote such
time as is necessary for the proper performance of
their duties. This is anticipated to be the equivalent of
a minimum of one day a month on work for the Group
including attendance at a minimum of four Board
meetings per annum and the annual general meeting
and consideration of all relevant papers before each
meeting.
All of the Executive Directors are full time employees
of the Group. In addition, Executive Directors are
required to work such additional hours, over and above
normal working hours, that are necessary for the
proper performance of their duties.
All Directors are subject to either an Executive Service
Agreement or a letter of appointment. The Company’s
articles of association (“Articles”) require that each
Director shall retire from office at the third annual
general meeting after the annual general meeting or
general meeting (as the case may be) at which they
were previously appointed. The Articles further
provide that any Director who retires in such
circumstances shall be eligible for re-appointment by
the Shareholders at the annual general meeting at
which his retirement takes effect.
The Board meets formally every three months and on
other occasions where specific transactions or events
dictate the need. In addition, the Board has
established a number of committees in order to
provide corporate governance and these also meet
formally on a quarterly basis. These committees are an
Audit Committee, a Risk and Compliance Committee
and a Remuneration Committee and comprise only the
four 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.
26 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
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Both Chris Macdonald and Bill Rattray have been
Executive Directors of UK publicly listed companies
and maintain their skill sets through those
connections. In addition, Non-Executive Directors
receive external training where appropriate.
Since listing on the AIM market the Company has used
the service of external consultants for guidance on
executive remuneration levels and share incentive
packages. Consultants have also been engaged to assist
in the design and documentation required for the
introduction of share incentive plans for other senior
managers.
The Board regularly consult and meet with both
internal and external auditors to the Company at
quarterly Audit Committee meetings.
Executive Directors maintain their skill set though day
to day interaction with the industry and periodic
training, both internal and external.
All Directors are required to undertake and record
continual professional development training.
The internal advisory responsibilities of the Company
Secretary are currently performed by the Chief
Financial Officer for the Group.
The Chief Executive Officer currently conducts annual
performance appraisals of the other Executive
Directors that report to him. This is also supported by
regular 1:1 meetings between the Executives. In turn,
the Non-Executive Directors conduct the annual
appraisal review of the Chief Executive Officer.
The Board promotes and monitors a healthy corporate
culture through ensuring that the Company has proper
processes and written procedures in place to achieve
this. Monitoring is carried out by the Executive Board
members by day to day interaction with staff at all the
offices and review of all relevant minutes to identify
any areas of weakness. An ‘open door’ policy exists for
all members of staff. In normal times, Non-Executive
Directors visit the offices on a regular basis, albeit this
has been restricted by the Covid-19 pandemic, and
have sight of management committee minutes and
papers to keep fully briefed of the corporate culture
and any issues that may arise.
The Board receives regular updates on matters of
corporate culture in the Board packs prepared for each
Board meeting and through the Executive Committee
minutes, compliance and risk updates and regular
presentations from the Group Heads of Departments.
Board meetings are, restrictions permitting, rotated to
include both the Bristol and Ipswich office locations,
providing the opportunity for Non-Executive Directors
to experience the working and corporate culture and
to gain greater understanding of all areas of the
Group’s business.
Audit Committee
The primary focus of the Audit Committee is on
corporate reporting, from an external perspective,
and on monitoring the Group’s internal control and risk
management systems from an internal perspective.
The Audit Committee is chaired by Bill Rattray with
Chris Macdonald, Jules Hydleman and Jill Lucas as the
other members. Further details on the committee’s
responsibilities and activities are on page 29 of the
annual report.
Remuneration Committee:
The primary function of the Remuneration Committee
is to determine, on behalf of the Board, the
remuneration packages of the Executive Directors and
the bonus and share option schemes to be offered to
employees. The Remuneration Committee is chaired by
Jules Hydleman with Bill Rattray, Chris Macdonald and
Jill Lucas as the other members. Further details on the
committee are on pages 30 to 31 of the annual report.
Risk & Compliance Committee:
The primary function of the Risk & Compliance
Committee is to consider the Group’s appetite for risk,
to review and monitor the risk process undertaken by
the Group and adherence to the risk profile and
monitor procedures for identifying and controlling risk.
The Risk and Compliance Committee is chaired by
Bill Rattray with Chris Macdonald, Jill Lucas and Jules
Hydleman as the other members. Further details on
the committee’s responsibilities and activities are on
pages 29 to 30 of the annual report.
The terms of reference for the Audit, Remuneration
and Risk & Compliance Committees can be found in
the “Investors” section of the Group website at
www.curtisbanks.co.uk.
Attendance at the four scheduled Board and
committee meetings in the year ended 31 December
2020 is set out in the table below:
Board Risk &
Executive directors Meeting Audit Remuneration Compliance
Will Self 4 4 4 4
Jane Ridgley 4 4 4 4
Dan Cowland 4 4 4 4
Non-Executive
directors
Chris Macdonald 4 4 4 4
Bill Rattray 4 4 4 4
Jules Hydleman 4 4 4 4
Jill Lucas (appointed
19 January 2021) — — — —
Board Evaluation
Board effectiveness as a whole is evaluated annually
by means of formal questionnaire completed by each
Director followed by collective discussions on the
results and evaluation of the effectiveness of the
Board. The latest evaluation was undertaken in the
second half of 2020 and the results of the review
confirmed consistent responses among the participants
and no formal recommendations were put forward as
a consequence.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 27
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Chairman’s corporate governance report
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Compliance with legislation
The Group has documented internal policies to ensure
compliance with legislation including those relating to
the Bribery Act, the Modern Slavery Act, and the
General Data Protection Regulations and anti-tax
evasion procedures. There are also internal policies on
dealing in shares of the Company to ensure compliance
with Market Abuse Regulation of the AIM market.
Approved on behalf of the Board
Chris Macdonald
Chairman
6 April 2021
Relationships with shareholders
The Group has a programme of meetings each year
with institutional shareholders, potential shareholders,
brokers and analysts following the release of interim
and annual results. These include formal written
presentations that are available on our website. These
meetings allow the Executive Directors to update
existing and potential shareholders on strategy and the
Group’s performance. Additional meetings with
institutional investors and analysts are arranged from
time to time during the year as requested by our
brokers and investor relations representatives.
Following the formal interim and annual results
presentations, the Board receive copies of feedback
reports keeping them in touch with shareholder views.
Instinctif Partners provide investor public relations to
the Group with Peel Hunt LLP and N+1 Singers acting
as joint brokers.
Chris Macdonald, as Non-Executive Chairman, and the
other Non-Executive Directors are all willing to engage
with shareholders should they have a concern that is
not resolved through the normal channels. The
Company Secretary can also be contacted by
shareholders on matters of governance and investor
relations.
The Board also uses the annual general meeting to
communicate with investors, including those staff
holding shares or options in the Company. The meeting
is ordinarily held in Bristol and attended by
shareholders and professional advisers. All
shareholders are given the opportunity to ask
questions and raise issues; this can be done formally
during the meeting or informally with the Directors
after it. Computershare plc are registrars to the
Company and attend the annual general meeting.
Copies of our annual report, the annual general
meeting notice and the interim report are sent to all
shareholders and copies can be downloaded from the
Investors section of our website. They are also
available on request by writing to the Company
Secretary at 3 Temple Quay, Bristol, BS1 6DZ.
Other information for shareholders (and other
interested parties) is also provided on the Investors
section of our website, including all RNS
Announcements, interim and full year results
presentations to shareholders and other matters
relevant to shareholders.
28 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
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Corporate governance
Audit Committee Report
The Audit Committee is chaired by Bill Rattray with
Chris Macdonald, Jules Hydleman and Jill Lucas as the
other members.
The key duties of the Committee are:
a) 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;
b) To keep under review the adequacy and
effectiveness of the Group’s internal financial
controls and internal control and risk
management systems;
c) 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.
e) Evaluation of the external auditor’s
qualifications, performance, objectivity and
independence, including consideration of the
where other audit services are provided, and
recommendation of appointment of the external
auditor to the annual general meeting of
shareholders.
The Audit Committee has met four times during the
year under review with the external auditors and
internal auditors being in attendance at all of those
meetings. Specific matters discussed at those meetings
included:
a) Review of financial statements for the Group for
the year ended 31 December 2019 and receiving
the external auditors audit report thereon and
considering the key accounting considerations
and judgments attaching to those financial
statements;
b) Consideration and approval of the plan for the
interim review by the external auditor on the
interim financial statements for the six month
period to 30 June 2020;
c) Review of financial statements for the Group for
the six month period ended 30 June 2020 and
receiving the external auditors review report
thereon and considering the key accounting
considerations and judgments attaching to those
financial statements;
d) Consideration and approval of the audit plan for
the year ended 31 December 2020 and
confirmation of key audit matters and areas of
judgement, including carrying value of intangible
assets, going concern assumptions including
consideration of the impact of COVID-19 on the
Group, along with accounting and disclosure
requirements in relation to the acquisitions;
e) Consideration of the effect of the acquisition and
consolidation of Dunstan Thomas and Talbot and
Muir, including the initial valuation of assets
acquired;
f) Review of three reports produced by KPMG in
their role as internal auditors to the Group and
consideration of actions to be taken on matters
arising from those reports;
g) Review the outcome of a tender for appointment
of internal auditors for the period 2021 – 2023
and selection of Mazars as the internal audit
provider for that period.
Risk and Compliance Committee Report
The Risk and Compliance committee is chaired by
Bill Rattray with Chris Macdonald, Jules Hydleman and
Jill Lucas as the other members.
The key duties of the Committee are:
a) 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;
b) To ensure that the Group has in place procedures
and mechanisms for the identification and
control of all fundamental risks including
financial, legal, regulatory and operational risks;
c) 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;
d) To ensure that the Group has in place sufficient
regulatory capital.
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.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 29
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The Risk and Compliance Committee has met four
times during the year under review and received
formal presentations from the Compliance Officer of
the Group at two of the meetings.
Specific matters discussed at those meetings included:
a) Review and consideration of Compliance Reviews
and Compliance Strategy reports for the Group;
b) Consideration of Risk appetite throughout the
Group;
c) Consideration of the risks posed by the COVID-19
pandemic on the business
d) Review of the Group Risk Register and individual
risks within each area of the business. This
register summarises the key risks for the
business, their likely impact and relevant
mitigation actions;
e) Consideration of the appointment of an
additional Non-Executive Director with
a technology background
f) Review and acceptance of Own Risk and Solvency
Assessments for Suffolk Life Annuities Limited.
Remuneration Committee Report
The Remuneration Committee is chaired by
Jules Hydleman with Bill Rattray, Chris Macdonald and
Jill Lucas 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;
b) 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;
c) 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;
d) 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;
e) Within the terms of the agreed policy and in
consultation with the Chairman and/or Chief
Executive Officer 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;
f) To obtain reliable, up-to-date information about
remuneration in other companies of comparable
scale and complexity;
g) 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.
Specific matters discussed at those meetings included:
a) Annual salary reviews for all Executive Directors
and senior management and approval of
parameters for overall annual staff salary annual
reviews;
b) Agreement of Bonus awards in respect of the
year ended 31 December 2020;
c) Proposals and agreement to a further offering in
2020 to all staff of the “Save As You Earn” Share
Scheme;
d) Consideration and agreement of a remuneration
package for the new Non-Executive joining the
Group during the year.
e) Consideration of the funding of the Employee
Benefit Trust and the use of the Trust for
satisfying options exercised.
f) Consideration and agreement of the Executive
bonus schemes with performance targets for
2020 for Executive Directors and senior staff and
approval of the parameters for the 2020 staff
bonus scheme.
g) Consideration and agreement of bonus scheme
for the sales and distribution team.
The Committee continues to evaluate other incentive
based share option schemes for all employees and
Directors and additional grants under the existing
schemes.
Remuneration Policy
It is the policy of the Remuneration Committee to
reward Executive Directors with packages that will
30 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
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retain, incentivise and motivate them. The packages
are designed to be market competitive and are
reviewed annually.
Current remuneration packages for Executive Directors
comprise:
a) Basic salary
b) Pension contributions
c) Benefits in kind comprising principally life
assurance and travel allowance
d) Performance based annual bonus
e) Award of shares under share incentive plans
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.
The Remuneration Committee has previously granted
awards based under the Long Term Incentive Plan and
the Company Share Option Plan. Awards are limited to
a 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.
For awards made under the Long Term Incentive Plan
in 2017 and 2018, the percentage vesting of the shares
depends on 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
Director ceasing employment with the Company during
the vesting period, except under such conditions as
retirement or illness, the grant of shares will lapse.
Awards were made to each of the Executive Directors
in September 2020 under a new LTIP. Vesting of these
awards is dependent on the extent to which a basket
of performance criteria are satisfied, measured over
a three year period. To the extent that the
performance criteria are met, 50% of the awards will
vest following publication of the company’s interim
results to 30 June 2023, and 50% one year later. The
performance criteria encompass the following
categories:
• Financial – measured by reference to adjusted
EPS and operating margin;
• Customer – measured by reference to organic net
growth of the SIPP book;
• Internal process – by reference to appropriate
quantitative operational efficiency measures;
and
• Innovation and delivery of strategy – review by
Remuneration Committee, with the intention
that this may be supported by quantitative
metrics in due course.
For reasons of commercial sensitivity, the precise
performance measures will only be disclosed at the
end of the performance period.
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.
Service Agreements and 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.
Date of Notice Notice
Service Period by Period by
Director Agreements Company Director
Executive:
Will Self 30 August 2016 12 months 12 months
Jane Ridgley 18 January 2019 12 months 12 months
Dan Cowland 8 July 2019 12 months 12 months
Non-Executive:
Chris Macdonald 2 April 2015 3 months 3 months
Bill Rattray 2 April 2015 3 months 3 months
Jules Hydleman 2 April 2015 3 months 3 months
Jill Lucas 18 January 2021 3 months 3 months
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 31
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Directors’ remuneration report
Directors’ remuneration
Total emoluments
Basic salary Pension 2020 2019
Director and fees Bonus contributions Benefits £ £
Will Self 309,744 189,717 6,500 7,295 513,256 444,981
Jane Ridgley* 213,571 134,110 8,100 7,036 362,817 317,119
Dan Cowland** 251,116 150,465 5,480 13,295 420,356 176,039
Paul Tarran*** — — — — — 309,504
Chris Macdonald 104,000 — — — 104,000 101,667
Bill Rattray 52,000 — — — 52,000 50,833
Jules Hydleman 52,000 — — — 52,000 51,000
Jill Lucas**** — — — — — —
Total 982,431 474,292 20,080 27,626 1,504,429 1,451,143
* Appointed 18 January 2019.
** Appointed 5 September 2019.
*** Resigned 30 September 2019.
**** Appointed 19 January 2021.
Directors’ shareholdings
As at 31 December 2020, 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:
2020 2019
Director No. % No. %
Will Self 56,661 0.01 — —
Jane Ridgley 27,166 0.01 — —
Dan Cowland 9,523 0.01 — —
Chris Macdonald 22,179 0.03 7,894 0.01
Bill Rattray 47,894 0.07 7,894 0.01
Jules Hydleman 40,270 0.06 37,890 0.07
Jill Lucas — — — —
32 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
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Directors’ remuneration report
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The following share options are currently held by Directors under the Long Term Incentive Plan (“LTIP”):
Number of Number of
shares under Granted/ shares under
option at (Exercised) option at
Date of 31 December during 31 December Exercise Exercise
Director grant 2019 the year 2020 price date
Will Self 26/10/2017 73,043 (73,043) — 0p 26/10/2020
Will Self 05/10/2018 55,559 — 55,559 0p 05/10/2021
Will Self 14/09/2020 — 250,000 250,000 217p 14/09/2023
Will Self 14/09/2020 — 250,000 250,000 217p 14/09/2024
Jane Ridgley 26/10/2017 17,391 (17,391) — 0p 26/10/2020
Jane Ridgley 18/09/2018 21,951 — 21,951 0p 18/09/2021
Jane Ridgley 14/09/2020 — 250,000 250,000 217p 14/09/2023
Jane Ridgley 14/09/2020 — 250,000 250,000 217p 14/09/2024
Dan Cowland 14/09/2020 — 250,000 250,000 217p 14/09/2023
Dan Cowland 14/09/2020 — 250,000 250,000 217p 14/09/2024
167,944 1,409,566 1,577,510
The following share options are currently held by Directors under the Company Share Option Plan (“CSOP”):
Number of Number of
shares under Granted shares under
option at (Exercised)/ option at
Date of 31 December during 31 December Exercise Exercise
Director grant 2019 the year 2020 price date
Will Self 14/09/2016 53,745 — 53,745 267p 14/03/2018
Will Self 15/12/2016 535,996 — 535,996 201p 15/12/2019
Will Self 26/06/2017 535,996 — 535,996 260p 25/03/2020
Will Self 08/04/2020 — 93,548 93,548 217p 08/04/2023
Jane Ridgley 14/09/2016 27,388 — 27,388 267p 14/03/2018
Jane Ridgley 08/04/2020 — 66,129 66,129 217p 08/04/2023
Dan Cowland 08/04/2020 — 74,193 74,193 217p 08/04/2023
1,153,125 233,870 1,386,995
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 33
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continued
Directors’ remuneration report
continued
The following share options are currently held by Directors under the Executive Bonus Scheme (“EBS”):
Number of Number of
shares under Granted/ shares under
option at (Exercised) option at
Date of 31 December during 31 December Exercise Exercise
Director grant 2019 the year 2020 price date
Will Self 08/04/2020 — 13,271 13,271 0p 08/04/2022
Jane Ridgley 08/04/2020 — 8,479 8,479 0p 08/04/2022
Dan Cowland 08/04/2020 — 3,686 3,686 0p 08/04/2022
— 25,436 25,436
Further information about the CSOP, LTIP and EBS share option schemes are contained within note 27.
Group Remuneration
Remuneration paid to employees of the Group, including salary and benefits, are set in line with prevailing market
rates and at levels to attract the speciality skills required by the Group. In addition to salary and benefits wider
share ownership of the Group by staff is encouraged through share option and sharesave schemes.
Jules Hydleman
Chairman of the Remuneration Committee
6 April 2021
34 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
C O N S O L I DAT E D F I N A N C I A L STAT E M E N TS
FINANCIAL STATEMENTS 36 – 91
Independent Auditors’ report 36 – 44
Consolidated statement of
comprehensive income 45
Consolidated statement of
financial position 46
Company statement of
financial position 47
Consolidated statement of
changes in equity 48
Company statement of
changes in equity 49
Consolidated statement of
cash flows 50
Company statement of
cash flows 51
Notes to the financial statements 52 – 91
Company information 92
Supplementary unaudited
information 93 – 94
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 35
I N D E P E N D E N T AU D I TO R S ’ R E P O RT TO T H E
M E M B E R S O F C U RT I S BA N KS G RO U P P LC
Report on the audit of the financial statements
Opinion
In our opinion, Curtis Banks Group plc’s group 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 2020 and
of the group’s profit and the group’s and company’s cash flows for the year then ended;
• have been properly prepared in accordance with international accounting standards in conformity with the
requirements 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, which comprise: the Consolidated and Company statement of financial position as at 31 December
2020; 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.
Separate opinion in relation to international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union
As explained in note 2 to the financial statements, the group, in addition to applying international accounting
standards in conformity with the requirements of the Companies Act 2006, has also applied international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
In our opinion, the group financial statements have been properly prepared in accordance with international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union.
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. During the
year the group acquired the Talbot and Muir Group, another administrator of self-invested pension products and
the Dunstan Thomas Group who is a provider of technology and complementary services in the financial services
market.
36 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
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Overview
Audit scope
We have scoped the audit based on the financially significant components and material account balances within the
group, which are described below:
Key audit matters
• Accounting for the 2020 acquisitions in the consolidated Group accounts (group)
• Carrying value of goodwill and client portfolios (group)
• Impact of COVID-19 (group and parent)
Materiality
• Overall group materiality: £670,000 (2019: £668,000) based on 5% of Adjusted profit before tax.
• Overall company materiality: £635,000 (2019: £493,000) based on 1% of net assets capped at 95% the overall
group materiality.
• Performance materiality: £503,000 (group) and £476,000 (company).
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.
Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined in the Auditors’ responsibilities for the audit of the financial statements section, to
detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to breaches of UK regulatory principles, such as those governed by the Financial Conduct
Authority and the Prudential Regulation Authority, and we considered the extent to which non-compliance might have a
material effect on the financial statements. We also considered those laws and regulations that have a direct impact on
the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls),
and determined that the principal risks were related to posting inappropriate journal entries to revenue and
management bias in accounting estimates specifically the carrying value of intangible assets and the valuation of the
contingent consideration relating the acquired entities. Audit procedures performed by the engagement team included:
• Discussions with Risk and Compliance function and the company’s Head of Legal, including consideration of known
or suspected instances of non-compliance with laws and regulation and fraud.
• Assessment of any matters reported on the company’s whistleblowing helpline .
• Reading key correspondence with, the Prudential Regulation Authority and the Financial Conduct Authority in
relation to compliance with laws and regulations.
• Reviewing relevant meeting minutes including those of the Board and Risk Committee.
• Reviewing data regarding customer complaints, the company’s register of litigation and claims and the
professional indemnity notification log, in so far as they related to non-compliance with laws and regulations and
fraud.
• Identifying and testing journal entries, in particular any journal entries posted with unusual account
combinations; and.
• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
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There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the
financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
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.
Accounting treatment of acquisitions and the Impact of COVID-19 are new key audit matters this year. Carrying value of
investment in the Suffolk Life Group and Provisioning and contingent liability disclosure, which were key audit matters
last year, are no longer included because of there is a relatively low level of judgement required to establish that the
carrying value of investment in the Suffolk Life Group is supportable. The provision considered within our key audit
matter in the prior year has been partly utilised and the associated data cleansing exercise has progressed which in
combination has reduced the uncertainty in relation to these balances and disclosures.. Otherwise, the key audit
matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Accounting for the 2020 acquisitions in the
consolidated Group accounts (group)
During the year ended 31 December 2020, the
Group completed the purchase of the Dunstan
Thomas Group (“DT”), and the Talbot and Muir
Group (“T&M”).
In line with IFRS 3, management have
consolidated DT and T&M into the Group
accounts at year end. This included a purchase
price allocation (“PPA”) for each acquisition to
fair value the balance sheets of the new
subsidiaries at their acquisition date and
allocate the consideration paid between
Tangible Assets and separately identifiable
Intangible Assets with the remainder included in
Goodwill. As required under accounting
standards management have performed an
initial assessment of the fair value of the
acquired tangible and intangible assets and
liabilities and, having regard to the
consideration payable, determined the level of
goodwill arising in relation to each acquisition.
There is judgement and estimation involved in:
•
The valuation of the consideration paid for
each acquisition, including a fair value of
the consideration contingent upon future
performance of the businesses acquired.
The audit procedures we have performed to address this key
audit matter are as follows:
For T&M:
• We assessed the total valuation of the consideration paid
including the estimation of the contingent consideration
due in the future.
• We considered management’s assessment that there
should be a separately identifiable intangible asset to
represent existing customer relationships or “client
portfolios” and how its valuation had been derived. We
challenged the assumptions used in the valuation and
considered their consistency with our understanding of
similar books of business acquired in the past.
• We assessed the estimation of the useful life of the
intangible created.
For DT:
• We assessed the total valuation of the consideration paid
including the estimation of the contingent consideration
due in the future.
• We considered management’s assessment that there
should be a separately identifiable intangible asset to
represent existing customer relationships and the
software developed within the business. We challenged as
to whether these should be shown as separate intangibles
and whether there should be consideration of other types
of intangible asset.
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Key audit matter
How our audit addressed the key audit matter
•
The identification and valuation of the
separately identifiable intangible assets
within the newly acquired businesses. In the
case of DT and T&M these comprise
internally generated software and customer
relationships.
In relation to DT, the fair value adjustments to
reflect the separately identifiable intangible
assets have been measured provisionally and
collectively pending completion of an
independent valuation, which has been delayed
as explained in note 34.
The consolidation process itself, including the
fair value of tangible assets is not judgemental
and we consider this to be of a lower risk. We
have therefore focused this key audit matter on
the assumptions, methodology and disclosure of
the result of this PPA process including the
valuation of the resulting intangibles.
Refer to note 2, Significant accounting policies,
note 13, Intangible assets and note 34, Business
combinations.
Carrying value of goodwill and client portfolios
(group)
The Group financial statements include
intangible assets arising from various business
and client portfolio acquisitions including these
that have related to previous acquisitions and
also Dunstan Thomas (“DT”) and Talbot & Muir
(“T&M”) in 2020 (which are considered in a
separate key audit matter as discussed above).
The total carrying value of these intangible
assets, as reflected in note 13, is material to the
consolidated Group accounts.
Management is required to consider if the
carrying values are appropriate or if an
impairment loss should be recognised if the
carrying value of any intangible 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. Management considers
the fair value of the intangible assets to be their
value in use.
• We considered management’s assessment of the useful
life of the intangible created.
We concluded that, with further information from the DT
business, a more precise valuation could be determined. We
therefore agree with management's assertion that the
measurement of the separately identifiable intangible assets
in relation to DT are provisional.
• We considered the disclosures made in the financial
statements in relation to these intangibles and
particularly in relation to the provisional nature of the
DT PPA process.
We concluded that the total valuation of intangibles created
(combining Goodwill and the separately identifiable assets
discussed above) was appropriate. We also concluded that the
split between Goodwill and the separately identifiable
intangible in relation to the customer book within T&M was
appropriate and that the equivalent split in DT has been
disclosed correctly as provisional with a reasonable estimate
made.
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 the carrying value
of individual client portfolios and goodwill;
the revenue and margin forecasts for each of the
customer books;
the discount rate and attrition assumption used in
these calculations; and
the period over which the client portfolios are
amortised.
– We performed sensitivity analysis over the assumptions
used;
– We assessed management’s forecasting ability by
comparing previous forecasts to actual past performance;
and
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Key audit matter
How our audit addressed the key audit matter
We consider the primary risk, in respect of
determining an appropriate carrying value for
intangibles, is in relation to the assumptions
adopted by management as part of their
impairment assessments most notably the
quantum and timing of future cash flows arising
in relation to the individual assets and the
discount rate to apply to derive a net present
value in relation to these cash flows as well as
the period over which Curtis Banks will derive
benefit from various acquired client portfolios.
The Covid-19 pandemic and associated economic
situation creates additional uncertainty in the
development of these forward looking financial
predictions.
Refer to note 13, Intangible assets.
Impact of COVID-19 (group and parent)
The impacts of the global pandemic due to
COVID-19 continue to cause significant social and
economic disruption up to the date of reporting.
In our audit we have identified the following key
impacts of COVID-19 to consider:
Ability of the entity to continue as a going concern
There are a number of potential matters in
relation to COVID-19 which could impact on the
going concern status of the Group and Company
such as continued downward pressure on interest
rates due to the economic environment.
Management has produced a going concern
assessment which projects the future cash
position considering, particularly, liquidity,
regulatory capital surplus and compliance with
debt covenants of the group.
The assessment has shown the group and entity
to have sufficient liquid resources to meet
payments as they fall due and not to breach
their regulatory capital requirements as well as
to ensure compliance with the Group’s debt
covenants for the period of the assessment.
The Directors’ have concluded that the Group
and Parent are a going concern for at least the
period of 12 months from the data of the
accounts being approved.
– We considered whether management had considered the
potential future impact of COVID-19 in their forward
looking forecasts.
From our work carried out we found that the assumptions
used were supported by the evidence we obtained and
accordingly that the carrying value of intangible assets was
supported.
In assessing management’s consideration of the impact of
COVID-19 on the Group and Company we have performed the
following procedures:
•
•
•
Obtained and reviewed management’s going concern
assessment which included severe but plausible downside
scenarios, board approved operating plan, cash flow,
regulatory capital and debt covenant forecasts;
Considered the forward looking assumptions and assessed
the reasonableness of this based on recent historic
performance; and
Considered information obtained during the course of the
audit and publicly available market information to
identify any evidence that would contradict
management’s assessment of the ongoing impact of
COVID-19.
As a result of the procedures performed, we agree with the
Director’s conclusions in respect of going concern.
•
Considered the potential impact of COVID 19 in the
completion of the procedures in relation to the new and
existing intangible assets that are described in the key
audit matters above.
We have audited the balances impacted by estimation
uncertainty and believe the values presented in the Financial
Statements to be reasonable.
•
Reviewed the appropriateness of disclosures within the
Annual Report and Financial Statements with respect to
COVID-19 and where relevant checked the material
consistency of other information to the audited financial
statements.
We conclude that the disclosures made are appropriate.
40 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
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Key audit matter
How our audit addressed the key audit matter
Impact on Estimation Uncertainty in the Financial
Statements
The pandemic and the associated economic
situation has increased the level of estimation
uncertainty in the financial statements. The
Directors have therefore considered how
COVID-19 has impacted the key estimates that
determine the valuation of material balances,
particularly the valuation of intangible assets
held.
Qualitative Disclosures in the Annual Report and
Financial Statements
In addition the Directors have considered the
qualitative disclosures included in the Annual
Report and Financial Statements in respect of
COVID-19 and the impact that the pandemic has
had, and continues to have, on the Group and
Company.
Refer to section COVID-19 in the strategic report
(COVID-19) and the Going Concern section in the
Directors’ report.
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.
For the purposes of our group scoping we have considered each separate trading entity within the group to be a
separate component. We concluded that the three principal trading entities, Curtis Banks Limited, Suffolk Life
Pensions Limited and Suffolk Life Annuities Limited as well as the group holding company, Curtis Banks Group PLC
to be financially significant components for the group audit and as such we have performed a full scope audit of
these components.
The newly acquired entities of Dunstan Thomas Holdings Limited and Talbot and Muir Limited contain a number of
individual balances that form part of our scope based on the magnitude of the individual balances. Other trading
and dormant entities within the group, listed in note 16 are considered to be non-significant components.
Together with additional procedures performed at a Group level on the consolidation, the result of the above
scoping was that we achieved greater than 95% coverage of revenue, expenses and adjusted profit before tax.
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.
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Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Financial statements – group Financial statements – company
Overall materiality £670,000 (2019: £668,000). £635,000 (2019: £493,000).
How we determined it 5% of Adjusted profit before tax 1% of net assets capped at 95% the overall
group materiality
Rationale for
benchmark applied
We have selected this benchmark because We consider the net assets of the Company
it is considered to be a key performance to be an appropriate benchmark as the
indicator of the group by the Directors and entity is principally a holding company
to be a reflection of the underlying and does not itself trade. Profit measures
performance of the trading business. are therefore less relevant to the financial
reporting for this entity.
We have applied a higher materiality of £37m (2019: £36m), based on 1% of total policyholder assets 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 assets and liabilities.
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 £200,000 and £635,000.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance
materiality in determining the scope of our audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was
75% of overall materiality, amounting to £503,000 for the group financial statements and £476,000 for the company
financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper
end of our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our
audit above £32,000 (group audit) (2019: £33,000) and £32,000 (company audit) (2019: £32,000) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going
concern basis of accounting included:
• Obtained and reviewed management’s going concern assessment which included severe but plausible
downside scenarios, board approved operating plan, cash flow, regulatory capital and debt covenant
forecasts
• Considered the forward looking assumptions and assessed the reasonableness of this based on recent historic
performance
• Considered information obtained during the course of the audit and publicly available market information to
identify any evidence that would contradict management’s assessment of the ongoing impact of COVID-19
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group's and the company’s ability to
continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
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continued
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the
group's and the company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
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 our work undertaken in the course of the audit, the Companies Act 2006 requires 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 2020 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, 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
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continued
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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using
data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather
than testing complete populations. We will often seek to target particular items for testing based on their size or
risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the
population from which the sample is selected.
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.
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 obtained 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
6 April 2021
44 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
C O N S O L I DAT E D STAT E M E N T O F
C O M P R E H E N S I V E I N C O M E
Year ended 31 December 2020
Year ended 31 December 2020
Year ended 31 December 2019
Before
amortisation Amortisation
and non-
recurring
costs
£’000
and non-
recurring
costs
£’000
Notes
Before
amortisation Amortisation
and non-
recurring
costs
£’000
and non-
recurring
costs
£’000
Total
£’000
Total
£’000
4
53,871
—
53,871
48,949
—
48,949
Group
Revenue
Administrative expenses
(39,885)
(5,411)
(45,296)
(35,218)
(2,470)
(37,688)
Impairment on client portfolios
—
(344)
(344)
—
Policyholder investment returns*
13
125,231
Non-participating investment
contract expenses
22
(35,343)
Changes in provisions:
Non-participating
investment contract
liabilities
Policyholder total
Operating profit
Finance income
Finance costs
Profit before tax
Taxation
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)**
10
9
11
12
12
—
—
—
—
125,231
365,815
(35,343)
(33,943)
(89,888)
(331,872)
—
—
—
—
—
—
—
—
365,815
(33,943)
(331,872)
—
(89,888)
—
13,986
(5,755)
8,231
13,731
(2,470)
11,261
83
(697)
13,372
(2,793)
—
(188)
(5,943)
1,129
83
(885)
7,429
(1,664)
145
(523)
13,353
(2,502)
—
—
145
(523)
(2,470)
10,883
469
(2,033)
10,579
(4,814)
5,765
10,851
(2,001)
8,850
5,765
—
5,765
9.7
9.5
8,850
—
8,850
16.2
15.9
The consolidated statement of comprehensive income has been prepared on the basis that all operations are
continuing operations.
**Policyholder investment returns were previously presented within revenue. Amounts for the current period
and comparatives are now represented alongside non-participating investment contract expenses and
changes in provisions for non-participating investment contract liabilities to better reflect the fact that all
such returns are due back to policyholders under non-participating investment contracts, and therefore
have nil impact on shareholder profit or loss. Please see note 2 to the financial statements for further
information.
**Adjusted to take into account impact of bonus factor within shares issued during the year ended
31 December 2020, see note 12 to the financial statements for further detail.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 45
C O N S O L I DAT E D STAT E M E N T O F F I N A N C I A L
P O S I T I O N
As at 31 December 2020
As at As at
31 Dec 20 31 Dec 19
Group Notes £’000 £’000
ASSETS
Non-current assets
Intangible assets 13 91,166 43,427
Investment property 14 1,208,605 1,265,784
Property, plant and equipment 15 7,658 6,195
Investments 16 2,072,317 1,994,197
Deferred tax asset 23 — 911
3,379,746 3,310,514
Current assets
Trade and other receivables 18 26,913 19,915
Cash and cash equivalents 19 430,578 421,547
Current tax asset 580 446
458,071 441,908
Total assets 3,837,817 3,752,422
LIABILITIES
Current liabilities
Trade and other payables 20 18,895 15,608
Deferred income 26,995 26,192
Borrowings 21 53,533 28,215
Lease liabilities 672 719
Provisions 22 501 553
Contingent consideration 35 2,516 214
Current tax liability — 738
103,112 72,239
Non-current liabilities
Borrowings 21 53,370 48,911
Lease liabilities 5,201 3,915
Provisions 7 —
Contingent consideration 35 5,657 —
Non-participating investment contract liabilities 24 3,585,307 3,571,904
Deferred tax liability 23 5,013 —
3,654,555 3,624,730
Total liabilities 3,757,667 3,696,969
Net assets 80,150 55,453
Equity attributable to owners of the parent
Issued capital 25 330 271
Share premium 26 57,799 33,659
Equity share based payments 26 2,747 2,313
Treasury shares 26 (741) (534)
Retained earnings 26 20,001 19,730
80,136 55,439
Non-controlling interest 28 14 14
Total equity 80,150 55,453
The financial statements on pages 45 to 91 were approved by the Board of Directors and authorised for issue on
6 April 2021.
Dan Cowland
Chief Financial Officer
Company Registration No. 07934492
46 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
C O M PA N Y STAT E M E N T O F F I N A N C I A L P O S I T I O N
As at 31 December 2020
As at As at
31 Dec 20 31 Dec 19
Company Notes £’000 £’000
ASSETS
Non-current assets
Investments 16 108,373 59,396
108,373 59,396
Current assets
Trade and other receivables 18 296 78
Cash and cash equivalents 19 4,411 1,330
Current tax asset 244 243
4,951 1,651
Total assets 113,324 61,047
LIABILITIES
Current liabilities
Trade and other payables 20 1,567 322
Borrowings 21 3,852 3,156
Contingent consideration 35 2,516 —
7,935 3,478
Non-current liabilities
Borrowings 21 19,904 8,274
Contingent consideration 35 5,657 —
25,561 8,274
Total liabilities 33,496 11,752
Net assets 79,828 49,295
Equity attributable to owners of the parent
Issued capital 25 330 271
Share premium 26 57,799 33,659
Equity share based payments 26 2,747 2,313
Retained earnings 26 18,952 13,052
Total equity 79,828 49,295
As permitted by section 408 Companies Act 2006, the holding company’s profit and loss account has not been
included in these financial statements. The Company’s profit after tax for the year was £11,049,000 (2019:
£6,925,000).
The financial statements on pages 45 to 91 were approved by the Board of Directors and authorised for issue on
6 April 2021.
Dan Cowland
Chief Financial Officer
Company Registration No. 07934492
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 47
C O N S O L I DAT E D STAT E M E N T O F C H A N G E S I N
EQ U I T Y
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 2019 269 33,451 1,357 (716) 15,295 49,656 14 49,670
Total comprehensive
income for the year — — — — 8,850 8,850 — 8,850
Share based payments — — 956 — — 956 — 956
Ordinary shares bought
and sold by EBT — — — 182 — 182 — 182
Ordinary shares issued 2 208 — — — 210 — 210
Deferred tax on share
based payments — — — — 147 147 — 147
Ordinary dividends
declared and paid — — — — (4,562) (4,562) — (4,562)
At 31 December 2019 271 33,659 2,313 (534) 19,730 55,439 14 55,453
Total comprehensive
income for the year — — — — 5,765 5,765 — 5,765
Share based payments — — 434 — — 434 — 434
Ordinary shares bought
and sold by EBT — — — (207) — (207) — (207)
Ordinary shares issued 59 24,140 — — — 24,199 — 24,199
Deferred tax on share
based payments — — — — (345) (345) — (345)
Ordinary dividends
declared and paid — — — — (5,149) (5,149) — (5,149)
At 31 December 2020 330 57,799 2,747 (741) 20,001 80,136 14 80,150
48 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
C O M PA N Y STAT E M E N T O F C H A N G E S I N EQ U I T Y
Equity share
Issued Share based Retained
capital premium payments earnings Total
Company £’000 £’000 £’000 £’000 £’000
At 1 January 2019 269 33,451 1,357 10,689 45,766
Total comprehensive income for the year — — — 6,925 6,925
Share based payments — — 956 — 956
Ordinary shares issued 2 208 — — 210
Ordinary dividends declared and paid — — — (4,562) (4,562)
At 31 December 2019 271 33,659 2,313 13,052 49,295
Total comprehensive income for the year — — — 11,049 11,049
Share based payments — — 434 — 434
Ordinary shares issued 59 24,140 — — 24,199
Ordinary dividends declared and paid — — — (5,149) (5,149)
At 31 December 2020 330 57,799 2,747 18,952 79,828
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 49
C O N S O L I DAT E D STAT E M E N T O F C A S H F LO WS
Year ended 31 December 2020
Year ended 31 December
2020 2019
Group £’000 £’000
Cash flows from operating activities
Profit before tax 7,429 10,883
Adjustments for:
Depreciation 1,499 1,321
Amortisation and impairments 2,442 1,379
Interest expense 697 523
Share based payment expense 434 956
Fair value gains on financial investments (119,957) (232,848)
Additions of financial investments (631,200) (532,717)
Disposals of financial investments 673,037 584,425
Fair value losses on investment properties 60,751 12,469
Increase in liability for investment contracts 13,403 166,476
Changes in working capital:
(Increase)/decrease in trade and other receivables (2,737) (1,730)
(Decrease)/increase in trade and other payables (1,105) 1,990
Taxes paid (2,996) (2,454)
Net cash flows received from operating activities 1,697 10,673
Cash flows from investing activities
Payments for intangible assets (986) (696)
Purchase of property, plant and equipment (591) (1,015)
Purchase of investment property (122,449) (125,848)
Purchase and sale of shares in the Group by the EBT (207) 182
Receipts from sale of investment property 118,877 122,047
Net cash flows from acquisitions (34,638) (166)
Net cash flows used in investing activities (39,994) (5,496)
Cash flows from financing activities
Equity dividends paid (5,149) (4,562)
Net proceeds from issue of ordinary shares 24,199 210
Net increase/(decrease) in borrowings 29,595 (9,456)
Principal elements of lease payments (934) (933)
Interest paid (383) (465)
Net cash received from/(used in) financing activities 47,328 (15,206)
Net increase/(decrease) in cash and cash equivalents 9,031 (10,029)
Cash and cash equivalents at the beginning of the year 421,547 431,576
Cash and cash equivalents at the end of the year 430,578 421,547
50 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
C O M PA N Y STAT E M E N T O F C A S H F LO WS
Year ended 31 December 2020
Year ended 31 December
2020 2019
Company £’000 £’000
Cash flows from operating activities
Profit before tax 11,049 6,922
Adjustments for:
Interest expense 514 376
Changes in working capital:
Increase in trade and other receivables (288) (6)
Increase in trade and other payables 1,269 204
Taxes paid — (158)
Net cash flows received from operating activities 12,544 7,338
Cash flows from investing activities
Investment in employee benefit trust (850) —
Net cash flows from acquisitions (39,522) —
Net cash flows used in investing activities (40,372) —
Cash flows from financing activities
Equity dividends paid (5,149) (4,562)
Net proceeds from issue of ordinary shares 24,199 210
Net increase/(decrease) in borrowings 12,242 (3,158)
Interest paid (383) (465)
Net cash received from/(used in) financing activities 30,909 (7,975)
Net increase/(decrease) in cash and cash equivalents 3,081 (637)
Cash and cash equivalents at the beginning of the year 1,330 1,967
Cash and cash equivalents at the end of the year 4,411 1,330
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 51
NOTES TO THE FINANCIAL STATEMENTS
Corporate information
1
Curtis Banks Group PLC (“the Company”) is a public limited company incorporated in the United Kingdom and
domiciled and registered in England and Wales whose shares are publicly traded on the AIM market of the London
Stock Exchange PLC. The financial statements were authorised for issue in accordance with a resolution of the
Directors on 6 April 2021.
Significant accounting policies
2
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 on a historical cost basis modified by revaluation of financial assets
and financial liabilities through profit and loss where held at fair value, and are presented in pounds sterling, with
all values rounded to the nearest thousand pounds except when otherwise indicated.
The financial statements have been prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union, and accounting policies have been
consistently applied.
Presentation of policyholder investment returns
Policyholder investment returns were, previous to 31 December 2020, presented within revenue in the
Consolidated Statement of Comprehensive Income. To better reflect the fact that all such returns are due back to
policyholders under non-participating investment contracts the Group has decided to present such amounts
alongside non-participating investment contract expenses and changes in provisions for non-participating
investment contract liabilities, such that the nil impact on shareholder profit or loss is evident.
New standards adopted by the Group
The Group has not applied any new accounting standards for the first time for the financial year commencing
1 January 2020.
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and its subsidiary
undertakings up to 31 December 2020.
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 2020 were Curtis Banks Limited, Suffolk Life
Pensions Limited, Suffolk Life Annuities Limited, Rivergate Legal Limited, Templemead Property Solutions Limited,
Dunstan Thomas Group Limited, Digital Keystone Limited, Dunstan Thomas Holdings Limited, Dunstan Thomas
Consulting Limited, Platform Action Limited, and Talbot and Muir 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 Group are required to disclose
insurance policyholder assets, liabilities and returns.
Certain trading subsidiaries of Curtis Banks Group PLC hold the entire issued share capital of several non-trading
trustee companies. The financial statements of these companies have not been consolidated as they would be
immaterial to the Group’s position. All of these companies are bare trustee companies for the pension products
administered by the trading subsidiaries of Curtis Banks Group PLC and have been dormant throughout the year
and are expected to remain dormant.
Going concern
The Group and Company are required to assess whether they have sufficient resources to continue their operations
and to meet their commitments for the foreseeable future. The directors have prepared the financial statements
on a going concern basis, as in their opinion the Group and Company are both able to meet their obligations as
they fall due. This opinion is based on detailed forecasting for the following 12 months from the date these
financial statements have been signed based on current and expected market conditions together with current
performance levels. The Company is supported by dividend income from its subsidiaries. The Directors have also
considered the impact of a number of severe but plausible events that could impact the business, such as the
Covid-19 pandemic, and are satisfied that this opinion remains unchanged.
In respect of shareholder reserves, excluding policyholder assets and liabilities, the Group has net current assets of
£17,108k (2019: £16,976k).
52 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
Significant accounting policies - continued
2
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.
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. If the initial accounting for a business combination is incomplete by the
end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items
for which the accounting is incomplete. Once all information is obtained about facts and circumstances that
existed as of the acquisition date, or following a maximum period of 12 months after the acquisition takes place,
the Group may update these provisional amounts to reflect new information obtained about facts and
circumstances that existed as of 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”).
The Group acquired FinTech provider Dunstan Thomas on 3 August 2020. Prior to this acquisition, all results were
viewed as one by the CODM for the purposes of management decisions. This is because all operations were
conducted within the UK and all material operations were of the same nature and shared 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 had one reportable segment being pensions administration.
Following the acquisition of Dunstan Thomas during the year ended 31 December 2020, the Group is now
considered to have two operating segments. Dunstan Thomas provides IT software development, licences and
consultancy services and, collectively, these services are described in the Group’s financial statements as FinTech.
Foreign Currencies
The consolidated financial statements are presented in Pounds 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 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.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 53
NOTES TO THE FINANCIAL STATEMENTS
continued
Significant accounting policies - continued
2
Non-participating investment contracts – continued
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.
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 applies the 5 step model under IFRS 15 Revenue
from Contracts with Customers to recognition of revenue as follows:
–
Step 1: Identify the contract(s) with a customer
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 or direct to its own clients.
The Group also provides IT software licences, development and support services predominantly to businesses
within the financial services sector, collectively referred to as FinTech revenue. The customer is deemed to be the
named recipient of services as per the contract, rather than any subsequent downstream user of the product.
–
Step 2: Identify the performance obligations in the contract
Performance obligations are understood to be the individual components of SIPP & SSAS administration as detailed
on the Group’s products’ terms and conditions and fee schedules or any contractual obligations laid out in
contracts for provision of FinTech services. Annual renewal fees are deemed to comprise multiple individual
obligations. However, each of these obligations represents a continuous service over the same annual period and
can therefore be viewed collectively as one obligation for the purpose of revenue recognition. Obligations under
set up fees and transaction fees are deemed to be short term in nature (three months or less).
Contracts for the provision of FinTech services individually details the performance obligations and trigger events
for progress and any other payments. These vary according to the contract as FinTech solutions are bespoke to the
customer.
–
Step 3: Determine the transaction price
The transaction price is deemed to be that shown in the Group’s products’ 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 are not separable as the combined set of obligations represents a
continuous service over the same annual period.
Contracted fees relating to provision of FinTech services are as per each individual contract.
54 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
Significant accounting policies - continued
2
Revenue recognition – continued
–
Step 4: Allocate the transaction price to the performance obligations in the contract
The result of judgements made in Step 2 and Step 3 mean that transaction prices are allocated in substance to fee
items included in the Group’s product’s terms and conditions and fee schedules, as these also wholly reflect the
individual performance obligations. The same applies in relation to FinTech contracts, the price and performance
obligations being detailed in the individual contract along with timing of both service delivery and payments.
–
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Set up and initial transaction fees, as well as ad hoc transaction fees are recognised as the work is completed and
performance obligations satisfied, net of VAT.
Annual renewal fees are invoiced in advance and recognised, 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.
Fees which are received in arrears, including certain property annual fees and property acquisition fees, are
accrued over the period in which services are provided and performance obligations are satisfied.
Income derived in relation to FinTech contracts is generally recognised on a progress basis, with usually 25%
recognised at the outset of the contract and the remainder of the income recognised in equal amount annually
over the term of the contract.
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.
The timing of satisfaction of performance obligations under contracts with SIPP & SSAS members does not bear any
relevance to the typical timing of payment for such services. The typical timing of payment is on or after the
related fee invoice is issued.
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.
All brought forward deferred income in relation to the pension administration operating segment is recognised in
the current year as there are no performance obligations spanning a period of more than twelve months.
Contract income relating to FinTech is recognised in equal amounts over the course of contract in line with
satisfaction of contractual performance obligations at relevant points in time. The remainder of the income is then
recognised in equal amounts over the course of the term of the contract through deferred income, as relates to
the on-going servicing element of the contractual performance obligations.
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 and wholly comprise SIPPs acquired.
Client portfolios are amortised on a straight line basis over their estimated useful life of 20 years based upon long
term historic average client attrition rates experienced by the Group and other factors that indicate this longevity
such as the SIPPs themselves being utilised throughout retirement, and often passed down to dependents in the
event of a death.
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.
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 between 4 and 5 years.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 55
NOTES TO THE FINANCIAL STATEMENTS
continued
Significant accounting policies - continued
2
Administrative expenses
Administrative expenses represent those arising as a result of the Group’s operations and include depreciation. All
amounts are recognised on an accruals basis.
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:
Computer equipment
Office equipment, fixtures & fittings
Right of use assets
25%
25%
Expected underlying lease length of between 1 and 12 years
straight line
straight line
On initial recognition, right of use assets are measured at cost comprising the following:
–
The amount of the initial measurement of lease liability
–
–
–
Any lease payments made at or before the commencement date less any lease incentives received
Any initial direct costs
Any restoration costs expected
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.
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 recorded and subsequently measured at amortised cost. 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.
The Group classifies its financial assets at amortised cost where the asset is held within a business model whose
objective is to collect the contractual cash flows and the contractual terms give rise to cash flows that are solely
payments of principal and interest. Other financial assets are classified as fair value through profit or loss. The
Group has no financial assets at fair value through other comprehensive income.
Amounts recorded and measured at amortised cost include non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. These 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.
56 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
Significant accounting policies - continued
2
Trade receivables
Trade receivables are recorded and subsequently measured at amortised cost in accordance with IFRS 9 Financial
Instruments.
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.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have
been grouped based on shared characteristics and overall credit quality. A provision for impairment of trade
receivables is established when there is evidence that the Group might not be able to collect all amounts due
according to the original terms of the receivables. The movement in the provision is recognised in the consolidated
statement of comprehensive income.
The expected loss rates for each grouping are based on historic actual recovery rates achieved for such groupings
over the last 12 months, modified for factors such as existing market conditions, days past due or forward looking
estimates, where supported by existing reliable evidence.
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand, deposits with credit institutions, cash equivalents and
bank overdrafts.
Cash at bank and in hand, and deposits with credit institutions, are classified and measured at amortised cost.
Cash equivalents are classified as fair value through profit loss.
Financial liabilities – Trade and other payables
Trade and other payables are recognised and initially measured at cost, due to their short term nature, and
subsequently measured at amortised cost. 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.
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.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 57
NOTES TO THE FINANCIAL STATEMENTS
continued
Significant accounting policies – continued
2
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 are assessed as to whether a right-of-use relationship exists and are
classified as property, plant and equipment when this criteria is satisfied. 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. Interest and
finance costs associated with lease liabilities on right-of-use assets are expensed to the consolidated statement of
comprehensive income within total finance costs.
Assets and liabilities arising from a lease where a right-of-use relation exists are initially measured on a present
value basis. Lease liabilities include the net present value of fixed payments, less any lease incentive payments
receivable, and include amounts following lease extension options where there is reasonable certainty of
extension. There are no other types of payments or variable amounts included. Lease payments are allocated
between principal and finance cost. The finance cost is charge to the consolidated statement of income over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
year.
Lease payments are discounted using the interest rate implicit in the lease where possible. However, this cannot
currently be readily determined for any of the leases that the Group holds in respect of right-of-use assets.
The Group therefore uses an incremental borrowing rate similar to what it would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms, security and
conditions.
The Group has no short-term leases or low value assets that may be considered as short term leases. All of the
Group’s leases where a right-of-use relationship exists relate to commercial property assets. The Group has no
other classes of right-of-use assets such as equipment or vehicles.
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.
A right-of-use asset exists and a corresponding lease liability exists in respect of non-participating investment
contract assets which relate entirely to ground rent on policyholder leasehold investment property. Consequently
the Group has opted not to recognise right-of-use assets and lease liabilities in relation to these leases as the
impact from recognition in the consolidated financial statements is minimal.
Non-recurring costs
Non-recurring costs are classified as such when the nature and quantum of the expense is significant and arises
from 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.
Contingent consideration
Where the Group has entered into certain acquisition agreements that provide for contingent consideration to be
paid management estimates the net present value of contingent consideration payable by utilising a future
discounted cash flow model. Management then continue to review the agreement and monitor the financial and
other targets to be met to maintain an accurate estimate of the fair value of any amounts payable. Subsequent
changes to the fair value of contingent consideration are recognised in accordance with IFRS 9 in the Statement of
Comprehensive Income.
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.
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 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.
58 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
Significant accounting policies – continued
2
Share based payments – continued
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 Effective date, annual period beginning on or after
IFRS 17 Insurance Contracts 1 January 2023
Amendments to IAS 1 – Presentation of Financial Statements 1 January 2023
The directors anticipate that the adoption of these standards and interpretations and amendments in future years
will have no material impact on the financial statements of the Group.
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.
There are no critical judgements in the application of accounting policies.
The key sources of estimation uncertainty are disclosed below:
Client portfolios
Client portfolios acquired are amortised over their useful economic life (“UEL”) which management estimate to be
20 years. This estimated UEL is based upon management’s historical experience of similar portfolios and
expectation of the future persistency of the portfolio. The reasonableness of this estimate is assessed annually by
comparison to actual lapse rates and consideration of factors that may affect it in the future, for example,
changes to products.
Additionally, the Group reviews and judges whether acquired client portfolios show any indicators of impairment
at least on an annual basis by considering actual versus forecast lapse rates and comparing the carrying value and
recoverable amount. An impairment would exist where the recoverable amount determined is less than the
carrying value of the asset.
Assessing recoverable amount through value in use 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 Group and applying this against
forecast revenue from the relevant client portfolio.
One key source of estimation uncertainty is the level of future interest income expected, and in particular the
longevity of the current low interest rate environment. Another key source of estimation uncertainty arises from
the attrition rates used. The recoverable amount is most sensitive to both of these assumptions.
A 20% increase to the attrition rate assumption would result in a cumulative £164,000 decrease in the carrying
value of client portfolios. A 40% increase to the attrition rate assumption would result in a cumulative £316,000
decrease in the carrying value of client portfolios.
A 2% decrease in the EBITDA margin assumption would result in a cumulative £123,000 decrease in the carrying
value of client portfolios. A 4% decrease in the EBITDA margin assumption would result in a cumulative £314,000
decrease in the carrying value of client portfolios.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 59
NOTES TO THE FINANCIAL STATEMENTS
continued
Critical accounting judgements and key sources of estimation uncertainty – continued
3
IFRS 9 impairment
Trade and other receivables are impaired based on the IFRS 9 simplified approach to measure expected credit
losses using a lifetime expected loss allowance for all trade receivables. The loss allowances for trade and other
receivables are based on assumptions about risk of default and expected loss rates. The Group uses judgement in
making these assumptions and selecting the inputs to the impairment calculation, based on the group’s past
history of shared credit risk characteristics, days past due, existing market conditions as well as forward looking
estimates at the end of each reporting period. The loss rates are considered the key source of estimation
uncertainty because the impact of a change in these could result in a material change in the expected credit loss.
Details of the key assumptions and estimates are disclosed in note 32 to the financial statements.
Contingent consideration payable on acquisitions
The Group has entered into certain acquisition agreements that provide for a contingent consideration to be paid.
A financial instrument is recognised for all amounts management anticipates will be paid under the relevant
acquisition agreement. This requires management to make an estimate of the expected future cash flows from the
acquired business using forecasts that cover the contingent consideration period, and determine a suitable
discount rate for the calculation of the present value of any contingent consideration payments.
A material change to the carrying value might occur if the acquired businesses achieve significantly more or less
than their target earnings. The key assumption used in determining the value of these provisions is the forecast
financial performance as applied in the terms of the contingent consideration arrangement. A 10% increase or
reduction in achievement of forecast contingent consideration targets would increase or reduce the value of
contingent consideration payable required by £0.8m.
Revenue
4
Revenue is wholly derived from activities undertaken within the United Kingdom and comprises the following
categories:
Year ended 31 December
2020 2019
£’000 £’000
Pension administration fees 36,856 36,268
FinTech services 4,793 —
Interest income 12,222 12,681
53,871 48,949
Profit for the year
5
Profit for the year is arrived at after:
Year ended 31 December
2020 2019
£’000 £’000
Charging:
Amortisation and impairment of intangible assets 2,442 1,379
Depreciation of property, plant and equipment 1,499 1,321
Auditors’ remuneration:
- audit of the financial statements of the Group 421 278
- audit of the financial statements of the Company 70 50
- audit related assurance services 37 35
Operating segment reporting
6
The Group acquired FinTech provider Dunstan Thomas on 3 August 2020. Prior to this acquisition, all results were
viewed as one operating segment for the purposes of management decisions as all operations were conducted
within the UK and all material operations were of the same nature and shared the same economic characteristics
including a similar customer base and nature of product and services (i.e. pensions administration).
Following the acquisition of Dunstan Thomas during the year ended 31 December 2020, the Group is now
considered to have two operating segments. Dunstan Thomas provides IT software development, licences and
consultancy services and, collectively, these services are described in the Group’s financial statements as FinTech.
60 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
Operating segment reporting – continued
6
The following tables present revenue and profit information regarding the Group’s operating segments for the
two years ended 31 December 2020 and 31 December 2019 respectively.
Pension Consolidation
Administration FinTech adjustments Consolidated
Year ended 31 December 2020 £’000 £’000 £’000 £’000
Revenue
External customers 49,078 4,793 — 53,871
Internal customers — 485 (485) —
49,078 5,278 (485) 53,871
Administrative expenses
External customers 36,830 3,055 — 39,885
Internal customers — 485 (485) —
36,830 3,540 (485) 39,885
Adjusted operating profit 12,248 1,738 — 13,986
Adjusted operating profit margin 25.0% 32.9% 26.0%
Pension
Administration Consolidated
Year ended 31 December 2019 £’000 £’000
Revenue
External customers 48,949 48,949
48,949 48,949
Administrative expenses
External customers 35,218 35,218
35,218 35,218
Adjusted operating profit 13,731 13,731
Adjusted operating profit margin 28.1% 28.1%
Corporate costs
The Group’s operating segments are managed together as one business. Accordingly, certain corporate costs such
as finance income and expenses, non-recurring costs, gains and losses on the disposal of assets, taxes, intangible
assets and certain other assets and liabilities are not allocated to individual segments as they are managed on a
group basis. Segment adjusted operating profit or loss reflects the measure of segment performance reviewed by
the Board of Directors (the Chief Operating Decision Maker).
The following table reconciles the total segments adjusted operating profit to statutory profit before tax:
Year ended 31 December
2020 2019
£’000 £’000
Total segments adjusted operating profit 13,986 13,731
Amortisation and impairments (2,442) (1,379)
Non-recurring administrative expenses (3,313) (1,091)
Finance income 83 145
Finance costs (885) (523)
Profit before tax 7,429 10,883
The following table presents a split of assets and liabilities of the Group’s operating segments for the year ended
31 December 2020. For the year ended 31 December 2019 the Group had only one operating segment, being
Pension Administration, and consequently comparative information is disclosed in the Consolidated Statement of
Financial Position.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 61
NOTES TO THE FINANCIAL STATEMENTS
continued
Operating segment reporting – continued
6
Corporate costs – continued
Corporate assets and liabilities are not allocated to individual operating segments as they are managed on a group
basis. Policyholder assets and liabilities are not allocated to individual operating segments as all investment
returns associated with these are due back to policyholders under non-participating investment contracts,
alongside non-participating investment contract expenses and changes in provisions for non-participating
investment contract liabilities, such that the impact on shareholder assets and liabilities, and profit or loss, is nil.
Pension
Administration FinTech Corporate Policyholder Consolidated
Year ended 31 December 2020 £’000 £’000 £’000 £’000 £’000
Total assets 63,241 8,079 75,041 3,691,456 3,837,817
Total liabilities 26,621 3,798 35,792 3,691,456 3,757,667
Non-recurring administrative expenses
7
Non-recurring administrative expenses include the following significant items:
Year ended 31 December
2020 2019
£’000 £’000
Dunstan Thomas acquisition costs 769 —
Talbot and Muir acquisitions costs 561 —
Other acquisition related costs 151 61
Redundancy & restructuring costs 1,091 696
In-specie contributions 402 —
Treasury solution implementation 286 —
Data cleansing provision 53 —
Costs relating to directorate and senior management changes — 334
3,313 1,091
Acquisition costs – Dunstan Thomas and Talbot and Muir
Two acquisitions were completed during the year: FinTech provider Dunstan Thomas on 3 August 2020, and fellow
SIPP provider Talbot and Muir on 30 October 2020. The Group has incurred legal and professional fees in connection
with these transactions and, in accordance with IFRS 3 Business Combinations, these have been expensed and
treated as non-recurring costs. The Group expects that further costs may be recognised for these acquisitions over
the next three financial years in relation to fair value changes to the amount of contingent consideration payable.
Other acquisition related costs
During the year, the Group incurred some final costs in relation to deferred consideration payable on the client
portfolio acquired from Friends Life in 2015, together with final costs related to the acquisitions of Hargreave Hale
and European Pension Management Ltd.
Redundancy & restructuring costs
During the year ended 31 December 2020 and 31 December 2019, the Group progressed its strategy to deliver its
Target Operating Model and centralise commercial property administration within one office location. Redundancy
costs associated with this decision as well as costs associated with duplicated staff efforts while work is
transferred between offices were included within non-recurring costs.
In-specie contributions
As previously reported, 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
has been challenged by the sector as a whole. Following a favourable ruling for HMRC in a case affecting another
SIPP operator, and having taken further legal advice, the Directors now consider it more likely than not that some
cost associated with this issue will be incurred by the Group. See provisions note 24 for further detail.
Treasury solution implementation
During the year ended 31 December 2020, the Group invested in a new strategic treasury solution with a global provider
of back office operational cash management software. The investment is designed to innovate and improve the Group’s
treasury management function through provision of a system that provides a multibank facility. Costs associated with
this investment that did not meet the criteria for capitalisation have been treated as non-recurring cost.
62 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
Non-recurring administrative expenses – continued
7
Data cleansing provision
As part of the consolidation and integration exercise undertaken during the year ended 31 December 2018
management initiated a review of data records relating to commercial properties held within SIPPs administered
by the Group. A small amount of further cost, over and above amounts previously provided, associated with this
process arose during the year ended 31 December 2020.
Costs relating to directorate and senior management changes
During the year ended 31 December 2019, the incumbent Chief Financial Officer of the Group announced he was
stepping down from the role and a successor was recruited. An orderly handover of responsibilities took place
between the previous Chief Financial Officer and the new Chief Financial Officer. Costs associated with this
transitional period incurred during the year ended 31 December 2019, including recruitment costs and costs of
associated senior staff changes, have been treated as non-recurring costs.
Directors and employees
8
Year ended 31 December
2020 2019
£’000 £’000
Wages and salaries 21,317 18,524
Social security costs 2,301 1,765
Other pension costs 2,015 1,704
Share-based incentive awards 434 956
26,067 22,949
2020 2019
Number Number
Directors 6 6
Administration 692 566
698 572
Details of emoluments paid to the directors and key management personnel of the Group are as follows:
Year ended 31 December
2020 2019
£’000 £’000
Total emoluments paid to:
Directors
Wages and salaries 1,487 1,280
Social security costs 220 146
Post-employment costs 20 37
Share-based incentive awards 202 427
Key management personnel
Wages and salaries 908 1,334
Compensation for loss of office — 126
Social security costs 136 173
Post-employment costs 60 67
Share-based incentive awards 80 177
3,113 3,767
Emoluments of highest paid director:
Wages and salaries 508 436
Pension contribution 7 9
515 445
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 63
NOTES TO THE FINANCIAL STATEMENTS
continued
Directors and employees – continued
8
Short term employee benefits include wages and salaries. Long term employee benefits include share-based
incentive awards.
Finance costs
9
Year ended 31 December
2020 2019
£’000 £’000
Operational cost
Interest payable on bank loans 523 382
Interest and finance costs on lease liabilities 174 141
Non-recurring cost
Unwind of discount factor on contingent consideration relating to:
Acquisition of Dunstan Thomas 131 —
Acquisition of Talbot and Muir 57 —
885 523
10 Finance income
Year ended 31 December
2020 2019
£’000 £’000
Interest income 83 145
Taxation
11
Year ended 31 December
2020 2019
£’000 £’000
Domestic current year tax
UK Corporation tax 1,542 2,202
Deferred tax
Origination and reversal of temporary differences 122 (169)
1,664 2,033
Factors affecting the tax charge for the year
Profit before tax 7,429 10,883
Profit before tax multiplied by standard rate of UK Corporation tax
of 19% (2019: 19%) 1,412 2,068
Effects of:
Adjustment to prior year 117 (33)
Non-deductible expenses 177 10
Other tax adjustments (42) (12)
252 (35)
Total tax charge 1,664 2,033
64 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
12 Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to equity holders of
the Company 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 Company 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.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
2020 2019
£’000 £’000
Net profit available to equity holders of the Company 5,765 8,850
Net profit before tax, non-recurring costs and amortisation available to
equity holders of the Company. 13,372 13,353
Number Number
Weighted average number of ordinary shares:
Issued ordinary shares at start of the year 54,142,346 53,807,346
Effect of shares issued during the year** 5,859,094 1,002,290
Effect of shares held by employee benefit trust (296,835) (244,741)
Basic weighted average number of shares 59,704,605 54,564,895
Effect of dilutive options ** 886,707 1,216,778
Diluted weighted average number of shares 60,591,312 55,781,673
Pence Pence
Earnings per share:
Basic** 9.7 16.2
Diluted** 9.5 15.9
Earnings per share on net profit before non-recurring costs and amortisation,
less an effective tax rate*:
Basic** 18.1 19.8
Diluted** 17.9 19.4
* In order to reduce the impact of accounting measures such as deferred tax, and the timing of tax reliefs, the effective tax rate
matches the current tax rate applicable to the accounting year. The current tax rate applicable for the year ended
31 December 2020 was 19% (2019: 19%).
** Both basic EPS and diluted EPS have been adjusted to reflect the impact of a bonus factor within shares issued during the year
ended 31 December 2020. Diluted EPS for the year ended 31 December 2019 has been restated on the same basis in these
financial statements. There is no impact to either the income statement or balance sheet of the Group.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 65
NOTES TO THE FINANCIAL STATEMENTS
continued
13 Intangible assets
Group
Internally
Generated
Client Computer Software and
Goodwill Portfolios Software Relationship Total
£’000 £’000 £’000 £’000 £’000
Cost
At 1 January 2019 28,903 18,866 1,481 — 49,250
Additions — — 696 — 696
At 31 December 2019 28,903 18,866 2,177 — 49,946
Arising on acquisitions 20,682 17,435 — 11,078 49,195
Additions — — 606 380 986
At 31 December 2020 49,585 36,301 2,783 11,458 100,127
Amortisation and Impairment
At 1 January 2019 — 4,379 761 — 5,140
Charge for the year — 941 438 — 1,379
At 31 December 2019 — 5,320 1,199 — 6,519
Charge for the year — 1,081 248 769 2,098
Impairment — 344 — — 344
At 31 December 2020 — 6,745 1,447 769 8,961
Net book value
At 1 January 2019 28,903 14,487 720 — 44,110
At 31 December 2019 28,903 13,546 978 — 43,427
At 31 December 2020 49,585 29,556 1,336 10,689 91,166
Goodwill
Goodwill totalling £28,903,000 arose on the acquisition of Suffolk Life Group Limited and its subsidiaries on 25 May
2016. Goodwill totalling £16,115,000 arose on the acquisition of Dunstan Thomas Group Limited and its subsidiaries
on 3 August 2020. Goodwill totalling £4,567,000 arose on the acquisition of Talbot and Muir Limited and its
subsidiaries on 30 October 2020.
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.
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, a book of full SIPPs from Friends Life PLC (now Aviva PLC) on 13 March 2015 and a book of SIPPs
from Hargreave Hale Limited on 10 December 2018.
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.
66 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
13 Intangible assets – continued
Client Portfolios – continued
Client portfolios fair valued at £17,435,000 arose on acquisition of Talbot and Muir Limited and its subsidiaries on
30 October 2020.
Impairment charges totalling £344,000 against the intangible asset relating to client portfolios have been
recognised during the year (2019: £nil). This relates to changes in the estimate of future cash flows expected on
these assets over their remaining useful economic lives owing to increased uncertainty over the longevity of the
current low interest rate environment.
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 2020 of 14 years and 1 month.
Computer Software
Computer software comprises 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.
Internally Generated Software
Internally generated software and relationships represents the provisional and collective valuation of identifiable
intangible assets separate to goodwill arising on acquisition of Dunstan Thomas by Curtis Banks Group PLC during
the year ended 31 December 2020. Internally generated software and relationships are being provisionally
amortised over a period of between 5 and 7.5 years. Please see business combinations note 34 to the consolidated
financial statements for further detail.
14 Investment Property
Assets held at fair value
Group
Year ended 31 December
2020 2019
£’000 £’000
Fair value
At 1 January 1,265,784 1,274,452
Additions 122,449 125,848
Disposals (118,877) (122,047)
Fair value losses (60,751) (12,469)
At 31 December 1,208,605 1,265,784
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.
Rental income from investment property is disclosed in note 22(b) to the financial statements.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 67
NOTES TO THE FINANCIAL STATEMENTS
continued
15 Property, plant and equipment
Assets held at cost
Group
Office
Right of Computer equipment,
use assets equipment fixtures & fittings Total
£’000 £’000 £’000 £’000
Cost
At 1 January 2019 — 4,338 1,528 5,866
Arising on transition to IFRS 16 5,285 — — 5,285
Additions — 917 98 1,015
Disposals — (172) — (172)
At 31 December 2019 5,285 5,083 1,626 11,994
Arising from acquisitions 1,904 292 468 2,664
Additions — 570 21 591
At 31 December 2020 7,189 5,945 2,115 15,249
Depreciation
At 1 January 2019 — 3,555 1,095 4,650
Charge for the year 695 459 167 1,321
Disposals — (172) — (172)
At 31 December 2019 695 3,842 1,262 5,799
Arising from acquisitions — 180 113 293
Charge for the year 763 547 189 1,499
At 31 December 2020 1,458 4,569 1,564 7,591
Carrying value
At 1 January 2019 — 783 433 1,216
At 31 December 2019 4,590 1,241 364 6,195
At 31 December 2020 5,731 1,376 551 7,658
68 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
16 Investments
Assets held at fair value
Total fair value as at 31 December 2020
Group
2020 2019
£’000 £’000
Fair value
Equity and other variable-yield securities 2,015,190 1,920,595
Debt securities and other fixed-income securities 57,127 73,602
Total shares and securities 2,072,317 1,994,197
At cost 1,641,683 1,578,366
Movement in the year on total shares and securities
Group
2020 2019
£’000 £’000
At beginning of the year 1,994,197 1,813,057
Additions 631,200 532,717
Disposals (673,037) (584,425)
Unrealised gains 119,957 232,848
At end of the year 2,072,317 1,994,197
The Group values all investments in line with its accounting policy.
Assets held at cost
Company
£’000
Cost
At 1 January 2019 58,440
Additions – equity share based payment costs 956
At 31 December 2019 59,396
Additions – equity share based payment costs 434
Additions – acquisition of Dunstan Thomas (see note 34) 25,848
Additions – acquisition of Talbot and Muir (see note 34) 21,845
Additions – investment in employee benefit trust 850
At 31 December 2020 108,373
Net book value
At 1 January 2019 58,440
At 31 December 2019 59,396
At 31 December 2020 108,373
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 69
NOTES TO THE FINANCIAL STATEMENTS
continued
16 Investments – continued
Details of the investments are as follows:
% of Ordinary
Registered Shares held % of Ordinary
Office Address Principal Country of by parent Shares held
Name of entity Indicator activity Incorporation Company by Group
Curtis Banks Limited (A) Provision of pension England and Wales 100.00 100.00
administration
services
Suffolk Life Group Limited (B) Holding company England and Wales 100.00 100.00
Suffolk Life Pensions Limited (B) Provision of pension England and Wales — 100.00
administration
services
Suffolk Life Annuities Limited (B) Provision of pension England and Wales — 100.00
administration
services
CB 2019 Limited (A) Non-trading England and Wales — 90.00
Rivergate Legal Limited (A) Provision of England and Wales 100.00 100.00
legal services
Templemead Property (A) Provision of property England and Wales 100.00 100.00
Solutions Limited valuation services
Dunstan Thomas Group Limited (D) Holding company England and Wales 100.00 100.00
Digital Keystone Limited (D) Provision of IT England and Wales — 100.00
products and services
Dunstan Thomas Holdings Limited (D) Provision of IT England and Wales — 100.00
products and services
Dunstan Thomas Consulting Limited (D) Provision of IT England and Wales — 100.00
product development
and services
Platform Action Limited (D) Provision of IT England and Wales — 100.00
product development
and services
Talbot and Muir Limited (E) Provision of pension England and Wales 100.00 100.00
administration
services
The Pension Partnership Limited (E) Non-trading England and Wales — 100.00
MYSIPP Trustees Limited (E) Dormant England and Wales — 100.00
The Ward Mitchell Trustees Limited (E) Dormant England and Wales — 100.00
Oval Trustees Limited (E) Dormant England and Wales — 100.00
SAM Trustees Limited (E) Dormant England and Wales — 100.00
T M Trustees Limited (E) Dormant England and Wales — 100.00
MYSIPP Trustees (Property) Limited (E) Dormant England and Wales — 100.00
TPP Nominees Limited (E) Dormant England and Wales — 100.00
The Pension Partnership SIPP (F) Dormant England and Wales — 100.00
Trustees Limited
The Pension Partnership SSAS (F) Dormant England and Wales — 100.00
Trustees Limited
MYSSAS Trustees Limited (E) Dormant England and Wales — 100.00
Colston Trustees Limited (A) Dormant England and Wales — 100.00
Montpelier Pension Trustees Limited (A) Dormant England and Wales — 100.00
Tower Pension Trustees Limited (A) Dormant England and Wales — 100.00
SPS Trustees Limited (A) Dormant England and Wales — 100.00
Crescent Trustees Limited (A) Dormant England and Wales — 100.00
Tower Pension (S-B) Trustees Limited (C) Dormant Scotland — 100.00
Bridgewater Pension Trustees Limited (A) Non-trading England and Wales — 100.00
Temple Quay Pension Trustees Limited (A) Dormant England and Wales — 100.00
Suffolk Life Trustees Limited (B) Non-trading England and Wales — 100.00
Suffolk Life (Spartan Estate) Limited (B) Dormant England and Wales — 100.00
SLA Property Company Limited (B) Dormant England and Wales — 100.00
EPPL P1056 Limited (B) Dormant England and Wales — 100.00
Tower Pension (S-B) Trustees Limited (C) Dormant Scotland — 100.00
70 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
16 Investments – continued
The registered office address indicator included in the table above reflects the following current registered offices
for each company:
(A)
(B)
(C)
(D)
(E)
(F)
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
Building 3000 Lakeside North Harbour, Portsmouth, PO6 3EN
55 Maid Marian Way Nottingham NG1 6GE
33 Park Square West, Leeds, LS1 2PF
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, Suffolk Life Annuities Limited and Talbot and Muir Limited are exempt from audit
under the requirements of s479 of the Companies Act 2006
Fair value hierarchy
17
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).
The following table presents the Group’s financial investments and investment property by IFRS 13 hierarchy
levels:
Total Level 1 Level 2 Level 3
£’000 £’000 £’000 £’000
As at 31 December 2020
Equity and other variable-yield securities 2,015,190 1,975,187 27,655 12,348
Debt securities and other fixed-income securities 57,127 34,034 21,348 1,745
Cash equivalents 551 — 551 —
Investment property 1,208,605 — — 1,208,605
Total financial investments and investment
property 3,281,473 2,009,221 49,554 1,222,698
Total Level 1 Level 2 Level 3
£’000 £’000 £’000 £’000
As at 31 December 2019
Equity and other variable-yield securities 1,920,595 1,881,632 28,477 10,486
Debt securities and other fixed-income securities 73,602 40,995 25,110 7,497
Cash equivalents 604 416 188 —
Investment property 1,265,784 — — 1,265,784
Total financial investments and investment
property 3,260,585 1,923,043 53,775 1,283,767
There have been no significant transfers between level 1 and level 2 in 2020 or 2019.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 71
NOTES TO THE FINANCIAL STATEMENTS
continued
Fair value hierarchy – continued
17
Level 3 assets where internal models are used comprise property and unquoted investments, 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.
With the exception of £nil (2019: £42k) of investment property, all level 3 investments relate to policyholder assets
and movements in the value of such assets do not therefore impact on shareholder reserves.
Equity and Debt securities and
other variable-yield other fixed income Investment
securities securities Property
2020 2020 2020
Level 3 Investments £’000 £’000 £’000
Fair value
At 1 January 2020 10,486 7,497 1,265,784
Net (losses)/gains for the year recognised in
profit and loss (6,702) (7,486) (60,751)
Purchases/Additions — — 122,449
Disposals — — (118,877)
Transfers into level 3 9,268 1,734 —
Transfers out of level 3 (704) — —
At 31 December 2020 12,348 1,745 1,208,605
Equity and Debt securities and
other variable-yield other fixed income Investment
securities securities Property
2019 2019 2019
Level 3 Investments £’000 £’000 £’000
Fair value
At 1 January 2019 16,907 4,189 1,274,452
Net (losses)/gains for the year recognised in
profit and loss (5,948) 4,759 (12,469)
Purchases/Additions — — 125,848
Disposals — — (122,047)
Transfers into level 3 7,836 966 —
Transfers out of level 3 (8,309) (2,417) —
At 31 December 2019 10,486 7,497 1,265,784
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 where observable inputs are no longer
available. This is principally due to assets becoming illiquid meaning that observable inputs are no longer available.
72 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
Fair value hierarchy – continued
17
Fair values of financial instruments are, in certain circumstances, measured using valuation techniques that
incorporate inputs and 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. A factor of 5% has been used as the reasonably possible alternative
assumption.
Reasonably possible
As at 31 December 2020 alternative assumptions
Current Increase in Decrease in
fair value fair value fair value
Valuation Main inputs 2019 2019 2019
Assets Basis/Technique and assumptions £’000 £’000 £’000
Suspended securities Note 1 Estimated
recoverable
amount 10,665 533 (533)
Unquoted securities Note 1 Price earning
Investment property Note 2 Third party
property index 1,208,605 60,430 (60,430)
multiple 3,428 170 (170)
1,222,698 61,133 (61,133)
Reasonably possible
As at 31 December 2019 alternative assumptions
Current Increase in Decrease in
fair value fair value fair value
Valuation Main inputs 2019 2019 2019
Assets Basis/Technique and assumptions £’000 £’000 £’000
Suspended securities Note 1 Estimated
recoverable
amount 9,992 500 (500)
Unquoted securities Note 1 Price earning
Investment property Note 2 Third party
property index 1,265,784 63,289 (63,289)
multiple 7,991 400 (400)
1,283,767 64,189 (64,189)
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.
Any changes in value of assets held within non-participating investment contracts are offset by an equal and
opposite change in investment contract liabilities.
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 contingent consideration payable is split between creditors due within one year and creditors due
in more than one year. The total amount payable relates to acquisitions by the Group of Dunstan Thomas and
Talbot and Muir. See notes 34 and 35 for further details. Contingent consideration payable is wholly classified as
Level 3 for fair value measurement under IFRS 13.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 73
NOTES TO THE FINANCIAL STATEMENTS
continued
18 Trade and other receivables
Group Company
As at 31 December As at 31 December
2020 2019 2020 2019
£’000 £’000 £’000 £’000
Trade receivables 17,496 13,305 — —
Prepayments and accrued income 7,150 5,689 17 8
Amounts owed by group undertakings — — — 70
Other receivables 2,267 921 279 —
26,913 19,915 296 78
All 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 from 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. The Group holds the trade receivables with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortised cost using the effective interest method.
Details about the Group’s impairment policies and the calculation of loss allowance are provided in note 32 to the
financial statements
19 Cash and cash equivalents
As at 31 December 2020 and 2019 cash and cash equivalents were as follows
Group Company
As at 31 December As at 31 December
2020 2019 2020 2019
£’000 £’000 £’000 £’000
Cash at bank and in hand 32,509 31,228 4,411 1,330
Deposits with credit institutions 397,518 389,715 — —
Cash equivalents 551 604 — —
Cash and cash equivalents 430,578 421,547 4,411 1,330
The Group considers potential expected credit losses on cash and cash equivalents to be insignificant.
20 Trade and other payables
Group Company
As at 31 December As at 31 December
2020 2019 2020 2019
£’000 £’000 £’000 £’000
Trade payables 8,172 1,553 29 47
Taxes and social security costs 2,880 3,204 51 —
Amounts owed to group undertakings — — 1,347 168
Other payables 246 4,974 — —
Accruals 7,597 5,877 140 107
18,895 15,608 1,567 322
Trade payables are non-interest bearing and are normally settled on 30 day terms.
74 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
21 Borrowings
Group Company
As at 31 December As at 31 December
2020 2019 2020 2019
£’000 £’000 £’000 £’000
Current
Bank loans 53,533 28,215 3,852 3,156
53,533 28,215 3,852 3,156
Non-current
Bank loans 53,370 48,911 19,904 8,274
53,370 48,911 19,904 8,274
Total borrowings 106,903 77,126 23,756 11,430
Bank borrowings
The bank borrowings are repayable as follows:
Group Company
As at 31 December As at 31 December
2020 2019 2020 2019
£’000 £’000 £’000 £’000
Within 1 year 53,533 28,215 3,852 3,156
Between 1 year and 5 years 42,531 31,793 19,904 8,274
After more than 5 years 10,839 17,118 — —
106,903 77,126 23,756 11,430
Bank borrowings of the Company are repayable between January 2021 and July 2025 and bear average coupons of
2.25% plus LIBOR per annum.
Total borrowings of the Group include liabilities of £83,147,000 (2019: £65,696,000) secured by legal charge over
certain properties held within non-participating investment contracts, and liabilities of £23,756,000 (2019:
£11,430,000) secured on the shares of Curtis Banks Limited, Suffolk Life Pensions Limited, Suffolk Life Annuities
Limited, and Dunstan Thomas Group Limited.
22 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 (2019: £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.
2020 2019
Movement in non-participating investment contract liabilities £’000 £’000
As at 1 January 3,571,904 3,405,428
Reserves in respect of new business 180,513 112,052
Amounts paid on surrenders and maturities during the year (256,998) (277,448)
Investment income 125,231 365,815
Expenses (35,343) (33,943)
As at 31 December 3,585,307 3,571,904
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 75
NOTES TO THE FINANCIAL STATEMENTS
continued
22 Non-participating investment contract liabilities – continued
(a)
Analysis of investment contract liabilities (continued)
These relate to:
2020 2019
£’000 £’000
Self-Invested Personal Pensions 2,554,264 2,500,340
Group Managed Funds – Trustee Investment Plans 55,583 65,054
Group Managed Funds 55,306 74,736
Trustee Investment Plans 920,154 931,774
As at 31 December 3,585,307 3,571,904
Assets held to cover non-participating investment contracts are detailed under separate notes to the
financial statements.
(b)
Investment contract liabilities – investment income
2020 2019
£’000 £’000
Rents receivable 75,931 81,697
Interest receivable 2,715 3,326
Investment and other income 27,526 36,378
Realised (losses)/gains on investments (40,093) 24,772
Unrealised gains on investments 59,152 219,642
125,231 365,815
(c)
Investment contract liabilities – expenses
2020 2019
£’000 £’000
Investment management fees 10,010 10,322
Adviser fees 610 379
Management charges – administration 6,859 8,807
Bank fees and charges 300 180
Professional fees and sundries 11,150 11,417
Bad debts 4,104 593
Interest payable on bank loans and overdrafts 2,310 2,245
35,343 33,943
(d)
Reserves in respect of new business
2020 2019
£’000 £’000
Gross premiums
Periodic premiums relating to Self-Invested Personal Pensions 1,700 2,270
Single premiums relating to Self-Invested Personal Pensions 120,837 34,164
Single premiums relating to Group Managed Funds – TIPs 3,851 3,274
Single premiums relating to Group Managed Funds 1,212 2,280
Single premiums relating to Trustee Investment Plans 52,913 70,064
180,513 112,052
76 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
22 Non-participating investment contract liabilities – continued
(e)
Amounts paid on surrenders and maturities during the year
2020 2019
£’000 £’000
Gross claims paid
Lump sums on death 16,910 9,868
Lump sums on pensions vesting 12,010 23,039
Income withdrawals 31,090 33,979
Annuities purchased 122 941
Transfers out 183,705 200,949
Surrenders of managed funds – Trustee Investment Plans 13,161 8,672
256,998 277,448
23 Deferred tax liability
As a result of the taxation position set out in note 11, a deferred tax asset has arisen as follows:
Group
2020 2019
£’000 £’000
Brought forward asset (911) (595)
Net change in temporary differences on equity share based payments 568 (383)
Net change in temporary differences on plant and equipment 77 67
Net change in temporary differences on intangible assets 5,279 —
Carried forward asset 5,013 (911)
The deferred tax asset with respect to temporary differences is analysed as follows:
Group
As at 31 December
2020 2019
£’000 £’000
Temporary differences on equity share based payments (269) (837)
Temporary differences on plant and equipment 3 (74)
Temporary differences on intangible assets 5,279 —
5,013 (911)
The deferred tax asset assumes a future corporation tax rate of 19% will be applicable to the Group.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 77
NOTES TO THE FINANCIAL STATEMENTS
continued
24 Provisions
As at 31 December
In-specie
Other Restructuring contributions Group
provision provision provision Total
Provisions £’000 £’000 £’000 £’000
Balance as at 1 January 2019 500 — — 500
Amounts introduced — 307 — 307
Amounts utilised (254) — — (254)
Balance as at 31 December 2019 246 307 — 553
Amounts introduced 53 — 402 455
Amounts arising on acquisitions 7 — — 7
Amounts utilised (292) (170) — (462)
Amounts released as unutilised (7) (38) — (45)
Balance as at 31 December 2020 7 99 402 508
Other provision
As part of the consolidation and integration exercise undertaken during the year ended 31 December 2018
management initiated a review of data records relating to commercial properties held within SIPPs administered
by the Group. A provision of £500,000 was made for the estimated costs arising from this exercise. Additionally,
a contingent liability was recognised and remains disclosed within note 38 to the financial statements.
As at 31 December 2019, the Group had completed its review enabling identification of the total number of cases
potentially requiring remediation, and as of 31 December 2020, the vast majority of cases had been settled. There
were no material variances to the original estimate of future remaining direct costs the Group expected to
potentially bear.
Restructuring provision
During the year ended 31 December 2019, the Group progressed its strategy to deliver its Target Operating Model
by deciding to centralise commercial property administration within one office location. Redundancy costs
associated with this decision, relating to the year ended 31 December 2019, are included as amounts introduced to
the restructuring provision for that year. There were no material variances to the original estimate of costs the
Group expected to potentially bear.
In-specie contributions provision
As previously reported, 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
has been challenged by the sector as a whole. Following a favourable ruling for HMRC in a case affecting another
SIPP operator, and having taken further legal advice, the Directors now consider it more likely than not that some
cost associated with this issue will be incurred by the Group.
The total exposure for affected clients is estimated at £1.1m inclusive of interest. However, in recognition of the
possibility that some clients may have insufficient assets to settle their share of the cost, the Group has recognised
a provision of £0.4m and treated this amount as a non-recurring cost during the year ended 31 December 2020.
78 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
25 Issued capital
Group and Company
2020 2019
£’000 £’000
Allotted, called up and fully paid
Ordinary shares of 0.5p each 330 271
330 271
Number Number
Number of Ordinary shares
Brought forward 54,142,346 53,807,346
Issued during the year 12,271,966 335,000
Carried forward 66,414,312 54,142,346
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.
26 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. 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 27.
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. The Company’s profit after tax for the year was £11,049,000 (2019:
£6,925,000).
Treasury shares
The Group has established an employee benefit trust (“EBT”) in order to acquire ordinary shares in the Company
to satisfy awards under the Group’s share based payment schemes. At 31 December 2020, the EBT held 261,276
ordinary shares in the Company, acquired for a total consideration of £681,490 with a market value of £600,935
(2019: 206,286 ordinary shares acquired for a total consideration of £614,084 with a market value of £728,190).
They are classified as treasury shares in the Consolidated Statement of Financial Position, their cost being
deducted from equity.
27 Equity share based payments
The weighted average exercise price for all options outstanding at 31 December 2020 was 197.08p (2019: 162.17p).
The weighted average exercise price for all options exercised during the year ended 31 December 2020 was 79.04p
(2019: 99.32p).
The weighted average remaining contractual life of all unexercised share options as at 31 December 2020 was
6 years and 7 months (2019: 5 years and 8 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 2020 was £434,000 (year ended 31 December 2019:
£956,000). The total increase in equity arising from equity-settled share-based payment transactions for the year
ended 31 December 2020 was £434,000 (year ended 31 December 2019: £956,000).
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 79
NOTES TO THE FINANCIAL STATEMENTS
continued
27 Equity share based payments – continued
The following table sets out each of the Group’s equity share based payments in operation during the year ended
31 December 2020:
Number of Number of
shares under shares under
option at option at Latest
Date of 1 January 31 December Exercise Exercise
Scheme grant 2020 Granted Exercised Lapsed 2020 price Date
EMI15 08/04/15 465,000 — — — 465,000 62.54p 08/04/25
SS16 28/06/16 17,518 — (7,103) (10,415) — 288.88p 01/02/20
SS17 30/05/17 471,493 — (204,601) (16,230) 250,662 213.60p 01/02/21
SS18 21/05/18 77,795 — — (8,432) 69,363 268.80p 01/02/22
SS19 21/05/19 180,585 — — (42,368) 138,217 244.80p 01/02/23
SS20 19/05/20 — 587,977 — (20,636) 567,341 212.80p 01/02/24
CSOP16A 14/09/16 171,616 — — — 171,616 267.00p 14/09/26
CSOP16B 15/12/16 535,996 — — — 535,996 201.00p 15/12/26
CSOP17 26/06/17 535,996 — — — 535,996 260.00p 25/06/27
CSOP20 08/04/20 — 391,757 — — 391,757 217.00p 08/04/30
LTIP17 26/10/17 373,073 — (367,204) — 5,869 0p 26/10/27
LTIP18A 18/09/18 154,603 — — — 154,603 0p 18/09/28
LTIP18B 05/10/18 55,559 — — — 55,559 0p 05/10/28
LTIP20A 14/09/20 — 750,000 — — 750,000 217.00p 14/09/30
LTIP20B 14/09/20 — 750,000 — — 750,000 217.00p 14/09/30
EBS20 08/04/20 — 25,436 — — 25,436 0p 08/04/30
3,039,234 2,505,170 (578,908) (98,081) 4,867,415
Of the total 4,867,415 shares under option as at 31 December 2020, 1,882,014 were exercisable.
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 2020, one member of key management personnel of the Group held options under the EMI.
SS16, SS17, SS18, SS19 & SS20
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 & CSOP20
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 2020, five key management personnel of the Group held options under
the CSOP. The CSOP is a performance based option grant.
LTIP17, LTIP18A, LTIP18B, LTIP20A and LTIP20B
The Group operates a performance based Long Term Incentive Plan (“LTIP”) under which executive directors and
certain key management of the Group are able to subscribe to ordinary shares in the Company. As at the year end
31 December 2020, five key management personnel of the Group held options granted under the LTIP in 2017 and
2018. In September 2020, awards were made to the executive directors under a new LTIP.
Vesting of LTIP awards is subject to satisfaction of performance criteria as described in the Corporate Governance
Report on page 31.
EBS20
The Group operates an executive bonus scheme through which a proportion of annual bonus amounts over a
certain threshold for certain executives are provided as share options providing those individuals with the ability
to subscribe to ordinary shares in the Company. As at the year end 31 December 2020, only certain executive
directors of the Group held options under the EBS, as disclosed in the Directors’ Remuneration Report.
80 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
27 Equity share based payments (continued)
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 certain 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:
Option Fair value Share price Risk free
vesting per option on grant rate of Expected Dividend
Scheme Date of grant period granted date interest volatility yield
EMI15 08/04/15 3 years 5.64p 62.54p 0.50% 24.00% 0.00%
SS16 28/06/16 3 years 58.76p 302.50p 0.50% 29.00% 1.00%
SS17 30/05/17 3 years 99.77p 282.50p 0.25% 44.29% 1.50%
SS18 21/05/18 3 years 84.09p 316.00p 0.50% 37.39% 1.98%
SS19 21/05/19 3 years 79.37p 308.00p 0.75% 33.05% 2.60%
SS20 19/05/20 3 years 60.43p 271.00p 0.10% 29.60% 3.32%
CSOP16A 14/09/16 1.5 years 45.58p 267.00p 0.25% 39.01% 1.00%
CSOP16B 15/12/16 3 years 52.42p 201.00p 0.25% 42.95% 1.00%
CSOP17 26/06/17 3 years 63.54p 260.00p 0.25% 43.41% 1.50%
CSOP20 08/04/20 3 years 31.82p 217.00p 0.10% 32.82% 4.15%
LTIP17 26/10/17 3 years 289.25p 310.00p 0.25% 46.66% 1.50%
LTIP18A 18/09/18 3 years 262.35p 287.00p 0.75% 36.05% 2.18%
LTIP18B 05/10/18 3 years 265.09p 290.00p 0.75% 35.98% 2.18%
LTIP20A 14/09/20 3 years 31.17p 215.00p 0.10% 33.09% 4.19%
LTIP20B 14/09/20 4 years 33.78p 215.00p 0.10% 33.09% 4.19%
EBS20 08/04/20 2 years 194.80p 217.00p 0.10% 32.82% 4.15%
28 Non-controlling interests
The non-controlling interests reflect the relevant amounts of the trading results and net assets attributable to the
non-controlling shareholders in CB 2019 Limited (see note 16).
As at 31 December
2020 2019
£’000 £’000
Share of net assets brought forward and carried forward 14 14
29 Financial commitments
The Group holds investment properties on behalf of non-participating investment contracts which generate income
by leasing these to tenants under operating leases.
At the statement of financial position date, the Group had contracted with vendors to purchase investment
properties or develop existing investment properties to pay the following future payments:
As at 31 December
2020 2019
Attributable to non-participating investment contracts £’000 £’000
Authorised and contracted commitments not provided for in respect of
investment property acquisition and development, payable after 31 December: 2,041 1,490
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 81
NOTES TO THE FINANCIAL STATEMENTS
continued
29 Financial commitments (continued)
At the statement of financial position date, the Group had contracted with tenants to receive the following future
minimum lease payments on behalf of non-participating investment contracts:
As at 31 December
2020 2019
Attributable to non-participating investment contracts £’000 £’000
Future aggregate minimum lease receivables under non-cancellable operating
leases:
Within 1 year 70,324 71,363
Within 2 – 5 years 128,114 139,164
After more than 5 years 82,941 78,786
281,379 289,313
Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is
as follows:
As at 31 December
2020 2019
Attributable to shareholder reserves £’000 £’000
Intangible assets — 878
30 Pension costs – defined contribution
As at 31 December
2020 2019
£’000 £’000
Contributions payable by the Group for the year 2,015 1,704
31 Dividends
As at 31 December
2020 2019
£’000 £’000
Ordinary dividend declared and paid 5,149 4,562
5,149 4,562
An interim dividend in respect of the year ended 31 December 2020 of 2.5p per share was declared by reference to
audited distributable reserves as at 31 December 2019 and paid on 13 November 2020.
A final dividend in respect of the year ended 31 December 2020 of 6.5p per share is proposed by reference to
audited distributable reserves as at 31 December 2020 and, if approved, will be paid on 4 June 2021.
32 Financial risk management
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. There is deemed to be minimal concentration risk present due to revenue
generation being spread over a high volume of individual customers. All risk management included in this note is in
relation to shareholder assets and liabilities, as there is no credit risk, interest risk or liquidity risk on the
policyholder assets and liabilities attributable to shareholder reserves.
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. 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.
82 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
32 Financial risk management – continued
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 £32,126k (2019: £31,228k) 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 30 days depending on the immediate cash
requirements of the Group and earn interest at the respective term deposit rates.
The Group had external borrowings attributable to shareholders at the year end of £23,756k (2019: £11,339k). 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
Effect on profit
Increase/decrease before tax
in basis points £’000
2020
£ Sterling +100 (238)
£ Sterling –100 238
2019
£ Sterling +100 (146)
£ Sterling –100 146
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.
The maximum credit risk exposure of the Group’s financial instruments in the event of other parties failing to
perform their obligations is considered to be equal to the carrying amount of such financial instruments, excluding
policyholder assets and liabilities within non-participating investment contracts included within the consolidated
statement of financial position. Given the nature of the Group’s operations, it does not have significant
concentration of credit risk in respect of shareholder trade receivables, with exposure spread over a large number
of customers.
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. The directors continue to monitor the strength of the banks used by the Group.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. The loss rate is determined by reference to the underlying level
of liquidity in each of the Group’s clients’ SIPPs because clients’ fees are normally settled directly from their SIPP
cash holdings. A lower level of liquidity in the SIPP, or indeed illiquidity, indicates reduced credit quality in the
related trade receivable balance.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 83
NOTES TO THE FINANCIAL STATEMENTS
continued
32 Financial risk management – continued
Credit risk (continued)
The Group’s credit quality ratings as at 31 December 2020 in respect of shareholder trade receivables are set out
below:
Trade receivables
IFRS 9 loss gross carrying Net trade
rate amount Loss allowance receivables
% £’000 £’000 £’000
Good quality 0.00 – 10.00 5,422 (144) 5,278
Satisfactory quality 10.01 – 30.00 1,855 (339) 1,516
Low quality 30.01 – 99.99 1,535 (1,111) 424
No expected recovery 100.00 30 (30) —
8,842 (1,624) 7,218
The Group’s credit quality ratings as at 31 December 2019 in respect of shareholder trade receivables are set out
below:
Trade receivables
IFRS 9 loss gross carrying Net trade
rate amount Loss allowance receivables
% £’000 £’000 £’000
Good quality 0.00 – 10.00 4,370 (187) 4,183
Satisfactory quality 10.01 – 30.00 52 (16) 36
Low quality 30.01 – 99.99 1,043 (793) 250
No expected recovery 100.00 30 (30) —
5,495 (1,026) 4,469
The Group’s approach to managing credit risk is based on its credit quality ratings, where a set of policies and
procedures are in place to recover fee debt based on individual SIPP liquidity. This underlying level of liquidity in
each of the Group’s clients’ SIPPs is mostly driven by the clients’ use of the SIPP and what they choose to invest in.
The terms and conditions attached to the Group’s SIPP products include a requirement to maintain a minimum
cash balance from which the Group normally draws fees when due. Where cash is not immediately available,
assets from the SIPP are disinvested in order to settle fees. We also request fees direct from clients where
necessary.
Trade receivables of £17,496,000 at 31 December 2020 (2019: £13,305,000) includes £10,278,000 (2019:
£8,836,000) 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 credit quality rating analysis since the Group is not directly exposed to
the risks from these contracts.
The Group continually assesses historical recovery data to help determine how the underlying level of liquidity in
the SIPPs fits into each of the credit quality ratings. Future historical data available may lead to changes in the
estimated categorisation of trade receivables gross carrying amounts and associated loss allowance.
The Group regularly categorises its trade receivables to help determine underlying changes in the level of liquidity
of the SIPP which then drives changes in the estimated loss allowance associated with the trade receivables
balance.
Where trade and other receivables have been outstanding for more than six years, amounts are deemed to have no
reasonable expectation of recovery and are written off.
84 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
32 Financial risk management – continued
Credit risk – continued
Changes in macroeconomic factors may impact the Group’s clients’ use of the SIPP and cause the level of liquidity
in the SIPP to increase or decrease. A 10% increase or decrease in loss rates estimated at the year end would have
the following impact:
Effect on profit
Increase/(decrease) before tax
Year ended 31 December 2020 in loss rates £’000
Loss rate 10% (726)
Loss rate (10%) 402
Effect on profit
Increase/(decrease) before tax
Year ended 31 December 2019 in loss rates £’000
Loss rate 10% (445)
Loss rate (10%) 240
The Group charges fixed fees for its services reducing its exposure to changes in macroeconomic factors which may
otherwise impact a percentage basis point fee charging model.
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 21 and details on the maturity of the
Group’s lease liabilities are as reflected in the consolidated statement of financial position. The undiscounted
value of lease liabilities due <1 year is £905k. The undiscounted value of lease liabilities due >1 year is £5,739k.
Maturity analysis relating to other financial liabilities including trade and other payables and deferred
consideration is as disclosed in the consolidated statement of financial position as these liabilities are all due
<1 year.
33 Capital management
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 2020 was £80,150k (2019: £55,453k). 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.
Under the terms of the major shareholder borrowing facilities, the Group is required to comply with the following
financial covenants:
-
-
-
Cash flow cover – a measure of the Group’s liquidity
Interest cover – a measure of the Group’s ability to meet interest repayments
Leverage – a measure of the Group’s overall net cash position
The Group has complied with these covenants throughout the current and prior reporting period.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 85
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
34 Business combinations
Acquisition of Dunstan Thomas
On 3 August 2020, Curtis Banks Group PLC completed the acquisition of the entire share capital of Dunstan Thomas
Group Limited and its subsidiaries. Dunstan Thomas Group Limited holds four wholly owned trading subsidiaries,
Digital Keystone Limited, Dunstan Thomas Holdings Limited, Dunstan Thomas Consulting Limited and Platform
Action Limited, all of which now form part of the enlarged Group.
Dunstan Thomas Group Limited is a holding company. Dunstan Thomas Holdings Limited, Digital Keystone Limited,
Dunstan Thomas Consulting Limited, and Platform Action Limited provide licences to customers for financial
technologies that have been developed in house including Imago Illustrations and Integro CX Enterprise, alongside
training, consultancy and other development solutions to the financial services market.
Initial consideration settled wholly in cash totalled £21.9m. Variable deferred contingent consideration linked to
post acquisition EBITDA and estimated at approximately £3.9m is payable after a three year earn-out period post
acquisition.
The acquisition has been accounted for using the acquisition method and in accordance with IFRS 3: Business
Combinations.
£’000
Fair value of consideration payable 25,848
Less: Provisional fair value of net assets acquired (9,733)
Goodwill arising on acquisition (note 13) 16,115
The goodwill recognised above is attributed to the expected benefits from combining the assets and activities of
Dunstan Thomas with those of the Group. The primary components of this residual goodwill comprise:
-
-
-
-
Cost savings generated through use of Dunstan Thomas to progress Group IT strategy
Cost savings generated through economies of scale and enlarged Group purchasing power
A skilled and knowledgeable workforce
New opportunities available to the combined business, as a result of Dunstan Thomas being part of an
enlarged and more diversified Group
We have undertaken a valuation of the acquired goodwill and separately identifiable intangible assets, which
comprise internally generated software and customer relationships. The fair value adjustments to reflect these
assets have been measured provisionally and collectively pending completion of an independent valuation, which
has been delayed as the impact of the covid-19 pandemic has required management to prioritise other commercial
matters.
Fair value of these intangible assets has been based on the present value of expected future cash flows from these
relationships, and the assumptions used in this exercise have also been used in determining the estimated useful
economic life of each asset for the purposes of amortisation.
86 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
34 Business combinations – continued
Acquisition of Dunstan Thomas – continued
The provisional amounts recognised in respect of the identified assets acquired and liabilities assumed are set out
in the following table:
Fair value
Carrying value adjustment Total
£’000 £’000 £’000
Non-current assets
Intangible assets 2,358 8,690 11,048
Property, plant and equipment 1,351 — 1,351
Current assets
Trade receivables 1,527 — 1,527
Other debtors 1,356 — 1,356
Prepayments & accrued income 546 — 546
Bank and cash 918 — 918
Current liabilities
Trade payables (645) — (645)
Taxes and social security costs (831) — (831)
Other payables (49) — (49)
Accruals (452) — (452)
Deferred income (1,159) — (1,159)
Lease liabilities (189) — (189)
Current tax liability (380) — (380)
Non-current liabilities
Deferred income (125) — (125)
Lease liabilities (1,084) — (1,084)
Deferred tax liability — (2,099) (2,099)
Net assets acquired 3,142 6,591 9,733
Adjustments to finalise the fair values attributed to assets and liabilities acquired will be made in the financial
statements for the year to 31 December 2021. If information obtained within one year of the acquisition date
about facts and circumstances that existed at the acquisition date identifies adjustments to the above amounts, or
any additional provisions that existed at the acquisition date, then the accounting for the acquisition will be
revised.
Acquisition costs totalled £0.8m and comprised legal and professional fees, and due diligence work. In accordance
with IFRS 3 Business Combinations, these costs have been expensed as reflected in note 7 to the financial
statements as non-recurring cost.
The post-acquisition operating activity of Dunstan Thomas Group Limited and its subsidiaries for the period from
acquisition to the end of 31 December 2020 generated net profits before tax of £1.5m and after tax of £1.4m.
Operating revenues of £5.3m have been recognised in relation to the acquisition of Dunstan Thomas Group Limited
and its subsidiaries for the period from acquisition to 31 December 2020. The operating revenue as though the
acquired business had been held for the full year ended 31 December 2020 is estimated to be £12.7m.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 87
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
34 Business combinations – continued
Acquisition of Dunstan Thomas – continued
The net cash flows arising from this acquisition during the year ended 31 December 2020 were as follows:
£’000
Net cash inflow from debt refinancing 15,630
Working capital utilised 6,305
Total initial consideration paid to vendors 21,935
Cash acquired on acquisition (918)
Net cash outflow in the year ended 31 December 2020 21,017
Acquisition of Talbot and Muir
On 30 October 2020, Curtis Banks Group PLC completed the acquisition of the entire share capital of Talbot and
Muir Limited and its subsidiaries. The subsidiaries of Talbot and Muir Limited are all non-trading trustee entities
acting as bare trustee for SIPP and SSAS pension assets and liabilities, all of which now form part of the enlarged
Group. Talbot and Muir is a provider of SIPP and SSAS pension scheme administration services.
Initial consideration settled wholly in cash totalled £18.0m. Variable deferred contingent consideration linked to
post acquisition EBITDA and estimated at approximately £4.1m is payable over a two year earn-out period post
acquisition.
The acquisition has been accounted for using the acquisition method and in accordance with IFRS 3: Business
Combinations.
£’000
Fair value of consideration payable 21,845
Less: fair value of net assets acquired (17,278)
Goodwill arising on acquisition (note 13) 4,567
The goodwill recognised above is attributed to the expected benefits from combining the assets and activities of
Talbot and Muir with those of the Group. The primary components of this residual goodwill comprise
–
-
-
-
–
Revenue synergies expected to be available to the Group as a result of the transaction
Greater access to diverse distribution channels
Cost savings generated through additional scale and the purchasing power of the enlarged Group
A skilled and knowledgeable workforce
New opportunities available to the combined business, as a result of Talbot and Muir being part of an
enlarged Group
88 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
continued
34 Business combinations – continued
Acquisition of Talbot and Muir – continued
The fair value of the identifiable assets and liabilities acquired are set out below:
Fair value
Carrying value adjustment Total
£’000 £’000 £’000
Non-current assets
Intangible assets 3,145 14,290 17,435
Property, plant and equipment 1,020 — 1,020
Current assets
Trade receivables 870 (113) 757
Other debtors 1 — 1
Prepayments & accrued income 468 — 468
Bank and cash 4,193 — 4,193
Current liabilities
Trade payables (45) — (45)
Taxes and social security costs (322) — (322)
Accruals (218) — (218)
Deferred income (1,285) — (1,285)
Lease liabilities (106) — (106)
Deferred consideration (430) — (430)
Current tax liability (113) — (113)
Non-current liabilities
Lease liabilities (687) - (687)
Deferred tax liability (40) (3,350) (3,390)
Net assets acquired 6,451 10,827 17,278
Acquisition costs totalled £0.6m and comprised legal and professional fees, and due diligence work. In accordance
with IFRS 3 Business Combinations, these costs have been expensed as reflected in note 7 to the financial
statements as non-recurring cost.
The post-acquisition operating activity of Talbot and Muir Limited and its subsidiaries for the period from
acquisition to the end of 31 December 2020 generated net profits before tax of £0.3m and after tax of £0.2m.
Operating revenues of £1.0m have been recognised in relation to the acquisition of Talbot and Muir Limited and its
subsidiaries for the period from acquisition to 31 December 2020. The operating revenue as though the acquired
business had been held for the full year ended 31 December 2020 is estimated to be £6.0m.
The net cash flows arising from this acquisition during the year ended 31 December 2020 were as follows:
£’000
Net cash inflow from equity financing 24,217
Amount retained as working capital (6,177)
Total initial consideration paid to vendors 18,040
Cash acquired on acquisition (4,193)
Net cash outflow in the year ended 31 December 2020 13,847
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 89
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
35 Contingent consideration
The Group and Company has entered into certain acquisition agreements that provide for contingent consideration
to be paid. These agreements and the basis of calculation of the net present value of the contingent consideration
are summarised below. While it is not possible to determine the exact amount of contingent consideration (as this
will depend on the performance of the acquired businesses during the period), the Group estimates the fair value
of the remaining contingent consideration payable is £8.2m (2019: £0.1m).
On 3 August 2020 the Group acquired Dunstan Thomas for total maximum consideration of up to £27.5m,
comprising initial consideration of £21.9m in cash plus contingent consideration of up to £5.6m payable in cash
after three years post completion date if certain financial targets based on growth in earnings before interest, tax,
depreciation and amortisation are met. The Group estimates the fair value of the remaining contingent
consideration at 31 December 2020 to be £4.1m using forecasts approved by the Board covering the contingent
consideration period.
On 30 October 2020 the Group acquired Talbot and Muir for total maximum consideration of up to £25.25m,
comprising initial consideration of £18.0m in cash plus contingent consideration of up to £7.25m payable in cash
over a two year period post completion if certain financial targets based on growth in earnings before interest,
tax, depreciation and amortisation are met. The Group estimates the fair value of the remaining contingent
consideration at 31 December 2020 to be £4.1m using forecasts approved by the Board covering the contingent
consideration period.
36 Off Balance Sheet Cash
The Group administers cash held in SIPP bank accounts on behalf of its SIPP clients. Given the nature of these
client balances, neither the funds nor an offsetting liability are included in the financial statements. Off balance
sheet cash held in SIPP bank accounts as at 31 December 2020 totalled £992m (2019: £993m).
37 Related parties
At the year end, Curtis Banks Group PLC owed £344,340 to Curtis Banks Limited (2019: £167,593). 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 £176,747 (2019: £141,007).
During the year ended 31 December 2020, Suffolk Life Group Limited paid dividends totalling £7,800,000 to
Curtis Banks Group PLC (2019: £4,000,000). During the year ended 31 December 2020, Curtis Banks Limited paid
dividends totalling £6,000,000 to Curtis Banks Group PLC (2019: £4,000,000).
During the year ended 31 December 2019, Curtis Banks Group PLC provided an unsecured loan of £20,000 to
Rivergate Legal Limited, a subsidiary of the Group, to assist with set up costs. The loan was repaid during the year
ended 31 December 2020.
During the year ended 31 December 2020, the Group paid £45,833 (2019: £50,000) gross emoluments to Chris
Banks, a strategic adviser and significant shareholder of Curtis Banks Group PLC.
During the year ended 31 December 2018 Curtis Banks Group PLC provided an unsecured loan of £50,000 to
Templemead Property Solutions Limited, a subsidiary of the Group, to assist with set up costs. The loan was
written off as irrecoverable during the year ended 31 December 2020.
During the year ended 31 December 2020, as agreed and arranged under the sale and purchase agreement of
Dunstan Thomas, Dunstan Thomas Group Limited settled demerger amounts totalling £1,002,648 to the vendors for
the sale on behalf of Curtis Banks Group PLC. Consequently, at the year end Curtis Banks Group PLC owed
£1,002,648 to Dunstan Thomas Group Limited.
Staff costs in relation to directors and key management personnel of the Group are disclosed in note 8.
38 Contingent liabilities
Data cleansing
During the year ended 31 December 2018 management initiated a review of data records related to properties held
within SIPPs administered by the Group.
This review required a case by case assessment of each of the properties within the population in order to assess
whether any remedial action was required by the Group in respect of that property or the associated SIPP.
The Directors’ best estimate of this contingent liability is £1.4m (31 December 2019: £2.3m). The decrease in
estimate has arisen following satisfactory resolution of a number of cases and an overall reduction in the value of
remaining cases and uncertainty remaining.
90 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
38 Contingent liabilities – continued
Data cleansing – continued
There remain inherent uncertainties in the estimate due to the potential for variations in the assumed action
required to rectify individual positions. This estimate continues to be reviewed regularly, and any changes or
refinements will be reported as appropriate. The Directors currently expect that, with COVID-19 related working
limitations and also additional forbearance having been permitted in connection with the COVID-19 pandemic, any
potential material follow up actions will be completed by 2021.
39 Control
There is no one ultimate controlling party.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 91
COMPANY INFORMATION
Directors
Will Self – Chief Executive Officer
Dan Cowland – Chief Financial Officer
Jane Ridgley – Chief Operating Officer
Chris Macdonald – Non-Executive Chairman
Bill Rattray – Non-Executive Director
Jules Hydleman – Non-Executive Director
Jill Lucas – Non-Executive Director
Registered Office
3 Temple Quay
Temple Back East
Bristol
BS1 6DZ
Registered Number
07934492
Nominated Advisor and Broker
Peel Hunt LLP
Moor House
120 London Wall
London
EC2Y 5ET
Independent Auditors
PricewaterhouseCoopers LLP
2 Glass Wharf
Temple Quay
Bristol
BS2 0FR
Solicitors
Roxburgh Milkins Limited
Merchants House North
Wapping Road
Bristol
BS1 4RW
Registrars
ComputerShare Plc
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
Joint Broker
N+1 Singer Ltd
1 Bartholomew Lane
London
EC2N 2AX
92 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
SUPPLEMENTARY UNAUDITED INFORMATION
Unaudited IFRS Consolidated Statement of Financial Position as at 31 December 2020 split
between insurance policy holders and the Group’s shareholders
2020 2020 2020 2019
£’000 £’000 £’000 £’000
ASSETS Group Total Policyholder Shareholder Shareholder
Non-current assets
Intangible assets 91,166 — 91,166 43,427
Investment property 1,208,605 1,208,605 — 42
Property, plant and equipment 7,658 — 7,658 6,195
Investments 2,072,317 2,072,317 — —
Deferred tax asset — — — 911
3,379,746 3,280,922 98,824 50,575
Current assets
Trade and other receivables 26,913 12,243 14,670 9,509
Cash and cash equivalents 430,578 398,069 32,509 31,228
Current tax asset 580 222 358 —
458,071 410,534 47,537 40,737
Total assets 3,837,817 3,691,456 146,361 91,312
LIABILITIES
Current liabilities
Trade and other payables 18,895 10,626 8,269 5,966
Deferred income 26,995 12,376 14,619 12,415
Borrowings 53,533 49,681 3,852 3,156
Lease liabilities 672 — 672 719
Provisions 501 — 501 553
Contingent consideration 2,516 — 2,516 214
Current tax liability — — — 738
103,112 72,683 30,429 23,761
Non-current liabilities
Borrowings 53,370 33,466 19,904 8,183
Lease liabilities 5,201 — 5,201 3,915
Provisions 7 — 7 —
Contingent consideration 5,657 — 5,657 —
Non-participating investment
contract liabilities 3,585,307 3,585,307 — —
Deferred tax liability 5,013 — 5,013 —
3,654,555 3,618,773 35,782 12,098
Total liabilities 3,757,667 3,691,456 66,211 35,859
Net assets 80,150 — 80,150 55,453
Equity attributable to owners of
the parent
Issued capital 330 — 330 271
Share premium 57,799 — 57,799 33,659
Equity share based payments 2,747 — 2,747 2,313
Treasury shares (741) — (741) (534)
Retained earnings 20,001 — 20,001 19,730
80,136 — 80,136 55,439
Non-controlling interest 14 — 14 14
Total equity 80,150 — 80,150 55,453
Annual Report and Consolidated Financial Statements for the year ended 31 December 2020 Curtis Banks Group PLC | 93
SUPPLEMENTARY UNAUDITED INFORMATION
continued
Unaudited IFRS Consolidated Statement of Cash Flows as at 31 December 2020 split between
insurance policy holders and the Group’s shareholders
2020 2020 2020 2019
£’000 £’000 £’000 £’000
Group Total Policyholder Shareholder Shareholder
Cash flows from operating activities
Profit before tax 7,429 — 7,429 10,883
Adjustments for:
Depreciation 1,499 — 1,499 1,321
Amortisation and impairments 2,442 — 2,442 1,379
Interest expense 697 — 697 523
Share based payment expense 434 — 434 956
Fair value gains on financial investments (119,957) (119,957) — —
Additions of financial investments (631,200) (631,200) — —
Disposals of financial investments 673,037 673,037 — —
Fair value losses on investment properties 60,751 60,751 — —
Increase in liability for investment
contracts 13,403 13,403 — —
Changes in working capital:
(Increase)/decrease in trade and other
receivables (2,737) (1,214) (1,523) 113
(Decrease)/increase in trade and other
payables (1,105) (816) (289) 1,092
Taxes paid (2,996) — (2,996) (2,454)
Net cash flows from operating activities 1,697 (5,996) 7,693 13,813
Cash flows from investing activities
Payments for intangible assets (986) — (986) (696)
Purchase of property, plant & equipment (591) — (591) (1,015)
Purchase of investment property (122,449) (122,449) — —
Purchase and sale of shares in the
Group by the EBT (207) — (207) 182
Receipts from sale of investment property 118,877 118,835 42 —
Net cash flows from acquisitions (34,638) — (34,638) (166)
Net cash flows from investing activities (39,994) (3,614) (36,380) (1,695)
Cash flows from financing activities
Equity dividends paid (5,149) — (5,149) (4,562)
Net proceeds from issue of ordinary shares 24,199 — 24,199 210
Net increase/(decrease) in borrowings 29,595 17,360 12,235 (3,158)
Principal element of lease payments (934) — (934) (933)
Interest paid (383) — (383) (465)
Net cash flows from financing activities 47,328 17,360 29,968 (8,908)
Net increase in cash and cash equivalents 9,031 7,750 1,281 3,210
Cash and cash equivalents at the
beginning of the year 421,547 390,319 31,228 28,018
Cash and cash equivalents at the end
of the year 430,578 398,069 32,509 31,228
94 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2020
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