curtisbanks.co.uk
Annual Report
and Consolidated
Financial Statements
For the year ended 31 December 2022
Your future, our focus.
Contents
Page
Strategic Report
Financial, Operational Highlights and
Key Performance Indicators 1
Our services and history 2
Chairman’s statement 3
Chief Financial Officer’s review 7
Principal risks and uncertainties 12
Environmental, social and governance 16
Governance
Board of Directors 21
Directors’ report 23
Statement of Directors’ responsibilities 25
Corporate governance report 26
Directors’ remuneration report 32
Financial statements
Independent auditors’ report 36
Consolidated statement of comprehensive income 42
Consolidated statement of financial position 43
Company statement of financial position 44
Consolidated statement of changes in equity 45
Company statement of changes in equity 46
Consolidated statement of cash flows 47
Company statement of cash flows 48
Notes to the financial statements 49
Company information 86
Glossary 87
Supplementary unaudited information 88
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CURTIS BANKS GROUP PLC 2022
STRATEGIC REPORT
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 1
Financial, Operational Highlights and
Key Performance Indicators
REVENUE
£68.1m
+7.6% (2021: £63.3m)
ADJUSTED PROFIT BEFORE TAX 1 3
£15.4m
+10.0% (2021: £14.0m)
ADJUSTED OPERATING MARGIN 2 3
24.1%
(2021: 23.5%)
LOSS BEFORE TAX
£(3.7)m
(2021: Profit before tax £9.3m)
DILUTED (LPS)/EPS
(10.1)p
(2021: 11.5p)
ADJUSTED DILUTED EPS 3
18.7p
(2021: 16.9p3)
TOTAL ORGANIC GROWTH –
NEW FULL & MID SIPPS
3,602
(2021: 4,329)
GROSS ORGANIC GROWTH –
FULL AND MID SIPPs
6.4%
(2021: 7.9%)
TOTAL SIPPS ADMINISTERED
(including third party)
78,592
(2021: 79,679)
ATTRITION RATE –
FULL AND MID SIPPs
4.7%
(2021: 6.1%)
ASSETS UNDER
ADMINISTRATION (AUA)
£35.8bn
(2021: £37.4bn)
NUMBER OF PROPERTIES
ADMINISTERED
8,890
(2021: 9,065)
Financial Highlights
Operational Highlights
1 Profit before tax, amortisation and adjusting items
2 The ratio of operating profit before amortisation and adjusting items to revenue.
3 In addition to statutory IFRS performance measures, the Group has presented a number of non-statutory alternative performance measures (“APMs”) on page 8. The Board
believes that the APMs used give a more representative view of the underlying performance of the Group and enhance comparability of information between reporting periods.
APMs are further defined in the Glossary on page 87.
Our services and history
STRATEGIC REPORT
continuedcontinued
2 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Curtis Banks Group PLC (“Curtis Banks” or the “Group”)
commenced trading in 2009 and has successfully
developed, through a combination of organic growth
and acquisitions, into one of the UK’s leading providers
of self-invested pension products. As at 31 December
2022, the Group administered circa £35.8bn (2021:
£37.4bn) of pension assets on behalf of circa 78,500
(2021: 80,000) active SIPP 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, a FinTech provider, and Talbot and
Muir, a SIPP provider. The Group currently trades under
the names Curtis Banks, Suffolk Life, Dunstan Thomas
and Talbot and Muir. 802 staff were employed across its
head office in Bristol and regional locations in Ipswich,
Portsmouth, Dundee, Nottingham and Leeds, as at the
year end (2021: 828).
Our strategic objective of increased diversification saw
the acquisition of Dunstan Thomas in August 2020. The
acquisition was 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 Executives 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. Strong, long-standing
relationships with key distributors result in high levels of
retention and repeat business.
The Group continues to be focussed on delivering value
to both customers and shareholders and continuing to
develop its client and service excellence.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 3
STRATEGIC REPORT
continued
The results for the year ended 31 December 2022
demonstrate that the Group’s business model is robust
and capable of withstanding challenges in the
macroeconomic environment. Our Full and Mid SIPP
achieved a modest growth in the number of policies of
1.7% (2021: 1.8%) with underlying gross sales growth of
6.4% (2021: 7.9%). Focus on intermediary and client
service has driven a 1.4% improvement in attrition rates
down to 4.7% (2021: 6.1%).
Group revenues increased by 7.6% to £68.1m (2021:
£63.3m) following a favourable improvement in the
interest rate environment. Revenue growth was also
underpinned by our fixed fee, inflation-linked pricing
model which provides resilience and protection against
falling markets. Despite the slight easing of inflationary
pressures in recent months, we expect the steepening of
the yield curve observed in 2022 to have a material
favourable impact on interest income generated from
pension administration services into 2023. Inflation has
remained stubbornly high in early 2023, and the return
to the Bank of England’s target rate of 2% is unlikely to
be swift. Therefore, the Bank of England is still under
pressure to maintain, if not slightly increase rates, in the
short term.
The FinTech segment has delivered lower than expected
results in the period, with revenues down 17.8% to £9.3m,
reflecting a reduction in project activity from one of its
major clients and lower new business in 2022. The
current year has commenced more positively in this
segment and we remain optimistic over the medium
term prospects.
The Group has delivered adjusted profit before tax of
£15.4m (2021: £14.0m) and maintains a strong balance
sheet and cash flow profile, with our regulatory capital
surplus above regulatory capital requirements.
While the strength of our operating model is evident, we
also recognise that there is further room for
improvement in order to fully capitalise on the
advantages of operating leverage, in particular in
achieving efficiencies through the streamlining of our
technology and administrative systems.
Post balance sheet event – Acquisition by
Nucleus
On 6 January 2023, the boards of Curtis Banks Group
PLC, and Nucleus Clyde Acquisition Limited (“Bidco”),
a wholly-owned subsidiary of Nucleus Financial
Platforms Limited (“Nucleus”), announced that they have
reached agreement on the terms of a recommended
cash offer by Bidco to acquire the entire issued share
capital of Curtis Banks for 350 pence per share. On
27 February 2023, Curtis Banks’s shareholders voted in
favour of the proposed acquisition. Both parties are
progressing the relevant regulatory and court approval
processes and the acquisition is expected to complete,
subject to these approvals, in the summer of 2023.
The aggregate fees and expenses expected to be
incurred by the Group as part of the acquisition are
expected to be approximately £6.2m contingent to the
completion of the acquisition, the breakdown of which
is published in the Scheme document available on the
Curtis Banks website at
www.curtisbanks.co.uk/investors/pc-communications-
library.
The proposed acquisition by Nucleus is expected to
deliver significant benefits for our intermediaries and
customers. The combination will bring together the
strengths of both organisations, providing a full
spectrum of enhanced and comprehensive product
offering and capabilities across pension administration
and platform technology.
One of the key benefits is the realisation of operational
efficiencies for the enlarged group from Nucleus’s
outsourcing arrangements with FNZ, which will facilitate
best-in-class service provision for financial advisers and
their customers. This is a significant opportunity for
Curtis Banks to become a key part of an enlarged
organisation dedicated to positive customer outcome,
and to leverage our strengths and expertise from our
award-winning SIPP & SSAS offering and market leading
commercial property administration expertise.
The completion of the transaction will create a leading
financial planning and retirement-focused adviser
platform in the UK, with combined Assets Under
Administration of c. £80bn. The broader product set and
enhanced distribution channels will enable an extension
Chairman’s statement
David Barral
Chairman
to the current reach and to service a greater number of
intermediaries and customers more effectively. For
example, our existing customer base and network of
adviser firms will gain access to the broad range of
products and services offered by Nucleus, including
ISAs, GIAs and onshore/offshore bonds.
Furthermore, the Curtis Banks back office would benefit
from the use of FNZ’s platform administration solutions.
The enhanced scale of the combined Group will enable
greater investment in technology and product and
service offerings that we would not be in a position to
finance or execute on a standalone basis.
In summary, the proposed acquisition by Nucleus is
a strategic opportunity that will enable us to expand
our offering, leverage the strengths of the combined
Group; and deliver enhanced value to our advisers,
customers and shareholders.
The process of obtaining relevant regulatory and court
approvals is currently progressing as planned and we
expect to announce an update on this in the coming
months.
SIPP Administration
Total Full and Third Party
Number of policies Full SIPPs Mid SIPPs Mid SIPPs eSIPPs Administered Total
As at 31 December 2021 21,272 34,699 55,971 17,881 5,827 79,679
SIPPs added organically 810 2,792 3,602 108 14 3,724
Conversions & reclassifications (674) 674 — — — —
SIPPs lost through attrition (1,134) (1,510) (2,644) (1,622) (545) (4,811)
As at 31 December 2022 20,274 36,655 56,929 16,367 5,296 78,592
Gross organic growth rate 3.8% 8.0% 6.4% 0.6% 0.2% 4.7%
Attrition rate 5.3% 4.4% 4.7% 9.1% 9.4% 6.0%
Despite the challenging macro-economic backdrop, our
Full and Mid SIPP products grew organically by 6.4% on
a gross basis (2021: 7.9%) reflecting continued positive
momentum in our most popular products. Our Mid SIPP
product experienced strong gross organic growth of
8.0% (2021: 10.7%) and net growth of 5.6% (2021: 8.5%).
In combination, the Full and Mid SIPPs products
increased by 1.7%, after accounting for attrition, to
56,929 (2021: 55,971), slightly below our target range of
2% - 6%. In 2022, we added 3,602 new Full and Mid
SIPPs across 369 adviser firms and wealth managers, of
which 179 were new relationships.
Attrition levels were lower at 4.7% (2021: 6.1%), reflecting
improving service levels across the business. We
continue to have an attractive and loyal client base and
our average case size of c. £455k is amongst the
highest in the industry with one-third of our clients
having been with the Group for over 10 years.
The Talbot and Muir business, which the Group acquired
in 2020, has also demonstrated strong client retention
and positive net growth of 6.0% in policies in force to
7,817 (2021: 7,374).
As at 31 December 2022, the total number of non-core
SIPPs administered decreased to 21,663 (2021: 23,708),
following the on-going managed reduction in these
lower margin eSIPP and Third Party Administered (“TPA”)
products and this is expected to continue for the
medium-term.
FinTech business
The segment performed below the Group’s expectation
in the year, with revenues of £9.3m (2021: £11.2m) due to
difficulty in securing material new external revenue and
a reduction in project activity from a key client.
Consequently, an £11.5m impairment to the goodwill in
relation to the Dunstan Thomas segment was
recognised, which is discussed in more detail in note 3.
The Board remains focused on improving the
performance of Dunstan Thomas’s third party business
and the sales pipeline for FY23 remains strong with
expectation of increased margins.
Dunstan Thomas continues to support the successful
delivery of Curtis Banks’s own technology strategy,
providing internal efficiencies and enhancing our
capabilities. CB Labs, established in conjunction with
Dunstan Thomas’s technical expertise, has delivered
Chatbots, an annual allowance tool, a salary sacrifice
tool, and the additional projects will further strengthen
our product offerings. Dunstan Thomas is also
prototyping a bank of technical concepts, including the
adoption of machine learning and integration of
capabilities directly on IFA platforms. As an integral part
of the Group, we expect to further leverage Dunstan
Thomas’s expertise in FinTech to help us continue to
develop our propositions for both advisers and clients.
Nucleus intends to undertake a detailed review of the
strategic fit of Dunstan Thomas within the Combined
Group following the acquisition.
Industry backdrop
Despite the market volatility experienced in the last two
years, Curtis Banks’s business model has again proven
to be resilient with our fixed fee approach delivering
consistent revenue generation that is inflation proof.
Our diverse product offering and extensive range of
services enable us to respond to the evolving retirement
market, which has faced greater levels of
macroeconomic volatility in recent years.
The UK retail saving and investment market has
experienced growth but faces headwinds due to the
cost of living crisis, changing client preferences towards
Chairman’s statement
continued
4 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
STRATEGIC REPORT
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 5
Chairman’s statement
continued
STRATEGIC REPORT
continued
Environmental, social, and governance (“ESG”) and
responsible investing, and the uncertainty caused by
the post pandemic inflationary economic environment.
Individuals and households are facing affordability
challenges due to ongoing inflationary pressures.
The Group is well advanced in preparation for the
upcoming Consumer Duty regulations that are being
introduced by the FCA. The new Consumer Duty sets
higher and clearer standards of consumer protection
across financial services and requires firms to put
consumers at the heart of their business and focus on
delivering good outcomes for customers.
Planning is underway to meet the deadlines and staff
are fully engaged on all key activity. The milestones we
are working towards are:
•
30 April 2023 – Completion of manufacturer
reviews necessary to meet outcome rules for all
Curtis Banks Group existing open products and
services so that we can share with distributors to
meet their obligations under the Duty and identify
where changes need to be made.
•
31 July 2023 – Meeting implementation deadline
for new and existing products.
•
31 July 2024 – Meeting implementation deadline
for closed products.
Toby Larkman, Chief Commercial Officer, is the
Programme Sponsor and Susan McInnes, Non-Executive
Director, is the Board Consumer Duty Champion.
Target Operating Model
We reported in our half year results to 30 June 2022
that despite the progress on the consolidation of our
back office administration systems, and the delivery of
a number of elements of the programme, the
completion date of 2024 was at risk.
In light of the planned acquisition by Nucleus, we are re-
evaluating our objectives roadmap while remaining
committed to enhancing efficiency and accountability,
regardless of the path we choose.
Dividend
We paid an interim dividend of 2.5p per share (2021:
2.5p) on 11 November 2022. In light of the Nucleus
transaction, the Board has decided not to propose
a final dividend.
People update
In May 2022, Chris Macdonald (Chairman) and Jules
Hydleman (Non-Executive Director) retired from the
Board. Christopher Mills and I joined the Board as Non-
Executive Director and Chairman of the Group
respectively.
In August 2022, Will Self stepped down as Chief
Executive Officer and as an Executive Director of the
Group Board. I would like to once again thank Will for
the commitment that he showed to the business and
the huge contribution that he made throughout his time
with the Group.
Following Will’s departure, I assumed the role of
Executive Chairman while we undertook searches to
find a successor. I am pleased to report that on
10 January 2023 we appointed Peter Docherty as our
new Chief Executive Officer, and I reverted to the role of
Non-Executive Chairman on 1 February 2023. Peter is
very well positioned to lead the business with over
20 years of experience in financial services, having most
recently been the Chief Executive and Managing
Director of the Embark Platform during which time he
led a significant increase in customers and assets under
administration driven by organic growth and
integration initiatives. Previous positions include the
roles of Chief Executive Officer and Chief Risk Officer of
Alliance Trust Savings Limited. He joins us at an exciting
time as we work towards the intended completion of
the acquisition by Nucleus.
In November 2022, the Board appointed Susan McInnes
as a Non-Executive Director and chair of the
Remuneration Committee, taking over from Jill Lucas
who resigned in December 2022. The Board also
appointed Alastair Clarkson in December 2022 as
a Non-Executive Director and chair of the regulated
subsidiary entities of the Group. Both appointments
bring a broad range of experience to the Group,
particularly within customer outcomes, people, risk
management and finance.
On 1 May 2023, Jane Ridgley retired from Curtis Banks
and stepped down as the Group’s Chief Operating
Officer and from her directorships of all Group
companies. I would like to take this opportunity to
thank Jane for her dedication, hard work and leadership
which have been instrumental in helping us achieve our
goals. I am truly grateful for her many years of
outstanding service to the Group and I wish Jane the
very best of luck as she embarks on her retirement.
I am pleased to announce that Ross Allan replaced Jane
as the Chief Operating Officer with effect from 1 May
2023. Ross brings a wealth of experience to Curtis
Banks, having previously worked for abrdn and
Standard Life and we are delighted to have him take on
this important role with us.
I am also delighted to announce the addition of several
new Executive Committee and senior management
appointments within our IT, Transformational Change
and Operations teams. These new hires bring a wealth
of experience and expertise to the Group, and I am
confident that they will play a crucial role in
strengthening these key areas.
ESG
Curtis Banks offers a platform for clients to build, invest
and access their pension through a variety of ways,
including a wide range of investment options and
flexible passing of wealth. We understand and
appreciate our responsibility to our customers, as well
as the ongoing commitments we have to our staff,
customers, communities and the wider environment.
The Group’s purpose-led ESG strategy continues to
recognise our delivery against these commitments, and
this progress is outlined in this report. Our ESG policy
6 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
STRATEGIC REPORT
continued
Chairman’s statement
continued
(https://www.curtisbanks.co.uk/esg/) sets out our
priorities and plans in implementing positive change.
The Group’s ESG performance is overseen at Board level
by the Group’s CEO, Peter Docherty.
Outlook
We expect revenue and profit margins to continue to
improve in 2023 as interest on deposit balances benefit
from a higher yield curve, alongside improvement in our
FinTech segment which has been a key focus over
H2 2022, and underlying stability in our pension
administration fees.
The management team are also heavily focused on
facilitating the proposed acquisition by Nucleus,
however remain very mindful of the potential for delays
or the unlikely event which causes the acquisition not to
proceed. As such, we are investing substantial time and
effort into delivering service improvements for clients
and advisers, paying particular attention to incoming
regulatory requirements, such as Consumer Duty. We
are also strengthening the leadership team to
accommodate expected integration activity with
Nucleus and to ensure we maximise the potential of the
core SIPP business (Full and Mid SIPPs), deliver systems
improvements, and continue to maintain robust levels
of service to our clients and advisers.
Section 172
The disclosures required under section 172 of the
Companies Act are included in the Directors’ report.
David Barral
Chairman
4 May 2023
Chief Financial Officer’s review
STRATEGIC REPORT
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 7
Results
Group financial performance for the year ended
31 December 2022 resulted in an adjusted profit before
tax of £15.4m (2021: £14.0m), generating an adjusted
operating margin of 24.1% (2021: 23.5%). By segment,
the pension administration activity achieved an
improved adjusted operating margin of 25.5% (2021:
23.9%); while the FinTech segment’s adjusted operating
margin decreased to 15.4% (2021: 21.9%). Adjusted
diluted EPS increased to 18.7p (2021: 16.9p), while diluted
EPS on a statutory basis reduced to a loss per share of
10.1p (2021: profit per share of 11.5p).
On a statutory basis, the loss before tax of £3.7m (2021:
profit before tax of £9.3m) was materially driven by an
impairment charge of £11.5m against the value of
goodwill relating to the acquisition of Dunstan Thomas.
As at 30 June 2022, goodwill associated with the
acquisition of Dunstan Thomas was impaired by £9.8m
due to expectations that the business segment’s
financial performance would fall materially short of
expectations over the year. This created uncertainty
over the forecast future cash flows, which was used to
conduct the goodwill impairment assessment. It has
subsequently been identified that in the assessment as
at 30 June 2022 certain assumptions used in the
discount rate were not reflective of risks specific to the
CGU, and that a post-tax rate had been used rather
than a pre-tax rate as required. Had these factors been
reflected in the impairment assessment at 30 June
2022, the impairment would have been £11.5m which is
the total impairment charge that has now been booked
during the year ended 31 December 2022. There would
have been no impact of these items on the financial
statements for the prior year to 31 December 2021. For
more detailed information on the goodwill impairment
assessment, please refer to note 3 to the financial
statements.
An additional driver of the loss before tax is the value of
adjusting items recognised during the year. These
included a previously disclosed incentive arrangement
for the Chairman of the Group of £2.0m, and
redundancy & restructuring costs of £2.7m, which
included costs relating to Will Self’s departure as CEO of
the Group.
The challenging conditions of 2022 have been reflected
in net growth in own Full and Mid SIPP plan numbers of
1.7%, this being slightly below our target range. The
Group’s financial performance has benefitted from an
improvement in interest income, delivered by the yield
curve steepening sharply, and also from a slight
reduction in the level of regulatory costs incurred. In
a challenging market place, organic sales remained
robust, albeit lower than 2021, and attrition in Full &
Mid SIPPs reduced compared to 2021.
The Group reports certain Alternative Performance
Measures ("APMs") which we believe provide greater
clarity to stakeholders over the Group's underlying
performance and better enables stakeholders to form
a view on the Group’s future prospects. The principal
APMs adopted are Adjusted Profit before Tax, Adjusted
EPS and Adjusted Operating Margin, and these are
presented further below.
Adjusting items are classified as such when the nature
and quantum of the income or expense item is
significant and arises from a business event, or activity,
that does not form part of usual day-to-day operations.
Examples of such items include acquisitions, including
any subsequent re-measurement of contingent
deferred consideration and amortisation of intangible
assets, office relocations and restructuring activities.
Dan Cowland
Chief Financial Officer
A full reconciliation between the APMs and the statutory measures is disclosed below for 2022 and prior year
comparatives:
Year ended Year ended
31 December 31 December
£'000 2022 2021
Revenue 68,063 63,307
Adjusted operating cost (51,639) (48,402)
Adjusted operating profit 16,424 14,905
Adjusted operating margin 24.1% 23.5%
Finance income 134 20
Interest expense (1,196) (921)
Adjusted profit before tax 15,362 14,004
Adjusting items:
Dunstan Thomas acquisition costs — (70)
Talbot and Muir acquisition costs — (63)
Other M&A related income/(costs) 359 (1,401)
Movement on contingent consideration relating to acquisitions 1,123 1,870
Discount unwind on contingent consideration (499) (879)
Redundancy & restructuring costs (2,665) (626)
In-specie contributions — 76
Centralisation of pension administration system (273) (322)
Treasury solution implementation — (45)
Data cleansing provision 63 (288)
Costs relating to the proposed acquisition by Nucleus (579) —
Chairman’s incentive – cash settled share based payment (2,000) —
Adjusting items (4,471) (1,748)
Impairment of Goodwill (11,545) —
Intangible asset amortisation (3,086) (2,934)
IFRS (Loss)/Profit after tax (3,740) 9,322
Taxation (2,973) (1,603)
IFRS (Loss)/Profit after tax (6,713) 7,719
Adjusted EPS
Basic 18.7p 17.1p
Diluted 18.7p 16.9p
Revenue
Revenue of £68.1m for 2022 was 7.6% higher than the
comparable period (2021: £63.3m), driven by an increase
in interest income. The Group saw a material reduction
in Fintech revenue from Dunstan Thomas, along with
a slight reduction in transactional SIPP fee volumes. In
addition, the Group continued to progress its managed
reduction in non-core eSIPP and TPA products. Despite
this reduction, inflationary rises in fees levied, along with
slight net growth in Full and Mid SIPPs and a robust
fixed fee model, saw overall pension administration
income remain stable year on year.
Fee revenue from SIPPs and SSASs remains the
predominant source of income for the Group with
a strong emphasis on recurring annual fee income.
In 2022, fee income represented 67% of the total
income and 91% of this fee income is recurring (2021:
88%). Interest income saw a £6.8m increase on the prior
period comparative whilst the Fintech revenue
contribution from Dunstan Thomas fell by £2.2m.
SIPP fees are based on a recurring fixed monetary
annual fee and a menu of additional fixed fees
depending on the services provided to the SIPPs. The
annual fees for the Curtis Banks Full and Mid SIPP
products were amended as at 1 February 2021 and at
the same time we made a clear commitment to our
clients as to how we will share interest revenue with
them and therefore remove any discretion. All of the
fees that are applied to our SIPP products are subject to
contractual annual inflationary rises linked to the
measurement of Average Weekly Earnings (“AWE”). AWE
applied from 1 January 2022 was 7.1%.
SIPP fees are not correlated to movements in the value
of underlying assets within the SIPP and as a result the
recurring fee income of the Group is not directly
affected by the volatility in financial markets. This is
a key differential that sets us apart from most of our
competitors and provides an attractive product in
terms of competitive fees for higher value SIPPs. As the
value of a SIPP increases our product becomes
increasingly affordable from a basis points perspective,
and vice versa.
Chief Financial Officer’s review
continued
STRATEGIC REPORT
continued
8 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
STRATEGIC REPORT
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 9
Chief Financial Officer’s review
continued
Client deposits remained relatively stable across the
period and as at 31 December 2022 the Group held
£1.004bn (2021: £1.027bn) of client deposits across
a range of UK-based, PRA regulated banking
counterparties and managed the cash in line with its
established Treasury Framework. As at the reporting
date, the Group is paying 1.72% to clients on cash held
within their SIPPs and this is expected to increase from
1 July 2023 as the Bank of England continues to keep
base rates under review, with the expectation of
a consequent improvement in deposit rates available.
Revenues generated by Dunstan Thomas were down
£2.2m, largely due to a reduction of project income from
a key client and the current economic climate. The
combined performance over the last 3 years has
resulted in a reduction of £1.9m to the total related
contingent consideration expected to be payable over
the earn out period and a corresponding credit to the
consolidated statement of comprehensive income. The
remaining earn out for the acquisition of Talbot and
Muir was settled post year end and the remaining earn
out for the acquisition of Dunstan Thomas is expected
to be paid before 30 June 2023.
Expenses
The year ended 31 December 2022 saw administrative
expenses, excluding amortisation of intangibles,
goodwill impairment and adjusting items, increase to
£51.6m (2021: £48.4m).
Staff costs increased to £34.6m (2021: £30.5m), which
include adjusting items of £2.0m charge for the
chairman’s incentive, expected to be payable on
completion of the transaction with Nucleus, and
a substantial proportion of the £2.7m redundancy and
restructuring costs disclosed. Overall staff costs have
not changed materially year on year, with annual pay
increases offset by a decrease in headcount. These
costs continue to be protected to a large extent by the
contractual inflationary increases applied to our SIPP
and SSAS products.
Overall headcount stood at 801 as at 31 December 2022
compared to 828 as at 31 December 2021.
Non-staff costs in aggregate grew to £20.9m from
£15.3m in 2021, driven by higher professional fees and
an increase in compensation costs. This was a result of
a small number of individual high value financial
detriment cases and despite a decrease in the overall
level of complaint volumes.
The Group continues to take steps to improve its
adjusted operating margin through a combination of
revenue enhancements, cost saving measures and
operational efficiency improvements.
Adjusting Items
Adjusting items for the year were a net expense of
£4.5m (2021: net expense of £1.7m) and include
redundancy and restructuring costs, an incentive
scheme arranged for the Chairman, and costs
associated with the proposed Nucleus transaction.
Acquisition related items
A net credit of £0.4m has been recognised in the period
as other M&A related costs which relates to contingency
fees no longer payable on a potential corporate
transaction which did not subsequently proceed.
Movement in contingent consideration and discount
unwind
The movements in contingent consideration payable
(a £1.1m reduction) and the discount unwind
(£0.5m expense) are related to the acquisitions of
Dunstan Thomas and Talbot and Muir. The contingent
considerations are dependent on the business
performance post-acquisition. The underperformance in
Dunstan Thomas during the year has contributed to the
reduction in the liability.
As at the reporting date, the final consideration relating
to the Talbot and Muir acquisition has been fully settled,
and the settlement was materially in line with that
estimated at the balance sheet date.
The final consideration relating to the Dunstan Thomas
acquisition is expected to be concluded imminently
Redundancy and restructuring costs
In the year ended 31 December 2022, the Group incurred
restructure costs of £0.6m relating to the physical
closure of the Dundee office location and the transition
of all Dundee-based colleagues to remote working
arrangements (2021: £nil). The Group also incurred senior
executive restructure costs of £2.0m (2021: £0.6m) of
which £1m relates to the former CEO’s departure.
Centralisation of pension administration system
The Group has made progress in implementing its
strategy to transition its entire SIPP administration onto
a single administration platform. During the year, the
upgrade of the current Navision platform, which
supports the majority of the Group's SIPPs, to the
Navision Business Central platform progressed and was
subsequently completed in January 2023. Following the
announcement of the Nucleus acquisition in January
2023, there is uncertainty around the future application
of Navision, and this remains under review pending the
outcome of the proposed transaction. The net book
value of the intangible assets capitalised in relation to
this is £1.5m as at 31 December 2022.
Data cleansing provision
As part of the consolidation and integration exercise
undertaken in 2018, a review of data records relating to
commercial properties held within SIPPs administered
by the Group was undertaken and data cleansing
provision was recorded as a result. In 2022,
management have reassessed the potential liability
and released a portion of the previously recorded
provision, resulting in a net credit of £0.1m.
Proposed acquisition by Nucleus
External advice supporting the negotiation and due
diligence process in relation to the proposed acquisition
by Nucleus resulted in costs of £0.6m, primarily
consisting of professional fees and legal fees.
Chairman incentive
In October 2022, an incentive scheme was announced
for the Group’s Chairman, David Barral. This incentive
has been accounted for as a cash-settled share-based
payment transaction. Although the proposed
acquisition by Nucleus was not announced until
January 2023, i.e. after the end of the reporting period
(and is still yet to complete and therefore has not yet
been paid), management determined that it was
appropriate to record the estimated incentive payment,
an amount of £2.0m, in the year end financial
statements, as it represented the best available
estimate of the rewards expected to vest as at
31 December 2022, in accordance with the relevant
International Financial Reporting Standard (IFRS 2
Share –based payment). The £2.0m value is based on
the acquisition price of 350p per share and the term of
the incentive agreement. If the transaction is successful,
the amount is payable upon Completion.
Amortisation of intangible assets
Amortisation of the Group’s intangible assets
represented a charge of £3,086k (2021: £2,934k) for the
year.
Goodwill impairment
As mentioned in the Results section above, goodwill
associated with the acquisition of Dunstan Thomas was
impaired by £11.5m due to expectations at half year
2022 reporting that the business segment’s financial
performance would fall materially short of expectations
over the year and an update to the discount rate
assumptions at year end. For more detailed information
on the goodwill impairment assessment, please refer to
note 3 to the financial statements.
Accounting methodology
During the year, Dunstan Thomas restructured their
commercial model of software licensing and related
services. This was done in order to ensure consistency in
standard licensing practices, better management of
business risk, and to respond more effectively to
changing customer needs. As a result, new template
customer agreements have been created and are now
being used for the majority of new software license
contracts.
Alongside this change, a formal accounting
methodology assessment was conducted with the
support of third party specialists, which concluded that
revenue recognition under IFRS 15 (Revenue from
contracts with customers) for certain new contracts
would be different to the existing accounting
methodology. Specifically, revenue associated with the
license performance obligation itself will be recognised
separately from that associated with the service, and
recognised at a point in time when the license is
delivered to the customer, instead of on a straight-line
basis over the contract period.
Cash flows
Shareholder cash balances at period end were £23.9m
compared to £31.9m at the end of December 2021.
Net cash inflows from shareholder operating activities
for the period were £9.2m (2021: £13.5m). The reduction
was due to exceptional cash inflows in the prior year
from the cash attributable to the additional working
capital introduced from Dunstan Thomas and Talbot
and Muir on their respective acquisitions, and a
reduction in profits generated in the period.
Net cash outflows from investing activities for the
period were £5.8m (2021: £2.8m) which is largely
attributable to the deferred consideration paid on the
Talbot and Muir acquisition, of £2.7m, and the addition
of intangible assets of £2.2m (2021: £1.7m) which relate
primarily to product development activity within
Dunstan Thomas and computer software.
Net cash outflows from financing activities were £11.4m.
These represent a marginal increase from prior year
(£11.3m), with the increase coming from higher interest
payments and the absence of shares being issued in
the year (2021: £0.3m).
Suffolk Life Annuities
Part of the Group, 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 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.
An illustrative balance sheet as at 31 December 2022
showing the financial position of the Group excluding
the policyholder assets and liabilities is included as
supplementary 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
2022, the EBT held 332,591 shares in Curtis Banks Group
PLC (2021: 488,296). 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 (2021: four) regulated subsidiary
companies submit regular returns to the FCA and the
PRA relating to their capital resources. As at
31 December 2022, the total regulatory capital
requirement across the Group was £15.6m (2021: £15.1m)
and the Group had an aggregate surplus of £6.9m
(2021: 17.0m). The reduction in surplus was primarily
driven by a timing differences relating to accrued
interest receivable over 90 days which increased
Chief Financial Officer’s review
continued
STRATEGIC REPORT
continued
10 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
STRATEGIC REPORT
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Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 11
Chief Financial Officer’s review
continued
substantially over H2 2022 following the higher interest
rate environment. All subsidiaries complied with their
regulatory requirements throughout the year. In
addition to this, it is the Group’s internal policy for
regulated companies within the Group to hold at least
130% of their required regulatory capital and to take
corrective action should regulatory capital dip below
this level.
One of the Group’s FCA regulated entities dipped below
the 130% internal policy for a short period due to a
timing difference in recognising interest income for
regulatory purposes. The audits of all regulated
subsidiary results for 2022 have been completed as of
the date of this report and consequently coverage has
now returned above 130%, in line with the Group’s
internal policy.
Three (2021: three) of the principal trading subsidiaries
of the Group are regulated by the FCA and are subject
to the relevant capital adequacy rules. The fourth
regulated entity, Suffolk Life Annuities Limited (“SLA”),
being an insurance company, is subject to Solvency II
rules and its capital requirement is determined by the
Standard Formula as set out in the Solvency II
directives. The regulatory solvency position (the ratio of
the Company's own funds to the biting requirement) of
SLA was 216% as at 31 December 2022 (2021: 319%). Full
details of SLA’s capital position are set out in the
Solvency and Financial Condition Report published
annually on the Group’s website.
Financial Position
The statement of Financial Position as at 31 December
2022 reflects shareholder net assets decreasing from
£81.6m at 31 December 2021 to £69.4m as at
31 December 2022 primarily as a result of the
£11.5m impairment charge taken during the current
period.
As at 31 December 2022 the Group had net shareholder
cash (after debt) of £7.7m (2021: £12.0m).
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 discipline over our controllable
cost base. We have benefited from the interest income
increase as a result of the rising interest rate
environment in the year and expect this to increase
materially during 2023.
The proposed Nucleus transaction is expected to unlock
significant new opportunities for the Group. With the
investment, the combined business aims to further
enhance business infrastructure to drive greater
efficiency and offer even better services and products
to our customers and advisors.
Dan Cowland
Chief Financial Officer
4 May 2023
The risks faced by the Group have been fully assessed
and a robust governance and risk management
structure is in place. A Governance Committee
Framework is in place in the Group, which provides
dedicated focus and attention on the key risks relevant
to each Committee. Each Governance Committee has
responsibility to feed into the comprehensive group risk
register, which is reviewed and updated by the Board at
each meeting. The risk register sits alongside the
dedicated risk monitoring activity and the operational
risk management system, where appropriate controls
and mitigating actions have been agreed and are
regularly monitored for the risks identified. Further
actions are identified and tracked through to
completion where the level of residual risk remains
above the desired target threshold.
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 Group is also in the process of
a proposed takeover by the Nucleus Group,
subject to regulatory approvals. There exists a risk
that senior management attention is not
focussed on the prevailing key risks to the Group.
This risk is largely mitigated by the recruitment of
a number of additional Senior Managers across
the group to provide additional oversight,
guidance and support to existing Senior Managers
and other employees.
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.
•
Integration requirements divert management
time and focus away from day to day
business activities, leading to an inability to
service the business effectively.
•
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 oversee 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. Appropriate warranties and
indemnities are obtained in relation to commercial
activities and certain client activities where it is
deemed commercially appropriate to do so.
Robust insurance cover is arranged to cover past
events in businesses that have been acquired.
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
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.
Principal risks and uncertainties
STRATEGIC REPORT
continued
12 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
STRATEGIC REPORT
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 13
Principal risks and uncertainties
continued
3.
Counterparty Credit Risk
The Group operates a pooled bank account
structure for the transactional accounts associated
with the pension arrangements of clients. These
monies are held with institutions approved by the
Curtis Banks Group Asset and Liability Committee
in line with the Curtis Banks Group Treasury
Framework, and only after undergoing a thorough
due diligence process, both at outset and annually.
The insolvency of a banking partner may lead to
the loss of access to these deposits.
Mitigation
To mitigate the risk of a disruption to deposit
access, the criteria for the type of accounts
utilised has been set based on the results of
scenario based analysis. A key term within the
Group Treasury Framework ensures that
appropriate instant-access reserves are held, and
only investment grade banking partners are used
to further mitigate some credit risk.
4.
Interest on customer funds
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
customers 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 customers
may materially reduce the margins earned by the
group in respect of customer balances
administered.
From time to time, the Group may lock into fixed
term rates of interest on customer balances that
offer a higher return. 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 customers
may reduce.
Mitigation
To minimise this risk, the Group Asset and Liability
Committee continually monitors all customer
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 customers 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.
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 its senior
leadership team to ensure that there is an open
and cooperative culture that attracts and retains
staff. The Group was also officially recognised as
an accredited Living Wage Employer in February
2022.
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.
Mitigation
To minimise this risk the Group has project teams
that continually evaluate and update current
systems, and implement new or enhanced
systems where considered necessary. A full risk
assessment is carried out before significant
changes to systems. Business continuity is
assured by thorough full back up of data and
comprehensive data recovery procedures being in
place, and the Group Operational Resilience
self-assessment cycle provides comfort that
areas of weakness are identified and addressed.
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
customers 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. In the event that any 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,
14 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
the Group Operational Risk & Customer Outcomes
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, IT, finance 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 & Customer Outcomes
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.
8.
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 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 cyber security in place. This
includes the interception and rejection of a high
volume of incoming emails, monitoring and staff
training. 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 customers may
look to the Group, as their pension provider, for
compensation in the event that a NSI 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 and their relevant
experience with such investments. The Group has
a clearly defined schedule of allowable assets,
setting out the categories of NSIs which may be
accepted, subject to the completion of robust due
diligence, and those that will not be considered at
all. New business is primarily only accepted from
regulated financial advisers, who have a duty to
ensure that any NSIs that are recommended are
suitable for both the client and the relevant
Principal risks and uncertainties
continued
STRATEGIC REPORT
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 15
STRATEGIC REPORT
continued
Principal risks and uncertainties
continued
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 potential 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.
We understand the primary risks to be the
management of common areas and
residual/vacant parts of properties, and the
incoming regulatory changes regarding Minimum
Energy Efficiency Standard (MEES), which came
into force in April 2023. Both of these risks have
robust action plans in place to track, report and
bring to resolution, as described in further detail
below.
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 are
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.
16 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
ESG Strategy – Promoting Fairness for
Current and Future Generations
The Group is pleased to have published its inaugural
ESG Policy in 2022. Following an independent
materiality assessment of the Group, we identified
a number of opportunities to make a difference in
addressing important issues to society, the economy
and the environment.
Key initiatives delivered in 2022 include:
•
Continued our partnership with The
Intergenerational Foundation through sponsoring
their report on how the savings squeeze affects
young people, and how policy makers could
consider younger generations more when it comes
to pensions. They also conducted an independent
review of our flagship Your Future SIPP product
which supports our work around the upcoming
Consumer Duty regulations;
•
Engaged with our deposit taking counterparties to
better understand the use of the cash which is
placed with them;
•
Undertook further analysis of our Commercial
Property holdings in pensions to understand the
future climate risk and proactively engaged with
clients to improve energy efficiency of our
commercial property book to meet upcoming
regulatory changes relating to MEES;
•
Delivery of unconscious bias in software training in
our Dunstan Thomas business;
•
Initial ESG KPIs have been defined and work is
underway to identify how we can capture and
report the relevant data.
Plans for 2023:
•
Further discussions with deposit takers to establish
how cash funds are being deployed and how these
funds may be used to make a positive
environmental impact.
•
Unconscious bias - We continue seek proactive
opportunities for training within the Group to
ensure that all processes and procedures are
undertaken impartially.
•
Consider a new strategy to reduce the
environmental impact of our commercial property
portfolio.
•
ESG Data centre for the Group all in one place
(i.e. adviser, customer, employee satisfaction,
carbon, and financials).
•
Implement new teams in the business to conduct
charity and environmental activities across the
Group.
We have established board level accountability for the
Group’s ESG performance, overseen by CEO,
Peter Docherty. Progresses on activities are reported at
monthly Executive Committee meetings with regular
updates alongside the formal annual reporting cycle.
Our people and our communities
At Curtis Banks we are committed to investing in all our
800+ employees, making their lives fairer, encouraging
their diversity and providing them with equal
opportunities. It’s important that our employees who
provide our customers with their pensions are motivated
and supported at work and in their communities.
In 2022 we are pleased to highlight a number of
achievements
•
We published our Gender Pay gap report, our
median pay gap reduced from 13.4% in 2020/2021
to 4.0% in 2022. We are transparent in our
reporting and are pleased with the progress we
continue to make;
•
We introduced the UK Living Wage for all our
employees and on site contractors in recognition
that a hard day’s work deserves a fair day’s pay;
•
76% of our employees received an out of cycle
salary increase in September 2022 to enable them
to better cope financially, especially in this period
where there is significant emphasis on cost of
living. This was in addition to an annual increase in
January 2022;
•
We introduced a flexible benefits platform, Flex+,
for all employees. This enables our employees to
add to their benefits to suit their lifestyle such as
gaining free mortgage advice, discounted gym
membership, life cover for their partners/spouses,
etc;
•
In collaboration with our mortgage advice
provider, one tree is planted for every new
mortgage taken out, two for every re-mortgage;
•
We invested £150,000 in Learning & Development
of our employees;
•
Our employees continued to support their
communities through volunteering and charitable
donations. In total, we volunteered over 320 hours,
raised £19,273 in 2022 for charities and supported
employees with £3,794 of matched fundraising;
•
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 17 for further
details on this policy.
Staff initiatives and interaction
•
Management engages closely with employees to
determine their needs and initiatives are
implemented where these benefit the majority of
employees. Feedback from staff is encouraged 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 employees are
actively shared, such as exam successes,
STRATEGIC REPORT
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Environmental, social and governance (ESG)
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 17
STRATEGIC REPORT
continued
Environmental, social and governance (ESG)
continued
promotions or completion of personal challenges
such as marathons or other competitive events;
•
The Group has an established Employee Forum
which supports employees 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;
•
We introduced a new employee benefit platform,
with a variety of benefits from private health care,
to electric car rental and charitable giving.
Wellbeing
We launched our Wellbeing initiative, focusing on the
four key pillars of Physical Wellbeing, Mental Wellbeing,
Social Wellbeing and Financial Wellbeing. Through the
Wellbeing initiative, we are proud that we have been
able to support our employees in a number of ways,
including:
•
Free sanitary products in all sites in the male,
female and gender neutral toilets;
•
A number of financial wellbeing webinars for
employees to learn how to better manage their
personal financial situation;
•
Courtesy of Mind, we trained our managers in “The
Essentials”, which is a part of Mind’s Mental Health
Toolkit, thus enabling our managers to spot the
signs of a deterioration in mental health earlier to
bring about intervention sooner;
•
The National Autistic Society delivered
“Understanding autism in the workplace” training
which can provide strategies for both managers
and employees;
•
Opening up a Wellbeing Room in our Ipswich site,
providing a safe and private space for our
employees that need time on their own, perhaps
to manage a panic attack, administer medication
or pray.
In 2023, our Wellbeing initiative will focus on one topic
per month, not only linking to key “international” days
but also to continue to draw attention to issues that
were once considered taboo such as the menopause,
neurodiversity and loneliness.
Staff Training
Employees are actively encouraged to train and
develop through both structured and ‘on the job’
training. Employees 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.
We were also delighted to launch the first strand of our
management training, investing £48,000 in training in
Conflict Management, Managing Remotely and
Coaching and Feedback. In 2023 we are rolling out
Resilience and Change training and also Interview Skills
training and continue to look at other ways to continue
to support all of our employees.
In addition to this, we shall continue with our new
starter inductions, our customer service training (which
we are in the process of enhancing) and also in
supporting Consumer Duty to ensure that not only are
all the concepts known and understood, but also fully
embedded in the organisation.
Employment of staff with protected
characteristics
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.
Sponsorships and partnerships with charities
and community organisations
Working with our employees we support a number of
initiatives in communities important to our business. In
2022 we were pleased to support the following:
•
We continued to support three designated
charities from the Mental Health & Wellbeing
sector in 2022 being Lighthouse in Ipswich, the
Teenage Cancer Trust in Bristol and the Dundee
Wellbeing Works charity. Talbot and Muir
continued their longstanding relationship with
Barnardo’s. Dunstan Thomas continued to support
Singing Gorilla Projects, funding and managing
community-based projects in remote parts of
Uganda that improve the welfare of communities
and enriches the lives of individuals;
•
All offices regularly hold events for their chosen
local charities and employees 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
18 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
an annual matching contribution to the relevant
charity by matching employee fundraising by up
to £250 per person;
•
As part of the new employee benefit platform,
employees are able to “Give As You Earn” to a
chosen charity, or participate in a programme
called ‘Pennies from Heaven’ where they can
round up their monthly salary to the nearest
pound, and donate this balance to charity. We
have forged a strong connection with a local high
school in Ipswich, supporting Year 13 children as
they prepare to make the transition from
education to the workplace. This continues in
2023 as we support them in interview skills
workshops, CV writing, seeking employment etc.
Jaynie Vincent, our Group People Officer, has also
accepted the role as Enterprise Advisor to the
school. We would hope to replicate this amongst
our other sites.
Curtis Banks and addressing the challenge of
Climate Change
As a SIPP Provider, we take instructions from customers
and financial advisers to hold assets in their pension
funds. We recognise that as a financial services provider
we must directly and indirectly reduce global warming
and temperature rise driven by CO2 emissions.
We are doing this in three ways:
•
Through managing down our own emissions as a
business, using renewable energy sources to run
our own business and what we can’t reduce we
will offset. Details of which are in the SECR report
below;
•
We are starting to understand how cash assets
placed with deposit takers can have a more
positive impact on society and the climate. We
request information from deposit takers as to how
our deposits are being held and information about
their own ESG policies;
•
Many of our customers hold commercial
properties in their SIPPS. We are proactively
engaging with these customers to ensure
compliance with evolving MEES.
Climate-related Disclosures
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. Peter Docherty, 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;
•
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,
STRATEGIC REPORT
continued
Environmental, social and governance (ESG)
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 19
STRATEGIC REPORT
continued
Environmental, social and governance (ESG)
continued
fluorescent tubes, light bulbs, ink cartridges and
toner, corporate clothing and IT equipment. This is
current practice in our Ipswich location and we
plan to extend this to other locations across the
Group in 2023;
•
To ensure air conditioning engineers complete the
F-Gas register and that we have access to this
information, including the record of any lost
fugitive gases;
•
Monitor Curtis Banks’ electricity and water
consumption in our offices on a monthly basis;
look to introduce energy efficient systems and
plant and equipment such as smart sensors
where practical 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 inspected and
fully serviced regularly in line with
recommendations to ensure that it is safe and
working efficiently and correctly;
•
Ensure that our staff are engaged and given
regular Environmental initiative updates on
a quarterly basis and more frequent location
specific initiatives. The introduction of a specific
Environmental Matters Group team will continue
to build on our existing initiatives;
•
Implement carbon capture scheme to record our
paper usage and offsetting with planting of trees.
This is current practice in our Bristol and Ipswich
offices, with work ongoing to consider the viability
of introducing this in all office locations;
•
Continually review environmental innovations and
where possible introduce these to further improve
environmental management.
Monitoring & Reviewing:
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.
Streamlined Energy and Carbon Reporting
(“SECR”)
Curtis Banks Group has adopted SECR for the third year
in the year ended 31 December 2022. Comparative data
from 2021 is set against the current financial year.
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 2022. 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 when more detailed
data was not available. 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. More precise data had been
made available for this year which contributed to lower
electricity usage figures. 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:
Year ended Year ended
31 December 31 December
Global greenhouse gas emissions and energy use data for the period 1 January to 31 December 2022 2021
Energy consumption used to calculate emissions (kWh):
Energy consumption related to business travel
Business travel in private vehicle (miles travelled) 83,376 46,504
Calculated total CO2 emissions related to business travel – metric tonnes 26.7 14.9
Energy consumption related to office activities
Energy consumption used to calculate emissions (kWh) 950,053 2,216,256
Average CO2 per kwh - tonnes 0.00019338 0.00021233
Calculated total CO2 emissions related to office electricity usage – metric tonnes 183.7 470.6
Total GHGs generated through all activities – tonnes CO2 210.4 458.5
Percentage of CO2 from office activities vs total 87.3% 96.9%
Percentage of CO2 from business travel vs total 12.7% 3.1%
Intensity ratio: Tonnes CO2e/Annual gross revenue 0.0000031 0.0000077
Intensity ratio: Tonnes CO2e/Average FTE 0.2627 0.5864
Intensity ratio: Tonnes CO2e/Customer policy 0.0027 0.0061
Actions taken by the Group in 2022 & 2023 to date
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 12.7% whereas CO2 generated from
office based activities equates to 87.3% of the total.
As referred to in the Climate-related Disclosures section
on pages 18 to 20, the Group has taken considerable and
ongoing measures in order to reduce CO2 outputs
relating to office activities. Additional specific energy
efficiency actions taken across the Group are detailed
below:
•
Across all office locations, the Group continues to
pursue a strategy to reduce power usage of our
technology equipment. We have already made
a step change in our approach to reducing power
consumption for our desktop computers and this
remains a key part of our strategy moving
forward. This not only include the switch from
conventional desktop computers to more energy
efficient ones, but also implementing smart
processes and controls which for example turn off
idle machines overnight. These changes form part
of an on-going strategy to ensure that
environmental impacts are considered in our
technology refresh programme through
consolidation, reducing packaging waste and
moving to devices with a lower power
consumption wherever practical;
•
A working group established in 2020 remains
active in 2022 to ensure compliance with the
ESOS regulations. An external third party was
appointed over the last two years on an as
needed basis to help undertake the required
tracking and reporting of energy usage. Display
Energy Certificates for the Ipswich and Bristol
office a full report for Dundee (as Display Energy
Certificates do not apply in Scotland) are included
in the submission to the Environment Agency and
to those within the business responsible for the
energy used by our buildings for consideration;
•
Maintenance and monitoring of a new cooling &
heating system installed in 2020 which is 30% more
energy efficient at our Ipswich office than before;
•
Encouraging employees to adapt cycling to work
scheme by making it available to all colleagues as
well as providing secure bicycle storage at office
locations.
•
In Q1 2023, we have further improved the structure
of the Environmental, Social, Health & Governance
team (“ESHG”) which is sponsored by our Chief
People Officer, Jaynie Vincent. This includes the
establishment of the Group Environmental Matters
Team that actively supports and carries out
positive environmental initiatives across the Group.
On behalf of the board
Dan Cowland
Chief Financial Officer
4 May 2023
Environmental, social and governance (ESG)
continued
STRATEGIC REPORT
continued
20 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
GOVERNANCE
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 21
David Barral
Non-Executive Chairman
David brings a wealth of experience to the Curtis Banks Group following an
extensive executive and Non-Executive career in financial services spanning
40 years. His current portfolio includes Non-Executive director Chair of
Rowanmoor Group and Non-Executive director of The Pensions Superfund.
Previous Non-Executive roles have included chair of Embark, senior
independent director of LV Group, Non-Executive director of LV General
Insurance, independent customer champion at Quilter and chair of Virgin
Wines. He is a former CEO of Aviva UK and Ireland Life, Aviva’s largest
business unit, achieving profit of £1bn. He has previously chaired the
ABI Retirement and Savings Committee and was a member of the Financial
Services Authority Retail Distribution Review Taskforce. David brings a mix of
strategic leadership, transformation and operational experience with a strong
focus on value creation, performance, customers and risk and governance.
Peter Docherty
Chief Executive Officer
Peter joined Curtis Banks on 10 January 2023 with an impressive track record
in leadership, transformation, operations and delivering results. At his
previous role as Managing Director at Embark Investment Services Limited,
Peter led the development of the Embark Platform business which was
acquired by Lloyds Banking Group in January 2022. Peter has also held
multiple roles at Alliance Trust Savings Limited including CEO and was Chief
Risk Officer with Scottish Friendly Assurance.
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.
Bill Rattray
Non-Executive Director, Chairman of the Audit Committee and the
Risk & Customer Outcomes 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.
Board of Directors
GOVERNANCE
continued
22 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Board of Directors
continued
Alastair Clarkson
Non-Executive Director and Chairman of the FCA and PRA regulated entities
of the Group
Alastair has over 30 years’ experience in the life insurance industry, and has
held a number of senior roles at Standard Life, specialising in financial risk
and capital management and the independent review and challenge of
strategy. As well as chairing Curtis Banks’ regulated subsidiaries and being
a member of our Risk and Customer Outcomes and our Audit Committees,
Alastair is currently on the Boards of Forester Life and Mediolanum
International Life and is a member of the Financial Reporting Council
Actuarial Tribunal Panel. He is a qualified actuary and Chartered Enterprise
Risk Actuary, and has previously sat on the Council of the Faculty of
Actuaries and been a chair of the Life Board of the Institute and Faculty of
Actuaries.
Susan McInnes
Non-Executive Director, Chair of the Remuneration Committee
Susan brings a wealth of financial services operational experience to
Curtis Banks with a strong focus on customers, people and risk. Susan spent
over 10 years with the Phoenix Group where she held a number of senior roles
including Customer Director, and Group Chief Risk officer before being
appointed as Chief Executive of Standard Life Assurance. Susan chairs our
Remuneration Committee and is a member of our Risk and Customer
Outcomes Committee.
Christopher Mills
Non-Executive Director
Christopher is Chief Executive Officer and principal shareholder of Harwood
Capital Management since 2011. He founded JO Hambro Capital
Management with Jamie Hambro in 1993, acting as Chief Investment Officer,
and Harwood Wealth with Alan Durant in 2013 until their respective sales in
2011 and 2020. He is CEO of North Atlantic Smaller Companies Investment
Trust (“NASCIT”) which he has managed since 1982 and Executive Director of
Oryx International Growth Fund which he has managed since 1995. He has
sat on the Board of over 100 companies during his career including most
recently Augean, MJ Gleeson, SureServe, Frenkel Topping and is currently
Chairman of EKF Diagnostics and Renalytix AI. He was awarded a
scholarship to go to university by Samuel Montagu and has a BA in Business
Studies.
GOVERNANCE
continued
Directors’ Report
The Directors present their annual report and audited
consolidated financial statements for the year ended
31 December 2022.
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 30 to the financial statements.
Results and dividends
The consolidated statement of comprehensive income
for the year is set out on page 42.
A final dividend in respect of 2021 results of 6.5p per
share totalling £4,321,059 was proposed and paid on
1 June 2022. An interim dividend in respect of 2022
results of 2.5p per share totalling £1,663,419 was paid on
11 November 2022. In light of the Nucleus transaction,
the Board has decided not to propose a final dividend.
* Artemis Investment Management’s holding decreased to below 3% on 17 April 2023.
Directors
The directors of the company who were in office during
the year and up to the date of signing the financial
statements were:
David Barral (appointed 26 May 2022)
Peter Docherty (appointed 10 January 2023)
Dan Cowland
Bill Rattray
Susan McInnes (appointed 21 November 2022)
Alastair Clarkson (appointed 21 December 2022)
Christopher Mills (appointed 26 May 2022)
Jane Ridgley (resigned 1 May 2023)
Jill Lucas (resigned 9 December 2022)
Christopher Macdonald (resigned 26 May 2022)
Jules Hydleman (resigned 26 May 2022)
Will Self (resigned 6 October 2022)
Directors will seek re-election immediately following
appointment at the Company’s annual general meeting
and annually thereafter. The next Annual General
Meeting will be held on 20 June 2023.
Directors’ indemnity
The directors had qualifying third party indemnity cover
totalling £20,000,000 during the year ended
31 December 2022 and up to the date these financial
statements have been approved.
Related party transactions
Details of related party transactions are given in
note 34.
Independent Auditors
Subject to the acquisition by Nucleus, the company
may change the audit arrangement to align with that
of Nucleus and result in the replacement of the current
auditors, PricewaterhouseCoopers LLP.
Substantial Shareholders
At 31st March 2023, the Company had been notified of the following interests representing 3% or more of its issued
share capital, as published on the company website:
No. of Ordinary shares Percentage Holding
Christopher Banks 14,651,142 21.91%
Oryx International Growth Fund 4,225,000 6.32%
Paul Tarran 3,408,521 5.10%
Canaccord Genuity Wealth Management 3,300,000 4.93%
Rupert Curtis 2,948,845 4.41%
GWM Asset Management 2,790,346 4.17%
JP Morgan Securities 2,457,662 3.67%
Artemis Investment Management* 2,456,915 3.67%
Sally Curtis 2,331,413 3.49%
Goldman Sachs 2,213,470 3.31%
Barclays Capital 1,829,648 2.74%
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 23
Directors’ Report
continued
GOVERNANCE
continued
24 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Post balance sheet events
On 6 January 2023, the boards of Curtis Banks Group
PLC, and Nucleus Clyde Acquisition Limited (“Bidco”),
a wholly-owned subsidiary of Nucleus Financial
Platforms Limited (“Nucleus”), announced that they have
reached agreement on the terms of a recommended
cash acquisition by Bidco of the entire issued share
capital of Curtis Banks for 350 pence per share. On
27 February 2023, Curtis Banks’s shareholders voted in
favour of the acquisition. Both parties are progressing the
relevant regulatory and court approval processes and
the acquisition is expected to complete, subject to these
approvals, towards the summer of 2023.
More details of the Nucleus acquisition has been
disclosed in pages 3 to 4 of the Chairman’s Statement.
Going concern
The Directors have prepared the financial statements
on a going concern basis, as in their opinion the Group is
able to meet its obligations as they fall due. This opinion
is based on detailed forecasting for the following
12 months based on current and expected market
conditions together with current performance levels. The
Directors have also considered the impact of a number
of severe but plausible events that could impact the
business, 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.
Material uncertainty in relation to going
concern
As set out in the post balance sheet events disclosure,
the Group is the subject of an all cash offer from Nucleus
Financial Platform Limited (“Nucleus”) that, if successful,
is expected to complete over the course of the summer in
2023. The Directors note the intentions of Nucleus as set
out in the Scheme circular, however while they do not
have any reason to believe that Nucleus would not
continue to support the Group or would materially
change their activities in the next 12 months, they are not
party to the detailed intentions of the acquirer. Although
this does not change the Directors’ conclusion as to the
appropriateness of preparing the financial statements of
the Group on a going concern basis, it is considered to
create a material uncertainty which may cast significant
doubt on the Group’s ability to continue as a going
concern. Accordingly, the financial statements do not
include the adjustments that would result if the Group
were unable to continue as a going concern.
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 customers
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 15.
Our People
The Group is committed to being a responsible business.
Our behaviour is aligned with the expectations of our
people, customers, 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 customer 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 committed 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 18 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 2022 the Board met
frequently, and as required to manage corporate
transactions;
•
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 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 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.
Statement of directors’ responsibilities in respect of the
financial statements
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 and the Company
financial statements in accordance with UK-adopted
international accounting standards.
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 UK-adopted international
accounting standards have been followed, 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 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 also responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s 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’s 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’s and
Company’s auditors are aware of that information.
Dan Cowland
Chief Financial Officer
4 May 2023
Directors’ Report
continued
GOVERNANCE
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 25
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.
It is the Chairman’s 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 the Chairman, two 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, apart from
David Barral and Christopher Mills, are considered to be
independent and are as follows:
• David Barral (Chairman)
• Bill Rattray (Senior Independent Director)
• Alastair Clarkson
• Susan McInnes
• Christopher Mills
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 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 Customer Outcomes 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.
GOVERNANCE
continued
26 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Corporate governance report
GOVERNANCE
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 27
Corporate governance report
continued
Both David Barral 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
who 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. Non-Executive Directors 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.
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 Alastair
Clarkson and Susan McInnes as the other members.
David Barral and Christopher Mills are also invited to
attend the meetings. 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 Susan McInnes
with Bill Rattray as the other member. Jill Lucas was
chair of the Committee until her resignation. David
Barral and Christopher Mills are also invited to attend
the meetings. David was not in attendance during the
Committee meetings when the Chairman’s incentive
was discussed. Further details on the Committee are on
pages 30 to 31 of the annual report.
Risk & Customer Outcomes Committee
(Previously Risk & Compliance Committee):
The primary function of the Risk & Customer Outcomes
Committee is to consider the Group’s appetite for risk, to
review and monitor the risk process undertaken by the
Group, to adhere to the risk profile and monitor
procedures for identifying and controlling risk, and to
review the adequacy and effectiveness of the
Company’s Consumer Duty report. The Committee is
chaired by Bill Rattray with Alastair Clarkson and Susan
McInnes as the other members. David Barral and
Christopher Mills are also invited to attend the
meetings. 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 & Customer Outcomes Committee can be found in
the “Investors” section of the Group website at
www.curtisbanks.co.uk.
During the year ended 31 December 2022 there were
4 scheduled Board and committee meetings (with the
exception of 3 scheduled Audit Committee meetings
instead of 4), 12 additional ad hoc Board meetings,
1 additional ad hoc Audit Committee meeting,
5 additional Remuneration Committee meetings and no
additional ad hoc Risk & Customer Outcomes
Committee meetings. The attendance from the
directors is set out in the table below:
GOVERNANCE
continued
28 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Risk &
Board Customer
Meeting Audit Remuneration Outcomes
Executive Directors
Will Self (resigned 6 October 2022) 6 1 2 2
Jane Ridgley (resigned 1 May 2023) 15 4 3 4
Dan Cowland 16 4 5 4
Peter Docherty (appointed 10 January 2023) — — — —
Risk &
Board Customer
Meeting Audit Remuneration Outcomes
Non-Executive Directors
David Barral 12 3 5 2
Bill Rattray 16 4 9 4
Alastair Clarkson (appointed 21 December 2022) — — — —
Susan McInnes (appointed. 21 November 2022) 2 1 1 1
Christopher Mills (appointed 26 May 2022) 9 1 1 1
Chris Macdonald (resigned 26 May 2022) 2 1 1 1
Jules Hydleman (resigned 26 May 2022) 2 1 1 1
Jill Lucas (resigned 9 December 2022) 9 4 9 3
Board Evaluation
The latest formal evaluation of Board effectiveness was
undertaken in the second half of 2020 whereby a
questionnaire was completed by each director, followed
by collective discussions of the results. No formal
recommendations were made following this exercise. In
light of the Board changes and impending Nucleus
transaction, the previously intended Board evaluation
exercise in 2022 was postponed.
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 Singers Capital
Markets acting as joint brokers.
David Barral, 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.
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.
Corporate governance report
continued
GOVERNANCE
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 29
Audit Committee Report
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 approve the schedule of work to be undertaken
by the Group’s internal auditors, Mazars, and
consider the reports and findings, together with
management’s responses;
d) 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;
e) 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.
f) 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 4 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 2021 and receiving
the external auditors audit report thereon and
considering the key accounting considerations
and judgments attaching to those financial
statements;
b) Review of financial statements for the Group for
the six month period ended 30 June 2022 and
receiving the external auditors review report
thereon and considering the key accounting
considerations and judgments attaching to those
financial statements;
c) Consideration and approval of the audit plan for
the year ended 31 December 2022 and
confirmation of key audit matters and areas of
judgement, which include CGUs impairment
assessments for the Dunstan Thomas
Cash-Generating Unit, going concern
assessments for the Group, key accounting
policies and critical accounting judgements
applied (e.g. contingent consideration), risk of
fraud/error in DT revenue recognition and
mandatory risks required by the auditing
standards on risk of fraud in revenue recognition
and risk of management override of controls;
d) Consideration of the effect of the acquisition and
consolidation of Dunstan Thomas and Talbot and
Muir, including the contingent considerations that
are due to be settled in H1 2023;
e) Review of reports produced by Mazars in their role
as internal auditors to the Group and
consideration of actions to be taken on matters
arising from those reports;
Risk and Customer Outcomes Committee
Report
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.
e) To review quarterly Consumer Duty report and
assess the Group’s ongoing monitoring and
actions; ensure good outcomes for consumers
remains central to the Group and consistent with
the Consumer Duty.
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.
The Risk and Customer Outcomes 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;
Corporate governance report
continued
GOVERNANCE
continued
30 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
b) Consideration of Risk appetite throughout the
Group;
c) 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;
d) Review and acceptance of Own Risk and Solvency
Assessments for Suffolk Life Annuities Limited.
Remuneration Committee Report
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 QCA
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 2022;
c) Proposals and agreement to a further offering in
2022 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, including the Chairman’s
incentive plan;
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
2022 for Executive Directors and senior staff and
approval of the parameters for the 2022 staff
bonus scheme;
g) Consideration and agreement of bonus scheme
for the sales and distribution team;
h) Consideration and agreement of termination
arrangements for the former CEO and
remuneration packages for the interim CEO; and
i) Consideration and agreement of one-off cost of
living payments to employees.
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
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; and
e) Award of shares under share incentive plans.
Corporate governance report
continued
GOVERNANCE
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 31
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
(“LTIP”) and the Company Share Option Plan (“CSOP”).
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 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.
One LTIP was set up in 2022 for selected members of
the senior leadership team. Vesting of these awards is
dependent on the growth in adjusted diluted earnings
per share exceeding the growth in the Consumer Price
Index for the three financial years ending 31 December
2022, 2023 and 2024.
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 customers.
Notice Notice
Date of Period by Period by
Director Appointment Company Director
Executive:
Peter Docherty 10 January 2023 12 months 12 months
Dan Cowland 8 July 2019 12 months 12 months
Non-Executive:
David Barral 26 May 2022 12 months 12 months
Bill Rattray 2 April 2015 3 months 3 months
Christopher Mills 26 May 2022 3 months 3 months
Susan McInnes 21 November 2022 3 months 3 months
Alastair Clarkson 21 December 2022 3 months 3 months
Approved on behalf of the Board
Gemma Millard
Company Secretary
4 May 2023
Corporate governance report
continued
GOVERNANCE
continued
32 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Directors’ remuneration report (audited)
Basic Pension Total emoluments
salary contri- Chairman’s Termination 2022 2021
Director and fees Bonus butions Benefits incentive benefits £ £
David Barral1 105,673 — — — 2,000,000* — 2,105,673 —
Jane Ridgley8 222,728 146,370 4,000 6,863 — — 379,961 313,181
Dan Cowland 255,684 164,220 4,000 12,914 — — 436,818 355,467
Peter Docherty4 — — — — — — — —
Bill Rattray 52,000 — — — — — 52,000 52,000
Jill Lucas5 49,067 — — — — — 49,067 49,467
Christopher Mills1 31,133 — — — — — 31,133 —
Will Self2 189,337 — 200 10,662 — 953,876 1,154,075 441,737
Chris Macdonald3 42,133 — — — — 26,000 68,133 104,000
Jules Hydleman3 21,667 — — — — 26,000 47,667 52,000
Susan McInnes6 8,667 — — — — — 8,667 —
Alastair Clarkson7 2,000 — — — — — 2,000 —
Total 980,089 310,590 8,200 30,439 2,000,000 1,005,876 4,335,194 1,367,852
* chairman’s incentive of £2.0m was recorded at the year end to reflect the ongoing Nucleus acquisition, this is a cash-settled share-based payment.
1 appointed 26 May 2022. The remuneration above has been paid in respect of the Executive Chairman tenure during the year.
2 resigned 6 October 2022.
3 resigned 26 May 2022.
4 appointed 10 January 2023.
5 resigned 9 December 2022.
6 appointed 21 November 2022.
7 appointed 21 December 2022.
8 resigned 1 May 2023.
Directors’ shareholdings
As at 31 December 2022, the interest of the directors and former 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:
2022 2021
Director No. % No. %
Will Self — — 56,661 0.08
Jane Ridgley 33,974 0.05 27,166 0.04
Dan Cowland 11,320 0.02 9,523 0.01
Chris Macdonald — — 22,179 0.03
Bill Rattray 47,894 0.07 47,894 0.07
Jules Hydleman — — 15,270 0.02
Directors’ remuneration report
GOVERNANCE
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 33
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) Lapsed option at
Date of 1 January during during 31 December Exercise Vesting
Director grant 2022 the year the year 2022 price date
Will Self 05/10/2018 13,890 (13,890) — — 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 18/09/2018 5,488 (5,488) — — 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
1,519,378 (19,378) (500,000) 1,000,000
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) Lapsed option at
Date of 1 January during during 31 December Exercise Vesting
Director grant 2022 the year the year 2022 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
Will Self 27/04/2021 67,037 — (67,037) — 283p 27/04/2024
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
Jane Ridgley 27/04/2021 47,388 — — 47,388 283p 27/04/2024
Dan Cowland 08/04/2020 74,193 — — 74,193 217p 08/04/2023
Dan Cowland 27/04/2021 53,167 — — 53,167 283p 27/04/2024
1,554,587 — (1,286,322) 268,265
Directors’ remuneration report
continued
GOVERNANCE
continued
34 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
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) Lapsed option at
Date of 1 January during during 31 December Exercise Exercise
Director grant 2022 the year the year 2022 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 25.
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.
David Barral
Chairman
4 May 2023
Directors’ remuneration report
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 35
CONSOLIDATED FINANCIAL STATEMENTS
Contents
Page
Independent auditors’ report 36
Consolidated statement of comprehensive income 42
Consolidated statement of financial position 43
Company statement of financial position 44
Consolidated statement of changes in equity 45
Company statement of changes in equity 46
Consolidated statement of cash flows 47
Company statement of cash flows 48
Notes to the financial statements 49
Company information 86
Glossary 87
Supplementary unaudited information 88
▲
36 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Report on the audit of the financial statements
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF CURTIS BANKS GROUP PLC
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 2022 and of the
group’s loss and the group’s and company’s cash flows for the year then ended;
•
have been properly prepared in accordance with UK-adopted international accounting standards as applied in
accordance with the provisions of the Companies Act 2006; and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Consolidated Financial Statements
(the “Annual Report”), which comprise: the Consolidated and Company statements of financial position as at
31 December 2022; the Consolidated statement of comprehensive income, the Consolidated and Company
statements of cash flows and the Consolidated and Company statements of changes in equity for the year then
ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to other listed entities of
public interest, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in note 5 to the financial statements, we have provided no non-audit services to the
company or its controlled undertakings in the period under audit.
Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the
disclosure made in note 2 to the financial statements concerning the group’s and the company’s ability to continue
as a going concern. On 6th January 2023, the board of Curtis Banks Group PLC, announced they had agreed terms of
a recommended all cash offer to be made by Nucleus Clyde Acquisition Limited for the entire issued and to be issued
share capital of Curtis Banks Group PLC. The offer was approved by Curtis Banks Group PLC shareholders on
27th February 2023 and is now subject only to regulatory approval which is expected within the next 12 months such
that Curtis Banks Group PLC and all subsidiaries will therefore be under new ownership. While the directors do not
have any reason to believe that the acquirer will not continue to support the company or materially change its
activities in the next 12 months, they do not have full visibility over the future intentions of the acquirer. These
conditions, along with the other matters explained in note 2 to the financial statements, indicate the existence of
a material uncertainty which may cast significant doubt about the group’s and the company’s ability to continue as
a going concern. The financial statements do not include the adjustments that would result if the group and the
company were unable to continue as a going concern.
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.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 37
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF CURTIS BANKS GROUP PLC
continued
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:
• Obtaining and evaluating the Directors’ going concern assessment which reflects conditions up to the point of
the approval of the Annual Report;
• Performing look-back procedures on management’s previous assessments to determine the reasonableness
and accuracy of the forecasts and assumptions used;
• Assessing the reasonableness of the severe but plausible going concern stress scenarios presented by
management and concluding these were modelled appropriately and reflective of possible stresses; and
• Assessing the adequacy of management’s disclosures in the financial statements and relevant “other
information” and checking consistency with the financial statements and our knowledge based on our audit.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Our audit approach
Context
Curtis Banks Group PLC is primarily an administrator of self-invested pension products in the United Kingdom. In
2020 the group acquired the Talbot and Muir Group, another administrator of self-invested pension products and the
Dunstan Thomas Group which is a provider of technology and complementary services in the financial services
market.
Overview
Audit scope
• We have scoped the audit based on the financially significant components as set out below in the section “How we
tailored the audit scope”.
Key audit matters
• Carrying value of the Dunstan Thomas cash-generating unit (group), and investment in Dunstan Thomas Group
Limited (company).
Materiality
• Overall group materiality: £600,000 (2021: £610,000) based on 5% of profit before tax, impairment, chairman
incentive arrangement and amortisation.
• Overall company materiality: £570,000 (2021: £857,000) based on 1% of net assets (restricted to 95% of overall
group materiality as noted below).
• Performance materiality: £450,000 (2021: £458,000) (group) and £428,000 (2021: £642,000) (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.
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.
In addition to going concern, described in the Material uncertainty related to going concern section above, we determined
the matters described below to be the key audit matters to be communicated in our report. This is not a complete list of all
risks identified by our audit.
38 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Revenue recognition for Dunstan Thomas (group), which was a key audit matter last year, is no longer included because of
an immaterial level of new non-standard contracts entered into during the year. Otherwise, the key audit matters below
are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
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 principal trading entities, Curtis Banks Limited, Suffolk Life Pensions
Limited, Suffolk Life Annuities Limited, Dunstan Thomas Holdings Limited and Talbot and Muir Limited as well as the
The audit procedures we have performed to address this key
audit matter are as follows:
• We assessed and challenged the key assumptions which
management has adopted in the impairment
assessment. This included:
o the relevant future expected cash flows;
o the revenue growth included in the Board approved
plan for 2023 to 2024;
o the long-term growth rate used into perpetuity;
o the discount rate assumption applied to future cash
flows (assessed with support from auditor’s experts);
and
o the working capital assumptions incorporated into
the value in use calculations.
• We performed sensitivity analysis over the assumptions
used;
• We considered management’s forecasting ability by
comparing previous forecasts to actual past
performance, and performance year to date in 2023; and
• We considered the adequacy of the disclosures
surrounding the degrees of uncertainty present in
management’s estimate of value in use.
From our work performed and the evidence obtained, we
consider the impairment recorded to be appropriate, and that
the disclosures appropriately reflect the requirements of IAS 36.
Carrying value of the Dunstan Thomas
cash-generating unit (group), and investment in
Dunstan Thomas Group Limited (company)
(Refer to Note 2 Significant accounting policies,
Note 3 Critical accounting judgements and key
sources of estimation uncertainty, Note 11
Intangible assets (group), and Note 14 Investments
(company))
The consolidated financial statements include
intangible assets arising from the business
acquisition of Dunstan Thomas (“DT”) in 2020. The
£17.1m of goodwill, and £10.0m of other intangible
assets brought forward on 1 January 2022 are
material to the consolidated financial
statements. These intangible assets are allocated
to one cash-generating unit, referred to below as
‘DT’. The company financial statements include
an investment in subsidiary brought forward on
1 January 2022 of £26.5m recognised at historical
cost arising from the business acquisition of DT
in 2020.
Due to the underperformance of DT in 2022, and
a corresponding downwards revision in future
expectations of performance, management has
recognised an impairment charge in 2022 of
£11.5m against the carrying value of goodwill in
the consolidated financial statements, and an
impairment of £11.7m against the carrying value
of the investment in this subsidiary in the
company financial statements.
We consider there to be a significant risk arising
from the assumptions and judgements involved
in performing the impairment assessment as
required by International Accounting Standard
(‘IAS’) 36 “Impairment of assets”.
We consider the primary risk to be the
assumptions adopted by management as part of
the impairment test and determination of the
value in use; most notably the growth rates
assumed for revenue, anticipated margins, and
the discount rate applied to derive a net present
value in relation to future cash flows.
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF CURTIS BANKS GROUP PLC
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 39
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF CURTIS BANKS GROUP PLC
continued
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.
Other trading and dormant entities within the group, listed in Note 14, 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 profit before tax.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate
risk on the group’s and company’s financial statements, and we remained alert when performing our audit
procedures for any indicators of the impact of climate risk. Our procedures did not identify any material impact as
a result of climate risk on the group’s and company’s financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £600,000 (2021: £610,000). £570,000 (2021: £857,000).
How we determined it 5% of profit before tax, impairment, 1% of net assets (restricted to 95% of overall
chairman incentive arrangement and group materiality as noted below).
amortisation.
We have selected this benchmark, in a Ordinarily we would apply a benchmark of 1%
change to previous years for which the of net assets for the determination of the
benchmark selected was profit before tax company materiality. However, we have
and amortisation. Our materiality restricted our materiality for the company to
benchmark has been changed to add back the lower figure of 95% of group materiality
the Chairman incentive liability and as the company represents a significant
impairment charge recognised during the component of the group.
year. We have used a separate materiality
for the Chairman’s incentive charge and
impairment of goodwill as these are highly
material one-off transactions and are likely
to be of specific interest to the users of the
financial statements.
We have applied a higher materiality of £35m (2020: £39m), 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 £110,000 and £570,000. Certain
components were audited to a local statutory audit materiality that was also less than our overall group materiality.
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% (2021:
75%) of overall materiality, amounting to £450,000 (2021: £458,000) for the group financial statements and
£428,000 (2021: £642,000) 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 in the middle 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 £30,000 (group audit) (2021: £27,700) and £29,000 (company audit) (2021: £27,700) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Rationale for
benchmark applied
40 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
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 2022 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.
Directors' Remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
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 in respect of the financial statements, the
directors are responsible for the preparation of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the group or the company or to
cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, 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 law and UK regulatory principles, such as those imposed 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 financial statements such as the Companies Act 2006. We evaluated management’s incentives and
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF CURTIS BANKS GROUP PLC
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 41
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF CURTIS BANKS GROUP PLC
continued
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 or costs, and
management bias in accounting estimates, specifically the carrying value of intangible assets, and carrying value of
investment in subsidiary in relation to Dunstan Thomas. Audit procedures performed by the engagement team included:
• Enquiring of the Risk and Compliance functions, including consideration of known or suspected instances of
non-compliance with laws and regulation and fraud;
• Reading key correspondence with the Prudential Regulation Authority and the Financial Conduct Authority in
relation to compliance with laws and regulations;
• 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;
• Reviewing relevant meeting minutes including those of the Board and Risk Committee;
• Identifying and testing journal entries, in particular any journal entries posted with unusual account
combinations;
• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing; and
• Testing those estimates most susceptible to risk of fraud, namely, impairment assessments of intangible
assets, and the carrying value of the investment in Dunstan Thomas as set out in more detail in the key audit
matters section above.
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.
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 and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Lee Clarke (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
4 May 2023
42 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
Year ended 31 December 2022
Year ended
Year ended
31 December 2022
31 December 2021
Total
Total
Notes
£’000
£’000
Revenue
4
68,063
63,307
Administrative expenses
(58,697)
(52,205)
Impairment of goodwill
(11,545)
—
Policyholder investment (losses)/returns
20
(288,162)
466,811
Non-participating investment contract expenses
20
(34,372)
(33,850)
Changes in provisions: Non-participating investment
contract liabilities
322,534
(432,961)
Policyholder total
—
—
Operating (loss)/profit
(2,179)
11,102
Finance income
134
20
Finance costs
8
(1,695)
(1,800)
(Loss)/Profit before tax
(3,740)
9,322
Taxation
9
(2,973)
(1,603)
(Loss)/profit for the year and total
comprehensive (loss)/income for the year
(6,713)
7,719
Attributable to:
Equity holders of the company
(6,713)
7,723
Non-controlling interests
—
(4)
(6,713)
7,719
(Loss) per ordinary share on the net loss /Earnings
per ordinary share on net profit
Basic (pence)
10
(10.1)
11.6
Diluted (pence)
10
(10.1)
11.5
The consolidated statement of comprehensive income has been prepared on the basis that all operations
are continuing operations.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 43
Group
As at As at
31 Dec 22 31 Dec 21
Group Notes £’000 £’000
ASSETS
Non-current assets
Intangible assets 11 77,362 89,814
Investment property 12 1,108,073 1,316,468
Property, plant and equipment 13 8,012 8,636
Investments 14 1,970,567 2,224,965
3,164,014 3,639,883
Current assets
Trade and other receivables 16 31,859 27,981
Cash and cash equivalents 17 404,816 410,133
Current tax asset 371 957
437,046 439,071
Total assets 3,601,060 4,078,954
LIABILITIES
Current liabilities
Trade and other payables 18 21,942 20,853
Deferred income 30,943 29,960
Borrowings 19 40,632 46,832
Lease liabilities 1,040 964
Provisions 22 484 453
Contingent consideration 32 4,355 2,467
99,396 101,529
Non-current liabilities
Borrowings 19 34,903 43,957
Lease liabilities 6,290 6,774
Provisions 22 2 178
Contingent consideration 33 — 5,199
Non-participating investment contract liabilities 20 3,387,893 3,836,211
Deferred tax liability 21 3,214 3,464
3,432,302 3,895,783
Total liabilities 3,531,698 3,997,312
Net assets 69,362 81,642
Equity attributable to owners of the parent
Issued capital 23 332 332
Share premium 24 58,087 58,087
Equity share based payments 25 3,079 2,840
Treasury shares 24 (1,284) (1,382)
Retained earnings 24 9,148 21,755
69,362 81,632
Non-controlling interest — 10
Total equity 69,362 81,642
The financial statements on pages 42 to 85 were approved by the Board of Directors and authorised for issue on 4
May 2023.
Dan Cowland
Chief Financial Officer
Company Registration No. 07934492
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at 31 December 2022
44 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Company
As at As at
31 Dec 22 31 Dec 21
Company Notes £’000 £’000
ASSETS
Non-current assets
Investments 14 97,932 109,317
97,932 109,317
Current assets
Trade and other receivables 16 321 377
Cash and cash equivalents 17 3,232 4,458
Current tax asset 519 519
4,072 5,354
Total assets 102,004 114,671
LIABILITIES
Current liabilities
Trade and other payables 18 2,885 1,383
Borrowings 19 4,565 4,507
Contingent consideration 32 4,355 2,467
11,805 8,357
Non-current liabilities
Borrowings 19 11,628 15,399
Contingent consideration 32 — 5,199
11,628 20,598
Total liabilities 23,433 28,955
Net assets 78,571 85,716
Equity attributable to owners of the parent
Issued capital 23 332 332
Share premium 24 58,087 58,087
Equity share based payments 24 3,079 2,840
Retained earnings 24 17,073 24,457
Total equity 78,571 85,716
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 loss after tax for the year was £1,400k (2021: profit of £11,656k).
The financial statements on pages 42 to 85 were approved by the Board of Directors and authorised for issue on
4 May 2023.
Dan Cowland
Chief Financial Officer
Company Registration No. 07934492
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 45
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 2021 330 57,799 2,747 (741) 20,134 80,269 14 80,283
Profit/(loss) and total
comprehensive income
for the year — — — — 7,723 7,723 (4) 7,719
Share based payments — — 93 — — 93 — 93
Ordinary shares bought
and sold by EBT — — — (641) — (641) — (641)
Ordinary shares issued 2 288 — — — 290 — 290
Deferred tax on share
based payments — — — — (105) (105) — (105)
Ordinary dividends
declared and paid — — — — (5,997) (5,997) — (5,997)
At 31 December 2021 332 58,087 2,840 (1,382) 21,755 81,632 10 81,642
Loss and total
comprehensive loss
for the year — — — — (6,713) (6,713) — (6,713)
Share based payments — — 239 — — 239 — 239
Ordinary shares
bought and sold by EBT — — — 98 — 98 — 98
Deferred tax on share
based payments — — — — 90 90 — 90
Ordinary dividends
declared and paid — — — — (5,984) (5,984) (10) (5,994)
At 31 December 2022 332 58,087 3,079 (1,284) 9,148 69,362 — 69,362
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For The Year Ended 31 December 2022
46 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Equity share
Issued Share based Retained
capital premium payments earnings Total
Company £’000 £’000 £’000 £’000 £’000
At 1 January 2021 330 57,799 2,747 18,798 79,674
Profit and total comprehensive income for the year — — — 11,656 11,656
Share based payments — — 93 — 93
Ordinary shares issued 2 288 — — 290
Ordinary dividends declared and paid — — — (5,997) (5,997)
At 31 December 2021 332 58,087 2,840 24,457 85,716
Loss and total comprehensive loss for the year — — — (1,400) (1,400)
Share based payments — — 239 — 239
Ordinary dividends declared and paid — — — (5,984) (5,984)
At 31 December 2022 332 58,087 3,079 17,073 78,751
COMPANY STATEMENT OF CHANGES IN EQUITY
For The Year Ended 31 December 2022
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 47
Year ended 31 December
*Restated
2022 2021
Group £’000 £’000
Cash flows from operating activities
(Loss)/Profit before tax (3,740) 9,322
Adjustments for:
Depreciation 1,645 1,806
Amortisation and impairments 14,631 2,934
Finance costs 1,695 1,800
Share based payment expense 239 93
Fair value gains on movement in contingent consideration (1,123) (1,870)
Fair value losses/(gains) on financial investments 202,325 (213,701)
Additions of financial investments (620,331) (647,479)
Disposals of financial investments 672,404 708,532
Fair value losses/(gains) on investment properties 175,450 (120,416)
(Decrease)/Increase in non-participating investment contract liabilities (448,318) 250,904
Changes in working capital:
Increase in trade and other receivables (3,911) (1,330)
Increase in trade and other payables 2,032 5,017
Taxes paid (2,514) (2,410)
Net cash flows used in operating activities (9,516) (6,798)
Cash flows from investing activities
Payments for intangible assets (2,179) (1,670)
Purchase of property, plant and equipment (683) (270)
Purchase of investment property (84,724) (92,456)
Net Sale/(purchase) of shares in the Group by EBT 98 (641)
Receipts from sale of investment property 117,669 105,009
Payment for acquisition of subsidiary (2,687) (255)
Net cash flows received from investing activities 27,494 9,717
Cash flows from financing activities
Equity dividends paid (5,984) (5,997)
Net proceeds from issue of ordinary shares — 290
Net decrease in borrowings* (11,901) (10,148)
Principal elements of lease payments (894) (762)
Interest paid (876) (781)
Net cash used in financing activities (19,655) (17,398)
Net decrease in cash and cash equivalents (1,677) (14,479)
Cash and cash equivalents at the beginning of the year* 386,187 400,666
Cash and cash equivalents at the end of the year* 384,510 386,187
*The audited results for year ended 31 December 2021 has been restated to correct for “Cash and cash equivalents at the beginning of
the year” for £29,912k and “Cash and cash equivalents at the end of the year” for £23,946k for the impact of the opening and closing
Overdrafts balance the impact of which was incorrectly included within “Net decrease in borrowings”. A reconciliation is included in
note 17.
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Year Ended 31 December 2022
48 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Year ended 31 December
As restated*
2022 2021
Company £’000 £’000
Cash flows from operating activities
(Loss)/profit before tax (1,400) 11,656
Adjustments for:
Interest expense 1,368 712
Impairment of investments 11,701 —
Fair value gains on movement in contingent consideration* (1,123) (1,870)
Changes in working capital:
Decrease/(increase) in trade and other receivables 56 (345)
Increase/(decrease) in trade and other payables 1,533 693
Taxes paid — (275)
Net cash flows received from operating activities 12,135 10,571
Cash flows from investing activities
Payment for acquisition of subsidiary (2,764) (255)
Net cash flows used in investing activities (2,764) (255)
Cash flows from financing activities
Equity dividends paid (5,984) (5,997)
Net proceeds from issue of ordinary shares — 290
Net decrease in borrowings (4,000) (3,850)
Interest paid (613) (712)
Net cash used in financing activities (10,597) (10,269)
Net (decrease)/increase in cash and cash equivalents (1,226) 47
Cash and cash equivalents at the beginning of the year 4,458 4,411
Cash and cash equivalents at the end of the year 3,232 4,458
*The audited results for year ended 31 December 2021 has been restated to correct for ‘Fair value gains on movement in contingent
consideration’ of £1,870k which was incorrectly included within the line “Increase/(decrease) in trade and other payables”.
COMPANY STATEMENT OF CASH FLOWS
For The Year Ended 31 December 2022
1
Corporate information
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 4 May 2023.
2
Significant accounting policies
Basis of preparation
The financial statements comprise the financial statements of the Company and its subsidiaries (“the Group”) as at
31 December each year. The nature of the Group’s operations and its principal activities are set out in the Chairman’s
Statement.
The financial statements have been prepared on a going concern basis under the historical cost convention, modified
by the 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.
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became
UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK
Endorsement Board. The financial statements have been prepared in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the Companies Act 2006 as applicable top companies
reporting under those standards.
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 2022.
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. Specifically, insurance contracts issued by the
Group are not within the scope of IFRS 17 because they are non-participating and do not contain any discretionary
participation features.
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and its subsidiary
undertakings up to 31 December 2022.
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 2022 were Curtis Banks Limited, Suffolk Life
Pensions Limited, Suffolk Life Annuities Limited, Rivergate Legal Limited, Dunstan Thomas Holdings Limited, and
Talbot and Muir Limited.
Suffolk Life Annuities Limited provides SIPPs through non-participating individual insurance contracts. As such, it is
authorised as an insurance company and the consolidated results for the whole Group also include Suffolk Life
Annuities Limited’s 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.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 49
2
Significant accounting policies - continued
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 scenarios that could impact the business, and are satisfied that this
opinion remains unchanged in the event of these scenarios.
In respect of shareholder reserves, excluding policyholder assets and liabilities, the Group has net current assets of
£5,122k (2021: £14,206k).
Material uncertainty in relation to going concern
As set out in the post balance sheet events disclosure, the Group is the subject of an all cash offer from Nucleus
Financial Platform Limited (“Nucleus”) that, if successful, is expected to complete towards the summer of 2023. The
directors note the intentions of Nucleus as set out in the Scheme circular, however while they do not have any reason
to believe that Nucleus would not continue to support the Group or would materially change their activities in the
next 12 months, they are not party to the detailed intentions of the acquirer. Although this does not change the
directors’ conclusion as to the appropriateness of preparing the financial statements of the Group on a going concern
basis, it is considered to create a material uncertainty which may cast significant doubt on the Group’s ability to
continue as a going concern. Accordingly, the financial statements do not include the adjustments that would result
if the Group were unable to continue as a going concern.
Investment in 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.
Investments in subsidiaries within the Company Statement of Financial Position are held at cost less accumulated
impairment losses.
Business Combinations
Acquisitions 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 considers it has 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. The
remaining operations are described as pension administration, because all of these operations are conducted within
the UK and all material operations are of the same nature and share the same economic characteristics including a
similar customer base and nature of product and services.
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.
NOTES TO THE FINANCIAL STATEMENTS
continued
50 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
2
Significant accounting policies - continued
Foreign Currencies – continued
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 are charged to
the consolidated statement of comprehensive income in the year they are payable.
Research and development
Research expenditure is written off to the consolidated statement of comprehensive income in the year in which it is
incurred. Development expenditure is written off in the same way unless the directors are satisfied as to the technical,
commercial and financial viability of individual projects. In this situation, the expenditure is deferred and amortised
over a four year period during which the Group is expected to benefit.
Non-participating investment contracts
The Group’s long term business includes unit linked Self-Invested Personal Pension policies, also referred to as the
‘Policyholder Business’, wholly administered by Suffolk Life Annuities Limited, a subsidiary company. The liability of
the Group towards its policyholders is exactly equal to the value of policyholder assets held at all times.
Non-participating investment contract liabilities are measured at fair value by reference to the value of the
underlying net asset values of the assets held to cover investment contracts at the Statement of Financial Position
date.
For non-participating investment contracts, premiums are not included in the consolidated statement of
comprehensive income but are reported as contributions to non-participating investment contract liabilities in the
consolidated statement of financial position. Investment income in respect of non-participating investment
contracts are accounted for in ‘Investment return’. Investment income and investment return includes dividends,
rental and interest income.
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
Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary
course of the Group’s activities. 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 customers.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 51
2
Significant accounting policies - continued
Revenue recognition – continued
The Group also provides IT software licences, implementation, maintenance & updates, development and post
contract 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 detail 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. This has historically been made up of implementation fee billed on time and expense incurred, and a
combined licence fee obligation that covers licence, maintenance, support and API (if applicable). In 2022 a new form
of contract has begun to be offered to new customers which is comprised of three distinct performance obligations:
licence, implementation and post contract support.
–
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 customer 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.
–
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.
Any interest received in excess of that payable to customers 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.
NOTES TO THE FINANCIAL STATEMENTS
continued
52 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
2
Significant accounting policies - continued
Revenue recognition – continued
Revenue relating to FinTech is recognised in line with satisfaction of contractual performance obligations. For
customer contracts entered into before 30 June 2022, licence and post contract support obligations are recognised
on a straight-line basis over time throughout the contract period. Following this date, Dunstan Thomas restructured
their commercial model of software licensing and related services. As a result, new template customer agreements
have been created and are now being used for the majority of new software license contracts. Where the new
template customer agreement is now used and the licence is identified as a distinct performance obligation. Licence
revenue is recognised at a point in time upfront, while the post contract support revenue is recognised over time on
a straight-line basis throughout the contract period. Revenue relating to implementation and IT consultancy services
are billed according to standard rate cards on a time and expense basis. Therefore, they are recognised as and when
measurable progress is made and at full when the specific engagement is completed.
The Group generates certain revenue from the arrangement of property insurance for properties held within SIPPs
and SSASs administered by the Group. Revenue earned this way is recognised using an input method such that 80%
is recognised at arrangement and renewal of the insurance policy, and 20% is spread over the insurance policy term.
Intangible assets – 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.
Intangible assets – Customer Portfolios
Customer 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.
Customer portfolios are amortised on a straight line basis over their estimated useful life of 20 years based upon long
term historic average customer 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 customer 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.
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.
Intangible assets – Internally generated software
Internally generated software represents the principal software products owned and licensed by Dunstan Thomas
and is being amortised over a period of 10 years.
Intangible assets – Brand
Brand comprises the value of the Dunstan Thomas brand from the acquisition of Dunstan Thomas during the year
ended 31 December 2020 and is being amortised over 10 years.
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.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 53
2
Significant accounting policies - continued
Property, plant and equipment – continued
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
25%
straight line
Office equipment, fixtures & fittings
25%
straight line
Right of use assets
Expected underlying office lease length of between 3 and 12 years
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.
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.
NOTES TO THE FINANCIAL STATEMENTS
continued
54 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
2
Significant accounting policies – continued
Trade receivables – continued
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, short term 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.
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.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 55
2
Significant accounting policies – continued
Leases – continued
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.
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.
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.
On a discretionary basis, the Group also grants exceptional awards to certain employees of the Group, linked to share
price performance, that are settled wholly in cash. These schemes are accounted for as cash-settled share-based
payment transactions in accordance with IFRS 2. Liabilities for expected settlement of these schemes are held at fair
value on the consolidated statement of financial position and re-measured at each reporting period end.
3
Critical accounting judgements and key sources of estimation uncertainty
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:
Impairment assessment on the Cash Generating Units
The Group has established 4 cash generating units (“CGUs”) that are closely aligned to the Group’s subsidiaries and
their distinct cash flows: namely Curtis Banks (“CB”), Suffolk Life (“SL”) Dunstan Thomas (“DT”) and Talbot and Muir
(“T&M”). There is goodwill associated with the latter three CGUs that is not amortised, and therefore these amounts
are subject to annual impairment assessment. The Curtis Banks CGU will be assessed for impairment if indicators of
impairment are identified. The definition of the CGUs is the judgement applied.
NOTES TO THE FINANCIAL STATEMENTS
continued
56 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
3
Critical accounting judgements and key sources of estimation uncertainty – continued
Impairment assessment on the Cash Generating Units – continued
Impairment assessments are performed by comparing the carrying amount of the goodwill and intangible assets or
investment associated with the CGU, with the recoverable amount. Recoverable amount is assessed through value in
use which comprises an estimation of future cash flows expected to arise from each CGU, discounted to their present
value using a pre-tax discount rate. The following key assumptions are applied across all CGUs:
•
FY23 budget approved by the Board and management forecast from FY24 – FY27;
•
Pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to that asset (CB: 16.19%, SL: 16.24%, T&M: 17.15%; DT: 13.22%);
•
Terminal growth rate of 2%, being the long term inflation expectation in the UK;
The goodwill impairment assessment performed resulted in headroom present in each of the relevant CGU other than
Dunstan Thomas:
Suffolk Life Talbot and Muir Dunstan Thomas
£’m 31/12/2022 31/12/2021 31/12/2022 31/12/2021 31/12/2022 31/12/2021
Value in use 77.3 93.7 30.1 27.8 14.9 29.7
Goodwill 28.9 28.9 9.8 9.8 17.1 17.1
Non-current asset 8.3 8.2 8.2 9.4 9.3 10.0
Headroom 40.2 56.6 12.1 8.6 (11.5) 2.6
As at 30 June 2022, goodwill associated with the acquisition of Dunstan Thomas was impaired by £9.8m due to
expectations that the business segment’s financial performance would fall materially short of expectations over the
year. This created uncertainty over the forecast future cash flows, which was used to conduct the goodwill
impairment assessment. It has subsequently been identified that in the assessment as at 30 June 2022 certain
assumptions used in the discount rate were not reflective of risks specific to the CGU, and that a post-tax rate had
been used rather than a pre-tax rate as required. Had these factors been reflected in the impairment assessment at
30 June 2022, the impairment would have been £11.5m which is the total impairment charge that has now been
booked during the year ended 31 December 2022. There would have been no impact of these items on the financial
statements for the prior year to 31 December 2021.
Sensitivity analysis was performed on the following stress scenarios and the negative impact on value in use is
calculated as follows:
Suffolk Life Talbot and Muir Dunstan Thomas
£’m 31/12/2022 31/12/2021 31/12/2022 31/12/2021 31/12/2022 31/12/2021
1% increase in discount rate (4.3) (8.0) (1.7) (2.4) (1.3) (2.5)
1% decrease in terminal growth rate (2.5) (6.6) (1.0) (2.0) (0.9) (2.1)
10% reduction in operating profit budgeted and
forecasted (7.3) (8.3) (3.0) (2.5) (1.7) (3.1)
Amongst the CGUs, although Suffolk Life sees the largest movement in potential headroom, Dunstan Thomas is most
susceptible to the stress scenarios due to a lack of any headroom being available.
In addition, we have also performed impairment assessments on investment in subsidiaries by leveraging the same
discounted cash flow model which are summarised below:
£’m Curtis Banks Suffolk Life Talbot and Muir Dunstan Thomas
Value in use 69.4 77.3 30.1 14.9
Investment by Curtis Banks Group Plc 12.4 46.9 22.1 26.6
Headroom 57.0 30.4 8.0 (11.7)
Impairment of investment in Dunstan Thomas of £11.7m was identified and recorded in the Company financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 57
3
Critical accounting judgements and key sources of estimation uncertainty – continued
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 30 to the financial statements.
Contingent consideration payable on acquisitions
The Group has entered into certain acquisition agreements that provide for 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 £0.4m (2021: £0.8m), which in turn would reduce or increase profit before tax.
Chairman’s incentive award
In October 2022, an incentive scheme for the Group’s Chairman was announced and accounted for as a cash-settled
share-based payment transaction by 31 December 2022. Management made the critical judgement to recognise the
full £2m in the 2022 results, even though the acquisition offer by Nucleus was not announced until 6 January 2023,
after the reporting period, and the transaction is not expected to complete until the summer of 2023.
The judgement was based on the best available estimate of rewards expected to vest, in accordance with IFRS 2
Share-based Payment. Importantly, management consider that the services associated with the incentive scheme
by the Chairman were materially completed as at 31 December 2022. This was supported by the announcement on
23 December 2022 that the due diligence was complete and that the parties were close to agreeing transaction
documentation. Therefore, it was appropriate to recognise the entire £2m in the year ended 31 December 2022, rather
than spreading the cost over 2022 and 2023.
The payment is contingent upon the sales offer becoming unconditional, which includes conditions such as obtaining
regulatory and court approvals, that introduce an element of estimation uncertainty. Management’s decision to
recognise the entire amount in 2022 demonstrates our assessment that the probability of the potential transaction
proceeding as at 31 December 2022, and the consequent vesting of the incentive payment, was more likely than not.
4
Revenue
Revenue is wholly derived from activities undertaken within the United Kingdom and comprises the following
categories:
Year ended 31 December
2022 2021
£’000 £’000
Pension administration fees 45,295 45,091
FinTech services 7,694 9,900
Pension administration interest income 15,074 8,316
68,063 63,307
NOTES TO THE FINANCIAL STATEMENTS
continued
58 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
5
Total comprehensive income for the year
Total comprehensive income for the year is arrived at after charging:
Year ended 31 December
2022 2021
£’000 £’000
Amortisation and impairment of intangible assets 14,631 2,934
Depreciation of property, plant and equipment 1,645 1,806
Auditors’ remuneration:
– audit of the Company and consolidated financial statements 285 227
– audit of the financial statements of the subsidiaries 440 397
– audit related assurance services 71 40
6
Operating segment reporting
The following tables present revenue and profit information regarding the Group’s operating segments for the two
years ended 31 December 2022 and 31 December 2021 respectively.
Pension Consolidation
Administration FinTech adjustments Consolidated
Year ended 31 December 2022 £’000 £’000 £’000 £’000
Revenue
External customers 60,369 7,694 — 68,063
Internal customers - 1,557 (1,557) —
60,369 9,251 (1,557) 68,063
Administrative expenses
External customers 51,421 7,276 — 58,697
Internal customers 549 773 (1,322) —
Impairment of goodwill — — 11,545 11,545
51,970 8,049 10,223 70,242
Operating profit/(loss) 8,399 1,202 (11,780) (2,179)
Pension Consolidation
Administration FinTech adjustments Consolidated
Year ended 31 December 2021 £’000 £’000 £’000 £’000
Revenue
External customers 53,407 9,900 — 63,307
Internal customers — 1,349 (1,349) —
53,407 11,249 (1,349) 63,307
Administrative expenses
External customers 43,866 8,339 — 52,205
Internal customers 813 390 (1,203) —
44,679 8,729 (1,203) 52,205
Operating profit/(loss) 8,728 2,520 (146) 11,102
Corporate costs
The Group’s operating segments are managed together as one business. Accordingly, certain corporate costs such as
finance income and expenses, 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
operating profit or loss reflects the measure of segment performance reviewed by the Board of Directors (the CODM).
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 59
6
Operating segment reporting – continued
Corporate costs – continued
The following table presents a split of assets and liabilities of the Group’s operating segments as at 31 December
2022.
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
As at 31 December 2022 £’000 £’000 £’000 £’000 £’000
Total assets 63,573 10,427 55,389 3,471,670 3,601,059
Total liabilities 34,094 3,154 22,780 3,471,670 3,531,698
The split of assets and liabilities of the Group’s operating segments as at 31 December 2021 is illustrated below:
Pension
Administration FinTech Corporate Policyholder Consolidated
As at 31 December 2021 £’000 £’000 £’000 £’000 £’000
Total assets 65,960 9,508 70,853 3,932,633 4,078,954
Total liabilities 32,793 3,113 28,773 3,932,633 3,997,312
7
Directors and employees
Year ended 31 December
2022 2021
£’000 £’000
Wages and salaries 26,925 25,189
Social security costs 2,878 2,644
Other pension costs 2,576 2,327
Share-based incentive awards 2,244 364
34,623 30,524
The monthly average number of employees during the year was:
2022 2021
Number Number
Directors 8 7
Administration 793 821
801 828
NOTES TO THE FINANCIAL STATEMENTS
continued
60 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
7
Directors and employees – continued
Details of emoluments paid to the directors and key management personnel of the Group are as follows:
Year ended 31 December
2022 2021
£’000 £’000
Total emoluments paid to:
Directors
Wages and salaries 1,288 1,354
Social security costs 338 162
Compensation for loss of office 1,006 —
Post-employment costs 8 14
Share-based incentive awards 2,057 80
Other key management personnel
Wages and salaries 1,066 1,005
Compensation for loss of office 219 62
Social security costs 158 129
Post-employment costs 119 69
hare-based incentive awards 15 2
6,274 2,877
Emoluments of highest paid director:
Wages and salaries 2,106 429
Pension contribution — 6
2,106 435
Short term employee benefits include wages and salaries. Long term employee benefits include share-based
incentive awards.
8
Finance costs
Year ended 31 December
2022 2021
£’000 £’000
Interest payable on bank loans 869 702
Interest and finance costs on lease liabilities 262 209
Other interest expense 65 10
Total interest expense 1,196 921
Unwind of discount on contingent consideration relating to:
Acquisition of Dunstan Thomas 161 364
Acquisition of Talbot and Muir 338 515
Total finance costs 1,695 1,800
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 61
9
Taxation
Year ended 31 December
2022 2021
£’000 £’000
Domestic current year tax
UK Corporation tax 2,615 1,875
Under provision in prior years 551 121
Deferred tax
Origination and reversal of temporary differences (193) (393)
2,973 1,603
Factors affecting the tax charge for the year
(Loss)/Profit before tax (3,740) 9,322
(Loss)/Profit before tax multiplied by standard rate of UK Corporation tax
of 19% (2021: 19%) (711) 1,771
Effects of:
Adjustment to prior year 555 121
Non-deductible expenses 2,868 93
Other tax adjustments 261 (382)
3,684 (168)
Total tax charge 2,973 1,603
10
(Loss)/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:
2022 2021
£’000 £’000
Net (loss)/profit available to equity holders of the Company (6,713) 7,723
Number Number
Weighted average number of ordinary shares:
Issued ordinary shares at start of the year 66,879,312 66,414,312
Effect of shares issued during the year — 333,781
Effect of shares held by employee benefit trust (390,563) (316,688)
Basic weighted average number of shares 66,488,749 66,431,405
Effect of dilutive options 265,012 510,602
Diluted weighted average number of shares 66,753,761 66,942,007
NOTES TO THE FINANCIAL STATEMENTS
continued
62 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
10
(Loss)/Earnings per share – continued
Pence Pence
(Loss)/Earnings per share:
Basic (10.1) 11.6
Diluted (10.1) 11.5
11
Intangible assets
Group
Internally
Customer Computer Generated
Goodwill Brand Portfolios Software Software Total
£’000 £’000 £’000 £’000 £’000 £’000
Cost
At 1 January 2021 55,732 1,595 33,805 2,783 5,770 99,685
Additions — — — 492 1,178 1,670
At 31 December 2021 55,732 1,595 33,805 3,275 6,948 101,355
Additions — — — 1,083 1,096 2,179
Disposals — — — (30) — (30)
At 31 December 2022 55,732 1,595 33,805 4,328 8,044 103,504
Amortisation and Impairment
At 1 January 2021 — 66 6,854 1,447 240 8,607
Charge for the year — 160 1,878 264 632 2,934
At 31 December 2021 — 226 8,732 1,711 872 11,541
Charge for the year — 160 1,878 295 753 3,086
Impairment 11,545 — — — — 11,545
Disposals — — — (30) — (30)
At 31 December 2022 11,545 386 10,610 1,976 1,625 26,142
Net book value
At 31 December 2020 55,732 1,529 26,951 1,336 5,530 91,078
At 31 December 2021 55,732 1,369 25,073 1,564 6,076 89,814
At 31 December 2022 44,187 1,209 23,195 2,352 6,419 77,362
Goodwill
Goodwill totalling £28,903k arose on the acquisition of Suffolk Life Group Limited and its subsidiaries on 25 May 2016.
Goodwill totalling £17,075k arose on the acquisition of Dunstan Thomas Group Limited and its subsidiaries on
3 August 2020. Goodwill totalling £9,754k 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 budget & forecast approved by management covering a five year period, assuming business then
continues onwards after this period at a steady rate for the purpose of the analysis.
Impairment charges totalling £11,545k against the intangible asset relating to Goodwill within the Dunstan Thomas
CGU have been recognised during the period ended 31 December 2022 (2021: £nil). This relates to lower than expected
performance of the CGU in the period, a consequent reduction in the estimate of future cash flows expected from the
CGU, combined with an update in discount rate assumptions used in the value-in-use calculation to better reflect the
characteristics of the business. More details and sensitivity analysis are disclosed in note 3.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 63
11
Intangible assets – continued
Customer Portfolios
Represents individual customer 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 (2021: £nil). The
customer 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.
Lastly, the brought forward balance includes customer portfolios fair valued at £11,229k which arose on acquisition of
Talbot and Muir Limited and its subsidiaries on 30 October 2020.
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 represents the value of principal software products owned and licensed by Dunstan
Thomas. The asset includes both value arising on acquisition of Dunstan Thomas during the year ended 31 December
2020, and further development of the asset since. Internally generated software is being amortised over a period of
10 years.
Brand
Brand comprises the value of the Dunstan Thomas brand, which was obtained following acquisition of Dunstan
Thomas during the year ended 31 December 2020. Dunstan Thomas has been established in the UK for over 30 years
and has a strong market presence. The Group operates Dunstan Thomas as an independent brand. The value of the
brand was assessed at acquisition and is being amortised over 10 years.
Research and development
The amount of research and development expenditure recognised as an expense is £7k (2021: nil).
12
Investment Property
Assets held at fair value
Group
Year ended 31 December
2022 2021
£’000 £’000
Fair value
At 1 January 1,316,468 1,208,605
Additions 84,724 92,456
Disposals (117,669) (105,009)
Fair value (losses)/gains (175,450) 120,416
At 31 December 1,108,073 1,316,468
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 20(b) to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
continued
64 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
13
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 2021 7,189 5,945 2,115 15,249
Additions 2,627 265 5 2,897
Disposals (579) — (81) (660)
At 31 December 2021 9,237 6,210 2,039 17,486
Additions 341 621 62 1,024
Disposals — (118) (3) (121)
At 31 December 2022 9,578 6,713 2,098 18,389
Accumulated depreciation
At 1 January 2021 1,458 4,569 1,564 7,591
Arising from acquisitions — (14) 14 —
Charge for the year 944 611 251 1,806
Disposals (469) — (78) (547)
At 31 December 2021 1,933 5,166 1,751 8,850
Charge for the year 948 562 135 1,645
Disposals — (115) (3) (118)
At 31 December 2022 2,881 5,613 1,883 10,377
Carrying value
At 31 December 2020 5,731 1,376 551 7,658
At 31 December 2021 7,304 1,044 288 8,636
At 31 December 2022 6,697 1,100 215 8,012
The total cash outflow for leases was £0.8m (2021: £0.9m).
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 65
14
Investments
Financial assets at fair value through profit or loss
Total fair value as at 31 December
Group
2022 2021
£’000 £’000
Fair value
Equity and other variable-yield securities 1,928,047 2,184,067
Debt securities and other fixed-income securities 42,519 40,898
Total shares and securities 1,970,566 2,224,965
At cost 1,759,139 1,693,768
Movement in the year on total shares and securities
Group
2022 2021
£’000 £’000
At beginning of the year 2,224,965 2,072,317
Additions 620,331 647,479
Disposals (672,404) (708,532)
Unrealised (losses)/gains (202,325) 213,701
At end of the year 1,970,567 2,224,965
The Group values all investments in line with its accounting policy.
Assets held at cost
Company
£’000
Cost
At 1 January 2021 (restated*) 109,224
Additions – equity share based payment costs 93
At 31 December 2021 109,317
Additions – equity share based payment costs 239
Additions – correction to investment in employee benefit trust 77
At 31 December 2022 109,633
Impairment of investment in subsidiaries** (11,701)
Net book value
At 31 December 2020 (restated*) 109,222
At 31 December 2021 109,317
At 31 December 2022 97,932
*The investments note to the financial statements for the year ended 31 December 2021 contained an error relating to an IFRS 3
measurement period adjustment over acquisitions of Dunstan Thomas and Talbot and Muir during 2020 that were erroneously
described as additions to the investment in employee benefit trust, arising during 2021. Consequently, cost at 1 January 2021 and net
book value at 31 December 2020 have been restated to reflect this measurement period adjustment having arisen during 2020, and
no additional investment in employee benefit trust is presented during the year ended 31 December 2021.
**Investment in the Dunstan Thomas Group has been impaired following an impairment assessment undertaken. For more
information please refer to note 3 to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
continued
66 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
14
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
administration services England and Wales 100.00 100.00
Suffolk Life Group Limited (B) Holding company England and Wales 100.00 100.00
Suffolk Life Pensions Limited (B) Provision of pension
administration services England and Wales — 100.00
Suffolk Life Annuities Limited (B) Provision of pension
administration services England and Wales — 100.00
Rivergate Legal Limited (A) Provision of legal services England and Wales 100.00 100.00
Dunstan Thomas Group Limited (C) Holding company England and Wales 100.00 100.00
Digital Keystone Limited (C) Non-trading England and Wales — 100.00
Dunstan Thomas Holdings Limited (C) Provision of IT product
development and services England and Wales — 100.00
Dunstan Thomas Consulting Limited (C) Non-trading England and Wales — 100.00
Platform Action Limited (C) Non-trading England and Wales — 100.00
Talbot and Muir Limited (D) Provision of pension
administration services England and Wales 100.00 100.00
The Pension Partnership Limited (D) Non-trading England and Wales — 100.00
MYSIPP Trustees Limited (D) Dormant England and Wales — 100.00
The Ward Mitchell Trustees Limited (D) Dormant England and Wales — 100.00
Oval Trustees Limited (D) Dormant England and Wales — 100.00
SAM Trustees Limited (D) Dormant England and Wales — 100.00
T M Trustees Limited (D) Dormant England and Wales — 100.00
MYSIPP Trustees (Property) Limited (D) Dormant England and Wales — 100.00
TPP Nominees Limited (D) Dormant England and Wales — 100.00
MYSSAS Trustees Limited (D) 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 (A) 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
CB 2019 Limited (A) Non-trading England and Wales — 90.00
Templemead Property Solutions Limited (A) Non-trading England and Wales — 100.00
CB 2019 Limited and Templemead Property Solutions Limited were dissolved via voluntary strike-off from the
Companies House on 4 April 2023.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 67
14
Investments – continued
The following entities are all dormant, registered at (E), incorporated in England and Wales and 100% of ordinary
shares held by the group:
CH Property Trustee FOX Ltd
CH Property Trustee GARETH
BROOKES LTD
CH Property Trustee GARY GARDNER
Ltd
CH Property Trustee GERALDINE
BROOKES LTD
CH Property Trustee GLOVER Ltd
CH Property Trustee GREAVES Ltd
CH Property Trustee GRIFFITHS Ltd
CH Property Trustee HAGUE Ltd
CH Property Trustee HAGUE No2 Ltd
CH Property Trustee HAMER Ltd
CH Property Trustee HANSFORD Ltd
CH Property Trustee HAWTHORNE Ltd
CH Property Trustee HEASMAN Ltd
CH Property Trustee HENDERSON Ltd
CH Property Trustee HORNIMAN Ltd
CH Property Trustee HOWE Ltd
CH Property Trustee HURLEY Ltd
CH Property Trustee HUTCHINSON Ltd
CH Property Trustee HUTTON Ltd
CH Property Trustee IFA Ltd
CH Property Trustee JARVIS LTD
CH Property Trustee JOHN PARNELL
Ltd
CH Property Trustee FERROUS HOUSE
Ltd
CH Property Trustee JOHNSEN Ltd
CH Property Trustee KABIR Ltd
CH Property Trustee KEARNEY LTD
CH Property Trustee KEITH EDWARD
LTD
CH Property Trustee KENNEDY
&WILLIAMS LTD
CH Property Trustee KENNY Ltd
CH Property Trustee KERR Ltd
CH Property Trustee KERRIGAN Ltd
CH Property Trustee KNAGGS Ltd
CH Property Trustee LAWRENCE Ltd
CH Property Trustee LEE Ltd
CH Property Trustee MACBEAN &
PALMER Ltd
CH Property Trustee MACEY &
ROBERTS LTD
CH Property Trustee MACEY LIMITED
CH Property Trustee MANSION HOUSE
(NO.2) Ltd
CH Property Trustee MANSION HOUSE
Ltd
CH Property Trustee MANTEL Ltd
CH Property Trustee MCCARTHY Ltd
CH Property Trustee MCNEIL Ltd
CH Property Trustee MEWES Ltd
CH Property Trustee MNS Limited
CH Property Trustee MNS No 2 Limited
CH Property Trustee MOXON & TAYLOR
Ltd
CH Property Trustee MULLARKEY (2)
Ltd
CH Property Trustee MULLARKEY Ltd
CH Property Trustee MURRAY Ltd
CH Property Trustee O’ROURKE Ltd
CH Property Trustee PADDEY Ltd
CH Property Trustee PATRICK
McCUTCHEON Ltd
CH Property Trustee MOVE Ltd
CH Property Trustee PEAKER Ltd
CH Property Trustee PERKINS Ltd
CH Property Trustee PICKFORD Ltd
CH Property Trustee PIDDINGTON Ltd
CH Property Trustee PREMIER Ltd
CH Property Trustee PRICE Limited
CH Property Trustee PURNELL Ltd
CH Property Trustee QUALITYCOURSE
Ltd
CH Property Trustee QUINN Ltd
CH Property Trustee RAYSON &
WALTON Ltd
CH Property Trustee REEVES Ltd
CH Property Trustee REID Ltd
CH Property Trustee RHODES Ltd
CH Property Trustee RIDDELL Limited
CH Property Trustee ROBINSON Ltd
CH Property Trustee RODDICK LTD
CH Property Trustee ROGERSON Ltd
CH Property Trustee SAFTRONICS LTD
CH Property Trustee SELLARS Ltd
CH Property Trustee SHEPHERD Ltd
CH Property Trustee SHORT Ltd
CH Property Trustee SOUTHILL Ltd
CH Property Trustee SPENCE Ltd
CH Property Trustee SPRINGFIELD
(NO.2) Ltd
CH Property Trustee SPRINGFIELD Ltd
CH Property Trustee STEPHENSON Ltd
CH Property Trustee SUCHET Ltd
CH Property Trustee SWIFT Ltd
CH Property Trustee T DAVIES Ltd
CH Property Trustee TEESSIDE Ltd
CH Property Trustee WESTWOOD Ltd
CH Property Trustee WHARTON Ltd
CH Property Trustee WHITEHEAD Ltd
CH Property Trustee WOOD FAMILY
LTD
CH Property Trustee THORNE LTD
PDJD LTD
Pensions Partnership EFRBS Trustees
Limited
Pensions Partnership SIPP Trustees
Limited
Pensions Partnership SSAS Trustees
Limited
C H Property Trustee CORISANDE Ltd
C H Property Trustee Salter Ltd
CH Property Trustee A Lyons Ltd
CH Property Trustee AHMED Ltd
CH Property Trustee AIZLEWOOD &
CASSON LTD
CH Property Trustee AK TRUST Ltd
CH Property Trustee AKENSIDE Ltd
CH Property Trustee AYERS HODGES
Ltd
CH Property Trustee BAKER Ltd
CH Property Trustee BANDS CAPITAL
Ltd
CH Property Trustee BAYLISS Ltd
CH Property Trustee BINNS & LA
TROBE Ltd
CH Property Trustee BROOKES Ltd
CH Property Trustee BROOKES NO2
LTD
CH Property Trustee BURRAGE Ltd
CH Property Trustee BURT Ltd
CH Property Trustee BUTT Ltd
CH Property Trustee C WHEWELL Ltd
CH Property Trustee CAM Ltd
CH Property Trustee CATE HARVEY Ltd
CH Property Trustee CAULFIELD Ltd
CH Property Trustee CHARLES NIXON
Ltd
CH Property Trustee COMBER Ltd
CH Property Trustee COX Ltd
CH Property Trustee CRONIN Ltd
CH Property Trustee DANIELS Ltd
CH Property Trustee DAVMAC Ltd
CH Property Trustee DEENS &
HEGARTY Ltd
CH Property Trustee DEIBEL Ltd
CH Property Trustee DICKINSON Ltd
CH Property Trustee DIXO0002 Ltd
CH Property Trustee DIXON 2 Ltd
CH Property Trustee DREAMCRAFT Ltd
CH Property Trustee DUXBURY Ltd
CH Property Trustee EDMONDSON-
HANNON Ltd
CH Property Trustee ELLIOTT Ltd
CH Property Trustee ELLIOTT No 2 Ltd
CH Property Trustee ENA SHAW Ltd
CH Property Trustee ENRIGHT&
CUNNINGHAM Ltd
CH Property Trustee EVANS & WALTON
Ltd
CH Property Trustee FORSTER Ltd
CH Property Trustee FALCON LTD
CH Property Trustee FASTSOURCE LTD
Pensions Partnership SIPP Trustees
No 2 Ltd
NOTES TO THE FINANCIAL STATEMENTS
continued
68 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
14
Investments – continued
The registered office address indicator included in the table above reflects the following current registered offices for
each company:
(A)
3 Temple Quay, Temple Back East, Bristol, BS1 6DZ
(B)
153 Princes Street, Ipswich, Suffolk, IP1 1QJ
(C)
Building 3000 Lakeside North Harbour, Portsmouth, PO6 3EN
(D)
55 Maid Marian Way Nottingham NG1 6GE
(E)
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 s479A of the Companies Act 2006.
15
Fair value hierarchy
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 2022
Equity and other variable-yield securities 1,928,047 1,896,459 24,975 6,613
Debt securities and other fixed-income securities 42,519 30,698 10,721 1,100
Cash equivalents 2,217 1,579 638 —
Investment property 1,108,073 — — 1,108,073
Total financial investments and investment
property 3,080,856 1,928,736 36,334 1,115,786
Total Level 1 Level 2 Level 3
£’000 £’000 £’000 £’000
As at 31 December 2021
Equity and other variable-yield securities 2,184,067 2,152,883 24,726 6,458
Debt securities and other fixed-income securities 40,898 23,026 16,483 1,389
Cash equivalents 1,386 — 1,386 —
Investment property 1,316,468 — — 1,316,468
Total financial investments and investment
property 3,542,819 2,175,909 42,595 1,324,315
There have been no significant transfers between level 1, level 2 and level 3 in 2022 or 2021.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 69
15
Fair value hierarchy – continued
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.
All level 3 investments relate to policyholder assets and movements in the value of such assets do not impact on
shareholder reserves.
Equity and Debt securities and
other variable-yield other fixed income Investment
securities securities Property
2022 2022 2022
Level 3 Investments £’000 £’000 £’000
Fair value
At 1 January 2022 6,458 1,389 1,316,468
Net losses for the year recognised in profit
and loss (4,050) (1,067) (175,450)
Purchases/Additions — — 84,724
Disposals — — (117,669)
Transfers into level 3 4,568 778 —
Transfers out of level 3 (363) — —
At 31 December 2022 6,613 1,100 1,108,073
Equity and Debt securities and
other variable-yield other fixed income Investment
securities securities Property
2021 2021 2021
Level 3 Investments £’000 £’000 £’000
Fair value
At 1 January 2021 12,348 1,745 1,208,605
Net (losses)/gains for the year recognised in
profit and loss (7,593) (1,079) 120,416
Purchases/Additions — — 92,456
Disposals — — (105,009)
Transfers into level 3 4,230 941 —
Transfers out of level 3 (2,527) (218) —
At 31 December 2021 6,458 1,389 1,316,468
NOTES TO THE FINANCIAL STATEMENTS
continued
70 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
15
Fair value hierarchy – continued
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.
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 2022 alternative assumptions
Current Increase in Decrease in
fair value fair value fair value
Valuation 2022 2022 2022
Assets Basis/Technique Main assumptions £’000 £’000 £’000
Suspended securities Note 1 Estimated
recoverable
amount 5,500 275 (275)
Unquoted securities Note 1 Price earning
multiple 2,213 111 (111)
Investment property Note 2 Third party
property index 1,108,073 55,404 (55,404)
1,115,786 55,790 (55,790)
Reasonably possible
As at 31 December 2021 alternative assumptions
Current Increase in Decrease in
fair value fair value fair value
Valuation Main inputs 2021 2021 2021
Assets Basis/Technique and assumptions £’000 £’000 £’000
Suspended securities Note 1 Estimated
recoverable
amount 6,315 316 (316)
Unquoted securities Note 1 Price earning
multiple 1,532 77 (77)
Investment property Note 2 Third party
property index 1,316,468 65,823 (65,823)
1,324,315 66,216 (66,216)
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. As at 31 December 2022, all contingent consideration are classified as creditors due within one
year. The total amount payable relates to acquisitions by the Group of Dunstan Thomas and Talbot and Muir during
the year ended 31 December 2022. Contingent consideration payable is wholly classified as Level 3 for fair value
measurement under IFRS 13.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 71
16
Trade and other receivables
Group Company
As at 31 December As at 31 December
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Trade receivables 16,456 16,830 — —
Prepayments and accrued income 12,201 9,116 7 29
Amounts owed by group undertakings — — 294 305
Other receivables 3,202 2,035 20 43
31,859 27,981 321 377
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 from
pension administration segment are fees due from SIPPs and SSASs or due from policyholders in relation to their
investments. These fees are collected 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. Trade receivables from the Fintech segment are primarily made up
of licence and IT consultancy fees which are collected from the customers directly. 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 30 to the
financial statements.
17
Cash and cash equivalents
As at 31 December 2022 and 2021 cash and cash equivalents were as follows:
Group Company
As at 31 December As at 31 December
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Cash at bank and in hand 23,853 31,891 3,232 4,458
Deposits with credit institutions 378,746 376,856 — —
Cash equivalents 2,217 1,386 — —
Cash and cash equivalents 404,816 410,133 3,232 4,458
Bank overdraft (included within Borrowings) (20,306) (23,946) — —
Balance as per Statement of Cash flows 384,510 386,187 3,232 4,458
The Group considers potential expected credit losses on cash and cash equivalents to be insignificant.
18
Trade and other payables
Group Company
As at 31 December As at 31 December
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Trade payables 5,919 8,880 69 57
Taxes and social security costs 5,288 2,775 4 5
Amounts owed to group undertakings — — 314 —
Other payables 1,037 983 — —
Accruals 9,698 8,215 2,498 1,321
21,942 20,853 2,885 1,383
Trade payables are non-interest bearing and are normally settled on 30 day terms.
NOTES TO THE FINANCIAL STATEMENTS
continued
72 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
19
Borrowings
Group Company
As at 31 December As at 31 December
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Current
Bank loans 40,632 46,832 4,565 4,507
40,632 46,832 4,565 4,507
Non-current
Bank loans 34,903 43,957 11,628 15,399
34,903 43,957 11,628 15,399
Total borrowings 75,535 90,789 16,193 19,906
Bank borrowings
The bank borrowings are repayable as follows:
Group Company
As at 31 December As at 31 December
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Within 1 year 40,632 46,832 4,565 4,507
Between 1 year and 5 years 27,137 34,928 11,628 15,399
After more than 5 years 7,766 9,029 — —
75,535 90,789 16,193 19,906
Bank borrowings of the Company are repayable between January 2021 and July 2025 and bear average coupons of
2.25% plus compounded Sterling Overnight Index Average (SONIA) and a credit adjustment spread per annum.
Total borrowings of the Group include liabilities of £59,342k (2021: £70,883k) secured by legal charge over certain
properties held within non-participating investment contracts, and liabilities of £16,193k (2021: £19,906k) secured on
the shares of Curtis Banks Limited, Suffolk Life Pensions Limited, Suffolk Life Annuities Limited and Dunstan Thomas
Group Limited.
The company’s undiscounted borrowing repayable is £4,701k (2021: £4,477k) within one year and £12,814k (2021:
16,836k) over one year.
20
Non-participating investment contract liabilities
All amounts within this note relate to the Group only. There are no non-participating investment contract liabilities
within the Company.
(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 (2021: £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.
2022 2021
Movement in non-participating investment contract liabilities £’000 £’000
As at 1 January 3,836,211 3,585,307
Reserves in respect of new business 202,056 226,312
Amounts paid on surrenders and maturities during the year (327,840) (408,369)
Investment (loss)/income (288,162) 466,811
Expenses (34,372) (33,850)
As at 31 December 3,387,893 3,836,211
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 73
20
Non-participating investment contract liabilities – continued
(a)
Analysis of investment contract liabilities – continued
These relate to:
2022 2021
£’000 £’000
Self-Invested Personal Pensions 2,381,661 2,683,775
Group Managed Funds – Trustee Investment Plans 33,668 45,557
Group Managed Funds 33,619 43,761
Trustee Investment Plans 938,945 1,063,118
As at 31 December 3,387,893 3,836,211
Assets held to cover non-participating investment contracts are detailed under separate notes to the financial
statements.
(b)
Investment contract liabilities – investment income
Year ended 31 December
2022 2021
£’000 £’000
Rents receivable 81,239 69,365
Interest receivable 2,297 2,440
Investment and other income 35,075 29,252
Realised (losses)/gain on investments (29,834) 30,802
Unrealised (losses)/gains on investments (376,939) 334,952
(288,162) 466,811
(c)
Investment contract liabilities – expenses
Year ended 31 December
2022 2021
£’000 £’000
Investment management fees 12,619 11,482
Adviser fees 634 633
Management charges – administration 7,218 7,231
Bank fees and charges 103 73
Professional fees and sundries 12,287 11,602
Bad debts (147) 1,299
Interest payable on bank loans and overdrafts 1,658 1,530
34,372 33,850
(d)
Reserves in respect of new business
2020 2019
£’000 £’000
Gross premiums
Periodic premiums relating to Self-Invested Personal Pensions 1,667 1,600
Single premiums relating to Self-Invested Personal Pensions 136,264 157,012
Single premiums relating to Group Managed Funds – TIPs 2,484 4,049
Single premiums relating to Group Managed Funds 321 848
Single premiums relating to Trustee Investment Plans 61,320 62,803
202,056 226,312
NOTES TO THE FINANCIAL STATEMENTS
continued
74 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
20
Non-participating investment contract liabilities – continued
(e)
Amounts paid on surrenders and maturities during the year
Year ended 31 December
2022 2021
£’000 £’000
Gross claims paid
Lump sums on death 22,934 12,906
Lump sums on pensions vesting 11,242 19,462
Income withdrawals 31,475 33,266
Annuities purchased — 314
Transfers out 248,464 327,238
Surrenders of managed funds – Trustee Investment Plans 13,725 15,183
327,840 408,369
21
Deferred tax liability
Deferred tax liability movement is analysed as follows:
Group
As at 31 December
2022 2021
£’000 £’000
Brought forward liability 3,464 3,790
Net change in temporary differences on equity share based payments (81) 100
Net change in temporary differences on plant and equipment 71 (113)
Net change in temporary differences on intangible assets 748 (313)
Net change in temporary differences on tax losses (988) —
Carried forward liability 3,214 3,464
The deferred tax liability with respect to temporary differences is analysed as follows:
Group
As at 31 December
2022 2021
£’000 £’000
Temporary differences on equity share based payments (250) (169)
Temporary differences on plant and equipment (39) (110)
Temporary differences on intangible assets 4,491 3,743
Temporary differences on tax losses (988) —
3,214 3,464
The deferred tax liability assumes a future corporation tax rate of 19% will be applicable to the Group until 6 April
2023 whereby a new corporation tax rate of 25% will be applicable.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 75
22
Provisions
In-specie
Other Restructuring contributions Group
provision provision provision Total
Provisions £’000 £’000 £’000 £’000
Balance as at 1 January 2021 7 99 402 508
Amounts provided 211 93 11 315
Amounts utilised — (99) — (99)
Amounts released as unutilised — — (93) (93)
Balance as at 31 December 2021 218 93 320 631
Amounts provided — 20 — 20
Amounts utilised — (93) — (93)
Amounts released as unutilised (72) — — (72)
Balance as at 31 December 2022 146 20 320 486
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 of completing this exercise.
By 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.
A contingent liability was also recorded in respect of possible remediation that might be required depending on the
outcome of the review. The estimate of these possible costs at 31 December 2019 was £1,400,000. Having largely
completed the review during 2021, management have been able to quantify the expected remediation costs and
provision of £211,000 has been made to the remaining costs as at 31 December 2021. £68k of this provision was
released in 2022.
Restructuring provision
A £93,000 provision in 2021 has been made to reflect the updated estimate of the impact from the restructuring
activities. This has been fully utilised in 2022.
A new provision of £20k has been raised on the Dundee office dilapidation.
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 customers is estimated at £1.1m inclusive of interest. However, in recognition of the
possibility that some customers may have insufficient assets to settle their share of the cost, the Group recognised
a provision of £0.4m as at 31 December 2020. In 2021, this was revised to £0.3m based on updated information. No
changes have been made on this provision in 2022.
NOTES TO THE FINANCIAL STATEMENTS
continued
76 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
23
Issued capital
Group and Company
2022 2021
£’000 £’000
Allotted, called up and fully paid
Ordinary shares of 0.5p each 332 332
332 332
Number Number
Number of Ordinary shares
Brought forward 66,879,312 66,414,312
Issued during the year — 465,000
Carried forward 66,879,312 66,879,312
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.
24
Reserves
Share premium
This reserve was created on admission to trading on the Alternative Investment Market (“AIM”) and arises on the
difference between the placing price and the par value of Ordinary shares issued. Expenses directly relating to the
issue of new shares in the Company onto the AIM market have been deducted from the share premium account.
Equity share based payments
This reserve arises from share options granted by the Group to certain employees of the Group. Further details are
disclosed in note 25.
Retained earnings
Retained earnings comprise the cumulative realised gains and losses of the Group from each of the individual
combined entities.
As permitted by section 408 Companies Act 2006, the holding Company’s profit and loss account has not been
included in these financial statements. The Company’s loss after tax for the year was £1,400k (2021: profit after tax of
£9,162k).
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 2022, the EBT held 331,562 ordinary
shares in the Company, acquired for a total consideration of £894,250 with a market value of £1,080,892 (2021:
448,296 ordinary shares acquired for a total consideration of £1,209,091 with a market value of £1,192,467). They are
classified as treasury shares in the Consolidated Statement of Financial Position, their cost being deducted from
equity.
25
Share-based payments
Cash-settled share-based payments
In October 2022, an incentive scheme was announced for the Group’s Chairman, David Barral. This incentive has been
accounted for as a cash-settled share-based payment transaction. Although the proposed acquisition by Nucleus
was not announced until January 2023, i.e. after the end of the reporting period, management determined that it was
appropriate to record the estimated incentive payment, an amount of £2.0m, in the year end financial statements, as
it represented the best available estimate of the rewards expected to vest as at 31 December 2022, in accordance
with the relevant International Financial Reporting Standard (IFRS 2 Share-based payment).
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 77
25
Share-based payments – continued
Equity-settled share-based payments
The weighted average exercise price for all options outstanding at 31 December 2022 was 226.95p (2021: 227.29p).
The weighted average exercise price for all options exercised during the year ended 31 December 2022 was 150.88p
(2021: 90.18p).
The weighted average remaining contractual life of all unexercised share options as at 31 December 2022 was 5 years
and 5 months (2021: 6 years and 5 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 2022 was £239k (2021: £93k). The total increase in equity
arising from equity-settled share-based payment transactions for the year ended 31 December 2022 was £239k
(2021: £93k).
The following table sets out each of the Group’s equity share based payments in operation during the year ended
31 December 2022:
Number of Number of
shares under shares under
option at option at Latest
Date of 1 January 31 December Exercise Exercise
Scheme grant 2022 Granted Exercised Lapsed 2022 price Date
SS18 21/05/18 10,641 — (2,008) (8,633) — 268.80p 01/02/22
SS19 21/05/19 112,636 — (68,609) (16,831) 27,196 244.80p 01/02/23
SS20 19/05/20 482,774 — (1,303) (63,654) 417,817 212.80p 01/02/24
SS21 15/06/21 319,306 — — (62,498) 256,808 226.40p 01/02/25
SS22 07/06/22 — 278,172 — (38,968) 239,204 208.00p 01/02/26
CSOP16A 14/09/16 171,616 — — (98,722) 72,894 267.00p 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 26/06/27
CSOP20 08/04/20 345,325 — — (133,606) 211,719 217.00p 08/04/30
CSOP21 27/04/21 427,125 — — (126,368) 300,757 283.00p 27/04/31
LTIP18A 18/09/18 5,488 — (5,488) — — 0.00p 18/09/28
LTIP18B 05/10/18 13,890 — (13,890) — — 0.00p 05/10/28
LTIP20A 14/09/20 750,000 — — (250,000) 500,000 217.00p 14/09/30
LTIP20B 14/09/20 750,000 — — (250,000) 500,000 217.00p 14/09/30
LTIP22 16/11/22 — 72,790 — — 72,790 252.50p 27/04/26
EBS20 08/04/20 25,436 — (25,436) — — 0.00p 08/04/30
4,486,229 350,962 (116,734) (2,121,272) 2,599,185
Of the total 2,599,185 shares under option as at 31 December 2022, 82,816 were exercisable.
SS16, SS17, SS18, SS19, SS20, SS21, SS22
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 & CSOP21
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 ended 31 December 2022, four key management personnel of the Group held options under the CSOP.
The CSOP is a performance based option grant.
LTIP17, LTIP18A, LTIP18B, LTIP20A, LTIP20B & LTIP22
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 ended
31 December 2022, two key management personnel of the Group held options granted under the LTIP in 2017 and
2018.
Vesting of LTIP awards is subject to satisfaction of performance criteria as described in the Corporate Governance
Report on page 31.
NOTES TO THE FINANCIAL STATEMENTS
continued
78 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
25
Share-based payments – continued
EBS20
The Group previously operated an executive bonus scheme through which a proportion of annual bonus amounts
over a certain threshold for certain executives were provided as share options providing those individuals with the
ability to subscribe to ordinary shares in the Company. As at the year ended 31 December 2022, the remaining
options were fully exercised.
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 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
SS18 21/05/2018 3 years 84.09p 316.00p 0.50% 37.39% 1.98%
SS19 21/05/2019 3 years 79.37p 308.00p 0.75% 33.05% 2.60%
SS20 19/05/2020 3 years 60.43p 271.00p 0.10% 29.60% 3.32%
SS21 15/06/2021 3 years 63.57p 275.00p 0.10% 34.10% 3.27%
SS22 07/06/2022 3 years 70.48p 280.00p 1.00% 29.18% 3.23%
CSOP16A 14/09/2016 1.5 years 45.58p 267.00p 0.25% 39.01% 1.00%
CSOP16B 15/12/2016 3 years 52.42p 201.00p 0.25% 42.95% 1.00%
CSOP17 26/06/2017 3 years 63.54p 260.00p 0.25% 43.41% 1.50%
CSOP20 08/04/2020 3 years 31.82p 217.00p 0.10% 32.82% 4.15%
CSOP21 27/04/2021 3 years 48.80p 283.00p 0.10% 34.89% 3.18%
LTIP18A 18/09/2018 3 years 262.35p 287.00p 0.75% 36.05% 2.18%
LTIP18B 05/10/2018 3 years 265.09p 290.00p 0.75% 35.98% 2.18%
LTIP20A 14/09/2020 3 years 31.17p 215.00p 0.10% 33.09% 4.19%
LTIP20B 14/09/2020 4 years 33.78p 215.00p 0.10% 33.09% 4.19%
LTIP22 16/11/2022 3 years 40.02p 258.00p 3.42% 26.88% 3.44%
EBS20 08/04/2020 2 years 194.80p 217.00p 0.10% 32.82% 4.15%
26
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 which is under active proposal to be struck off as a company as at
31 December 2022.
As at 31 December
2022 2021
£’000 £’000
Share of net assets brought forward 10 10
Strike off (10) —
Share of net assets carried forward — 10
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 79
27
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
2022 2021
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: 366 2,192
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
2021 2020
Attributable to non-participating investment contracts £’000 £’000
Future aggregate minimum lease receivables under non-cancellable operating leases:
Within 1 year 69,428 71,719
Within 2 – 5 years 126,497 133,337
After more than 5 years 76,708 82,306
272,633 287,362
There are no capital expenditure contracted for at the end of the reporting period but not recognised as liabilities.
As disclosed in note 35, the Group is currently progressing with the acquisition by Nucleus. Regardless of whether
completion is successful, a minimum transaction costs of £1,703k will be incurred in 2023.
28
Pension costs – defined contribution
Year to 31 December
2022 2021
£’000 £’000
Contributions payable by the Group for the year 2,299 2,327
29
Dividends
Year to 31 December
2022 2021
£’000 £’000
Ordinary dividend declared and paid 5,984 5,997
5,984 5,997
A final dividend in respect of the year ended 31 December 2021 of 6.5p per share was proposed by reference to
audited distributable reserves as at 31 December 2021 and was paid on 1 June 2022.
An interim dividend in respect of the year ended 31 December 2022 of 2.5p per share was declared by reference to
audited distributable reserves as at 31 December 2021 and paid on 11 November 2022.
NOTES TO THE FINANCIAL STATEMENTS
continued
80 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
30
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.
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 £23,853k (2021: £31,891k) 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 £16,193k (2021: £19,906k). 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
2022
£ Sterling +100 (115)
£ Sterling –100 115
2021
£ Sterling +100 (282)
£ Sterling –100 282
In addition, a source of revenue is based on the value of customer cash under administration. The Group has an
indirect exposure to interest rate risk on these cash balances held for customers. The Group manages this risk
through a central treasury function which monitors customer 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 customers’ SIPPs because customers’ 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.
NOTES TO THE FINANCIAL STATEMENTS
continued
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 81
30
Financial risk management – continued
Credit risk – continued
The Group’s credit quality ratings as at 31 December 2022 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 5,101 (85) 5,016
Satisfactory quality 10.01 – 30.00 2,113 (421) 1,692
Low quality 30.01 – 99.99 1,083 (760) 323
No expected recovery 100.00 286 (286) —
8,583 (1,552) 7,031
The Group’s credit quality ratings as at 31 December 2021 in respect of shareholder trade receivables are set out
below:
Trade receivables
IFRS 9 gross carrying Net trade
loss rate amount Loss allowance receivables
% £’000 £’000 £’000
Good quality 0.00 - 10.00 5,326 (125) 5,201
Satisfactory quality 10.01 - 30.00 1,903 (518) 1,384
Low quality 30.01 - 99.99 1,675 (1,174) 502
No expected recovery 100.00 — — —
8,904 (1,817) 7,087
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 customers’ SIPPs is mostly driven by the customers’ 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 customers where necessary.
Trade receivables of £16,456k at 31 December 2022 (2021: £16,830k) includes £9,423k (2021: £10,573k) 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.
NOTES TO THE FINANCIAL STATEMENTS
continued
82 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
30
Financial risk management – continued
Credit risk – continued
Changes in macroeconomic factors may impact the Group’s customers’ 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 2022 in loss rates £’000
Loss rate 10% (830)
Loss rate (10%) 405
Effect on profit
Increase/(decrease) before tax
Year ended 31 December 2021 in loss rates £’000
Loss rate 10% (731)
Loss rate (10%) 489
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 19 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 £1,111k. The undiscounted value of lease liabilities due >1 year is £7,088k. 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.
31
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 2022 was £69.4m (2021: £81.6m). 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 2022 Curtis Banks Group PLC | 83
NOTES TO THE FINANCIAL STATEMENTS
continued
32
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. The Group estimates the fair value of the remaining contingent consideration payable is
£4.4m (2021: £7.7m).
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
2022 to be £1.4m (2021: £3.2m), and this is expected to be settled during H1 2023.
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 determined the fair value of the remaining contingent
consideration at 31 December 2022 to be £3.0m (2021: £4.5m), which was subsequently fully settled in February 2023.
33
Off Balance Sheet Cash
The Group administers cash held in SIPP bank accounts on behalf of its SIPP customers. Given the nature of these
customer 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 2022 totalled £888m (2021: £899m).
34
Related parties
At the year end, Curtis Banks Group PLC owed £297k to Curtis Banks Limited (2021: due £305k from Curtis Banks
Limited). The movement in the prior year related to share issue proceeds Curtis Banks Limited received on behalf of
Curtis Banks Group PLC of £291k. The balance in the current year primarily related to expenses recharged. The total
amount of expenses recharged by Curtis Banks Limited in the year amounted to £299k (2021: £243k).
During the year ended 31 December 2022, Suffolk Life Group Limited paid dividends totalling £6,600k to Curtis Banks
Group PLC (2021: £6,550k). During the year ended 31 December 2022, Curtis Banks Limited paid dividends totalling
£4,600k to Curtis Banks Group PLC (2021: £3,700k).
During the year ended 31 December 2022, Dunstan Thomas Group paid dividends totalling £180k to Curtis Banks
Group PLC (2021: £1,668k). During the year ended 31 December 2022, Talbot and Muir Limited paid dividends totalling
£3,200k to Curtis Banks Group PLC (2021: £1,750k).
During the year ended 31 December 2022, Dunstan Thomas Holdings Limited provided software licence and support
services to Surya Solutions Limited, which generated £1,587k of revenue (2021: £2,020k), with £264k trade receivables
due on 31 December 2022 (2021: £425k) that was fully received by the date of this report.
During the year ended 31 December 2022, Dunstan Thomas Holdings Limited provided software licence, hosting and
support services to Enegen power systems Limited, which generated £192k of revenue (2021: £254k), with £28k trade
receivables due on 31 December 2022 (2021: £6k) that was fully received by the date of this report.
During the year ended 31 December 2022, Dunstan Thomas Holdings Limited provided software licence, third party
administration outsourcing, hosting and support services to Spire platform solutions Limited, which generated £318k
of revenue (2021: £455k), with £22k trade receivables due on 31 December 2022 (2021: £92k) that was fully received by
the date of this report.
Staff costs in relation to directors and key management personnel of the Group are disclosed in note 7.
The Chairman incentive payment of £2.0m upon completion of the Nucleus transaction is also a related party
transaction. More information has been disclosed in note 25 Share based payments.
35
Post balance sheet events
On 6 January 2023, the boards of Curtis Banks Group PLC, and Nucleus Clyde Acquisition Limited (“Bidco”), a wholly-
owned subsidiary of Nucleus Financial Platforms Limited (“Nucleus”), announced that they have reached agreement
on the terms of a recommended cash offer by Bidco to acquire the entire issued share capital of Curtis Banks for 350
pence per share. On 27 February 2023, Curtis Banks’s shareholders voted in favour of the proposed acquisition. Both
parties are progressing the relevant regulatory and court approval processes and the acquisition is expected to
complete, subject to these approvals, in the summer of 2023.
Should the acquisition be completed, Curtis Banks Group Plc will be de-listed from the AIM market. We have formally
communicated to all of the relevant share option holders within our Save As You Earn schemes, Long Term Incentive
Plans, and Company Share Option Plans on the indication of the acquisition and potential de-listing from the public
exchange. The options under these schemes will vest and become exercisable to the extent determined by the
Remuneration Committee from the Sanction Date (as agreed by the court) for up to a month. The options will lapse
automatically one month after the Sanction Date if not earlier, in accordance with the specific term of each scheme.
NOTES TO THE FINANCIAL STATEMENTS
continued
84 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
35
Post balance sheet events – continued
The aggregate fees and expenses expected to be incurred by the Group with the acquisition are expected to be
approximately £6.2m, the breakdown of which is published in the Scheme document available on the Curtis Banks
website at www.curtisbanks.co.uk/investors/pc-communications-library.
As a result of the proposed acquisition, the Curtis Banks Group has decided to put a system migration that had been
planned for the Company on hold indefinitely. These events indicate that some of the internally generated intangible
assets for Computer Software of the Company may be impaired. An assessment is underway to consider whether
such impairment exists, and the total maximum quantum of such a charge over the assets if so would be £1.5m for
the Group.
The potential takeover by Nucleus is considered to be a non-adjusting post balance sheet event.
In April 2023, the Group drew down the remaining £4m available as part of its existing Revolving Credit Facility.
36
Control
There is no one ultimate controlling party.
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 85
NOTES TO THE FINANCIAL STATEMENTS
continued
COMPANY INFORMATION
86 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
Directors
David Barral – Chairman
Peter Docherty – Chief Executive Officer
Dan Cowland – Chief Financial Officer
Bill Rattray – Non-Executive Director
Christopher Mills – Non-Executive Director
Alastair Clarkson – Non-Executive Director
Susan McInnes – Non-Executive Director
Registered Office
3 Temple Quay
Temple Back East
Bristol
BS1 6DZ
Registered Number
07934492
Nominated Adviser and Broker
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
Independent Auditors
PricewaterhouseCoopers LLP
2 Glass Wharf
Temple Quay
Bristol
BS2 0FR
Registrars
Computershare PLC
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
Joint Broker
Singer Capital Markets
1 Bartholomew Lane
London
EC2N 2AX
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 87
GLOSSARY
Adjusted diluted EPS
This is calculated by taking adjusted profit before tax for the financial period, deducting an effective tax rate of 19%
(2021: 19%), and dividing the total by the diluted weighted average number of shares in issue for the financial period.
Adjusted profit before tax
This is calculated by taking profit before tax for the financial period and adding back amortisation and impairment
on acquired intangible assets, along with adjusting items.
Adjusted operating profit
This is calculated by taking operating profit for the financial period and adding back amortisation and impairment
on acquired intangible assets, along with adjusting items.
Adjusted operating cost
This is calculated as the difference between revenue and adjusted operating profit.
Adjusted operating margin
This is calculated by taking operating profit for the financial period and adding back amortisation and impairment
on acquired intangible assets, along with adjusting items, then dividing this total by revenue for the financial period.
Annualised gross organic growth rate
A calculation derived by taking new SIPPs obtained in the financial period from organic growth, dividing by the total
number of months in the financial period, and multiplying this by 12 to obtain an annualised quantity of new SIPPs
obtained. The annualised quantity is then divided by the brought forward quantity of SIPPs held to derive the
annualised gross organic growth rate.
Annualised attrition rate
A calculation derived by taking SIPPs lost in the financial period from attrition, dividing by the total number of
months in the financial period, and multiplying this by 12 to obtain an annualised quantity of SIPPs lost. The
annualised quantity is then divided by the brought forward quantity of SIPPs held to derive the annualised attrition
rate.
AUA
Assets Under Administration.
Full SIPP
A pension that facilitates the full range of investment solutions. This can encompass anything that is permitted
within a Mid SIPP, plus others such as commercial property, directly-held investments, specialist investments such as
unlisted shares and unregulated collectives, multiple cash deposit accounts, physical gold, National Savings &
Investments, or structured products.
Mid SIPP
A pension that facilitates the use of one (or more) streamlined investment solution. For example, a discretionary fund
manager, or a fund platform/supermarket, or a stockbroker account, and a cash deposit account if required.
Net shareholder cash (after debt)
This is calculated by taking shareholder only amounts as split within the illustrative condensed consolidated
statement of financial position provided in the supplementary unaudited information for cash and cash equivalents,
and deducting borrowings.
SUPPLEMENTARY UNAUDITED INFORMATION
88 | Curtis Banks Group PLC Annual Report and Consolidated Financial Statements for the year ended 31 December 2022
2022 2022 2022 2021
£’000 £’000 £’000 £’000
ASSETS Group Total Policyholder Shareholder Shareholder
Non-current assets
Intangible assets 77,362 — 77,362 89,814
Investment property 1,108,073 1,108,073 — —
Property, plant and equipment 8,012 — 8,012 8,636
Investments 1,970,567 1,970,567 — —
3,164,014 3,078,640 85,374 98,450
Current assets
Trade and other receivables 31,859 11,945 19,914 15,144
Cash and cash equivalents 404,816 380,963 23,853 31,892
Current tax asset 371 122 249 835
437,046 393,030 44,016 47,871
Total assets 3,601,060 3,471,670 129,390 146,321
LIABILITIES
Current liabilities
Trade and other payables 21,942 10,501 11,441 9,455
Deferred income 30,943 13,934 17,009 15,819
Borrowings 40,632 36,067 4,565 4,507
Lease liabilities 1,040 — 1,040 964
Provisions 484 — 484 453
Contingent consideration 4,355 — 4,355 2,467
99,396 60,502 38,894 33,665
Non-current liabilities
Borrowings 34,903 23,275 11,628 15,399
Lease liabilities 6,290 — 6,290 6,774
Provisions 2 — 2 178
Contingent consideration — — — 5,199
Non-participating investment contract
liabilities 3,387,893 3,387,893 — —
Deferred tax liability 3,214 — 3,214 3,464
3,432,302 3,411,168 21,134 31,014
Total liabilities 3,531,698 3,471,670 60,028 64,679
Net assets 69,362 — 69,362 81,642
Issued capital 332 — 332 332
Share premium 58,087 — 58,087 58,087
Equity share based payments 3,079 — 3,079 2,840
Treasury shares (1,284) — (1,284) (1,382)
Retained earnings 9,148 — 9,148 21,755
69,362 — 69,362 81,632
Non-controlling interest — — — 10
Total equity 69,362 — 69,362 81,642
Unaudited IFRS Consolidated Statement of Financial Position as at 31 December 2022 split
between insurance policy holders and the Group’s shareholders
Annual Report and Consolidated Financial Statements for the year ended 31 December 2022 Curtis Banks Group PLC | 89
SUPPLEMENTARY UNAUDITED INFORMATION
continued
2022 2022 2022 2021
£’000 £’000 £’000 £’000
Group Total Policyholder Shareholder Shareholder
Cash flows from operating activities
(Loss)/profit before tax (3,740) — (3,740) 9,322
Adjustments for:
Depreciation 1,645 — 1,645 1,806
Amortisation and impairments 14,631 — 14,631 2,934
Finance costs 1,695 — 1,695 1,800
Share based payment expense 239 — 239 93
Fair value gains on movement in contingent
consideration (1,123) — (1,123) (1,870)
Fair value loss/(gains) on
financial investments 202,325 202,325 — —
Additions of financial investments (620,331) (620,331) — —
Disposals of financial investments 672,404 672,404 — —
Fair value losses on investment properties 175,450 175,450 — —
Increase in liability for investment contracts (448,318) (448,318) — —
Changes in working capital:
(Increase)/decrease in trade and other
receivables (3,911) 892 (4,803) (737)
Increase/(decrease) in trade and other
payables 2,032 (1,104) 3,316 2,631
Taxes paid (2,514) — (2,514) (2,510)
Net cash flows from operating activities (9,516) (18,682) 9,166 13,469
Cash flows from investing activities
Payments for intangible assets (2,179) — (2,179) (1,670)
Purchase of property, plant & equipment (683) — (683) (270)
Purchase of investment property (84,724) (84,724) — —
Net Sale/(purchase) of shares in the Group
by EBT 98 — 98 (641)
Receipts from sale of investment property 117,669 117,669 — —
Net cash flows from acquisitions (2,687) — (2,687) (255)
Net cash flows from investing activities 27,494 32,945 (5,451) (2,836)
Cash flows from financing activities
Equity dividends paid (5,984) — (5,984) (5,997)
Net proceeds from issue of ordinary shares — — — 290
Net decrease in borrowings (11,901) (7,901) (4,000) (4,000)
Principal element of lease payments (894) — (894) (762)
Interest paid (876) — (876) (781)
Net cash flows from financing activities (19,655) (7,901) (11,754) (11,250)
Net (decrease) / increase in cash and cash
equivalents (1,677) 6,362 (8,039) (617)
Cash and cash equivalents at the beginning
of the year 386,187 354,295 31,892 32,509
Cash and cash equivalents at the end of
the year 384,510 360,657 23,853 31,892
Unaudited IFRS Consolidated Statement of Cash Flows for the year ended 31 December 2022
split between insurance policy holders and the Group’s shareholders
Linkway Financial Printers
Typeset & Printed in London (UK) 17531
CURTIS BANKS GROUP PLC
3 Temple Quay
Temple Back East
Bristol
BS1 6DZ
Registered Number
07934492
Your future, our focus.
curtisbanks.co.uk