Nucleus overcomes market volatility to boost annual sales

● Fintech’s first period of trading on Aim reveals rise in revenue, profit and AUA

Nucleus Financial Group has hailed a strong full-year performance in “volatile” market conditions in its first period of trading on London’s junior market.

The Edinburgh-based fintech, which floated on the Alternative Investment Market in July, recorded growth in assets under administration (AUA), revenue and customer numbers in the year to 31 December.

AUA rose 2.3 per cent to £13.9 billion, shaking off a challenging investor backdrop which saw the FTSE All-share Index decline by 13 per cent and the FTSE 100 Index drop 12.5 per cent across 2018.

Revenue climbed to £49.4 million, up from £45.5m in 2017.

The fintech, which has developed software platforms that enable financial advisers to provide online access to clients for investments across ISAS, pensions and bond accounts, enjoyed a 6 per cent increase in the number of active advisers to almost 1,400.

This drove a 7 per cent rise in customer numbers to more than 93,700 as of 31 December.

Nucleus highlighted an increase in its preferred adjusted Ebitda (earnings before interest, taxes, depreciation, and amortisation) metric, which grew by 33 per cent to £8.3m.

The business also pointed to benefits from a restructure of its business operations which it predicts will allow for greater control over its platform technology and speed up the rate of product development.

Chief executive David Ferguson, who founded the fintech with the backing of a number of financial advice firms in 2006, told The Scotsman that this gave a solid grounding for the future, despite ongoing uncertainty in the sector.

He said: “We’re optimistic about our own prospects rather than the stability in the outside world, as some of the reasons for the market headwinds haven’t entirely disappeared yet.”

Ferguson said that the bulk of the firm’s efforts will be targeted toward growing adviser and customer numbers, adding: “We grew the audience last year, we’d hope to do the same over the course of the coming year and that in turn takes the lead to growth over time. We’re feeling very buoyant about the future.”

At the year-end Nucleus held £17.7m in cash and recorded no debt. It recommended a final dividend of 3.6p per share, taking full-year dividend post-admission to Aim to 5p per share.

John Moore, senior investment manager at Brewin Dolphin Scotland, said: “It’s a relatively positive set of results from Nucleus Financial, given the volatile market environment in 2018.

“In its previous statement, the company said that advisers were feeling cautious and, although market values have recovered since then, it remains an uncertain backdrop.

“Key to the business’s future will be continuing to grow users, or acquiring other platforms and fintechs to drive economies of scale.”