Nucleus profits jump in tough year for platforms

CEO describes market outlook as positive for ‘better quality advisers’


Wrap platform provider Nucleus adjusted profits before tax jumped 32.8% to £7.7m in its annual results, following a “tough year” for platforms.

In its first set of results since listing on AIM last July, Nucleus delivered strong financial performance with net revenue growth of 9.6% reaching £43.2m, despite volatile markets.

However, Nucleus faced a bleak fourth quarter which saw net inflows for the year ended 31 December 2018 fall to £1.193bn from £1.668bn.

Clive Waller, managing director at CWC Research, said: “It’s been a tough year for many platforms both internally (replatforming) and externally (market corrections). However, Nucleus is a well-run business.

“They deal with high quality advisers and listen to them rather than white noise. Profits up nearly a third and net flows nearly 10% tells its own story,” Waller said.

While 2018 appeared to be a more challenging year than the prior year, the advised platform market grew 3% to £364bn at the end of the year, according to the Fundscape Platform report published in March 2019.

‘Market outlook positive for better quality advisers’

Despite the challenging market environment, Nucleus said it added over 8,600 new customers, helping grow assets under administration (AUA) by 2.3% to £13.9bn and grow adjusted Ebitda to £8.3m.

The platform said it also welcomed 43 new firms and 172 new advisers as platform users and this group, together with existing advisers and customers, is expected to contribute positively to future inflows.

David Ferguson (pictured), founder and CEO of Nucleus, said: “We expect the changes to our operating model to substantially accelerate our product development through 2019 and beyond and this has already been evidenced through a further Sonata upgrade and delivery of a new Junior Isa product in the first quarter following the reporting period.”

“It was also pleasing to see growth across most of our key performance indicators in the year, including growth in AUA, revenue, profit, customers, accounts and advisers using the platform,” he added.

“Despite the sector headwinds in the latter half of the year, we view the market outlook as positive for better quality advisers and those that provide services to those advisers and we are confident in our ability to deliver on our future plans.”

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