Simplybiz has swung from a £3.43m pre-tax profit in 2013 to a £5.49m pre-tax loss for 2014.
The loss came despite the business seeing turnover increase from £17.58m in 2013 to £26.75m in 2014.
Explaining the loss, Matt Timmins, joint managing director of the Simplybiz Group, said group turnover increased and continued to make significant investment in new business areas, namely serving the auto enrolment market and an increasing client base in the lending, consumer credit and estate planning sectors.
The Huddersfield-based IFA support services provider’s finances were hit last year by a provision of £3.87m being made against loan and trading balances owed by associate undertakings and joint ventures.
A total of £300,505 was also set aside against amounts owed from Simplybiz Employee Benefit Trust as bosses decided the balance was not recoverable in the forseeable future.
Mr Timmins said in relation to the loan to national advice business Sandringham it was not unusual for Simplybiz to write down loans or investments made to businesses they are connected with, especially those in the growth and investment phase of their development.
The national financial advice business backed by Ken Davy, officially opened its doors for business in 2012.
At the time of the launch Mr Davy, who is chairman for Simplybiz and nicknamed the ‘founding father of networks’, said Sandringham was the most important venture for financial advisers since the launch of SimplyBiz a decade ago.
Mr Timmins said the write down of the loan to Sandringham was in line with accounting standards and Simplybiz’s own internal accounting policies.
He said: “We are also very pleased to report continued growth in membership for the Group with an increase of 5.7 per cent in our financial services customer base.
“The published results themselves are impacted significantly by certain one off write downs or impairments which are covered in detail in the accounts. Exceptional item losses totalling £7.2m have resulted in an accounting loss for the group however these are not ‘in-year’ from a cash perspective and they relate to several previous years of investment or book-value adjustments which are subject to review in future periods.
“During 2014 we achieved an increase in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of 105 per cent, while growth in turnover and EBITDA from existing business areas is up over 10 per cent.
“Growth from new business areas and acquisitions sees a turnover increase of 42 per cent and an EBITDA increase of 20 per cent.”
The results also showed how Simplybiz is continuing to grow.
As of the end of 2014, the group served more than 5,500 advisers from across 2,485 firms, 580 will writers and probate associates plus 400 consumer and business credit firms.
In 2014 the group extended its services into consumer credit and bosses said they expect the group will see “strong growth from the FCA’s newest sector.”
New Model Business Academy surpassed 15,000 registered individuals in 2014 and bosses pointed out “this brings a new client bank and further cross-sell opportunities to the business.”
During 2014, the groups’ technical team received more than 10,000 calls per month, conducted more than 2,500 compliance visits on site with clients and checked more than 4,500 files.
emma.hughes@ft.com
