Nucleus  

Nucleus profits cut by half during 2020

Nucleus profits cut by half during 2020

Nucleus has seen its profits slump during 2020 after it continued to invest in the platform during the Covid-19 pandemic.

The company posted a profit of £3.2m during 2020 compared to £6m during 2019 - a fall of 46 per cent.

Nucleus chief executive David Ferguson said the company's profits had been hit by two factors, the first one being the fall in markets during the pandemic.

He added: "Perhaps most significantly, we made a clear and early decision to continue to invest through the pandemic and while this has contributed to improved user sentiment (and outlook) it had a predictably negative impact on profit in the short term.

"I am entirely comfortable this was the right decision and although adjusted [earnings before interest, tax, depreciation and amortisation] was down 27.9 per cent to £5.7m most of that was achieved in [the second half of the year] during which we outperformed our expectations."

Ferguson added the company had benefitted from lower costs in some areas, such as travel and entertainment.

Nucleus saw its assets under administration increase by 7.9 per cent to £17.4bn while revenues were broadly flat, increasing by 1.6 per cent to £46m.

Nucleus is currently subject to a £145m takeover offer by James Hay, which Nucleus shareholders will vote on later this month.

As part of the deal it is expected Nucleus will be shifted from the Bravura technology it currently uses to FNZ, a platform tech firm with which James Hay has a long-term strategic partnership.

Despite this, Ferguson said Nucleus would push forwards with its plans to upgrade its technology with Bravura.

He said: "This work will be carried out in collaboration with our long-term partners Bravura Solutions and is expected to result in our platform being hosted in AWS by the end of this year. This infrastructure change is expected to improve our flexibility, resilience and scalability."

During 2020 Nucleus also launched its discretionary fund management offering, IMX, which it said had become the third highest DFM on its platform for net inflows.

Ferguson said: "We have now completed the reshaping of our operating model and subject to any changes that may be triggered by a change in ownership I believe we are very well positioned for further growth."

damian.fantato@ft.com