NUCLEUS Financial has said it still expects to increase employee numbers this year although it has suspended dividend payments amid huge uncertainty about the impact of the coronavirus on markets.
Edinburgh-based Nucleus has seen the total value of the funds that people administer using its online platforms plunge amid sharp falls on equity markets this year.
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Noting significant uncertainty in global markets Nucleus said yesterday it is too early to estimate the impact of the pandemic on the company’s’ performance.
“In light of the exceptional and open-ended uncertainty caused by the Covid-19 pandemic and the rapidly changing environment, the board has decided, in the interests of prudence, not to recommend a dividend until there is more certainty around the term and impact on markets, investor confidence and revenue,” the company told investors.
However, chief executive David Ferguson said Nucleus aims to recruit more technology specialists in the belief the long-term growth prospects for the market it serves remain strong.
“We operate in a sector which is structurally growing and is expected to continue to do so for some years,” said Mr Ferguson.
The company is benefiting from changes that mean more people will be saving for retirement. They will be required to take greater responsibility for managing their savings than in the days when pensions based on final salaries were common.
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Nucleus expects to increase employee numbers by around 12 during the rest of the year, from 245 currently.The focus will be on technology specialists.
The company has moved to home working. Mr Ferguson said the process has gone smoothly.
Nucleus has not placed any staff on furlough.
Mr Ferguson was speaking after Nucleus posted a £6 million after tax profit for 2019, against £4.8m for 2018.
The company had been due to release the results in March. It was one of a number that delayed publication of their results at the request of the Financial Conduct Authority amid uncertainty about the impact of coronavirus.
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The total assets under administration (AUA) on Nucleus’s systems increased to £16.1 billion at December 31, from £13.9bn at the preceding year end.
The value had fallen to £14bn at March 31.
Market movements led to a £2.4 billion fall in AUA.
This was offset by £0.27bn inflow, net of withdrawals.
Mr Ferguson confirmed Nucleus recorded positive net flows in every month during the first quarter. Flows were positive last week.
The company is generating cash every day.
It had £18.5m cash at the year end and no debt putting it in a strong position to cope with challenging conditions.
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Nucleus paid a 1.5p per share interim dividend.
It paid a final dividend of 3.6p for 2018.
When the company was admitted to the Aim stock market in 2018 Nucleus said it expected to pay out up to 70% of annual profits in dividends.
Nucleus Financial shares closed up 8.5p at 132.5p.
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