ANNUAL REPORT & ACCOUNTS 2019 Customer-led. Data-driven. Innovation. The SimplyBiz Group provides essential support services, software and data that enable professional financial advisers, financial intermediaries and product providers to deliver better outcomes for their customers. As a leading independent provider of regulatory support and FinTech software, our understanding of the changing regulatory landscape and our deep insights into the needs of customers, advisers and product providers enables us to add unique value to the retail financial services sector. www.simplybizgroup.co.uk IN THIS REPORT Strategic report Governance Financial statements 1 Highlights 18 Board of Directors 31 Independent auditor’s report 2 Introduction 20 Corporate governance report 37 Consolidated statement of profit or loss and 4 Chairman’s statement 23 Audit Committee report other comprehensive income 6 Joint Chief Executive Officers’ statement 24 Nomination Committee report 38 Consolidated statement of financial position 10 Business model 26 Directors’ remuneration report 39 Company statement of financial position 12 Markets 28 Directors’ report 40 Consolidated statement of changes in equity 13 Our strategy 30 Statement of Directors’ responsibilities 41 Company statement of changes in equity 14 Financial review 42 Consolidated statement of cash flows 16 Risk management report 43 Notes 79 Notice of annual general meeting 88 Company information Strategic report Highlights FINANCIAL HIGHLIGHTS FY19 HIGHLIGHTS: Revenue Adjusted EBITDA* • Successful strategic acquisition of Defaqto (£000) (£000) • Strong progress on software development and deployment £62,774k £17,004k +23.8% +48.9% • Strong growth in value per intermediary customer • Strong increase in mortgage completions 17,004 62,774 50,686 • Strong cost control maintaining strong operating margin 11,419 44,066 9,543 17 18 19 17 18 19 Operating profit Adjusted profit (£000) after tax* (£000) £12,002k £12,378k +77.6% +48.1% 12,378 12,002 8,803 8,361 6,757 5,307 17 18 19 17 18 19 See more on pages 6 to 9 Basic EPS Adjusted EPS* (p) (p) 9.25p 13.40p +133.8% +15.3% 9.25 13.40 8.39 11.62 9.30 The SimplyBiz Group is 3.96 rooted in its unwavering commitment to the delivery 17 18 19 17 18 19 of the highest-quality * A reconciliation of non-GAAP measures presented to the GAAP measures is provided in notes 9 and 14. compliance support to all who use our services.” Ken Davy Non-Executive Chairman See more on pages 4 to 5 Annual report and accounts 2019 The SimplyBiz Group plc 1 Strategic report Introduction About us The SimplyBiz Group encompasses 13 key Our brands brands that share a core philosophy of enabling better outcomes SimplyBiz Services is the cornerstone upon for consumers, which The SimplyBiz Group of companies was built. The business launched in 2002 The New Model Business Academy was intermediaries and with a groundbreaking proposition designed launched in 2008 as a unique and product providers. to provide directly authorised financial groundbreaking not-for-profit organisation, advisers with a new level of support and dedicated to the training and development service previously unseen in this sector. of financial advisers and their support staff. Established in 2004, SimplyBiz Mortgages The Consumer Credit Centre was created in has grown to be one of the top three response to the 2014 change in regulation mortgage clubs in the UK, supporting that would impact companies in this market over 1,600 mortgage advisers as at and require full FCA regulation. 3,700 31 December 2019. firms receiving regulatory, business and software services Launched in January 2018, The Financial Intermediary & Broker Association (“FIBA”) 1,900 SimplyBiz Investment Services provides the is a new membership organisation dedicated firms receiving support services and software an adviser to supporting all types of professional FinTech software firm needs to deliver quality client outcomes. finance intermediaries in growing their businesses and delivering excellent 9,500 products and services to their clients. total users of our FinTech platform (5,800 who were not previously customers of the Group) £16bn of mortgage lending through our Club 2 The SimplyBiz Group plc Annual report and accounts 2019 Strategic report Our brands Gateway Surveyors is the combination of our three former surveying businesses (Gateway Verbatim Asset Management is The Acquired in 2019, Defaqto is an independent Surveyors, Landmark Surveyors and Sonas SimplyBiz Group’s investment offering and financial information business, with over 20 Surveyors) who have joined into one team of was launched in 2010 with a simple remit – years’ experience helping financial institutions, highly experienced RICS qualified surveyors, to deliver against client expectations. financial advisers and consumers make better bringing together the expected professional informed decisions. Its independent fund Each of the risk-managed, multi-asset, ethics and standards of the Royal Institution and product information helps banks, insurers investment portfolios have a clear mandate of Chartered Surveyors combined with a and fund managers with designing and that maps to the financial adviser’s straightforward approach to reporting that promoting their propositions. Defaqto supports recommendations. is designed to make the property buying delivery of financial advice with Engage Core, process easier for the consumer. our end-to-end financial planning tool. Founded in 1992 to support financial advisers Zest is an award-winning provider of software Signature delivers compliance and support working in partnership with legal firms, SIFA is for employee benefits communication, services designed to meet the needs of recognised as a professional standards leader enrolment and administration which has larger advisory and wealth management by both the Law Society and the Financial positioned itself firmly at the front of the specialists. Launched in 2018, Signature Conduct Authority. workplace technology market. offers a bespoke approach for these clients whilst also offering the benefit of access to the wider Group expertise and support. Established in 2000, Compliance First is Scotland’s premier provider of compliance and business support services to directly APS Legal & Associates is one of the largest authorised financial advisers. Compliance estate planning and will writing companies First supports advisers based in Scotland, in the UK, providing high standards of the North of England and Northern Ireland Quality, Expertise and Professionalism in with a uniquely personal service. a growing market that links closely with financial advice. simplybizgroup.co.uk/our-brands Annual report and accounts 2019 The SimplyBiz Group plc 3 Strategic report Chairman’s statement As Chairman of The SimplyBiz Group, I am delighted to report on the Group’s A year of first full year as a public company, one in which the Group has also completed the significant and exciting acquisition of Defaqto. significant growth This acquisition was the largest in the Group’s history, and I am very pleased to report on the effective integration into the Group of this well -established and successful business. 2019 saw positive progress in every During the year under review the Group grew area of the Group. its revenue by 24% to £63 million and Adjusted EBITDA (as defined in note 9) by 49% to £17 million. The Directors are recommending a final dividend of 2.85 pence per share, making a total for the year of 4.26 pence per share. In addition, we have been extremely successful in expanding the breadth of support we deliver to the independent firms we serve across the financial services sector, including financial planning, pensions, mortgage, protection, consumer credit, legal services and workplace markets. During the past 12 months we have widened this scope further by entering the FinTech market, through the acquisition of Defaqto, and launched services to the discretionary fund management market. The past four years have been a time of great political uncertainty; however, regardless of whichever side of the Brexit debate one stood, I believe an era of renewed stability beckons for our market and the economy as a whole, The Group has completed once the current and inevitable disruption the significant and exciting caused by the coronavirus has passed. We continue to monitor the Covid-19 situation acquisition of Defaqto. I am carefully and respond accordingly as the very pleased to report on condition develops. Our customers’ needs will always come first, and we will continue the effective integration of to evolve our contingency plans as the this well-established and situation develops. successful business.” Ken Davy Ken avy D 4 The SimplyBiz Group plc Annual report and accounts 2019 Strategic report The SimplyBiz Group is rooted in its the FSCS, which currently falls unfairly and to them all. Additionally, I would also like unwavering commitment to the delivery of wholly disproportionately on advisory firms. to thank my fellow Board members and our the highest-quality compliance support to all This is damaging the sector and must be equally dedicated Non-Executive Directors who use our services. We provide a myriad of addressed by the FCA. for their support and commitment over the services, compliance and technology to firms past 12 months. Our focus is to ensure that we deliver across the financial services market, with the robust and reliable support needed by In closing, I am confident of the continued our core provision of regulatory support, the financial services intermediaries and you may future growth, development, and success lifeblood of thousands of intermediary firms. be confident that the Group will continue to of The SimplyBiz Group over the next During the past 12 months, understanding and invest in training staff and, where necessary, 12 months. implementing the changes necessitated by recruiting new talent to help our growth. the Senior Managers and Certification Regime In addition, where appropriate, we will was a major challenge for advice firms and expand our range of services and acquire brokers.