REG - Fintel PLC - Half Year Results
20/09/2022 07:00
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RNS Number : 9260Z Fintel PLC 20 September 2022
20 September 2022
Fintel plc
("Fintel", the "Company", the "Business" or the "Group")
Half Year Results for the Six Months ended 30 June 2022
Strong trading, resilient business, confident outlook
Fintel (AIM: FNTL), the leading provider of fintech and support services to
the UK Retail Financial Services sector, today announces its unaudited
consolidated results for the six months ended 30 June 2022.
Financial highlights:
· Strong core(1) revenue growth - up 9% to £27.1m (HY21: £24.9m)
· Total revenue growth - up 2% to £32.2m (HY21: £31.7m)
· Adjusted EBITDA(2) - up 5% to £8.7m (HY21: £8.3m)
· Improved adjusted EBITDA(2) margin of 27.0% (HY21: 26.1%)
· Adjusted PBT(3) - up 15% to £6.9m (HY21: £6.0m)
· Adjusted EPS(4) - up 29% to 5.3p (HY21: 4.1p(5))
· Underlying operating profit to operating cash flow conversion(6) of
124% (HY21: 135%)
· Significant financial resources with £7.6m cash (HY21 net debt:
£15.5m) and access to undrawn £45m Revolving Credit Facility
Operational highlights
· Accelerated growth in proprietary advice software recommendations
to >£42bn(7), increasing data and insights footprint
· Significant growth in Fintech software revenue (including
proprietary and resell) of 17% to £7.7m (HY21: £6.6m) and product ratings
revenue of 12% to £4.2m (HY21: £3.8m)
· Core revenue growth of 9% in the period (HY21: 3%) driven by
continued progress in converting existing revenues to 'Distribution as a
Service', now having >60% of partner revenue converted, with full year
outlook remaining in line with upper end of medium-term objectives(8)
· Quality recurring revenues with 66% SaaS and subscription income in
core business (HY21: 67%)
· Industry leading services - Winner of ''Best Professional Adviser
Service Company of the Year'', five years in a row
Outlook
The Board remains confident of meeting full year expectations for 2022, and
the Company's longer-term growth ambitions amidst current wider macro-economic
uncertainties, owing to the proven strength of its business model.
Dividend
The Board intends to pay an interim dividend of 1.0p per share (HY21: 1.0p per
share), on or around 4 November 2022.
Matt Timmins, Joint CEO of Fintel plc, commented:
"Fintel has delivered a solid financial performance in the first half of the
year, trading in line with expectations.
"Growth in our core business has been strong, delivering increased revenues,
earnings and cash, while maintaining EBITDA margin and quality of earnings
(SaaS and Subscription revenues).
"Fintel continues to benefit from changes in regulation and these regulatory
tailwinds increase demand for both our Services and Fintech across our diverse
customer base. The continued digitisation of our service model and scaling of
our Fintech platform has been further strengthened by increased user adoption
and development of new modules.
"We are delighted to once again be recognised by our loyal and highly engaged
customer base, winning the Professional Adviser Service Company of the year
for the fifth consecutive year.
"We have a strong balance sheet following the strategic divestment of non-core
Zest Technology and Verbatim funds and the continued strong cash generation of
the business. A cash surplus of £7.6m and access to an undrawn £45m
Revolving Credit Facility provides a capital base to continue to invest in our
growth opportunities.
"We are confident of meeting our full year expectations and longer-term growth
ambitions."
(1)Core business excludes revenues from Panel Management and Surveying.
(2)Adjusted EBITDA is earnings before interest, tax, depreciation,
amortisation, share option charges and exceptional operating costs.
(3) Adjusted PBT is calculated as adjusted profit before tax, which excludes
exceptional operating costs and amortisation of intangible assets arising on
acquisition.
(4)Adjusted earnings per share is calculated as adjusted profit after tax
attributable to owners of the Company, which excludes operating exceptional
costs and amortisation of intangible assets arising on acquisition, divided by
the average number of Ordinary Shares in issue for the period.
(5)Excluding the one-off uplift in the UK corporation tax rates from 19% to
25% in prior year, the HY21 adjusted EPS would have been 5.0p on a
like-for-like basis.
(6)Underlying cash flow conversion is calculated as underlying cash flow from
operations (adjusted operating profit, adjusted for changes in working
capital, depreciation, amortisation, CAPEX and share based payments) as a
percentage of adjusted operating profit.
(7)Proprietary advice software recommendations are calculated on a 12-month
rolling basis.
(8) Medium term Core Revenue objective: Core revenue growth between 5% and 7%
annually.
Analyst Presentation
An analyst briefing is being held at 09:30 BST on 20 September 2022 via an
online video conference facility. To register your attendance please contact
Fintel@instinctif.com (mailto:Fintel@instinctif.com)
For more information, please visit: www.wearefintel.com
(http://www.wearefintel.com)
For further information please contact:
Fintel plc
via Instinctif Partners
Matt Timmins (Joint Chief Executive Officer)
Neil Stevens (Joint Chief Executive Officer)
David Thompson (Chief Financial Officer)
Zeus (Nominated Adviser and Joint Broker)
+44 (0) 20 3829 5000
Martin Green
Dan Bate
Investec Bank (Joint Broker)
+44 (0) 20 7597 5970
Bruce Garrow
David Anderson
Harry Hargreaves
Instinctif Partners (Financial PR)
+44 (0) 20 7866 7887
Mark Walter
fintel@instinctif.com
Joe Quinlan
Notes to Editors
Fintel is the UK's leading fintech and support services business, combining
the largest provider of intermediary business support, SimplyBiz, and the
leading research, ratings and Fintech business, Defaqto.
Fintel provides technology, compliance and regulatory support to thousands of
intermediary businesses, data and targeted distribution services to hundreds
of product providers and empowers millions of consumers to make better
informed financial decisions. We serve our customers through three core
divisions:
The Intermediary Services division provides technology, compliance, and
regulatory support to thousands of intermediary businesses through a
comprehensive membership model. Members include directly authorised IFAs,
Wealth Managers and Mortgage Brokers.
The Distribution Channels division delivers market Insight & analysis and
targeted distribution strategies to financial institutions and product
providers. Clients include major Life & Pension companies, Investment
Houses, Banks, and Building Societies.
The Fintech and Research division (Defaqto) provides market leading software,
financial information and product research to product providers and
intermediaries. Defaqto also provides product ratings (Star Ratings) on
thousands of financial products. Financial products are expertly reviewed by
the Defaqto research team and are compared and rated based on their underlying
features & benefits. Defaqto ratings help consumers compare and buy
financial products with confidence.
For more information about Fintel, please visit the website:
www.wearefintel.com (http://www.wearefintel.com)
JOINT CHIEF EXECUTIVES' STATEMENT
Overview
Fintel has delivered a strong financial performance in the first half of the
year, growing revenues in the core business by 9% and overall revenues by 2%,
outpacing the impact of strategic divestments. Adjusted EBITDA is up 5% with
adjusted EBITDA margin increasing to 27.0% (HY21: 26.1%). This continued
growth and profitability is underpinned by ongoing high levels of operating
profit to operating cashflow conversion at 124% (HY21: 135%).
The core business has performed strongly and in line with expectations.
Core Business
HY22 HY21
Revenue Growth 9% 3%
Adjusted EBITDA Margin 30% 30%
% Revenues from SaaS and Subscriptions 66% 67%
· The Intermediary Services division delivered a 15% growth in gross
profit, driven by increasing regulation, digitisation, and enhancement of our
core platform. We continue to maintain industry leading services and high
customer satisfaction, winning ''Best Professional Adviser Service Company of
the year'' for the fifth consecutive year.
· In the Distribution Channels division earnings quality continues to
increase with the conversion of our distribution partner revenue ahead of our
2022 target, and the successful scaling of Distribution as a Service ("DaaS")
into the protection market. Our mortgage club has seen continued growth in
market share to 5.8% (FY21: 5%) reflecting a buoyant market and a new
Buy-to-Let service launch.
· Strong market demand in our Fintech and Research division resulted
in a 22% increase in revenue, with significant growth in our software and
product ratings services following platform and service expansion and the
strategic partnership with Tatton Asset Management.
We are delighted with the strong performance across the business during the
first half of the year. Core revenue growth of 9% in the first six months
supports our full year expectation of growing at the upper end of our
medium-term target range, and a 30% core adjusted EBITDA margin has been
maintained during continued investment in our digital platform.
Having undertaken an assessment of the present and medium-term outlook, the
Board is confident that with the diversity of our customer proposition, the
resilience of our business model and our strong financial position, we will
meet our longer-term strategic ambitions.
Strategic Delivery and Priorities
The Company's value creation strategy combines organic growth and selective
acquisitions. Organic growth is expected to be driven by growth in our core
digital, software and technology offering as well as by increasing demand from
new regulation.
We continue to digitise our core platform at pace, delivering margin growth,
robust cash flow and good capital efficiency.
With the continued conversion and scaling of DaaS, earnings quality continues
to grow in absolute terms with SaaS and subscription income delivering 66% of
our expanded core revenues.
Capital discipline and a strong focus on cash return on capital employed,
along with a prudent balance sheet and leverage management ensure we can
continue to invest in our core platform and drive continued performance and
growth.
Outlook
We recognise the current difficult economic climate and expect that there may
be a period where this will worsen, causing further disruption to supply
chains, energy costs and overall inflationary pressures. Despite the
macro-economic outlook, we are confident of continued growth and in meeting
our full year expectations.
Neil Stevens & Matt Timmins
Joint Chief Executive Officers
FINANCIAL REVIEW
Underlying Performance Underlying Performance Period ended 30 June 2021
Period ended 30 June 2022 £m
£m
Group revenue 32.2 31.7
Expenses (23.5) (23.4)
Adjusted EBITDA 8.7 8.3
Adjusted EBITDA margin % 27.0% 26.1%
Depreciation (0.1) (0.2)
Depreciation of lease asset (0.2) (0.3)
Amortisation of development expenditure and software (0.5) (0.9)
Adjusted EBIT 7.9 6.9
Share option charges (0.7) (0.4)
Net finance costs (0.3) (0.5)
Adjusted Profit before tax 6.9 6.0
Taxation (1.3) (2.0)
Adjusted Profit after tax, before NCI 5.6 4.0
Revenue
Group Revenues of £32.2m were 2% higher than the prior period (HY21:
£31.7m). Adjusting for the impact of disposals in 2021, total revenue grew by
c.9%, driven by increasing demand for our Software and Fintech products, and
the core Marketing Services business recovering from the downturn caused by
COVID-19 restrictions.
Our Core revenues also grew 9% period-on-period, from £24.9m to £27.1m,
reflecting the strength of our underlying service offering and diverse
customer base. We have set our medium-term objective for core revenue growth
at 5-7% annually during the period 2021 to 2024, and we expect core revenue
growth for the full year will be towards the upper end of this range.
A key performance measure in our core business is the quality of revenue; our
focus is on growing revenue from SaaS and Subscriptions, delivering longer
term recurring income streams at high margins. SaaS and Subscriptions continue
to deliver 66% recurring revenue in our core business.
This combination of growth and increasing quality of our core revenue
period-on-period keeps us on track to achieve our medium-term financial
objectives.
Non-core revenues decreased 25% to £5.1m (HY21: £6.8m). Our Property
Surveying business was flat at £5.1m, period-on-period, with the decrease
entirely driven by the disposal of Zest Technology in HY21, constituting
£1.7m non-core revenue in HY21.
Profitability
We report on segmental gross profit as this highlights the contribution each
segment makes, taking account of directly attributable costs, but before
allocation of shared infrastructure costs which serve the business as a
whole.
Gross profit increased to £14.7m (HY21: £13.7m) with gross margin improving
by 2.4% to 45.6% (HY21: 43.2%) driven by the sale of Zest Technology,
increased software sales, and the improved performance in Marketing Services.
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA margin is calculated as adjusted EBITDA (as defined in note
6), divided by revenue. Whilst adjusted EBITDA is not a statutory measure, the
Board believes it remains a highly useful measure of the cash profit from
underlying trade and operations, excluding one-off and non-cash items. At an
EBITDA level, economies of scale in shared support costs will help us achieve
our key strategic aim of increasing EBITDA margin over the next two to three
years.
Adjusted EBITDA of £8.7m compares favourably with the prior period (HY21:
£8.3m).
The Company delivered a strong adjusted EBITDA margin of 27.0% (HY21: 26.1%).
Infrastructure and support costs have increased to £6.0m in HY22 from £5.4m
(HY21) following investment to drive a sustainable and scalable support model.
Divisional performance
Intermediary services
The Intermediary Services division provides technology, compliance, and
regulatory support to thousands of intermediary businesses through a
comprehensive membership model.
Revenues in the Intermediary Services division reduced by 10% to £11.4m
following the sale of Zest Technology which accounted for non-core revenues of
£1.7m to HY21. Underlying core intermediary revenues grew by 4% to £11.4m
(HY21: £11.0m), due to continued growth in membership revenues, improved
penetration of additional services and new software licenses.
The Intermediary division delivered a robust performance with a 3% increase in
membership revenues. As the regulatory landscape for our members becomes more
complex, we continue to benefit from increasing demand for help with new and
existing regulation. We continue to improve our average revenue per customer
through digitisation of our core services and higher software adoption, with a
6.5% growth in Software license income during the period.
The division reported strong growth in gross profit, up 15% year-on-year,
driven by increased regulation, digitisation and enhancement of our core
platform.
The financial highlights of the Intermediary division were as follows:
· Membership fee income increased to £5.7m (HY21: £5.6m)
· Additional services income increased to £2.6m (HY21: £2.5m)
· Software license income grew to £3.1m (HY21: £2.9m)
· Gross profit of £4.5m (HY21: £3.9m), with gross profit margin of
39.3% (HY21: 29.8%)
· Average revenue per customer ("ARPC") of £7,314 (HY21: £7,026) -
an increase of 4.1%
* Gross profit is calculated as revenue less direct operating costs.
* * Gross profit margin is calculated as gross profit as a percentage of
revenue
Distribution Channels
The Distribution Channels division delivers market Insight & analysis and
targeted distribution strategies to financial institutions and product
providers.
Distribution Channels revenue increased 1% to £11.4m (HY21: £11.3m).
The Distribution Channels division continues to benefit from the improvement
in the overall housing market, the introduction of remote valuations and an
increase in housing related transactions.
Marketing services revenues continue to improve on a year-on-year basis
following Covid-19 lockdowns in HY21. Our transition towards our new
Distribution as a Service ("DaaS") model continues at pace, with 63% of our
Marketing Services revenues written in HY22 under multi-year DaaS
arrangements.
The financial highlights in the Distribution division were as follows:
· Marketing services revenues of £2.3m (HY21: £1.4m) reflecting
significant post pandemic recovery in events in 2022.
· Core commission revenues of £4.0m (HY21: £4.8m), a reduction of
17% driven by the sale of Verbatim asset management with revenues of £1.2m in
HY21 (£0.1m in HY22). Underlying commission revenues increased by 7.5% to
£3.9m (HY22) from £3.7m (HY21) driven by mortgage market buoyancy against a
strong lending performance in the first half of 2022.
· Non-core panel management and valuation services revenues remained
static at £5.1m (HY21: £5.1m) driven by industry wide capacity
constraints.
· Gross profit reduced to £4.5m (HY21: £5.1m), with gross profit
margin of 39.2% (HY21: 45%) driven primarily by the sale of Verbatim and a
changing cost to serve mix in surveying, using more subcontracted labour as we
look to maintain the fixed non core cost base. Core underlying Gross Profit
increased from £3.5m (HY21) to £3.9m (HY22) underpinned by strong mortgage
performance.
We experienced market recovery by way of increased housing transactions and
prices which has more than compensated for the downturn impact of increased
economic uncertainty, rising interest rates and an increase in sales exchange
conversion times as the business deals with industry-wide capacity issues.
Fintech and Research
The Fintech and Research division (Defaqto) provides market leading software,
financial information and product research to product providers and
intermediaries. Defaqto also provides product ratings (Star Ratings) on
thousands of financial products. Financial products are expertly reviewed by
the Defaqto research team and are compared and rated based on their underlying
features & benefits. Defaqto ratings help consumers compare and buy
financial products with confidence.
Fintech and Research revenues increased by 21.5% to £9.4m (HY21: £7.8m) with
strong performance across the full range of products offered, including
ratings, software, and data services. This highlights increased uptake and
usage of the service, including the impact of the Tatton Strategic
Distribution Agreement, providing a further platform to grow SaaS and
Subscriptions revenues.
Revenue growth was driven by customer growth in risk mappings and reviews due
to increasing the scope of the service, an extended range of Star Ratings
products and fund review product launches.
The financial highlights from the Fintech and Research division were:
· Software revenues of £4.6m (HY21: £3.7m)
· Product Ratings revenue of £4.2m (HY21: £3.8m)
· Gross profit margin of 61% (HY21: 61%)
· 7% growth in Recommendations on our fintech platform of £22.0bn
(HY21: £20.6bn). 14% growth on a rolling 12-month basis of £42.1bn (HY21:
£37.0bn)
Share-based payments
Share-based payment charges of £0.7m (HY21: £0.4m) have been recognised in
respect of the options in issue.
Financial income and expense
Net finance expenses of £0.3m (HY21: £0.5m) relate to the utilisation of the
Company's five-year revolving credit facility, which is due for renewal in
March 2024.
Profit before tax
Adjusted profit before tax was £6.9m (HY21: £6.0m). This increase was driven
by an increase in the Group operating profit in addition to a lower
amortisation in the period following the disposal of Zest Technology Limited
in July 2021.
Taxation
The tax charge for the period has been accrued using the tax rate that is
expected to apply to the full financial year.
The underlying tax charge of £1.3m (HY21: £2.0m) represents a full year
effective tax rate of 19%.
In HY21 the ETR was 20% excluding the effect of a prior year adjustment in
respect of future tax rate change from 19% to 25%. The corporate tax rate in
the UK will increase from 19% to 25% from 1 April 2023. The increase was
announced in the March 2021 Budget and was substantively enacted on 10 June
2021. Deferred tax assets and liabilities are measured at 25% (FY21: 25%), the
tax rate effective 1 April 2023. As a result, in the interim results for the
period ended 20 June 2021 the net deferred tax liability increased by £0.8m,
being the half year equivalent charge for the full year adjustment. This was
a non-cash charge and will unwind in future years.
Earnings per share
Earnings per share has been calculated based on the weighted average number of
shares in issue. Adjusted earnings per share in the year amounted to 5.3 pence
per share (HY21: 4.1 pence per share). It should be noted that had the
deferred tax rates remained constant in prior year, the adjusted earnings per
share would have increased to 5.0p in the period, a year on year increase of
8%.
Dividend
Recognising the underlying financial strength of the business, the Board
announces an interim dividend of 1.0p (HY21: 1.0p). It is the Board's
intention that this will be paid on or around 4 November 2022 to shareholders
on the register on 30 September 2022. The Board intends the ex-dividend date
to be 29 September 2022.
Cash flow and closing net debt
As at 30 June 2022 the Company had net cash of £7.6m, compared to a net debt
position of £15.5m at 30 June 2021. Net debt is calculated as borrowings
less cash and cash equivalents, and amortised arrangement fees.
During the period, the Company settled all remaining amounts owing on the
revolving credit facility.
The continued deleveraging highlights the strong cash generative nature of the
business and the strategic decision to divest the non-core Zest Technology,
and the Verbatim Funds businesses.
The Company reported a strong operating profit to operating cash flow
conversion rate of 124% (HY21: £135%) calculated as underlying cash flow from
operations as a percentage of adjusted operating profit. Underlying cash flow
from operations is calculated as adjusted operating profit, adjusted for
changes in working capital, depreciation, amortisation, CAPEX, and share base
payments, a reconciliation of underlying cash flow conversion is provided in
note 6.
Accounting policies
The Company's consolidated financial information has been prepared
consistently in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 ("Adopted IFRS").
Going concern
The Directors have undertaken a comprehensive assessment to consider the
Company's ability to trade as a going concern for at least the next 12 months.
The Directors have considered the Company's financial position and its undrawn
committed borrowing facilities and performed various sensitivity analyses to
assess the impact of more severe but plausible downside scenarios.
Based on the Company's current and forecast profitability and cash flows, and
the availability of committed funding, the Directors consider and have
concluded that the Company will have adequate resources to continue in
operational existence for at least the next 12 months from the date of
approving the unaudited financial statements. As a result, they continue to
adopt a going concern basis in the preparation of the financial statements.
David Thompson
Chief Financial Officer
Consolidated statement of profit or loss and other comprehensive income
for the six months ended 30 June 2022
2022 2022 underlying adjustments 2022 total 2021 underlying 2021 underlying adjustments 2021 total
underlying
note £m £m £m £m £m £m
revenue 7 32.2 - 32.2 31.7 - 31.7
operating expenses 8 (25.0) - (25.0) (25.2) - (25.2)
amortisation of other intangible assets 12 - (1.0) (1.0) - (1.0) (1.0)
group operating profit 7.2 (1.0) 6.2 6.5 (1.0) 5.5
finance expense 9 (0.3) - (0.3) (0.5) - (0.5)
profit before taxation 6.9 (1.0) 5.9 6.0 (1.0) 5.0
taxation (1.3) 0.2 (1.1) (2.0) 0.2 (1.8)
profit for the financial year 5.6 (0.8) 4.8 4.0 (0.8) 3.2
profit attributable to shareholders:
owners of the company 6 4.7 3.1
non-controlling interests 6 0.1 0.1
4.8 3.2
adjusted earnings per share 11 5.3p 4.1p
earnings per share - basic 11 4.6p 3.2p
earnings per share - diluted 11 4.5p 3.2p
There are no items to be included in other comprehensive income in the current
or preceding period.
Consolidated Statement of Financial Position
as at 30 June 2022
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2021
Note £m £m £m
Assets
Non-current assets
Property, plant & equipment 13 1.3 1.3 1.3
Lease asset 3.5 4.8 3.6
Intangible assets and goodwill 12 95.7 104.4 96.6
Trade and other receivables 2.6 - 2.6
Total non-current assets 103.1 110.5 104.1
Current assets
Trade and other receivables 9.6 10.0 9.8
Deferred tax asset - 0.6 -
Cash and cash equivalents 7.6 8.3 9.4
Current tax asset - 0.1 -
Total current assets 17.2 19.0 19.2
Total assets 120.3 129.5 123.3
Equity and liabilities
Equity attributable to the owners of the Company
Share capital 15 1.0 1.0 1.0
Share premium account 15 65.8 65.2 65.6
Other reserves 16 (51.8) (51.8) (52.3)
Retained earnings 76.7 61.4 73.9
Equity attributable to the owners of the Company 91.7 75.8 88.2
Non-controlling interest 0.3 0.2 0.3
Total equity 92.0 76.0 88.5
Liabilities
Current liabilities
Trade and other payables 17.6 18.8 17.0
Lease liabilities, current 0.5 0.4 0.4
Current tax liabilities 2.2 - 2.0
Total current liabilities 20.3 19.2 19.4
Non-current liabilities
Loans and borrowings 14 - 23.8 6.8
Lease liabilities, non-current 3.0 4.4 3.2
Deferred tax liabilities 5.0 6.1 5.4
Total non-current liabilities 8.0 34.3 15.4
Total liabilities 28.3 53.5 34.8
Total equity and liabilities 120.3 129.5 123.3
Consolidated statement of changes in equity
Share Share Other Non Retained Total
capital premium reserve controlling interest earnings equity
£m £m £m £m £m £m
Balance at 1 January 2021 1.0 64.8 (52.2) 0.2 61.0 74.8
Total comprehensive income for period - - - 0.1 3.1 3.2
Transactions with owners, recorded directly in equity
Dividends - - - (0.1) (2.7) (2.8)
Deferred tax on share options exceeding profit and loss charge - - 0.4 - - 0.4
Release of option reserve - - (0.4) - 0.4 -
Share option charge - - 0.4 - - 0.4
Total contributions by and distribution to owners - - 0.4 (0.1) (2.3) (2.0)
Balance at 30 June 2021 1.0 64.8 (51.8) 0.2 61.4 76.0
Total comprehensive income for period - - - 0.1 12.3 12.4
Transactions with owners, recorded directly in equity
Issue of share capital - 0.8 - - (0.1) 0.7
Dividends - - - - (1.0) (1.0)
Deferred tax on share options exceeding profit and loss charge - - (0.3) - - (0.3)
Release of option reserve - - (0.9) - (0.9) -
Share option charge - - 0.7 - - 0.7
Total contributions by and distribution to owners - 0.8 (0.5) - (0.2) 0.1
Balance at 31 December 2021 1.0 65.6 (52.3) 0.3 73.9 88.5
Total comprehensive income for period - - - 0.1 4.7 4.8
Transactions with owners, recorded directly in equity
Issue of shares - 0.2 - - - 0.2
Dividends - - - (0.1) (2.1) (2.2)
Deferred tax on share options exceeding profit and loss charge - - (0.2) - 0.2 -
Share option charge - - 0.7 - - 0.7
Total contributions by and distribution to owners - 0.2 0.5 (0.1) (1.9) (1.3)
Balance at 30 June 2022 1.0 65.8 (51.8) 0.3 76.7 92.0
Consolidated statement of cash flows
for the 6 months ended 30 June 2022
6 months ended 6 months ended
30 June 2022
30 June 2021
£m £m
Net cash generated from operating activities (note 18) 8.4 8.5
Cash flows from investing activities
Purchase of property, plant, and equipment (0.1) -
Development expenditure (0.6) (0.9)
Net cash used in investing activities (0.7) (0.9)
Cash flows from financing activities
Finance costs (0.2) (0.4)
Loan repayments made (7.0) (8.0)
Drawdown of loans - 2.0
Payment of lease liability (0.3) (0.4)
Issue of share capital 0.2 -
Dividends paid (2.2) (2.8)
Net cash (used) / generated from financing activities (9.5) (9.6)
Net (decrease) / increase in cash and cash equivalents (1.8) (2.0)
Cash and cash equivalents at start of period 9.4 10.3
Cash and cash equivalents at end of period 7.6 8.3
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. Reporting entity
Fintel plc (formerly the Simply Biz Group Limited) is a company domiciled in
the UK. These condensed consolidated interim financial statements ("interim
financial statements") as at and for the six months ended 30 June 2022
comprise Fintel and its subsidiaries (together referred to as "the Company").
The Company is the leading provider of digital, data led and expert services
to product providers, intermediaries, and consumers to help them navigate the
increasingly complex world of retail financial services. Fintel provides
technology, compliance and regulatory support to thousands of intermediary
businesses, data and targeted distribution services to hundreds of product
providers and empowers millions of consumers to make better informed financial
decisions.
2. Basis of accounting
These interim financial statements have been prepared in accordance with IAS
34 Interim financial reporting and should be read in conjunction with the
Company's last annual consolidated financial statements as at and for the year
ended 31 December 2021 ("last annual financial statements"). They do not
include all the information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to explain events
and transactions that are significant to an understanding of the Company's
financial position and performance since the last annual financial statements.
The financial information set out in these interim financial statements for
the six months ended 30 June 2022 and the comparative figures for the six
months ended 30 June 2021 are unaudited. The comparative financial information
for the period ended 31 December 2021 in this interim report does not
constitute statutory accounts for that period under 435 of the Companies Act
2006.
Statutory accounts for the period ended 31 December 2021 have been delivered
to the Registrar of Companies. The auditors' report on the accounts for 31
December 2021 was unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
The interim financial statements comprise the financial statements of the
Company and its subsidiaries at 30 June 2022. Subsidiaries are consolidated
from the date of acquisition, being the date on which the Company obtained
control, and continue to be consolidated until the date when such control
ceases.
The interim financial statements incorporate the results of business
combinations using the acquisition method. In the consolidated balance sheet,
the acquiree's identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date.
These interim financial statements were authorised for issue by the Company's
Board of Directors on 15 September 2022.
3. Use of Judgements and Estimates
In preparing these interim financial statements, management has made
judgements and estimates that affect the application of accounting policies
and the reported amounts of assets and liabilities, income, and expense.
Actual results may differ from these estimates.
The significant judgements made by management in applying the Company's
accounting policies and the key sources of estimation uncertainty were the
same as those described in the last annual financial statements.
4. Changes in significant accounting policies
The accounting policies applied in these condensed consolidated interim
financial statements are the same as those applied in the Company's
consolidated financial statements in the 2021 Annual Report & Accounts.
Current taxes
The policy for recognising and measuring income taxes in the interim period is
described in note 10.
5. Going concern
The Company's business activities, performance and position are set out in the
Joint Chief Executives' statement.
The Company Directors have prepared cash flow forecasts for the Company for
the period to 31 December 2023 which indicate that, taking account of severe
but plausible downside scenarios, the Company will have sufficient funds, to
meet its liabilities as they fall due for that period.
Various sensitivity analyses have been performed to assess the impact of more
severe but plausible downside scenarios to future trading. Under these severe
but plausible downside scenarios the Company continues to operate within its
available facilities and does not incur any covenant breaches.
The Directors have considered these factors, the likely performance of the
business and possible alternative outcomes and the financing activities
available to the Company. Having taken all these factors into consideration,
including the impact on covenants relating to the external borrowing facility,
the Directors confirm that forecasts and projections indicate that the Company
has adequate resources for the foreseeable future and at least for the period
of 12 months from the date of signing the half year report. Accordingly, the
financial information has been prepared on the going concern basis.
6. Reconciliation of GAAP to Non-GAAP measures
The Company uses a number of "non-GAAP" figures as comparable key performance
measures, as they exclude the impact of one-off items that are not considered
part of ongoing trade. Amortisation of other intangible assets has been
excluded on the basis that it is a non-cash amount, relating to acquisitions
in the current and prior periods. Operating costs of an exceptional nature
have been excluded as they are not considered part of the underlying trade.
Share option charges have been excluded from Adjusted EBITDA only as non-cash
costs.
The Company's "non-GAAP" measures are not defined performance measures in
IFRS. The Company's definition of the reporting measures may not be comparable
with similar titled performance measures in other entities.
Adjusted EBITDA is calculated as follows:
6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Operating profit 6.2 5.5
add back:
Depreciation (note 13) 0.1 0.2
Depreciation of leased assets (note 13) 0.2 0.3
Amortisation of other intangible assets (note 12) 1.0 1.0
Amortisation of development costs and software (note 12) 0.5 0.9
EBITDA 8.0 7.9
Add back:
Share option charges 0.7 0.4
Adjusted EBITDA 8.7 8.3
Adjusted profit before tax is calculated as follows: 6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Profit before tax 5.9 5.0
add back:
Amortisation of other intangible assets (note 12) 1.0 1.0
Adjusted profit before tax 6.9 6.0
Adjusted profit after tax is calculated as follows:
6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Profit after tax 4.8 3.2
add back:
Amortisation of other intangible assets, net of deferred tax 0.8 0.8
Profit attributable to non-controlling interests (0.1)
Adjusted profit after tax 5.5 4.0
Free cash flow conversion is calculated as follows:
Period ended Period ended
30 June 30 June
2022 2021
£m £m
Adjusted operating profit 7.2 6.5
Adjusted for:
Depreciation of tangible assets 0.1 0.2
Depreciation of lease assets 0.2 0.3
Amortisation of development costs and software 0.5 0.9
Share option charge 0.7 0.4
Adjusted EBITDA 8.7 8.3
Net changes in working capital 0.9 1.4
Purchase of property. Plant and equipment (0.1) -
Development expenditure (0.6) (0.9)
Underlying cash flow from operations 8.9 8.8
Underlying operating profit to operating cash flow conversion 124% 135%
Adjusted EPS is reconciled to the statutory equivalent in note 11.
7. Segmental Information
During the year, the Company was domiciled in the UK and as such substantially
all revenue is derived from external customers in the United Kingdom.
The Company has three operating segments, which are considered to be
reportable segments under IFRS. The three reportable segments are:
· Intermediary Services;
· Distribution Channels; and
· Fintech and Research
The Intermediary Services division provides technology, compliance, and
regulatory support to thousands of intermediary businesses through a
comprehensive membership model. Members include directly authorised IFAs,
directly authorised mortgage advisers and directly authorised wealth managers
are authorized by the FCA.
The Distribution Channels division delivers market insight and analysis,
product design and compliance and targeted distribution channels to financial
institutions and product providers.
The Fintech and Research division comprises our Defaqto business. Defaqto
provides market leading software, financial information and product research
to product providers and intermediaries.
The reportable segments are derived on a product/customer basis. Management
have applied their judgement on application of IFRS 8, with operating segments
reported in a manner consistent with the internal reporting produced to the
chief operating decision makers ("CODM"). The chief operating decision makers
are deemed to be the Joint CEOs. No aggregation of operating segments has
occurred.
Segmental information is provided to gross profit, as the CODM believe this
best represents segmental profitability and performance before taking account
of the shared costs in the business that support these three segments.
The tables below present the segmental information.
Intermediary Distribution Fintech and Admin & Group
Services Channels Research Support
Period ended 30 June 2022 £m £m £m £m £m
Revenue 11.4 11.4 9.4 - 32.2
Direct operating costs (6.9) (6.9) (3.7) - (17.5)
Gross profit 4.5 4.5 5.7 - 14.7
Administrative and support costs (6.0) (6.0)
Adjusted EBITDA 8.7
Amortisation of other intangible assets (1.0)
Amortisation of development costs & software (0.5)
Depreciation (0.1)
Depreciation of lease assets (0.2)
Share option charge (0.7)
Operating profit 6.2
Net finance costs (0.3)
Profit before tax 5.9
Intermediary Distribution Fintech and Admin & Group
Services Channels Research Support
Period ended 30 June 2021 £m £m £m £m £m
Revenue 12.6 11.3 7.8 - 31.7
Direct operating costs (8.7) (6.2) (3.1) - (18.0)
Gross profit 3.9 5.1 4.7 - 13.7
Administrative and support costs (5.4) (5.4)
Adjusted EBITDA 8.3
Amortisation of other intangible assets (1.0)
Amortisation of development costs & software (0.9)
Depreciation (0.2)
Depreciation of lease assets (0.3)
Share option charge (0.4)
Operating profit 5.5
Net finance costs (0.5)
Profit before tax 5.0
Segmental assets and liabilities are not analysed between reporting segments
for management purposes and the chief decision-makers consider the Company
statement of financial position to best represent the presentation of the net
assets of the Company.
No customer has generated more than 10% of total revenue during the period
covered by the financial information.
8. Operating Profit
Operating profit for the period has been arrived at after charging: 6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Depreciation of tangible assets 0.1 0.2
Depreciation of lease asset 0.2 0.3
9. Finance Expense and Income
6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Finance Expense
Bank interest payable (0.2) (0.4)
Finance charge on lease liability (0.1) (0.1)
(0.3) (0.5)
Finance Income
Bank interest receivable - -
- -
Net finance expense (0.3) (0.5)
With effect from 1 January 2022, interest was payable on the Company's
Revolving Credit Facility at the Standard Overnight Index Average ("SONIA")
plus an interest rate margin ranging from 1.50% to 2.60% depending on
leverage.
10. Taxation
6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Current tax charge 1.6 1.0
Deferred tax (credit) / charge (0.5) 0.8
Tax charge for the period 1.1 1.8
The tax charge for the period has been accrued using the tax rate that is
expected to apply to the full financial year. The corporate tax rate in the UK
will increase from 19% to 25% from 1 April 2023. The increase was announced in
the March 2021 Budget and was substantively enacted on 10 June 2021. This has
a consequential impact on the deferred tax balances during 2021. Due to this
change in rate, the net deferred tax liability increased by £0.8m at 30 June
2021 (being the half year equivalent).
11. Earnings per share
Basic Earnings Per Share ("EPS") 6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Profit attributable to equity shareholders of the parent 4.7 3.1
Weighted average number of shares in issue 102,952,665 96,847,677
Basic profit per share (pence) 4.6p 3.2p
Earnings per share has been calculated based on the weighted average number of
shares in issue in both periods.
Diluted Earnings Per Share 6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Profit attributable to equity shareholders of the parent 4.7 3.1
Weighted average number of shares in issue 102,952,665 96,847,677
Diluted weighted average number of shares and options for the period 751,573 826,541
103,704,238 97,674,218
Diluted profit per share (pence) 4.5p 3.2p
Adjusted EPS has been calculated below based on the adjusted profit after tax,
which removes one-off items not considered to be part of underlying trading.
Adjusted basic Earnings Per Share 6 months ended 30 June 2022 6 months ended 30 June 2021
£m £m
Adjusted profit after tax (note 6) 5.5 4.0
Weighted average number of shares in issue 102,952,665 96,847,677
Adjusted earnings per share (pence) 5.3p 4.1p
12. Intangible assets and goodwill
Goodwill Brand Intellectual Total other Development Total
property intangible expenditure
assets
Group £m £m £m £m £m £m
Cost
At 1 January 2021 76.2 3.1 24.4 27.5 7.5 111.2
Additions - - - - 0.9 0.9
Disposals - - - - - -
At 30 June 2021 76.2 3.1 24.4 27.5 8.4 112.1
Additions - - - - 0.7 0.7
Disposals (3.8) - - - (5.3) (9.1)
At 31 December 2021 72.4 3.1 24.4 27.5 3.8 103.7
Additions - - - - 0.6 0.6
Disposals - - - - - -
At 30 June 2022 72.4 3.1 24.4 27.5 4.4 104.3
Amortisation and impairment
At 1 January 2021 0.2 0.5 3.2 3.7 1.9 5.8
Charge in the period - 0.2 0.8 1.0 0.9 1.9
At 30 June 2021 0.2 0.7 4.0 4.7 2.8 7.7
Charge in the period - 0.1 0.9 1.0 0.6 1.6
Disposals - - - - (2.2) (2.2)
At 31 December 2021 0.2 0.8 4.9 5.7 1.2 7.1
Charge in the period - 0.2 0.8 1.0 0.5 1.5
At 30 June 2022 0.2 1.0 5.7 6.7 1.7 8.6
Net book value
At 30 June 2022 72.2 2.1 18.7 20.8 2.7 95.7
At 31 December 2021 72.2 2.3 19.5 21.8 2.6 96.6
At 30 June 2021 76.0 2.4 20.4 22.8 5.6 104.4
Capitalised development expenditure relates to the development of the software
platform in Defaqto Limited and Zest Technology Limited.
In 2021, the Group sold Zest Technology Limited for total consideration of
£10.0m which had a development expenditure carrying value of £3.2m and
associated goodwill carrying value of £2.4m. The associated goodwill is
deemed to be an accurate apportionment of the total goodwill attributable to
the Intermediary Services operating segment.
Furthermore, in 2021, the Group disposed of its operations within its 100%
owned subsidiary Simply Biz Investments Limited (formerly Verbatim Investments
Limited) which accounted for all trade within the subsidiary for a total
consideration of £5.4m. As such, associated goodwill in the subsidiaries
operating segment, Distribution Solutions, of £1.4m has been disposed of in
2021. This is deemed to be an accurate apportionment goodwill associated with
the subsidiary.
13. Property, plant & equipment
Lease assets Owned assets
Plant and Leasehold Office
Property equipment Total improvements equipment Total
Group £m £m £m £m £m £m
Cost
At 1 January 2021 5.2 0.9 6.1 0.9 1.9 2.8
Additions - 0.1 0.1 - - -
Disposals - (0.1) (0.1) - - -
At 30 June 2021 5.2 0.9 6.1 0.9 1.9 2.8
Additions 0.1 0.1 0.2 - 0.2 0.2
Disposals (1.3) (0.1) (1.4) - (0.3) (0.3)
At 31 December 2021 4.0 0.9 4.9 0.9 1.8 2.7
Additions - 0.1 0.1 - 0.1 0.1
Disposals - - - - - -
At 30 June 2022 4.0 1.0 5.0 0.9 1.9 2.8
Depreciation and impairment
At 1 January 2021 0.5 0.6 1.1 - 1.3 1.3
Depreciation charge in the period 0.2 0.1 0.3 0.1 0.1 0.2
Disposals - (0.1) (0.1) - - -
At 30 June 2021 0.7 0.6 1.3 0.1 1.4 1.5
Depreciation charge in the period 0.2 0.1 0.3 0.1 - 0.1
Disposals (0.2) (0.1) (0.3) - (0.2) (0.2)
At 31 December 2021 0.7 0.6 1.3 0.1 1.3 1.4
Depreciation charge in the period 0.1 0.1 0.2 - 0.1 0.1
Disposals - - - - - -
At 30 June 2022 0.8 0.7 1.5 0.1 1.4 1.5
Net book value
At 30 June 2022 3.2 0.3 3.5 0.8 0.5 1.3
At 31 December 2021 3.3 0.3 3.6 0.8 0.5 1.3
At 30 June 2021 4.5 0.3 4.8 0.8 0.5 1.3
Plant and equipment includes I.T. equipment and motor vehicles. In 2020 the
Group entered into a significant lease contract for its head office. The
contract runs for a total of 15 years, with an option to purchase the building
from August 2022 to January 2023. The lease asset and liability were valued
at £2.7m on inception, which includes the aforementioned purchase option,
discounted at an incremental borrowing rate of 2.87%. The lease asset is
being depreciated over 20 years.
14. Borrowings
This note provides information about the contractual terms of the Group's and
Company's interest-bearing loans and borrowings.
30 June 30 June
2022 2021
£M £M
Current
Secured bank loan - -
Lease liability 0.5 0.4
0.5 0.4
Non-current
Secured bank loan - 23.8
Lease liability 3.0 4.4
3.0 28.6
The Company has access to a £45m Revolving Credit Facility, which, from 1
January 2022 is linked to the Sterling Overnight Interbank Average Rate
("SONIA"). The committed credit facilities are available at pre agreed margins
of between 1.50% and 2.60%, dependent on the net leverage of the company. The
facility is provided in two equal amounts of £22.5m from Yorkshire Bank and
NatWest and is due for renewal in March 2024.
As at 30 June 2022, the RCF was repaid in full, providing full access to the
£45m facility.
15. Share Capital & Share Premium
Share capital Ordinary Shares
Number of fully paid shares (nominal value £0.01):
At 1 January 2021 96,806,612
Issue of share capital 211,190
At 30 June 2021 97,017,802
Issue of share capital 5,861,028
At 31 December 2021 102,878,830
Issue of share capital 133,132
At 30 June 2022 103,011,962
£m
Share Premium
At 1 January 2021 64.8
Issue of share capital 0.4
At 30 June 2021 65.2
Issue of share capital 0.4
At 31 December 2021 65.6
Issue of share capital 0.2
At 30 June 2022 65.8
16. Other reserves
Merger Share option
reserve reserve Total
Group £m £m £m
At 1 January 2021 (53.9) 1.7 (52.2)
Share option charge - 0.4 0.4
Release of option reserve - (0.3) (0.3)
Tax on share options exceeding profit and loss charge - 0.3 0.3
At 30 June 2021 (53.9) 2.1 (51.8)
Share option charge - 0.7 0.7
Release of share option reserve - (1.0) (1.0)
Tax on share options exceeding profit and loss charge - (0.2) (0.2)
At 31 December 2021 (53.9) 1.6 (52.3)
Share option charge 0.7 0.7
Release of share option reserve - (0.2) (0.2)
Tax on share options exceeding profit and loss charge - - -
At 30 June 2022 (53.9) 2.1 (51.8)
17. Share-based payment arrangements
There have been no material changes to the share-based payment arrangements in
the period to those disclosed in the annual report and accounts for the period
ended 31 December 2021 other than as disclosed below:
NTA 2018
During the current period, 44,118 awards were exercised. No awards under the
plan have been forfeited as a result of bad leavers
SAYE 2018
During the current period, 77,035 awards were exercised. The cumulative awards
forfeited totalled 10,697 as a result of bad leavers.
SAYE 2019
During the current period, 3,037 awards were exercised. The cumulative awards
forfeited totalled 4,623 as a result of bad leavers.
18. Notes to the cash flow statement
Period ended Period ended
30 June 30 June
2022 2021
£m £m
Cash flow from operating activities
Profit after taxation 4.8 3.2
Add back:
Finance income - -
Finance cost 0.3 0.5
Taxation 1.1 1.8
6.2 5.5
Adjustments for:
Amortisation of development expenditure and software 0.5 0.9
Depreciation of lease asset 0.2 0.3
Depreciation of property, plant, and equipment 0.1 0.2
Amortisation of other intangible assets 1.0 1.0
Share option charge 0.7 0.4
Operating cash flow before movements in working capital 8.7 8.3
(Increase)/decrease in receivables 0.3 0.1
Increase in trade and other payables 0.7 1.3
Cash generated from operations 9.7 9.7
Income taxes paid (1.3) (1.2)
Net cash generated from operating activities 8.4 8.5
19. Subsequent Events
There are no material events arising after 30 June 2022 which have an impact
on these unaudited financial statements.
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