REG - Fintel PLC - Half Year Results
19/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230919:nRSS8353Ma&default-theme=true
RNS Number : 8353M Fintel PLC 19 September 2023
19 September 2023
Fintel plc
("Fintel", the "Company", the "Business" or the "Group")
Half year results for the six months ended 30 June 2023
Positive performance; strategic investments to accelerate future growth
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 2023.
"Fintel delivered a positive financial and operational performance during the
first half of 2023 and continued to make significant progress in line with its
strategic plan. We have increased investment into our technology and service
platform, with earnings enhancing acquisitions expanding our unique
proposition and driving future growth opportunities.
Our diverse client base and proposition, combined with the cash generative
nature of our business, provide resilience to tough market conditions and
ensure we are well placed to capitalise on the growth opportunities arising
from an evolving UK financial services landscape.
Current trading remains encouraging and in line with our expectations.
Together with the strength of our balance sheet and positive qualified M&A
pipeline, we are confident of delivering further strategic progress and
accelerating growth, as we continue to inspire better outcomes for retail
financial services."
Matt Timmins, Joint CEO
HY23 HY22 Change
Core business
Core(1) revenue £27.6m £27.1m 2%
Core SaaS & subscription revenue £18.8m £17.8m 6%
Core adjusted EBITDA(2) £8.8m £8.2m 8%
Core adjusted EBITDA margin 31.9% 30.1% 180bps
Fintel alternative performance measures
Adjusted EBITDA £9.0m £8.7m 3%
Adjusted EBITDA margin 28.3% 27.0% 130pbs
Adjusted EPS(2) 5.0p 5.3p -6%
Cash conversion(3) 104% 124% -2,000bps
Statutory measures
Statutory revenue £31.7m £32.2m -2%
Statutory EBITDA £6.7m £8.0m -16%
Statutory EPS 3.2p 4.6p -30%
Cash position £13.3m £7.6m 75%
Interim dividend per share 1.1p 1.0p 10%
Financial highlights
· Core(1) revenue growth to £27.6m (HY22: £27.1m) up 2%; and up
4% on a like for like basis
· Core adjusted EBITDA(2) increased to £8.8m (HY22: £8.2m) up
8%
· SaaS and subscription revenue up 6% to £18.8m (HY22: £17.8m),
now representing 68% of core revenue
· Strong liquidity with cash position of £13.3m (HY22: £7.6m), as
a result of consistently strong cash conversion(3) of 104% (HY22: 124%)
· Strength of balance sheet together with undrawn £80m Revolving
Credit Facility ("RCF") provides significant financial flexibility and
headroom to capitalise on organic and M&A opportunities
· Statutory revenue of £31.7m (HY22: £32.2m), down 2%,
reflects both new net revenue recognition on major software reseller contract
extension in current period and reduced activity in non-core business
· Adjusted EBITDA(2) up 3% to £9.0m (HY22: £8.7m) delivered
during a period of significant investment
· Solid adjusted EBITDA(2) margin of 28.3% (HY22: 27.0%), up
130bps, driven by improved revenue mix and growth on higher margin business
lines
· Adjusted EPS(2) down 6% to 5.0 pence per share (HY22: 5.3 pence
per share) driven largely by the UK wide increase in corporation tax rate from
19% to 25%
· Interim dividend of 1.1p (HY22: 1.0p) proposed, recognising the
strength of the underlying business
Strategic and operational highlights
· Strategic developments and investments expected to accelerate
future growth:
o Acquisition of MICAP by Defaqto extending its reach into the
tax-advantaged market, expanding both its data footprint and research
capabilities
o Acquisition of Competent Adviser, a dynamic learning platform enabling
advisers to meet increasing regulatory competency requirements
o Investment in Plannr through Fintel Labs technology incubator, expanding
Fintel's technology proposition and extending the capabilities of Defaqto
Engage through a two-way integration
o A new five-year minimum term technology contract with long-standing
supplier Intelliflo on improved terms, reducing pass through costs and the
associated revenues, and increasing EBITDA margin
· Maintained a steady improvement in earnings quality, enhancing
visibility of future earnings:
o Solid growth in core SaaS and Subscription revenue up 6% to £18.8m (HY22:
£17.8m), now representing 68% of core revenue
o Strong progress in conversion to Distribution as a Service ("DaaS"); 79%
of Distribution Partner revenue converted to multi-year subscription
agreements (HY22: >60%; Target: 60%)
· Enhanced and expanded proposition, driving organic growth:
o Intermediary Services
§ Expanded regulatory technology capability with four new software
distribution agreements
§ Strengthened core compliance offering including expanded Consumer Duty
support and digital compliance services
o Distribution Channels
§ Scaled DaaS proposition into mortgage and protection markets and further
growth of Strategic Asset Allocation service
§ Deepened insights for product providers with partner portal phase two
launched and digital events platform upgraded
§ Strengthened distribution agreement with BlackRock
o Fintech & Research
§ Expanded competitor intelligence and benchmarking software
§ Launch of new financial planning software modules
§ Expanded research and insights platform
Current trading and outlook
· Trading continues to be in line with the Board's expectations
· Sustainable organic growth expected with expansion of proposition
and increasing technology penetration
· Qualified M&A pipeline, underpinned by enhanced financial
resources, expected to accelerate medium term growth
· Increased demand as a result of positive market dynamics and
structural growth drivers including regulatory pressure, demand for technology
and insights, and market consolidation and disaggregation
Notes
(1)Core business excludes revenues from panel management and surveying.
(2)Core adjusted EBITDA and adjusted EPS are alternative performance measures
for which a reconciliation to a GAAP measure is provided in note 8 and note
10.
(3)Underlying operating 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.
Analyst Presentation
An analyst briefing is being held at 9:30am on 19 September 2023 via an online
video conference facility. To register your attendance, please
contact fintel@mhpgroup.com (mailto:fintel@mhpgroup.com) .
For further information please contact:
Fintel plc via MHP Group
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
Kieran Russell
Investec Bank (Joint Broker) +44 (0) 20 7597 5970
Bruce Garrow
David Anderson
Harry Hargreaves
MHP Group (Financial PR) +44 (0) 20 3128 8147
Reg Hoare Fintel@mhpgroup.com (mailto:Fintel@mhpgroup.com)
Robert Collett-Creedy
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 and analysis and
targeted distribution strategies to financial institutions and product
providers. Clients include major Life and 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 and 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 performed well in the first half of the year, delivering a positive
financial performance during a period of increased strategic investment.
As we innovate and expand our customer proposition, profitability and earnings
quality continued to improve across the business. Core adjusted EBITDA grew 8%
and SaaS and subscriptions now represent 68% of core revenue.
The diversity of our client base and proposition positions us resiliently and
allows us to capture growth in challenging markets. Excellent growth in our
Fintech and Research division mitigated the impact of a weaker mortgage market
in our Distribution Channels division, contributing to our core business
delivering growth across all key metrics.
In light of the performance and in recognition of the underlying business'
quality, the Board has proposed an interim dividend of 1.1p per share.
Core Business
HY23 HY22 Medium-term target
Core Revenue Growth 2%(*) 9% 5-7%
Adjusted EBITDA Margin 31.9% 30.1% 35-40%
% Revenues from SaaS and Subscriptions 68% 66% 70-80%
*4% on a like for like basis taking into account the change in revenue
recognition on major software contract
As we enhance and expand our services and technology platform, we continue to
drive performance, increasing margin, revenue quality and earnings in our core
divisions.
· The Intermediary Services division delivered a 15% growth in
gross profit, driven in part by the expansion of our regulatory technology
offering, and the digitisation and expansion of our core compliance offering.
· In the Distribution Channels division earnings quality increased
with 79% (HY22: >60%) of our partner revenue converted to multi-year
Distribution as a Service ("DaaS") contracts as we scale our distribution
solutions through expansion of the DaaS proposition into the mortgage and
protection market.
· The Fintech and Research division delivered a 9% increase in
revenue, driven by significant growth in software and fintech revenues,
following expansion of our competitor intelligence and benchmarking software,
and enhancements to our proprietary financial planning software.
With current trading in line with our expectations, the progress we have
delivered against our strategy and the resilience of our membership and
subscription based operating model, the Board remains confident in achieving
its medium-term strategic ambitions.
Strategic Delivery and Priorities
The Company's value creation strategy combines selective acquisitions and
organic growth, driven by increasing regulatory pressure, and continued
technology adoption across both our membership base and the broader market.
In 2023 we accelerated investment in the business, acquiring two complementary
businesses to Fintel and investing in Plannr Technologies Ltd, adding
significant scale and increasing our capabilities and IP. We also continued to
innovate and expand our service and technology platform organically,
delivering margin growth, robust cash flow and capital efficiency.
During the period, we agreed a new five-year technology contract with an
existing vendor on improved terms, reducing pass through costs and the
associated revenues and increasing EBITDA margin.
Prudent capital management remains a priority, and together with our cash
resources ensures, we have the capacity to continue to invest in our core
platform, and deliver further strategic progress.
Outlook
Fintel's long-term growth is underpinned by the evolving UK financial services
and regulatory landscape, supporting ongoing expansion of our product and
service platform. In addition, our diverse client base and proposition provide
resilience to tough market conditions. This ensures we are well placed to
capitalise on multiple growth opportunities.
With increasing profitability and earnings quality, underpinned by high levels
of cashflow conversion, and a series of strategic investments expanding our
reach, scale and IP, we are confident of accelerating our future growth.
Current trading remains encouraging and in line with our expectations.
Together with the strength of our balance sheet and qualified M&A
pipeline, we are confident of delivering further strategic progress and a
strong financial performance, as we continue to inspire better outcomes for UK
retail financial services.
Neil Stevens & Matt Timmins
Joint Chief Executive Officers
FINANCIAL REVIEW
For the six months ended 30 June 2023
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Group revenue 31.7 32.2
Expenses (22.7) (23.5)
Adjusted EBITDA 9.0 8.7
Adjusted EBITDA margin % 28.3% 27.0%
Depreciation (0.2) (0.1)
Depreciation of lease asset (0.2) (0.2)
Amortisation of development expenditure and software (0.6) (0.5)
Adjusted EBIT 8.0 7.9
Operating costs of an exceptional nature (1.5) -
Share option charges (0.8) (0.7)
Amortisation of other intangible assets (1.0) (1.0)
Net finance costs (0.2) (0.3)
Profit before tax 4.5 5.9
Taxation (1.1) (1.1)
Profit after tax 3.4 4.8
Adjusted earnings per share** ("EPS") 5.0 5.3
** Adjusted EPS 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.
Revenue
The core business performed positively during the first six months of 2023.
Core revenues grew 2% to £27.6m (HY22: £27.1m), and 4% on a like for like
basis, with growth impacted by two key factors; firstly, the change in revenue
recognition arising from the renegotiation of a contract with an existing
vendor in May 2023 to take the form of a new technology reseller contract, and
secondly the current volatility in the UK housing market has seen commission
income from our mortgage lending panel reduce by c.20%.
Ensuring a consistent improvement in the quality and visibility of our
earnings is a key strategic focus of the Group and we continued to deliver
significant progress. SaaS and subscription-based revenues grew 6% to £18.8m
(HY22: £17.8m), with 68% SaaS and subscription income in the core business
(HY22: 66%). Additionally, 79% of Distribution Partner revenue has been
converted to multi-year subscription agreements (HY22: >60%; Target: 60%).
On a statutory basis the Group, including the non-core property surveying
business, reported revenues declined 2% to £31.7m (HY22: £32.2m), reflecting
both new net revenue recognition on major software reseller contract extension
and reduced activity in the non core surveying business due again to the
downturn in the UK housing market.
Divisional performance
Intermediary Services
Our Intermediary Services division provides compliance and business services
to financial intermediary firms through a comprehensive membership model.
Members, including financial advisers, mortgage advisers and wealth managers,
are regulated by the FCA.
Intermediary Services core revenue increased 0.4% to £11.5m (HY22: £11.4m).
On a statutory basis, segment turnover remained stable but like for like
revenue increased by 5.6% allowing for changes relating to the revenue
recognition of the renegotiated technology reseller agreement.
In the six months to 2023 the Intermediary Services division delivered:
· Membership fee income of £6.0m (HY22: £5.7m) - an increase of
6%;
· Software licence income of £2.7m (HY22: £3.1m) - a decrease
of 14.0%; an increase of 5.3% on a like for like basis allowing for change in
revenue recognition following contract renegotiation;
· Additional services income of £2.8m (HY22: £2.6m) - an
increase of 6.1%; and
· Gross profit* of £5.2m (HY22: £4.5m) with gross profit
margin** of 45.2% (HY22: 39.3%). The improved margin reflects increased
investment in our delivery platform, and the beneficial effect of net
accounting under our new software reseller contract from May 2023.
* 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 data, distribution and marketing
services to product providers.
Distribution Channels revenue fell 12 % to £9.9m (HY22: £11.4m) as a
result of housing market volatility.
In the six months to 30 June 2023 Distribution Channels delivered:
· Core commission revenues of £3.4m (HY22: £4.0m), a decrease of
13.4% largely reflecting the current trends in the UK housing market;
· Marketing services revenues of £2.3m (HY22: £2.3m); an
increase of 2.3%;
o DaaS has grown well to £1.8m (HY22: £1.5m), or 79% converted versus 67%
converted in the prior period. This growth has come largely from internal
conversion from non-DaaS revenues;
· Non-core panel management and valuation services revenues of
£4.1m (HY22: £5.1m); a decrease of 18.0%, again reflecting current UK
housing market volatility; and
· Gross profit of £3.6m (HY22: £4.5m) with gross profit margin of
36.7% (HY22: 39.2%).
Fintech and Research
Fintech and Research comprises our Defaqto business. Defaqto provides
market-leading software, financial information and product research to product
providers and financial intermediaries.
Fintech and Research revenues grew by 9.2% to £10.3m (HY22: £9.4m), driven
by further enhancements in our capabilities.
In the six months to 30 June 2023 Fintech and Research division delivered:
· Software revenue of £5.2m (HY22: £4.6m) - an increase of 13.1%;
· Product ratings revenue of £4.5m (HY22: £4.2m) - an increase
of 5.5%;
· Other income of £0.6m (HY22: £0.6m) from consultancy and ad
hoc work; and
· Gross profit of £6.3m (HY22: £5.7m) with a strong gross
profit margin of 61.0% (HY22: 60.9%).
Profitability
Our adjusted EBITDA has increased by 3% in line with revenue achieving £9.0m
(HY22: £8.7m).
The resulting adjusted EBITDA margin of 28.3% (HY22: 27.0%) compares well with
prior periods due to improved revenue mix with continued growth on higher
margin business lines.
Adjusted EBITDA margin is calculated as adjusted EBITDA (as defined in
note 8), divided by revenue. Whilst adjusted EBITDA is not a statutory
measure, the Board believes it is a highly useful measure of the underlying
trade and operations, excluding one-off and non-cash items.
Adjusted EBITDA in our core business also performed well, increasing 8% to
£8.8m (HY22: £8.2m). Core adjusted EBITDA is the adjusted EBITDA calculated
above excluding the trading results of our non-core property surveying
business.
The business continues to deliver towards its medium-term goals and is well
positioned for continued growth.
Exceptional items
These are items which are non-recurring and are adjusted on the basis of
either their size or their nature. As these items are one-off or
non-operational in nature, management considers that their exclusion aids
understanding of the Group's underlying business performance.
Operating costs of an exceptional nature of £1.5m (HY22: Nil) comprised the
following:
· Transformation costs of £0.8m - includes implementation costs to
enhance Fintel's customer relationship management platform ("CRM") and a new
enterprise resource planning system ("ERP"),
· M&A pipeline costs £0.4m (HY22: Nil) - including costs relating
to the recent acquisition of Plannr Technologies Limited
· Restructuring related costs £0.3m (HY22: Nil)
No other costs have been treated as exceptional in the period to 30 June 2023.
Share-based payments
Share-based payment charges of £0.8m (HY22: £0.7m) have been recognised in
respect of the options in issue.
Financial income and expense
Finance costs of £0.3m (HY22: £0.3m) relate to the Group's four-year
revolving credit facility, which was fully repaid and remains undrawn since 30
June 2022.
Finance income of £0.1m (HY22: Nil) relates to interest earned on short term
deposit of available funds.
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 £1.7m for the period (HY22: £1.3m) represents a
full year effective tax rate of 23.7% (HY22: 20%). A blended statutory tax
rate of 23.5% has been applied to reflect the increase in the corporation tax
rate from 19 % to 25% effective 1 April 2023. All closing deferred tax
balances have been measured at 25%. As a significant UK corporation tax paying
Group, we settle our liability for corporation tax on a quarterly basis in
advance and have paid c.£1.8m in corporation taxes during the 6-month
period.
Earnings per share
Earnings per share has been calculated based on the weighted average number of
shares in issue at each balance sheet date. Adjusted earnings per share in the
period amounted to 5.0 pence per share (HY22: 5.3 pence per share).
Cash flow and closing cash position
At 30 June 2023 the total cash position was £13.3m (HY22: £7.6m) with nil
debt utilisation. The RCF was fully repaid and remains undrawn since June
2022. Net cash is calculated as cash and cash equivalents less borrowings
net of amortised arrangement fees. This represents a net cash to adjusted
EBITDA ratio of 0.68 times (HY22: 0.41 times).
Underlying operating cash flow conversion was strong at 104% (HY22: 124%),
which reduced by 2,000bps due to increased capital investment for growth
(HY23: £1.9m; HY22: £0.7m). Underlying operating cash flow is 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-based payments. A reconciliation of free cash
flow and underlying cash flow conversion is provided in note 8 to the
financial statements.
The Company's significant non-recurring transformation and M&A pipeline
costs, capitalised development expenditure and acquisition consideration
impact the Company's cash generation.
Dividend
Recognising the underlying financial strength of the business, the Board
proposes an interim dividend of 1.1p (HY22: 1.0p). It is the Board's intention
that this will be paid on or around 3 November 2023 to shareholders on the
register on 29 September 2023. The Board intends the ex-dividend date to be 28
September 2023.
Accounting policies
The accounting policies applied in these condensed consolidated interim
financial statements are the same as those applied in the Group's consolidated
financial statements in the 2022 Annual Report & Accounts.
Going concern
The Directors have undertaken a comprehensive assessment to consider the
Company's ability to trade as a going concern for a period of 18 months to
February 2025.
The Directors have robustly tested the going concern assumption in preparing
these financial statements, taking into account a number of severe but
plausible downside scenarios, which would collectively be considered remote.
The Group benefits from a deleveraged balance sheet and strong liquidity
position at 30 June 2023 and the Directors remain satisfied that the going
concern basis of preparation in the financial statements is appropriate.
On the basis of 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 18 months. 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 30 June 2023
2023 2023 2022 2022
2023 Underlying Year ended 2022 Underlying Year ended
Underlying Adjustments* 31 December Underlying adjustments 31 December
Note £m £m £m £m £m £m
Revenue 6 31.7 - 31.7 32.2 - 32.2
Operating expenses 7-8 (24.5) (1.5) (26.0) (25.0) - (25.0)
Amortisation of other intangible assets 13 - (1.0) (1.0) - (1.0) (1.0)
Group operating profit 7.2 (2.5) 4.7 7.2 (1.0) 6.2
Finance expense 9 (0.2) - (0.2) (0.3) - (0.3)
Profit before taxation 7.0 (2.5) 4.5 6.9 (1.0) 5.9
Taxation (1.7) 0.6 (1.1) (1.3) 0.2 (1.1)
Profit for the financial period 5.3 (1.9) 3.4 5.6 0.8 4.8
Profit attributable to shareholders:
Owners of the Company 3.3 4.7
Non-controlling interests 0.1 0.1
3.4 4.8
Earnings per share - adjusted (pence) 10 5.0p 5.3p
Earnings per share - basic (pence) 10 3.2p 4.6p
Earnings per share - diluted (pence) 10 3.2p 4.5p
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 2023
Unaudited 30 June 2023 Unaudited 30 June 2022
Note £m £m £m £m
Non-current assets
Fixed asset investment 11 1.0 -
Property, plant and equipment 12 1.3 1.3
Lease assets 12 2.0 3.5
Intangible assets and goodwill 13 95.2 95.7
Trade and other receivables 1.1 2.6
Total non-current assets 100.6 103.1
Current assets
Trade and other receivables 11.6 9.6
Current tax asset 0.5 -
Cash and cash equivalents 13.3 7.6
Total current assets 25.4 17.2
Total assets 126.0 120.3
Equity and liabilities
Equity
Share capital 15 1.0 1.0
Share premium account 15 67.0 65.8
Other reserves 17 (50.6) (51.8)
Retained earnings 81.8 76.7
Equity attributable to the owners of the Company 99.2 91.7
Non-controlling interest 0.4 0.3
Total equity 99.6 92.0
Liabilities
Current liabilities
Trade and other payables 19.5 17.6
Lease liabilities 14 0.4 0.5
Current tax liabilities - 2.2
Total current liabilities 19.9 20.3
Non-current liabilities
Lease liabilities 14 1.7 3.0
Deferred tax liabilities 4.8 5.0
Total non-current liabilities 6.5 8.0
Total liabilities 26.4 28.3
Total equity and liabilities 126.0 120.3
Consolidated statement of changes in equity
for the six months ended 30 June 2023
Share Share Other Non- Retained Total
controlling
capital premium reserves interest earnings equity
£m £m £m £m £m £m
Balance at 30 June 2022 1.0 65.8 (51.8) 0.3 76.7 92.0
Total comprehensive income for the period
Profit for the period - - - 0.2 5.1 5.3
Total comprehensive income for the period - - - 0.2 5.1 5.3
Transactions with owners, recorded directly in equity
Issue of shares - 1.0 - - - 1.0
Dividends - - - - (1.1) (1.1)
Share option charge - - 0.6 - - 0.6
Release of share option reserve on exercise - - (0.1) - 0.1 -
Total contributions by and distributions to owners - 1.0 0.5 - (1.0) 0.5
Balance at 31 December 2022 1.0 66.8 (51.3) 0.5 80.8 97.8
Balance at 1 January 2023 1.0 66.8 (51.3) 0.5 80.8 97.8
Total comprehensive income for the period
Profit for the period - - - 0.1 3.3 3.4
Total comprehensive income for the period - - - 0.1 3.3 3.4
Transactions with owners, recorded directly in equity
Issue of shares - 0.2 - - - 0.2
Dividends - - - (0.2) (2.4) (2.6)
Share option charge - - 0.8 - - 0.8
Release of share option reserve on exercise - - (0.1) - 0.1 -
Total contributions by and distributions to owners - 0.2 0.7 (0.2) (2.3) (1.6)
Balance at 30 June 2023 1.0 67.0 (50.6) 0.4 81.8 99.6
Consolidated statement of cash flows
for the period to 30 June 2023
Period ended Period ended
30 June 30 June
2023 2022
Note £m £m
Net cash generated from operating activities 18 6.1 8.4
Cash flows from investing activities
Fixed asset investment (1.0) -
Purchase of property, plant and equipment (0.3) (0.1)
Development expenditure (1.6) (0.6)
Finance income 0.1 -
Net cash flows (used in)/from investing activities (2.8) (0.7)
Cash flows from financing activities
Finance costs (0.2) (0.2)
Loan repayments made - (7.0)
Payment of lease liability (0.2) (0.3)
Issue of share capital 0.2 0.2
Dividends paid (2.6) (2.2)
Net cash flows used in financing activities (2.8) (9.5)
Net increase/(decrease) in cash and cash equivalents 0.5 (1.8)
Cash and cash equivalents at start of period 12.8 9.4
Cash and cash equivalents at end of period 13.3 7.6
Operating costs of an exceptional nature, as per note 7, are included in net
cash generated from operating activities.
During the period Fintel Labs Limited acquired 25% of the share capital of
financial technology company, Plannr Technologies Limited. The investment is
included in net cash from investing activities.
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 2023
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 General information and basis of preparation
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 2022 ("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 2023 and the comparative figures for the six
months ended 30 June 2022 are unaudited. The comparative financial information
for the period ended 31 December 2022 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 2022 have been delivered
to the Registrar of Companies. The auditors' report on the accounts for 31
December 2022 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 2023. 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 18 September 2023.
3 Critical accounting estimates and judgements
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 2022 Annual Report & Accounts.
5 Going concern
The Board has concluded that it is appropriate to adopt the going concern
basis, having undertaken a rigorous review of financial forecasts and
available resources.
The Directors have robustly tested the going concern assumption in preparing
these financial statements, taking into account the Group's strong liquidity
position at 30 June 2023 and a number of severe but plausible downside
scenarios have been modelled, which collectively would be considered remote,
and remain satisfied that the going concern basis of preparation is
appropriate.
6 Segmental information
During the period, the Company was domiciled in the UK and all revenue is
derived from external customers in the United Kingdom.
The Group 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.
Intermediary Services provides compliance and regulation services to
individual financial intermediary Member Firms, including directly authorised
IFAs, directly authorised mortgage advisers, workplace consultants and
directly authorised wealth managers.
Distribution Channels provides marketing and promotion, product panelling and
co-manufacturing services to financial institutions. This division of the
Group also undertakes survey panelling and surveying work for mortgage
lenders.
The Fintech and Research segment provides proprietary advice technology for
over 8,000 users; independent ratings and reviews of over 14,000 financial
products and funds, licensed by over 300 brands; and research of over 43,000
financial products and funds.
The reportable segments are derived on a product/customer type basis.
Management has applied its judgement on the application of IFRS 8, with
operating segments reported in a manner consistent with the internal reporting
produced to the Chief Operating Decision Maker ("CODM").
For the purpose of making decisions about resource allocation and performance
assessment, it is the operating results of the three core divisions listed
above that are monitored by management and the Group's CODM, being the Fintel
plc Board. It is these divisions, therefore, that are defined as the Group's
reportable operating segments.
Segmental information is provided for gross profit and adjusted EBITDA, which
are the measures used when reporting to the CODM The tables below present the
segmental information.
Intermediary Services Distribution Channels Fintech and Research Admin and support costs Group
Period ended 30 June 2023 £m £m £m £m £m
Revenue 11.5 9.9 10.3 - 31.7
Direct operating costs (6.3) (6.3) (4.0) - (16.6)
Gross profit 5.2 3.6 6.3 - 15.1
Administrative and support costs (6.1) (6.1)
Adjusted EBITDA 9.0
Operating costs of an exceptional nature (1.5)
Amortisation of other intangible assets (1.0)
Amortisation of development costs and software (0.6)
Depreciation (0.2)
Depreciation of lease assets (0.2)
Share option charge (0.8)
Operating profit 4.7
Net finance costs (0.2)
Profit before tax 4.5
Intermediary Distribution Fintech and Admin and
Services Channels Research support costs Group
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 and 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
In determining the trading performance of the operating segments central costs
have been presented separately in the current period. Segmental performance in
the prior period has been presented consistently on the same basis.
The statement of financial position is not analysed between the reporting
segments by management and the CODM considers the Group statement of financial
position as a whole.
No customer has generated more than 10% of total revenue during the period
covered by the financial information.
7 Operating profit
Operating profit for the period has been arrived at after charging:
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Depreciation of tangible assets - owned 0.2 0.1
Depreciation of lease assets 0.2 0.2
Underlying adjustments
Underlying adjustments include amortisation of other intangible assets and
operating and finance costs of an exceptional nature.
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Exceptional costs - operating
Transformation 0.8 -
M&A pipeline costs 0.4 -
Restructuring 0.3 -
Other underlying adjustments 1.0 1.0
Amortisation of other intangible assets
Underlying adjustments - before tax 2.5 1.0
These are items which are non-recurring and are adjusted on the basis of
either their size or their nature. As these items are one-off or
non-operational in nature, management considers that their exclusion aids
understanding of the Group's underlying business performance.
Operating costs of an exceptional nature of £1.5m (HY22: Nil) comprise the
following:
· Transformation costs of £0.8m - includes implementation costs to
enhance Fintel's customer relationship management platform ("CRM") and a new
enterprise resource planning system ("ERP")
· M&A pipeline costs £0.4m (HY22: Nil) - including costs relating
to the recent acquisition of Plannr Technologies Limited
· Restructuring related costs £0.3m (HY22: Nil)
No other costs have been treated as exceptional in the period to 30 June 2023.
8 Reconciliation of GAAP to non-GAAP measures
The Group uses a number of "non-GAAP" figures as comparable key performance
measures, as they exclude the impact of items that are non-cash items and also
items that are not considered part of ongoing underlying trade. Amortisation
of other intangible assets has been excluded on the basis that it is a
non-cash amount, relating to acquisitions in prior periods. The Group's
"non-GAAP" measures are not defined performance measures in IFRS. The Group's
definition of the reporting measures may not be comparable with similarly
titled performance measures in other entities.
Adjusted EBITDA is calculated as follows:
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Operating profit 4.7 6.2
Add back:
Depreciation (note 12) 0.2 0.1
Depreciation of lease assets (note 12) 0.2 0.2
Amortisation of other intangible assets (note 13) 1.0 1.0
Amortisation of development costs and software (note 13) 0.6 0.5
EBITDA 6.7 8.0
Add back:
Share option charge 0.8 0.7
Operating costs of exceptional nature (note 7) 1.5 -
Adjusted EBITDA 9.0 8.7
Adjusted EBITDA of non-core surveying business 0.2 0.5
Core adjusted EBITDA 8.8 8.2
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 as a non-cash item.
Adjusted operating profit is calculated as follows:
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Operating profit 4.7 6.2
Add back:
Operating costs of exceptional nature (note 7) 1.5 -
Amortisation of other intangible assets (note 13) 1.0 1.0
Adjusted operating profit 7.2 7.2
Adjusted profit before tax is calculated as follows:
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Profit before tax 4.5 5.9
Add back:
Operating costs of exceptional nature (note 7) 1.5 -
Amortisation of other intangible assets (note 13) 1.0 1.0
Adjusted profit before tax 7.0 6.9
Adjusted profit after tax is calculated as follows:
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Profit after tax 3.4 4.8
Add back:
Operating costs of exceptional nature (note 7), net of tax 1.2 -
Amortisation of other intangible assets (note 13), net of deferred 0.7 0.8
tax
Profit attributable to non-controlling interests (0.1) (0.1)
Adjusted profit after tax 5.2 5.5
Free cash flow conversion is calculated as follows:
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Adjusted operating profit 7.2 7.2
Adjusted for:
Depreciation of tangible assets 0.2 0.1
Depreciation of lease assets 0.2 0.2
Amortisation of development costs and software 0.6 0.5
Share option charge 0.8 0.7
Adjusted EBITDA 9.0 8.7
Net changes in working capital 0.4 0.9
Purchase of property, plant and equipment (0.3) (0.1)
Development expenditure (1.6) (0.6)
Underlying cash flow from operations 7.5 8.9
Underlying operating cash flow conversion 104% 124%
Net interest paid (0.1) (0.2)
Income tax paid (1.8) (1.3)
Payments of lease liability (0.2) (0.3)
Free cash flow 5.4 7.1
Adjusted EBITDA 9.0 8.7
Free cash flow conversion 60% 82%
9 Net finance expense
Finance Interest - expense
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Interest payable on financial liabilities at amortised cost 0.3 0.2
Finance charge on lease liability - 0.1
Total finance expense 0.3 0.3
Finance Interest - income
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Bank interest receivable 0.1 -
Total finance income 0.1 -
10 Earnings per share
Period ended Period ended
30 June 30 June
Basic earnings per share 2023 2022
Profit attributable to equity shareholders of the parent (£m) 3.3 4.7
Weighted average number of shares in issue 103,705,423 102,952,665
Basic profit per share (pence) 3.2 4.6
Period ended Period ended
30 June 30 June
Diluted earnings per share 2023 2022
Profit attributable to equity shareholders of the parent (£m) 3.3 4.7
Weighted average number of shares in issue 103,705,423 102,952,665
Diluted weighted average number of shares and options for the period 734,382 751,573
104,439,805 103,704,238
Diluted profit per share (pence) 3.2 4.5
Period ended Period ended
30 June 30 June
Adjusted basic earnings per share 2023 2022
Adjusted profit after tax (note 8) (£m) 5.2 5.5
Weighted average number of shares in issue 103,705,423 102,952,665
Adjusted earnings per share (pence) 5.0 5.3
11 Fixed asset investment
Fixed Asset Investment
£m
At 31 December 2022 -
Additions 1.0
At 30 June 2023 1.0
On 8 March, Fintel Labs Limited acquired a non-controlling interest in Plannr
Technologies Limited, acquiring 25% of Ordinary Shares in exchange for £1.0m
consideration. The acquisition is recorded at cost and subsequently recorded
at fair value through other comprehensive income.
12 Property, plant and equipment
Leased assets Owned assets
Plant and Leasehold Office
Property equipment Total Improvement Equipment Total
Group £m £m £m £m £m £m
Cost
At 1 January 2022 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
Additions - - - - 0.1 0.1
Revaluation of lease (1.1) - (1.1) - - -
At 31 December 2022 2.9 1.0 3.9 0.9 2.0 2.9
Additions - - - - 0.3 0.3
At 30 June 2023 2.9 1.0 3.9 0.9 2.3 3.2
Depreciation and impairment
At 1 January 2022 0.7 0.6 1.3 0.1 1.3 1.4
Depreciation charge for the period 0.1 0.1 0.2 - 0.1 0.1
At 30 June 2022 0.8 0.7 1.5 0.1 1.4 1.5
Depreciation charge for the period 0.2 - 0.2 0.1 0.1 0.2
At 31 December 2022 1.0 0.7 1.7 0.2 1.5 1.7
Depreciation charge for the period 0.1 0.1 0.2 0.1 0.1 0.2
At 30 June 2023 1.1 0.8 1.9 0.3 1.6 1.9
Net book value
At 31 June 2023 1.8 0.2 2.0 0.6 0.7 1.3
At 30 June 2022 3.2 0.3 3.5 0.8 0.5 1.3
Leased property includes the Group's head office for which the lease was
entered into during 2020. The lease had a non-cancellable term of 10 years,
and also contained an option to extend the lease for a further 5 years beyond
the non-cancellable term, and an option to purchase the building exercisable
until January 2023. During 2022 management reassessed the likelihood of
calling in the option to buy. The lease was revalued during 2022 which
resulted in a reduction of the lease liability and right-of-use asset of
£1.1m. The lease asset is being depreciated across the non-cancellable term
of the lease and the option to buy has since lapsed.
Plant and equipment includes IT equipment and motor vehicles.
13 Intangible assets
Goodwill Brand Intellectual Total other Development Total
property intangible expenditure
assets
Group £m £m £m £m £m £m
Cost
At 1 January 2022 72.4 3.1 24.4 27.5 3.7 103.6
Additions - - - - 0.6 0.6
At 30 June 2022 72.4 3.1 24.4 27.5 4.3 104.2
Additions - - - - 1.1 1.1
At 31 December 2022 72.4 3.1 24.4 27.5 5.4 105.3
Additions - - - - 1.6 1.6
At 30 June 2023 72.4 3.1 24.4 27.5 7.0 106.9
Amortisation and impairment
At 1 January 2022 0.2 0.8 4.8 5.6 1.2 7.0
Charge in the period - 0.2 0.8 1.0 0.5 1.5
At 30 June 2022 0.2 1.0 5.6 6.6 1.7 8.5
Charge in the period - 0.2 0.8 1.0 0.6 1.6
At 31 December 2022 0.2 1.2 6.4 7.6 2.3 10.1
Charge in the period - 0.2 0.8 1.0 0.6 1.6
At 30 June 2023 0.2 1.4 7.2 8.6 2.9 11.7
Net book value
At 30 June 2023 72.2 1.7 17.2 18.9 4.1 95.2
At 30 June 2022 72.2 2.1 18.8 20.9 2.6 95.7
Capitalised development expenditure relates to the development of the software
platform in Defaqto Limited.
The carrying amount of goodwill is allocated across operating segments, which
are deemed to be cash-generating units ("CGUs") as follows:
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Intermediary Services 12.7 12.7
Distribution Channels 11.5 11.5
Fintech and Research 48.0 48.0
72.2 72.2
Goodwill is determined to have an indefinite useful economic life. The Group
has determined that, for the purposes of impairment testing, each segment is a
cash-generating unit ("CGU"). The recoverable amounts for the CGUs are
predominantly based on value in use, which is calculated on the cash flows
expected to be generated using the latest projected data available over a
five-year period, plus a terminal value estimate.
14 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's and
Company's interest-bearing loans and borrowings.
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Current
Lease liability 0.4 0.5
0.4 0.5
Non-current
Lease liability 1.7 3.0
2.1 3.5
The Company has access to a £80m Revolving Credit Facility, which 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
2.40%, dependent on the net leverage of the company. The facility remains
fully undrawn.
15 Capital and reserves
Share capital
Ordinary
Shares
Number of fully paid shares (nominal value £0.01):
At 30 June 2022 103,011,962
Issue of share capital 636,983
At 31 December 2022 103,648,945
Issue of share capital 123,270
At 30 June 2023 103,772,215
Share
premium
£m
At 30 June 2022 65.8
Issue of share capital 1.1
At 31 December 2022 66.8
Issue of share capital 0.2
At 30 June 2023 67.0
16 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 2022 other than as disclosed below:
CSOP 2018
During the current period, 17647 awards were exercised. 8,823 awards under the
plan have been forfeited as a result of bad leavers
SAYE 2018
During the current period, 10,588 awards were exercised. No awards were
forfeited as a result of bad leavers.
SAYE 2019
During the current period, 83,152 awards were exercised. No awards were
forfeited as a result of bad leavers.
SAYE 2021
During the current period, 1,960 awards were exercised. The awards forfeited
totalled 14,503 as a result of bad leavers.
17 Other reserves
Merger Share option
reserve reserve Total
Group £m £m £m
At 30 June 2022 (53.9) 2.1 (51.8)
Share option charge - 0.6 0.6
Release of share option reserve - (0.1) (0.1)
At 31 December 2022 (53.9) 2.6 (51.3)
Share option charge - 0.8 0.8
Release of share option reserve - (0.1) (0.1)
At 30 June 2023 (53.9) 3.3 (50.6)
18 Notes to the cash flow statement
Period ended Period ended
30 June 30 June
2023 2022
£m £m
Cash flow from operating activities
Profit after taxation 3.4 4.8
Add back:
Finance income (0.1) -
Finance cost 0.3 0.3
Taxation 1.1 1.1
4.7 6.2
Adjustments for:
Amortisation of development expenditure and software (note 13) 0.6 0.5
Depreciation of lease asset 0.2 0.2
Depreciation of property, plant and equipment 0.2 0.1
Amortisation of other intangible assets 1.0 1.0
Share option charge 0.8 0.7
Operating cash flow before movements in working capital 7.5 8.7
Decrease/(increase) in receivables (0.2) 0.3
Increase in trade and other payables 0.6 0.7
Cash generated from operations 7.9 9.7
Income taxes paid (1.8) (1.3)
Net cash generated from operating activities 6.1 8.4
19 Subsequent events
On 7 July 2023 Regulus Bidco Limited, the parent company of Defaqto, acquired
100 % share capital of MI Capital Research Limited (MICAP). Initial
consideration of £3.0m has been paid, with a further £1.0m deferred for one
year and £0.5m contingent on certain trading criteria being met. The
acquisition of MICAP will extend Defaqto's reach into the tax-advantage market
expanding its data footprint and research capabilities.
On 27 July 2023, Fintel IQ Limited acquired Competent Adviser Training
Limited, the UK's fastest growing digital knowledge and competence management
system, acquiring 100% of Ordinary Shares in exchange for £2.5m consideration
and a £0.5m contingent earnout based on trading performance. The acquisition
forms part of the Group's strategy to strengthen its technology and data
proposition.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR GPUUPBUPWGBRRecent news on Fintel
See all newsREG - Fintel PLC - Notice of AGM and Annual Report
AnnouncementREG - Fintel PLC - Strategic Investments
AnnouncementRCS - Fintel PLC - Final Results Presentation for Retail Investors
AnnouncementREG - Fintel PLC - Full Year Results
AnnouncementREG - Fintel PLC - Trading Update, Acquisition and Notice of Results
Announcement