REG - Fintel PLC - Half Year Results
17/09/2024 07:00
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RNS Number : 3940E Fintel PLC 17 September 2024
17 September 2024
Fintel plc
("Fintel", the "Company", the "Business" or the "Group")
Half year results for the six months ended 30 June 2024
Strong performance; strategic expansion to accelerate future growth
Fintel (AIM: FNTL), the award-winning provider of fintech and support
services to the UK Retail Financial Services sector, today announces its
unaudited results for the six months ended 30 June 2024.
"Fintel delivered a strong financial performance during the first half of
2024, whilst continuing to expand strategically through further acquisitions
and organic investments.
"Completing four acquisitions year-to-date, totalling eight in the last twelve
months, we have significantly enhanced our scale, capabilities and IP, whilst
accelerating investment into our core propositions and technology offering.
"With our strategic foundations firmly in place, we are strongly positioned to
capitalise on the growth opportunities across our extensive family of brands,
underpinned by the strength of our balance sheet.
"Current trading is robust, and we are confident of meeting our full year
revenue expectations, as we continue to inspire better outcomes for retail
financial services."
Matt Timmins, Joint CEO
HY24 HY23 Change
Core(1) business
Core revenue £31.2m £27.6m 13%
Core SaaS & subscription revenue £20.0m £18.8m 6%
Core adjusted EBITDA(2) £9.3m £8.8m 5%
Core adjusted EBITDA margin 29.7% 31.9% -220bps
Fintel alternative performance measures
Adjusted EBITDA £9.6m £9.0m 7%
Adjusted EBITDA margin 26.8% 28.3% -150bps
Adjusted EPS(2) 5.0p 5.0p -
Cash conversion(3) 101% 104% -30bps
Statutory measures
Statutory revenue £35.7m £31.7m 13%
Statutory EBITDA £6.8m £6.7m -1%
Statutory EPS 2.0p 3.2p -38%
Cash position £7.4m £13.3m -44%
Interim dividend per share 1.2p 1.1p 9%
Financial highlights
· Core(1) revenue growth to £31.2m (HY23: £27.6m), up 13%
· Increased SaaS & Subscription revenue of £20.0m (HY23:
£18.8m), up 6% representing 65% of core revenue
· Core adjusted EBITDA(2) increased to £9.3m (HY23:
£8.8m), up 5%
· Gross cash of £7.4m (FY23: £12.7m; HY23: £13.3m), following
deployment of £6.4m into strategic acquisitions, and ongoing organic
investment into product development of c.£2.5m in the period, underpinned by
continued strong cash conversion of 101% (HY23: 104%)
· Net debt of £8.6m (HY23: net cash of £13.3m); comfortable
leverage with net debt to EBITDA ratio of 0.4x and £64m of headroom in £80m
Revolving Credit Facility
· Four acquisitions completed in FY23 with a further three
completed during HY24, delivering combined core revenues of £4.8m in the
period
· Statutory revenue of £35.7m (HY23: £31.7m), up 13%
· Adjusted EBITDA(2) increased to £9.6m (HY23: £9.0m), up 7%
· Solid adjusted EBITDA(2) margin of 26.8% (HY23: 28.3%), down
150bps, during a period of organic and inorganic investment
· Adjusted EPS(2) consistent at 5.0 pence per share (HY23: 5.0
pence per share) demonstrating continued strong profitability, offsetting the
impact of UK wide increase in corporation tax rate from 19% to 25% on 1 April
2023
· Interim dividend of 1.2p (HY23: 1.1p) announced, up 9%,
recognising the strength of the underlying business and confident outlook
Strategic and operational highlights
· Strong visibility of earnings, recurring revenues and earnings
quality
o SaaS & Subscription revenue grew 6% to £20m (HY23: £18.8m),
representing 65% of core revenues (HY23: 68%), which reflects the impact of
acquisitions over the period
· Leveraging of enhanced technology and data footprint to inform
investment in and scaling of core propositions, driving recurring revenues and
further organic growth
o Intermediary Services
§ Enhanced membership technology
§ Upgraded financial planning software
§ Extended consumer duty support, with launch of new event series and
training courses
o Distribution Channels
§ Expanded DaaS proposition into the employee benefits sector
§ Further growth of Strategic Asset Allocation through extended partnerships
including Invesco, and Legal and General
§ Enhanced DaaS proposition with development of a mortgage portal delivering
industry insights
o Fintech & Research
§ Expanded product ratings proposition, with launch of new model portfolio
comparison tool, and customer insights portal
§ Scaled consumer proposition with new distribution partnership with The
Times, providing features and rates insights
§ Continued investment in market and competitor intelligence software Matrix
360
· M&A and strategic investments expanding capabilities and
offering
o Completion of Fintel IQ capability set, with strong initial demand
o Four acquisitions completed year-to-date
§ Threesixty Services, a provider of compliance and business support services
§ ifaDASH, a reg-tech solution provider
§ Owen James, the leading provider of strategic engagement events
§ Synaptic Software, an independent provider of financial adviser planning
and research software
o One conditional acquisition announced post period end, subject to
regulatory approval
§ Rayner Spencer Mills Research, one of the most recognised fund ratings and
research agencies in the UK
o Minority investment in Mortgage Brain, one of the leading providers of
technology to the mortgage industry, alongside a new distribution agreement
Current trading and outlook
The business continues to trade well, and the Board is confident that revenue
expectations will be met based on key structural drivers:
· Continued organic growth expected with expansion of proposition
and synergistic opportunities from recent acquisitions
· Positive market dynamics including regulatory pressure, demand
for data and insights, and ongoing need for integrated technology
· The initial cut in interest rates has not yet filtered through to
our mortgage business, however we are well placed to benefit from a recovery
as further cuts are implemented
We will incur some additional staff costs in H2 2024, which will impact
underlying EBITDA this year. This is partly relating to additional investment
in Matrix 360 and Enterprise sales, as we work on realising revenue synergies
from our acquired portfolio; and also relating to the initial realisation of
future cost synergies across the business following the acquisitions. This
will likely result in the underlying FY24 EBITDA being marginally lower than
expectations although it is expected that these synergies will benefit FY25
and beyond.
In terms of specific transaction related activity in H2, we expect the
acquisition of threesixty to increase FY24 revenue by c.£3.0m. We also expect
an EBITDA contribution of £150k for the rest of the year. The purchase price
was £14.6m, albeit the business had £2.7m cash in hand resulting in an
increase in net borrowing of c.£12m, which will in turn incur additional
borrowing costs of c.£420,000 in H2.
In addition, our commitment to the CRM market remains strategically important
and we are looking to optimise the timing of triggering our equity options
over minority investments to attain best value for Fintel shareholders. As a
result, we are likely to exercise the second equity call option for Plannr,
taking us to 49% ownership, at a cost of c.£3.5m. As Plannr approaches its
break-even point in mid-2025 based on recent sales trajectory, we believe it
is right to exercise the call option in the window. This will require us to
consolidate the relevant proportion of its near-term losses, forecast at
c.£150k in Q4 2024. This will also incur additional borrowing costs of
c.£150k in Q4 2024.
The Group had utilised £16m of the Revolving Credit Facility as at 30 June
2024. We expect to have borrowed an additional £20m to fund threesixty,
Plannr and the first round of deferred consideration, taking total gross
borrowings to £36m from our £80m facility. With cash balances on hand, this
equates to approximately £30m of net debt, which would represent a net debt
to EBITDA ratio of c.1.34x at the end of FY24, which would then start to
deleverage due to our significant ongoing cash generation.
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 17 September 2024 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
Investec Bank (Joint Broker) +44 (0) 20 7597 5970
David Anderson
Kamalini Hull
MHP Group (Financial PR) +44 (0) 7736 464749
Reg Hoare Fintel@mhpgroup.com (mailto:Fintel@mhpgroup.com)
Robert Collett-Creedy
Notes to Editors
Fintel is a UK fintech and support services business, combining award-winning
intermediary business support services, and leading research, ratings and
fintech businesses.
Fintel provides technology, compliance and regulatory support to thousands of
intermediary firms, 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
(https://protect.checkpoint.com/v2/___http:/www.wearefintel.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzoxZWNkYzcyYzEyNGQxMTVkZjdlOWM2MGQwOGU0MzYzMTo2OjQyNWI6M2U4NzcxOWU1ZjJiZmVkYWY4MzU2MTQzNGJjNzcyZTc5ZTc3MzU0MGUxNTVjNWMyOWQwZDlkZmEzMjRkYWQ0MDpwOlQ6Tg)
Notes to Editors
Fintel is a UK fintech and support services business, combining award-winning
intermediary business support services, and leading research, ratings and
fintech businesses.
Fintel provides technology, compliance and regulatory support to thousands of
intermediary firms, 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
(https://protect.checkpoint.com/v2/___http:/www.wearefintel.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzoxZWNkYzcyYzEyNGQxMTVkZjdlOWM2MGQwOGU0MzYzMTo2OjQyNWI6M2U4NzcxOWU1ZjJiZmVkYWY4MzU2MTQzNGJjNzcyZTc5ZTc3MzU0MGUxNTVjNWMyOWQwZDlkZmEzMjRkYWQ0MDpwOlQ6Tg)
JOINT CHIEF EXECUTIVES' STATEMENT
Overview
Fintel has delivered a positive financial performance in the first half of the
year, with revenue growth of 13%.
Profitability and earnings quality further improved across the business, with
core adjusted EBITDA up 5% and SaaS and subscription revenues growing 6%, as
we innovate and scale our core propositions.
Recognising the positive performance of the Business, the Board has announced
an interim dividend of 1.2 pence per share, up 9% (HY23: 1.1 pence per share).
Core Business
As we integrate recent acquisitions and invest in our service and technology
platform, core revenues have grown in each division.
· The Intermediary Services division delivered an 8% growth in core
revenue. Structural headwinds in the mortgage market and the rapid, temporary
growth in consolidation has led to reduction in member numbers in this
division. Both of those headwinds are now calming, and with the increased
services and technology offered within this division, combined with
acquisition of threesixty significantly enhancing this customer base we are
confident of continued growth.
· In the Distribution Channels division core revenue increased by
15%, with recurring revenues up by 7%, driven by continued scaling of our
distribution solutions with expansion of the DaaS proposition into the
employee benefit market and continued scaling of the Strategic Asset
Allocation ("SAA") solution through existing strategic distribution
partnerships.
· The Fintech and Research division delivered a 19% increase in
core revenues, driven by strong growth across product ratings, software and
fintech revenue lines, following service developments in our product and risk
ratings propositions, and enhancements to competitor intelligence and
benchmarking software Matrix.
Strategic delivery and priorities
Fintel's value creation strategy combines selective acquisitions and organic
growth, underpinned by long term, positive market dynamics including an
increasing demand for technology, insights and data and rising regulatory
pressure.
During the last twelve months we have leveraged the underlying strength of our
cash generative model to significantly invest in our future growth, acquiring
four complementary businesses to Fintel year to date, and investing at record
levels in our technology offering. As we enhance our scale, IP and
capabilities, we are well positioned to capitalise on growth opportunities
arising within both our expanded group and the broader market.
Outlook
We have entered the second half of the year with continued momentum from our
portfolio of acquisitions, with additional upside from the expected completion
of the conditional acquisition of another complementary business in Rayner
Spencer Mills Research, one of the most recognised fund ratings and research
agencies in the UK.
With the first interest rate cut announced post period end and expectations of
further cuts by the end of the year, we remain well placed to capitalise on
any positive development as the mortgage market progresses.
Fintel's long-term growth remains underpinned by the evolving UK financial
services and regulatory landscape, supporting the continued expansion of our
market position and technology and service platform. With a diverse client
base and proposition, we are confident of continuing to capitalise on growth
opportunities across an expanded family of brands.
Having evolved Fintel through significant strategic investment, we are well
positioned for long-term growth.
Neil Stevens & Matt Timmins
Joint Chief Executive Officers
FINANCIAL REVIEW
For the six months ended 30 June 2024
Period ended Period ended
30 June 30 June
2024 2023
£m £m
Group revenue 35.7 31.7
Expenses (26.1) (22.7)
Adjusted EBITDA 9.6 9.0
Adjusted EBITDA margin % 26.8% 28.3%
Depreciation (0.3) (0.2)
Depreciation of lease asset (0.2) (0.2)
Amortisation of development expenditure and software (0.7) (0.6)
Adjusted EBIT 8.4 8.0
Operating costs of an exceptional nature (2.0) (1.5)
Share option charges (0.8) (0.8)
Amortisation of other intangible assets (1.6) (1.0)
Net finance costs (0.6) (0.2)
Profit before tax 3.4 4.5
Taxation (1.1) (1.1)
Profit after tax 2.3 3.4
Adjusted earnings per share** ("EPS") 5.0 5.0
** 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 2024.
Core revenues grew 13% to £31.2m (HY23: £27.6m), and 3% on a like-for-like
basis, adjusting for both revenue from acquired businesses during HY24 and,
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.
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 £20.0m
(HY23: £18.8m), with 65% SaaS and subscription income in the core business
(HY23: 68%).
On a statutory basis the Group, including the non-core property surveying
business, revenues grew 13% to £35.7m (HY23: £31.7m).
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 8% to £12.4m (HY23: £11.5m).
Excluding revenue from acquisitions and the revenue impact of the change in
contractual terms of the software reseller agreement, revenue remained stable
(LfL: HY24: £8.8m HY23: £8.9m). The Intermediary Services division is well
positioned to continue benefitting from increasing regulatory pressure,
including Consumer Duty regulation.
Fintel has made 4 acquisitions into the Intermediary Services division since
July 2023, contributing combined revenues of £2.9m (£1.7m to membership fee
income, £0.8m software license income and £0.4m to other services) and total
gross profit of £0.3m in HY24.
In the six months to 2024 the Intermediary Services division delivered:
· Membership fee income of £7.5m (HY23: £6.0m) - an increase of
25% driven by the acquisition of VouchedFor with organic membership fees down
£0.2m to £5.8m;
· Software licence income of £2.1m (HY23: £2.7m) - reduced
revenues as a result of the change in contractual terms of primary software
reseller agreement now recognised on a net basis through revenue since May
2023 offset by £1.2m of inorganic revenue from Competent Adviser and
Synaptic;
· Additional services income of £2.8m (HY23: £2.8m), consistent
with the prior period;
· Gross profit* of £5.3m (HY23: £5.2m) with gross profit
margin** of 42.7% (HY23: 45.2%).
* 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 grew by 11% to £11.1m (HY23: £9.9m).
Excluding revenue from acquisitions and non-core surveying services,
distribution revenues remained stable (LfL: HY24: £5.8m HY23: £5.8m). Whilst
we have not seen the effects of the slowly recovering mortgage market flow
through to the HY24 core business, any increase in completions will start to
flow into the second half of the year.
In January 2024, Fintel expanded its Distribution Channel division by
acquiring Owen James Events, which added £0.8m in marketing services revenue
and £0.2m in gross profit during the first half of 2024.
In the six months to 30 June 2024 Distribution Channels delivered:
· Core commission revenues of £3.2m (HY23: £3.4m), a decrease of
6% as the business starts to see a stabilising UK housing market towards
mid-2024;
· Marketing services revenues of £3.4m (HY23: £2.3m); stripping
out revenue from acquired business, revenue grew 10% on a like-for-like basis
(LfL:HY24: £2.6m, HY23: £2.3m);
o DaaS has grown well to £2.0m (HY23: £1.8m). This growth has come largely
from internal conversion from non-DaaS revenues;
· Non-core panel management and valuation services revenues grew 7%
to £4.5m (HY23: £4.1m); again, reflecting a stabilising UK housing market
during 2024; and
· Gross profit of £4.1m (HY23: £3.6m) with gross profit margin of
36.6% (HY23: 36.7%).
Fintech and Research
Fintech and Research includes our Defaqto business and provides market-leading
software, financial information and product research to product providers and
financial intermediaries.
Fintech and Research revenues grew by 19% to £12.2m (HY23: £10.3m).
Stripping out revenues from acquisitions, fintech and research revenues grew
by 8% (LfL: HY24: £11.2m, FY23: £10.3m) as the business further enhances
Fintech and Research capabilities.
Fintel acquired MICAP and AKG in H2 2023 contributing combined revenues of
£1.1m in product ratings revenue, and gross profit of £0.04m during the
first six months of 2024.
In the six months to 30 June 2024 Fintech and Research division delivered:
· Software revenue of £5.4m (HY23: £5.2m) - an increase of 6%;
· Product ratings revenue of £5.9m (HY23: £4.5m) - stripping
out revenue from acquired business, revenue grew 9% on a like-for-like basis
(LfL: HY24: £4.8m, HY23: £4.5m);
· Other income of £0.9m (HY23: £0.6m) from consultancy and ad
hoc work; and
· Gross profit of £7.1m (HY23: £6.3m) with a strong gross
profit margin of 58.5% (HY23: 61.0%).
Profitability
Our adjusted EBITDA increased by 7% achieving £9.6m (HY23: £9.0m). The
resulting adjusted EBITDA margin of 26.8% (HY23: 28.3%) has reduced
year-on-year during a period of growth, with multiple synergy opportunities
identified in newly acquired entities.
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 5% to
£9.3m (HY23: £8.8m). 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 £2.0m (HY23: £1.5m) comprised
the following:
· M&A transaction costs £1.1m (HY23: £0.4m)
· Share settlement costs £0.6m (HY23: £nil)
· Transformation costs of £0.3m (HY23: £0.8m) - includes
implementation costs to enhance Fintel's customer relationship management
platform ("CRM") and a new enterprise resource planning system ("ERP"),
delivered during HY24
· Restructuring related costs £nil (HY23: £0.3m)
No other costs have been treated as exceptional in the period to 30 June 2024.
Share-based payments
Share-based payment charges of £0.8m (HY23: £0.8m) have been recognised in
respect of the options in issue.
Financial income and expense
Finance costs of £0.7m (HY23: £0.3m) relate to the Group's four-year
revolving credit facility.
Finance income of £0.1m (HY23: £0.1m) 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 (HY23: £1.7m) represents a
full year effective tax rate of 24.5% (HY23: 23.7%). 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 tax 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 (HY23: 5.0 pence per share).
Cash flow and closing cash position
At 30 June 2024 the Group reported a robust liquidity position, featuring a
total cash balance of £7.4m (HY23: £13.3m), £8.6m net of debt (FY23:
£nil), and substantial headroom in the £80m revolving credit facility with
£64m undrawn. Net debt to adjusted EBITDA ratio is 0.4 times (net cash to
EBITDA ratio FY23: 0.1 times; HY23: 0.7 times).
Underlying operating cash flow conversion was strong at 101% (HY23: 104%),
which reduced by 30bps due to increased capital investment for growth of
£2.2m (HY23: £1.9m; HY22: £0.7m). 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 capitalised development expenditure, M&A and
transformation costs impact the Company's cash generation during this current
investment phase.
Dividend
Recognising the underlying financial strength of the business, the Board has
announced an interim dividend of 1.2p (HY23: 1.1p). It is the Board's
intention that this will be paid on or around 1 November 2024 to shareholders
on the register on 27 September 2024. The Board intends the ex-dividend date
to be 26 September 2024.
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 2023 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
March 2026.
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 continues to enjoy robust cash generation and benefits from a strong
liquidity position at 30 June 2024. 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 2024
2024 2024 2023 2023
2024 Underlying Period ended 2023 Underlying Period ended
Underlying Adjustments* 30 June Underlying adjustments 30 June
Note £m £m £m £m £m £m
Revenue 6 35.7 - 35.7 31.7 - 31.7
Operating expenses 7-8 (28.1) (2.0) (30.1) (24.5) (1.5) (26.0)
Amortisation of other intangible assets 13 - (1.6) (1.6) - (1.0) (1.0)
Group operating profit 7.6 (3.6) 4.0 7.2 (2.5) 4.7
Finance expense 9 (0.6) - (0.6) (0.2) - (0.2)
Profit before taxation 7.0 (3.6) 3.4 7.0 (2.5) 4.5
Taxation (1.7) 0.6 (1.1) (1.7) 0.6 (1.1)
Profit for the financial period 5.3 (3.0) 2.3 5.3 (1.9) 3.4
Profit attributable to shareholders:
Owners of the Company 2.1 3.3
Non-controlling interests 0.2 0.1
2.3 3.4
Earnings per share - adjusted (pence) 10 5.0p 5.0p
Earnings per share - basic (pence) 10 2.0p 3.2p
Earnings per share - diluted (pence) 10 2.0p 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 2024
Unaudited 30 June 2024 Unaudited 30 June 2023 Audited 31 December 2023
Note £m £m £m £m £m £m
Non-current assets
Fixed asset investments 11 2.5 1.0 1.2
Property, plant and equipment 12 1.1 1.3 1.2
Lease assets 12 2.1 2.0 2.2
Intangible assets and goodwill 13 124.1 95.2 118.2
Trade and other receivables 0.6 1.1 1.5
Total non-current assets 130.4 100.6 124.3
Current assets
Trade and other receivables 13.2 11.6 10.2
Current tax asset 0.1 0.5 -
Cash and cash equivalents 7.4 13.3 12.7
Total current assets 20.7 25.4 22.9
Total assets 151.1 126.0 147.2
Equity and liabilities
Equity
Share capital 15 1.0 1.0 1.0
Share premium account 15 67.1 67.0 67.0
Other reserves 17 (52.6) (50.6) (50.0)
Retained earnings 83.2 81.8 84.6
Equity attributable to the owners of the Company 98.7 99.2 102.6
Non-controlling interest 0.2 0.4 0.3
Total equity 98.9 99.6 102.9
Liabilities
Current liabilities
Trade and other payables 21.7 19.5 20.9
Lease liabilities 14 0.4 0.4 0.4
Contingent consideration 5.4 - -
Current tax liabilities - - -
Total current liabilities 27.5 19.9 21.3
Non-current liabilities
Loans and borrowings 15.8 - 10.7
Lease liabilities 14 1.3 1.7 1.5
Deferred tax liabilities 5.6 4.8 5.7
Deferred consideration 1.0 - 5.1
Contingent consideration 1.0 - -
Total non-current liabilities 24.7 6.5 23.0
Total liabilities 52.2 26.4 44.3
Total equity and liabilities 151.1 126.0 147.2
Consolidated statement of changes in equity
for the six months ended 30 June 2024
Share Share Other Non- Retained Total
controlling
capital premium reserves interest earnings equity
£m £m £m £m £m £m
Balance at 30 June 2023 1.0 67.0 (50.6) 0.4 81.8 99.6
Total comprehensive income for the period
Profit for the period - - - 0.2 3.8 4.0
Total comprehensive income for the period - - - 0.2 3.8 4.0
Transactions with owners, recorded directly in equity
Dividends - - - (0.3) (1.1) (1.4)
Share option charge - - 0.7 - - 0.7
Release of share option reserve on exercise - - (0.1) - 0.1 -
Total contributions by and distributions to owners - - 0.6 (0.3) (1.0) (0.7)
Balance at 31 December 2023 1.0 67.0 (50.0) 0.3 84.6 102.9
Balance at 1 January 2024 1.0 67.0 (50.0) - 84.6 102.9
Total comprehensive income for the period
Profit for the period - - - 0.2 2.1 2.3
Total comprehensive income for the period - - - 0.2 2.1 2.3
Transactions with owners, recorded directly in equity
Issue of shares - 0.1 - - - 0.1
Dividends - - - (0.3) (2.4) (2.7)
Share option charge - - 0.8 - - 0.8
Release of share option reserve on exercise - - (3.4) - (1.1) (4.5)
Total contributions by and distributions to owners - 0.1 (2.6) (0.3) (3.5) (6.3)
Balance at 30 June 2024 1.0 67.1 (52.6) 0.2 83.2 98.9
Consolidated statement of cash flows
for the period to 30 June 2024
Period ended Period ended
30 June 30 June
2024 2023
Note £m £m
Net cash generated from operating activities 18 7.6 6.1
Cash flows from investing activities
Equity investments (1.1) (1.0)
Purchase of property, plant and equipment (0.2) (0.3)
Development expenditure (2.0) (1.6)
Cost of acquisitions - net of cash received (4.7) -
M&A transaction costs (0.8) -
Loan to equity interest (0.6) -
Finance income 0.1 0.1
Net cash flows (used in)/from investing activities (9.3) (2.8)
Cash flows from financing activities
Finance costs (0.6) (0.2)
Drawdown of loans 5.0 -
Payment of lease liability (0.2) (0.2)
Cash settled Value Builder scheme (5.2) -
Issue of share capital 0.1 0.2
Dividends paid (2.7) (2.6)
Net cash flows used in financing activities (3.6) (2.8)
Net increase/(decrease) in cash and cash equivalents (5.3) 0.5
Cash and cash equivalents at start of period 12.7 12.8
Cash and cash equivalents at end of period 7.4 13.3
Operating costs of an exceptional nature, as per note 7, are included in net
cash generated from operating activities.
Within net cash flows from investing activities, fixed asset investments
include the acquisition in Fintel Labs Limited of a 5.8% equity interest in
mortgage technology company, Mortgage Brain Holdings Limited. Also included is
the sale in Fintel Labs of its 9.9% equity interest in Cardan Financial Group
Limited.
NOTES TO THE INTERIM FINANCIAL INFORMATION
1 Reporting entity
Fintel plc 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 2024 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 2023 ("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 2024 and the comparative figures for the six
months ended 30 June 2023 are unaudited. The comparative financial information
for the period ended 31 December 2023 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 2023 have been delivered
to the Registrar of Companies. The auditors' report on the accounts for 31
December 2023 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 2024. 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 16 September 2024.
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 2023 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 2024 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;
independent ratings and reviews of 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 2024 £m £m £m £m £m
Revenue 12.4 11.1 12.2 - 35.7
Direct operating costs (7.1) (6.9) (5.1) - (19.1)
Gross profit 5.3 4.2 7.1 - 16.6
Administrative and support costs (7.0) (7.0)
Adjusted EBITDA 9.6
Operating costs of an exceptional nature (2.0)
Amortisation of other intangible assets (1.6)
Amortisation of development costs and software (0.7)
Depreciation (0.3)
Depreciation of leased assets (0.2)
Share option charge (0.8)
Operating profit 4.0
Net finance costs (0.6)
Profit before tax 3.4
Intermediary Distribution Fintech and Admin and
Services Channels Research 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 leased assets (0.2)
Share option charge (0.8)
Operating profit 4.7
Net finance costs (0.2)
Profit before tax 4.5
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
2024 2023
£m £m
Depreciation of tangible assets - owned 0.3 0.2
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
2024 2023
£m £m
Exceptional costs - operating
M&A costs 1.1 0.4
Transformation 0.3 0.8
Value Builder related costs 0.6 -
Restructuring - 0.3
Other underlying adjustments 1.6 1.0
Amortisation of other intangible assets
Interest unwind on contingent and deferred consideration 0.2 -
Profit on sale of equity investments (0.2) -
Underlying adjustments - before tax 3.6 2.5
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 £2.0m (HY23: £1.5m) comprised
the following:
· M&A transaction costs £1.1m (HY23: £0.4m)
· Share settlement costs £0.6m (HY23: £nil)
· Transformation costs of £0.3m (HY23: £0.8m) - includes
implementation costs to enhance Fintel's customer relationship management
platform ("CRM") and a new enterprise resource planning system ("ERP"),
delivered during HY24
· Restructuring related costs £nil (HY23: £0.3m)
No other costs have been treated as exceptional in the period to 30 June 2024.
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
2024 2023
£m £m
Operating profit 4.0 4.7
Add back:
Depreciation (note 12) 0.3 0.2
Depreciation of leased assets (note 12) 0.2 0.2
Amortisation of other intangible assets (note 13) 1.6 1.0
Amortisation of development costs and software (note 13) 0.7 0.6
EBITDA 6.8 6.7
Add back:
Share option charge 0.8 0.8
Operating costs of exceptional nature (note 7) 2.0 1.5
Adjusted EBITDA 9.6 9.0
Adjusted EBITDA of non-core surveying business 0.3 0.2
Core adjusted EBITDA 9.3 8.8
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
2024 2023
£m £m
Operating profit 4.0 4.7
Add back:
Operating costs of exceptional nature (note 7) 2.0 1.5
Amortisation of other intangible assets (note 13) 1.6 1.0
Adjusted operating profit 7.6 7.2
Adjusted profit before tax is calculated as follows:
Period ended Period ended
30 June 30 June
2024 2023
£m £m
Profit before tax 3.4 4.5
Add back:
Operating costs of exceptional nature (note 7) 2.0 1.5
Amortisation of other intangible assets (note 13) 1.6 1.0
Adjusted profit before tax 7.0 7.0
Adjusted profit after tax is calculated as follows:
Period ended Period ended
30 June 30 June
2024 2023
£m £m
Profit after tax 2.3 3.4
Add back:
Operating costs of exceptional nature (note 7), net of tax 1.8 1.2
Amortisation of other intangible assets (note 13), net of deferred 1.3 0.7
tax
Profit attributable to non-controlling interests (0.2) (0.1)
Adjusted profit after tax 5.2 5.2
Free cash flow conversion is calculated as follows:
Period ended Period ended
30 June 30 June
2024 2023
£m £m
Adjusted operating profit 7.6 7.2
Adjusted for:
Depreciation of tangible assets 0.3 0.2
Depreciation of lease assets 0.2 0.2
Amortisation of development costs and software 0.7 0.6
Share option charge 0.8 0.8
Adjusted EBITDA 9.6 9.0
Net changes in working capital 0.3 0.4
Purchase of property, plant and equipment (0.2) (0.3)
Development expenditure (2.0) (1.6)
Underlying cash flow from operations 7.7 7.5
Underlying operating cash flow conversion 101% 104%
Net interest paid (0.5) (0.1)
Income tax paid (1.7) (1.8)
Payments of lease liability (0.2) (0.2)
Free cash flow 5.3 5.4
Adjusted EBITDA 9.6 9.0
Free cash flow conversion 55% 60%
9 Net finance expense
Finance Interest - expense
Period ended Period ended
30 June 30 June
2024 2023
£m £m
Interest payable on financial liabilities at amortised cost 0.7 0.3
Total finance expense 0.7 0.3
Finance Interest - income
Period ended Period ended
30 June 30 June
2024 2023
£m £m
Bank interest receivable 0.1 0.1
Total finance income 0.1 0.1
10 Earnings per share
Period ended Period ended
30 June 30 June
Basic earnings per share 2024 2023
Profit attributable to equity shareholders of the parent (£m) 2.1 3.3
Weighted average number of shares in issue 103,855,666 103,705,423
Basic profit per share (pence) 2.0 3.2
Period ended Period ended
30 June 30 June
Diluted earnings per share 2024 2023
Profit attributable to equity shareholders of the parent (£m) 2.1 3.3
Weighted average number of shares in issue 103,855,666 103,705,423
Diluted weighted average number of shares and options for the period 190,269 734,382
104,045,935 104,439,805
Diluted profit per share (pence) 2.0 3.2
Period ended Period ended
30 June 30 June
Adjusted basic earnings per share 2024 2023
Adjusted profit after tax (note 8) (£m) 5.2 5.2
Weighted average number of shares in issue 103,855,666 103,705,423
Adjusted earnings per share (pence) 5.0 5.0
11 Fixed asset investment
Fixed Asset Investments
£m
At 31 December 2023 1.2
Additions 1.5
Disposals (0.2)
At 30 June 2024 2.5
In March 2024, Fintel Labs Limited acquired a non-controlling interest in
Mortgage Brain Holdings Limited, acquiring 5.8% of Ordinary Shares in exchange
for £1.5m consideration. The acquisition is recorded at cost and subsequently
recorded at fair value through other comprehensive income.
In April 2024, Fintel Labs Limited sold its 9.9% stake in Cardan Financial
Group Limited for £0.4m, realising a profit on disposal of £0.2m.
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 2023 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
Acquisitions - - - - - -
Additions 0.3 0.1 0.4 - 0.1 0.1
Disposals - - - - (0.7) (0.7)
At 31 December 2023 3.2 1.1 4.3 0.9 1.7 2.6
Acquisitions - - - - - -
Additions - 0.1 0.1 - 0.2 0.2
At 30 June 2024 3.2 1.2 4.4 0.9 1.9 2.8
Depreciation and impairment
At 1 January 2023 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
Depreciation charge for the period 0.2 - 0.2 0.1 0.1 0.2
Disposals - - - - (0.7) (0.7)
At 31 December 2023 1.3 0.8 2.1 0.4 1.0 1.4
Depreciation charge for the period 0.1 0.1 0.2 0.1 0.2 0.3
At 30 June 2024 1.4 0.9 2.3 0.5 1.2 1.7
Net book value
At 30 June 2024 1.8 0.3 2.1 0.4 0.7 1.1
At 30 June 2023 1.8 0.2 2.0 0.6 0.7 1.3
Plant and equipment includes IT equipment and motor vehicles.
13 Intangible assets
Goodwill Brand Intellectual Customer list Total other Development Total
property intangible expenditure
assets
Group £m £m £m £m £m £m £m
Cost
At 1 January 2023 72.4 3.1 24.4 - 27.5 5.5 105.4
Additions - - - - - 1.6 1.6
At 30 June 2023 72.4 3.1 24.4 - 27.5 7.1 107.0
Acquisitions 16.7 1.0 3.0 1.3 5.3 - 22.0
Additions - - - - - 2.9 2.9
At 31 December 2023 89.1 4.1 27.4 1.3 32.8 10.0 131.9
Acquisitions 4.1 0.7 0.5 0.9 2.1 6.2 6.2
Additions - - - - - 2.0 2.0
At 30 June 2024 93.2 4.8 27.9 2.2 34.9 12.0 140.1
Amortisation and impairment
At 1 January 2023 0.2 1.1 6.6 - 7.7 2.3 10.2
Charge in the period - 0.2 0.8 - 1.0 0.6 1.6
At 30 June 2023 0.2 1.3 7.4 - 8.7 2.9 11.8
Charge in the period - 0.1 1.0 0.1 1.2 0.7 1.9
At 31 December 2023 0.2 1.4 8.4 0.1 9.9 3.6 13.7
Charge in the period - 0.1 1.1 0.4 1.6 0.7 2.3
At 30 June 2024 0.2 1.5 9.5 0.5 11.5 4.3 16.0
Net book value
At 30 June 2024 93.0 3.3 18.4 1.7 23.4 7.7 124.1
At 30 June 2023 72.2 1.8 17.0 - 18.8 4.2 95.2
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
2024 2023
£m £m
Intermediary Services 27.9 12.7
Distribution Channels 12.1 11.5
Fintech and Research 53.0 48.0
93.0 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
2024 2023
£m £m
Current
Lease liability 0.4 0.5
0.4 0.5
Non-current
Lease liability 1.3 1.7
Secured bank loan 15.8 -
17.1 1.7
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. As at the reporting date
the group had drawn down £16m of the facility
15 Capital and reserves
Share capital
Ordinary
Shares
Number of fully paid shares (nominal value £0.01):
At 30 June 2023 103,772,215
Issue of share capital 76,470
At 31 December 2023 103,848,685
Issue of share capital 23,529
At 30 June 2024 103,872,214
Share
premium
£m
At 30 June 2023 67.0
Issue of share capital -
At 31 December 2023 67.0
Issue of share capital 0.1
At 30 June 2024 67.1
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 2023 other than as disclosed below:
CSOP 2018
During the current period, 23,529 awards were exercised. No awards were
forfeited as a result of bad leavers.
17 Other reserves
Merger Share option
reserve reserve Total
Group £m £m £m
At 30 June 2023 (53.9) 3.3 (50.6)
Share option charge - 0.7 0.7
Release of share option reserve - (0.1) (0.1)
At 31 December 2023 (53.9) 3.9 (50.0)
Share option charge - 0.8 0.8
Release of share option reserve - (3.4) (3.4)
At 30 June 2024 (53.9) 1.3 (52.6)
18 Notes to the cash flow statement
Period ended Period ended
30 June 30 June
2024 2023
£m £m
Cash flow from operating activities
Profit after taxation 2.3 3.4
Add back:
Finance income (0.1) (0.1)
Finance cost 0.7 0.3
Taxation 1.1 1.1
4.0 4.7
Adjustments for:
Amortisation of development expenditure and software (note 13) 0.7 0.6
Depreciation of leased assets 0.2 0.2
Depreciation of property, plant and equipment 0.3 0.2
Amortisation of other intangible assets 1.6 1.0
Share option charge 0.8 0.8
Profit on sale of equity investment (0.2) -
Interest unwind on deferred sale proceeds (0.1) -
Costs relating to exercise of Value Builder share scheme 0.6 -
M&A related transactions 1.1 -
Operating cash flow before movements in working capital 9.0 7.5
Increase in trade and other receivables (0.5) (0.2)
Increase in trade and other payables 0.8 0.6
Cash generated from operations 9.4 7.9
Income taxes paid (1.7) (1.8)
Net cash generated from operating activities 7.6 6.1
19 Acquisitions
Acquisitions completed in the period ended 30 June 2024
Adv Data Holding Limited
On 26 January 2024 the Group acquired 100% of the issued shares of Adv Data
Holding Limited along with its wholly owned trading subsidiary Synaptic
Software Limited (together "Synaptic"), which is a provider of independent
adviser planning and research software. This acquisition will extend and
cement the Group's central market position as a provider of technology,
research, and consulting services to the adviser market. Total consideration
of £5.1m was paid upfront in cash upon completion. The fair value of the
total consideration at the acquisition date was £5.1m. On acquisition,
acquired intangibles were recognised relating to customer related intangibles
(£0.5m), intellectual property (technology) related intangibles (£0.4m), and
brand name (£0.3m). The residual goodwill of £2.9m represents the expertise
of the acquired workforce and the ability to leverage this into some of the
Group's businesses, together with the ability to exploit the Group's existing
customer base. Synaptic contributed revenue of £0.8m and losses before
taxation of £0.2m to the Group from the date of acquisition to 30 June 2024.
Had the acquisition been made at the beginning of the period, revenue would
have been £1.0m and losses before taxation would have been £0.3m. The amount
of goodwill expected to be deductible for tax purposes in respect of this
acquisition is £nil.
Owen James Group Ltd
On 26 January 2024 the Group acquired 100% of the issued shares of Owen James
Group Ltd along with its wholly owned trading subsidiary Owen James Events
Limited (together "Owen James"). Owen James is a leading provider of strategic
engagement events in UK financial services. This acquisition will extend the
Group's flagship industry events programme, and data and insights strategy.
Cash consideration of £0.8m was paid upfront upon completion, with a further
£0.1m payable two months later contingent upon successful completion of an
integration plan. Contingent consideration based upon certain revenue-based
and profit-based criteria over the three years following acquisition is capped
at £1.5m in total and is payable at the end of each earn-out year. The fair
value of the total consideration at the acquisition date was £1.2m. On
acquisition, acquired intangibles were recognised relating to customer related
intangibles (£0.4m), and brand name (£0.4m). The residual goodwill of £0.6m
represents the expertise of the acquired workforce and the ability to leverage
this into some of the Group's businesses, together with the ability to exploit
the Group's existing customer base. Owen James contributed revenue of £0.7m
and losses before taxation of £0.01m to the Group from the date of
acquisition to 30 June 2024. Had the acquisition been made at the beginning of
the period, revenue would have been £0.8m and losses before taxation would
have been £0.1m. The amount of goodwill expected to be deductible for tax
purposes in respect of this acquisition is £nil.
Newdez Limited ("Newdez")
On 15 March 2024 the Group acquired 70% of the issued share capital of Newdez.
which is a compliance tool provider to the financial intermediary market. The
deal will assist with digitising the Group's compliance proposition. Cash
consideration of £0.5m was paid upfront upon completion. Contingent
consideration based upon certain revenue-based criteria over the year ending
31 December 2024 is capped at £1.0m and is payable at the end of that year.
The fair value of the total consideration at the acquisition date was £0.6m.
There are call options to acquire up to 50% of the remaining shares during the
year ending 31 March 2027, and all shares then remaining during the year
ending 31 March 2028. On acquisition, acquired intangibles of £0.1m were
recognised relating to intellectual property (technology) related intangibles.
The residual goodwill of £0.6m represents the expertise of the acquired
workforce and the ability to leverage this into some of the Group's
businesses, together with the ability to exploit the Group's existing customer
base. Newdez contributed revenue of £0.02m and losses before taxation of
£0.03m to the Group from the date of acquisition to 30 June 2024. Had the
acquisition been made at the beginning the period, revenue would have been
£0.03m and losses before taxation would have been £0.04m. The amount of
goodwill expected to be deductible for tax purposes in respect of this
acquisition is £nil.
The fair values of the assets and liabilities acquired during the period ended
30 June 2024 are summarised below:
Synaptic Owen James Total
Newdez
During the period ended 30 June 2024 £m £m £m £m
Brands 0.3 0.4 - 0.7
Customer relationships 0.5 0.4 - 0.9
Intellectual property 0.4 - 0.1 0.5
Trade and other receivables 0.5 0.5 - 1.0
Trade and other payables (0.7) (0.7) (0.1) (1.5)
Net cash 1.5 0.2 - 1.7
Deferred tax liability (0.3) (0.2) - (0.5)
Fair value of assets 2.2 0.6 - 2.8
Non-controlling interest share of assets -
n/a n/a -
Fair value of assets acquired 2.2 0.6 - 2.8
Goodwill 2.9 0.6 0.6 4.1
Consideration 5.1 1.2 0.6 6.9
Satisfied by fair values of:
Cash consideration 5.1 0.8 0.5 6.4
Contingent consideration - 0.4 0.1 0.5
5.1 1.2 0.6 6.9
Less: net cash acquired (1.5) (0.2) - (1.7)
Transaction costs and expenses 0.2 0.1 0.1 0.4
Total committed spend on acquisitions completed in the period
3.8 1.1 0.7 5.6
The fair value of contingent consideration at the acquisition date represents
the estimated most likely pay-out based on management's forecast of future
trading and performance discounted at the Group's incremental borrowing rate.
Contractual contingent consideration is not linked to post-acquisition
services, and none of the contingent consideration is contingent upon
re-employment.
The fair value of trade receivables within trade and other receivables is
£0.9m. The gross contractual amount for trade receivables is £0.9m, all of
which other than an immaterial amount is expected to be collectible.
The cash outflow in the during the period ended 30 June 2024 in respect of
acquisitions completed in the same period comprised:
Synaptic Owen James Total
Newdez
During the period ended 30 June 2024 £m £m £m £m
Cash consideration 5.1 0.8 0.5 6.4
Less: net cash acquired (1.5) (0.2) - (1.7)
Net investing cash outflow in respect of acquisitions completed in the period 4.7
3.6 0.6 0.5
Transaction costs and expenses paid 0.2 0.1 0.1 0.4
Total cash outflow in respect of acquisitions completed in the period 5.1
3.8 0.7 0.6
Acquisition completed since the period ended 30 June 2024
The fair value and purchase price allocation work on the following acquisition
made since 30 June 2024 is at an early stage and will not be completed until
after the issue of these financial statements.
Threesixty Services Limited ("threesixty")
On 2 July 2024 the Group acquired 100% of the issued shares of threesixty for
upfront cash consideration of £14.6m. threesixty is a provider of independent
adviser planning and research software, and the acquisition will further
strengthen the Group's range of quality services available to professional
intermediaries. threesixty clients will directly benefit from access to the
Group's extensive technology and service platforms.
20 Subsequent events
On 2 July 2024 the Group acquired 100% of the issued shares of Threesixty
Services Limited ("threesixty"). threesixty is a provider of independent
adviser planning and research software. Further details can be found in note
19.
On 16 July 2024 the Group announced that it had conditionally agreed to
acquire Rayner Spencer Mills Research Limited ("RSMR"). RSMR is one of the
most recognised fund ratings and research agencies in the UK. The acquisition
is expected to complete in the coming months, subject to regulatory approval.
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