REG - Fintel PLC - Trading Update, Acquisitions & Notice of Results

FintelAnnouncement

27/07/2023 07:15

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RNS Number : 3161H  Fintel PLC  27 July 2023

27 July 2023

 

Fintel plc

("Fintel", the "Company" or the "Business")

 

Trading Update, Acquisitions and Notice of Half Year Results

Positive start to 2023; 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 issues a trading update for the
six months ended 30 June 2023.

 

"Fintel has made a positive start to 2023, with a solid performance in our
Core business and significant strategic progress through a series of
successful investments and acquisitions.

 

"During the period, Fintel successfully negotiated a new five-year technology
contract for its member firms with an existing vendor on improved terms, which
will reduce pass through costs and the associated revenues, whilst increasing
EBITDA margin.

 

"In addition, Fintel is pleased to announce today the acquisition of MICAP and
Competent Adviser, two technology platforms serving in excess of 15,000 users,
complementing our recent investment in Plannr Technologies through Fintel Labs
and further strengthening our product and service proposition."

 

Matt Timmins, Joint CEO

 

 

Financial highlights

 

·     Core(1) revenue increased to £27.6m (HY22: £27.1m, LfL: £26.6m)
up 1.6% in total and 4% on a like for like basis

·     Core adjusted EBITDA(2) increased to £8.8m (HY:22 £8.2m) up c.8%

·     Statutory revenue £31.7m (HY22: £32.2m), down c.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(3) increased to £9.0m (HY22: £8.7m) up c.4%

·     Strong liquidity with cash position of £13.3m (FY22: £12.8m; HY22:
£7.6m), driven by continued strong operating cash flow conversion, which is
expected to exceed 100% (HY22: 124%)

·     Four year £80m Revolving Credit Facility remains undrawn, providing
significant headroom for organic investment and M&A opportunities

 

Strategic highlights

 

·      Acquisition of MICAP by subsidiary business Defaqto, the leading
provider of financial information, ratings and fintech

o   MICAP provides independent research and advice tools for tax advantaged
investment products

o  The strategic acquisition will extend Defaqto's reach into the
tax-advantaged market, expanding both its data footprint and research
capabilities to further enhance scale and IP, whilst further growth is
expected from strong customer and proposition adjacencies

o   Completed in July 2023, the transaction was funded entirely from cash
reserves with upfront cash consideration of £3m representing a 10x EV EBITDA
multiple. In addition, £1m cash consideration is deferred for 1 year and a
£500k contingent earnout is based on certain trading criteria being delivered
in the first year of ownership

·      Acquisition of Competent Adviser via Fintel IQ, a newly formed
technology and knowledge platform

o   Competent Adviser is a dynamic learning platform enabling advisers to
meet increasing regulatory competency requirements

o   Completed in July 2023, the transaction was funded entirely from cash
reserves with upfront cash consideration of £2.5m representing a 9x EV EBITDA
multiple. In addition, a £500k contingent earnout is based on certain trading
criteria being delivered in the first year of ownership

·      Inaugural investment in Plannr through Fintel Labs technology
incubator

o   25% equity stake taken in Plannr Technologies Ltd, provider of
financial technology and specialist CRM capability for financial advisers,
planners and wealth managers

o   Subsidiary business Defaqto will integrate Plannr's CRM system,
extending the capabilities of its Engage financial advice and planning
technology to realise efficiency benefits for the 8000 financial advisers who
use its platform

·     Longstanding partnership with technology supplier Intelliflo
strengthened through a new five-year minimum term technology contract with
improved terms

o   The agreement enables continued expansion of Fintel's end-to-end
technology platform, whilst ensuring ongoing member access to an established
back office solution, which is fully integrated with Defaqto Engage, our
proprietary advice and planning technology

o   Taking the form of a reseller agreement, the new contract will reduce
pass through costs and the associated revenues, and increase EBITDA margin

o   Signed in May 2023, the contract is expected to reduce FY23 statutory
revenue and costs by c. £3.2m

 

Operational highlights

 

Fintel has continued to trade in line with Board's expectations in the first
six months of 2023, whilst making significant progress towards our strategic
goals and maintaining steady improvement in our earnings quality.

 

A diverse customer base and proposition ensures Fintel is resilient to market
conditions, with the impact of less favourable mortgage market conditions
offset by strong growth in our fintech and research division. Software
adoption and average revenue per customer continue to increase as we expand
our end-to-end service and technology platform through new products and
partnerships.

 

Leveraging the cash generative nature of our business, we have launched a new
technology incubator enabling us to invest in and scale modern technology
solutions to the intermediary market.

 

Outlook

 

Fintel's long term growth is underpinned by regulatory and structural changes
in the UK financial services market, with continued expansion of our products
and services supporting our customers through this evolving landscape.

 

A strong balance sheet with significant liquidity, coupled with recent
acquisitions and a strong M&A pipeline, positions us well to accelerate
growth.

 

The Board is confident of delivering further strategic progress in line with
its expectations for the full year.

 

 

Notice of Interim Results

 

Fintel intends to publish its interim results for the six months ended 30 June
2023 on 19 September 2023.

 

Matt Timmins, Joint CEO of Fintel plc, said:

 

"We are pleased to report significant strategic progress achieved in the first
half of 2023. Through a series of successful acquisitions and investments, we
have expanded our unique service and technology platform, propelling us
towards accelerated growth.

 

"We are confident that our strategic progress, coupled with strong organic
growth drivers, firmly positions us for sustainable growth and ongoing
success, as we continue to inspire better outcomes for all."

 

 

Notes

(1)Core business excludes revenues from Panel Management and Surveying.

(2)Core adjusted EBITDA represents earnings before interest, tax,
depreciation, amortisation, share option charges and operating exceptional
costs excluding Panel Management and Surveying.

(3)Adjusted EBITDA represents earnings before interest, tax, depreciation,
amortisation, share option charges and operating exceptional costs.

 

 

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

 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)

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)

 

 

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