REG - IntegraFin Holdings - Final Results
18/12/2024 07:00
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RNS Number : 4892Q IntegraFin Holdings plc 18 December 2024
LEI Number: 213800CYIZKXK9PQYE87
18 December 2024
IntegraFin Holdings plc
Announcement of full year results for the year ended 30 September 2024
IntegraFin Holdings plc ("IHP", or "the Group") operator of Transact, the UK's
premium investment platform for clients and UK financial advisers, is pleased
to report its full year results.
The Group continues to deliver strong financial and operational progress
Financial and operational highlights
- Closing Funds Under Direction (FUD) grew 17% to £64.1bn
(FY23:£55.0bn), supported by net inflows of £2.5bn (FY23:£2.7bn)
- Revenue increased 7% to £144.9m (FY23: £134.9m), driven by higher
average daily FUD on the Transact platform
- Underlying profit before tax grew 12% to £70.6m (FY23: 63.0m)
- Underlying earnings per share grew 7% in FY24, despite the impact of
the first full year operating with a 25% rate of UK corporation tax
- The Group's investment in its proprietary technology delivered further
improvements to the Transact platform, widening digitalisation across a range
of processes and implementing valuable integrations
- Declared second interim dividend of 7.2 pence per ordinary share,
resulting in a total dividend for the year of 10.4 pence per share (2023: 10.2
pence per share). The dividend is payable on 31 January 2025 to ordinary
shareholders on the register on 03 January 2025. The ex-dividend date will be
02 January 2025.
Financial information
IHP Group Year to 30 September 2024 Year to 30 September 2023 % Movement
Total Group revenue £144.9m £134.9m +7%
Reported profit before tax £68.9m £62.6m +10%
Underlying profit before tax £70.6m £63.0m +12%
Reported earnings per share 15.7p 15.1p +4%
Underlying earnings per share 16.2p 15.2p +7%
Total dividend per share 10.4p 10.2p +2%
Transact platform Year ended 30 September 2024 Year ended 30 September 2023 % Movement
Net inflows £2.5bn £2.7bn -7%
Closing FUD £64.1bn £55.0bn +17%
Average daily FUD £59.6bn £53.6bn +11%
Transact platform clients * 234,998 230,294 +2%
Transact platform registered advisers * 8,048 7,683 +5%
Time4Advice Year ended 30 September 2024 Year ended 30 September 2023 % Movement
Total number of chargeable CURO software users * 3,098 2,752 +13%
*as at 30 September
Commenting on the full year results, Alex Scott, IHP Group Chief Executive
Officer said:
"I am pleased with the Group's strong performance over the past financial
year. We have delivered growth in our key performance metrics, including
reaching record highs in average daily FUD, adviser numbers and client
numbers. Growth in average daily FUD delivered a 7% uplift to revenue in FY24,
helping increase underlying profit before tax to £70.6m.
These results would not have been possible without the hard work of our
employees across the Group. Their diligent focus on customer service and
enhancing platform functionality is essential to maintaining our leading
market position. We continue to prioritise good customer outcomes across the
business.
The macroeconomic picture has improved throughout the year. Growth
opportunities within the UK adviser market remain promising, although we
remain cognisant of the ongoing geopolitical risks. The announcements in the
Autumn Budget reaffirmed the importance of the UK pension market as the
Government continues to prioritise retirement security.
The flexibility and ongoing enhancements enabled by our proprietary
technology, coupled with our customer-first principles and personal,
high-touch client service ensure that the Group is well positioned to seize
opportunities and navigate emerging threats.
The Group remains focussed on delivering leading financial adviser technology,
service, and client value for money, which will in turn deliver organic
growth. Above all, we are dedicated to our goal of being the number one
provider of software and services for clients and UK financial advisers."
Outlook and guidance
· Positive fundamentals continue to support the ongoing growth of
the adviser platform market
· The macroeconomic backdrop is improving due to greater clarity
following the outcomes of the October UK budget, and US election
· Consistent with the Group's strategy to share the benefits of
scale with our clients, the Transact platform will make the following targeted
price changes:
o charging one pension wrapper fee per pension type in family linked
portfolios, effective from 01 April 2025 (annualised cost of c.£2m)
o reducing non-advised client charges, effective from 01 January 2025, a
cost of £0.6m in FY25 (annualised cost of c.£1m)
· For FY25, the Group expects total administrative costs to rise by
c.9%, exclusive of a one-off c.£2m cost associated with the relocation to a
new London office in FY25
· From FY26, we expect total administrative costs to moderate,
rising by low to mid-single digit percentages
Enquiries
Investors
Luke Carrivick, IHP Head of Investor Relations +44 (0)20 7608 5463
Media
FGS Global: Mike Turner +44 (0)7775992415
FGS Global: Chris Sibbald +44 (0)7855955531
2024 Full year results presentation
IHP will be hosting a virtual analyst audio presentation at 09:30am on 18
December 2024. This will be available at: https://brrmedia.news/IHP_FY_24
(https://brrmedia.news/IHP_FY_24)
A recording of the presentation will be available for playback after the event
at https://www.integrafin.co.uk/. Slides accompanying the analyst presentation
will also be available this morning at
https://www.integrafin.co.uk/annual-reports/.
CEO Statement
Overview
I am pleased to report another year of strong financial and operational
performance by the Group. We have achieved robust growth in our key metrics:
client and adviser numbers, revenue and underlying profit before tax (PBT).
Progress in these measures was supported by an increase in average daily FUD,
driven by our net inflows and rising markets. The Group's value proposition
continues to deliver positive outcomes for our clients, their financial
advisers and our shareholders.
In the first half of our financial year, equity markets performed well with a
beneficial impact on our FUD levels. However, across the industry, investment
funds and adviser platforms alike experienced heightened outflows, continuing
the trend seen towards the end of FY23. Nevertheless, Transact attracted among
the highest net flows in the industry.
The second half of the year saw more moderate market movements and the first
Bank of England interest rate cut since 2020. Net inflows also showed signs of
growth compared to H1, with higher inflows and an improving macroeconomic
picture as the financial year progressed, boosting flows.
T4A has also delivered over the year, increasing the number of CURO licence
users and making substantial progress on the development and rollout of CURO
on Power Platform (CURO PP). However, anticipated financial performance has
been behind the original expectation, due to complexities in the development
and finalisation of CURO PP.
The combination of our key differentiators - proprietary technology and
industry-leading, personal customer service - has again proven effective in
allowing us to capitalise on the opportunities within the adviser platform
market. Our focus remains, as always, on our purpose: to make financial
planning easier for clients and their UK financial advisers.
Transact platform performance
Over the financial year, we have continued to grow the number of advisers and
clients on the Transact platform, with steady increases throughout the period.
Adviser numbers passed a significant milestone, now standing at 8,048, and
client numbers are at 234,998. Our quality service remains the cornerstone of
our platform and advisers continue to recognise this, with Transact winning
multiple industry awards. This is emphasised further by achieving durable
client retention of 94% for the year.
Gross inflows were strong during the year, and in Q2 we achieved our highest
ever gross inflows figure for a single quarter at £2.3 billion. This is a
testament to the ongoing capability of our platform technology and our
industry-leading customer service which continues to win market share.
Partially offsetting this, gross outflows were elevated caused by an increase
in the value of one-off withdrawals from the platform. This was driven by
several factors, including the enduring impact of recent high inflation
driving up nominal living costs and the higher interest rate environment
increasing payments required on debts such as mortgages. As the year
progressed, we started to see signs of outflows moderating, with H2 outflows
slightly lower than in H1 FY24. With inflation now close to the Bank of
England's target, we anticipate that some of the factors previously driving
higher outflows will start to abate gradually in FY25.
This led to a robust performance in net flows which were the third highest in
the market over the financial year, representing 25% of market net flows.
Market movements also provided significant uplift to our FUD, especially in
the first half of the year, helping us reach closing FUD of £64.1 billion.
This is a new record for closing FUD, 17% ahead of FY23.
Financial performance
As a result of the increase in average daily FUD throughout the year, revenue
has increased to £144.9 million, 7% ahead of FY23. At T4A, revenue was
stable, with an improvement in the revenue mix. We are now generating a
greater proportion of income earned from CURO licence fees (c.88% compared to
c.83% in FY23), a more sustainable source of recurring revenue.
Underlying PBT, £70.6 million, and reported PBT, £68.9 million, have both
increased in the past year, by 12% and 10% respectively. This has been driven
by a combination of higher revenue and an increase in net interest income on
corporate cash, largely due to higher interest earned on corporate cash
balances. We also maintained our strong, debt-free balance sheet.
We remain committed to ensuring value for our clients and their financial
advisers. We are thus proud that we were able to deliver record revenue and
PBT, while also delivering value to our clients by removing the buy commission
and wrapper fees for Junior ISAs within linked family groups.
Transact platform digitalisation
This year, we have continued our digitalisation programme, implementing
digital enhancements to online wrapper application and bulk administration
processes resulting in significant uplift in online adoption and a reduction
in manual and paper processes. Key pension and ISA portfolio processes can now
be completed online, with real time data validation. We have also expanded the
implementation of straight-through processing. This continues to drive
efficiencies for advisers and their back-office staff, as well as starting to
deliver efficiencies for Transact platform operations.
A benefit of our proprietary platform technology is that we can maintain a
regular cycle of monthly updates to our functionality. Every month, we deliver
new functionality and improved efficiency in each update to the Transact
platform. The streamlining of processes, enabled by these releases, helps
deliver operational efficiency for both staff and the clients and advisers
using the platform.
People
I was delighted to welcome Euan Marshall to the board in January 2024. Euan
brings a breadth of experience that will be invaluable in driving and
delivering our strategy over the coming years.
Average headcount was 6% higher during the year, including further additions
to our IT and software functions. Existing and new employees have helped to
enhance our service, as well as enabling our program of platform improvements
and digitalisation. Our high-quality service and platform enhancements drive
our robust net inflows, delivering organic growth.
The wellbeing of our people remains of the utmost importance to our business.
We completed our third annual group engagement survey which indicated that our
employees feel supported and aligned with our business' core values.
Regulatory and sustainability matters
We operate in a changing regulatory environment and FY24 bore witness to
several evolving developments. This was the first full year in which the
Financial Conduct Authority (FCA)'s Consumer Duty regulation was in force.
Consumer Duty is not a one-off event but rather an ongoing commitment; as
such, we continuously review our operations to ensure we are maximising
positive consumer outcomes. We have always prioritised our clients' needs, and
this value is at the heart of our culture.
In December 2023, the FCA issued its "Dear CEO" letter outlining its stance on
taking a margin on client cash and calling on firms to cease the practice of
double-dipping. Our approach to client cash has always been, and continues to
be, to pass on the full value to our clients, in accordance with our
customer-first principles.
Outlook
Many of the headwinds that were present over the past year are showing signs
of abating. Yet uncertainty remains, especially regarding the new government's
policy agenda coupled with the impact of potential US policy changes on
geopolitics and the global markets. The outlook on interest rates is also
ambiguous, with inflation levels in the UK closer to the Bank of England's
target, but cautious rhetoric on any further reductions. As such, we expect to
see both the UK and US central banks slowly reduce interest rates during the
coming year, helping to improve investor confidence and appetite to invest in
equity markets.
Despite the level of uncertainty, the opportunities within the UK adviser
platform sector remain strong. The long-term structural trends within the
market look to provide compelling growth opportunities as customers seek to
take greater control over their financial wellbeing and long-term savings and
investments. The UK wealth management sector is expected to continue growing,
driven by government emphasis on retirement security and an ageing, wealthier
UK population. Consequently, over time, more investable assets will flow onto
platforms.
Meanwhile, the Group's strength in both people and technological aspects,
leave us well placed to capitalise on these trends. The flexibility enabled by
our proprietary technology, our customer-first principles and personal,
high-touch client service continues to serve the Group well. We continue to
target the development of Application Programming Interface (API) integrations
that will bring the most benefit to our advisers.
Next year, we will move to a new London office. We will seek to use this move
to bring further efficiencies to our ways of working and to advance our
sustainability goals, while also focusing on how changes to the working
environment can benefit our staff.
As always, I would like to thank all my colleagues across the Group for their
dedication. Their commitment to quality is essential to our success. I look
forward to continuing to deliver on our principal aim: being the number one
provider of software and services for clients and UK financial advisers.
Alexander Scott
Chief Executive Officer
17 December 2024
Financial Review
Headlines
The Group's platform business continued to show its strength in attracting and
retaining advised business. The primary measure of this success was FUD
growth, which was up 17% to £64.1 billion (FY23: £55.0 billion) as a result
of the benefit of both positive net inflows and market movements.
Against a backdrop of ongoing high interest rates and higher cost of living
impacting client withdrawals, where the wider adviser platform sector has
faced headwinds, to have robust, positive net inflows was extremely
encouraging.
As a result of the FUD growth, Group revenue also increased strongly, up 7% to
£144.9 million (FY23: £134.9 million).
The Group also continued to grow its market penetration with platform clients
of 234,998 (FY23: 230,294)* and registered advisers on the platform of 8,048
(FY23: 7,683)*.
Given the Group's strong liquidity profile, the higher UK interest rate
environment and ongoing interest income optimisation, net interest income
increased by 67% to £10.5 million (FY23: £6.3 million).
The growth in both Group revenue and interest income more than offset the 14%
increase in total administrative expenses to £85.0 million (FY23: £74.6
million). This was primarily the result of ongoing investment in staff to
reach a level that will support software development and IT infrastructure
projects, market-leading client service and operational requirements as the
Group continues to grow.
Statutory profit before tax (PBT) rose 10% to £68.9 million (FY23: £62.6
million), a new record for the Group, and underlying profit before tax rose by
12% to £70.6 million (FY23: £63.0 million)*.
The effective tax rate increased to 24% (FY23: 20%) due to the change in
corporation tax rate in April 2023. This resulted in profit after tax rising
by 4%, a slower rate than PBT growth, to £52.1million (FY23: £49.9 million).
Earnings per share (EPS) was 15.7p (FY23: 15.1p). After removing all
non-underlying expenses in FY24, underlying EPS was 16.2p*, compared with
15.2p in FY23.
* Alternative performance measures (APMs) are indicated with an asterisk.
APMs are financial measures which are not defined by IFRS. They are used in
order to provide better insight into the performance of the Group. Further
details are provided in the glossary.
Operational performance
Platform
FY24 FY23 Change %
£bn £bn
Opening FUD 55.0 50.1 +10%
Inflows 8.1 6.4 +27%
Outflows (5.6) (3.7) +51%
Net flows 2.5 2.7 -7%
Market movements 6.6 2.2 +200%
Closing FUD 64.1 55.0 +17%
Average daily FUD for the period 59.6 53.6 +11%
FY24 FY23 Change %
Platform clients 234,998 230,294 +2%
Platform registered advisers 8,048 7,683 +5%
(1) Other movements includes fees, tax charges and rebates, dividends and
interest.
FUD closed the year up 17% on FY23 at £64.1 billion.
During FY24, client pressures caused by macroeconomic factors eased and
investment sentiment improved. This, combined with the reliability and quality
of our advised investment platform, resulted in gross inflows of £8.1 billion
(FY23: £6.4 billion); this was a record for the Group, in what continues to
be a competitive marketplace.
Whilst outflows increased to £5.6 billion (FY23: £3.7 billion), the
annualised rate was 10% of opening FUD (FY23: 7%) and as a result are still
within the range observed historically, as a percentage of FUD. Factors
driving outflows included clients withdrawing savings, including increasing
pension drawdowns as the cost of living has increased and supporting one-off
purchases for themselves and dependents.
Our net flows of £2.5 billion (FY23: £2.7 billion), or 5% of opening FUD,
were strong for the sector.
Back-office technology
At the end of FY24 the number of CURO licence users was 3,098 (FY23: 2,752),
an increase of 13%.
Group Financial Performance
FY24 Group £m FY24 *Platform £m FY23 Group £m FY23 *Platform £m Change % Group Change % Platform
Revenue 144.9 140.0 134.9 130.1 +7% +8%
Cost of sales (3.0) (2.1) (3.9) (2.7) -23% -22%
Gross profit 141.9 137.9 131.0 127.4 +8% +8%
Underlying administrative expenses (83.3) (77.4) (74.2) (72.1) +12% +7%
Credit loss allowance on financial assets 0.1 0.1 (0.1) - -200% -
Non-underlying administrative expenses (1.7) 0.5 (0.4) (0.4) +325% -225%
Operating profit 57.0 61.1 56.3 54.9 +1% +11%
Net interest income 10.5 9.6 6.3 5.7 +67% +68%
Net gain attributable to policyholder returns 1.4 1.4 - - - -
Profit before tax 68.9 72.1 62.6 60.6 +10% +19%
Tax on ordinary activities (16.8) (15.7) (12.7) (11.6) +32% +35%
Profit after tax 52.1 56.4 49.9 49.0 +4% +15%
PBT margin 48% 52% 46% 47% +2% +11%
Earnings per share - basic 15.8p 17.1p 15.1p 14.8p +5% +16%
Earnings per share - diluted 15.7p 17.0p 15.1p 14.8p +4% +15%
* The "Platform" columns represent the activities conducted on Transact and
excludes the activities of T4A, the Group's adviser back-office technology
provider.
The T4A activities are included in the Group column. Platform is equivalent to
the investment administration services and insurance and life assurance
business segments in note 6.
Revenue
There are two streams of Group revenue: investment platform revenue and
back-office technology revenue.
FY24 FY23 Change %
£m £m
Platform Revenue
Recurring annual charges 126.1 116.1 +9%
Recurring wrapper charges 12.8 12.3 +4%
Other income 1.1 1.7 -35%
Total platform revenue 140.0 130.1 +8%
Back-office technology revenue 4.9 4.8 +2%
Total Revenue 144.9 134.9 +7%
Annual commission income and wrapper fee income have been renamed in FY24 to
recurring annual charges and recurring wrapper charges respectively.
Platform revenue
FY24 investment platform revenue increased by £9.9 million to £140.0 million
(FY23: £130.1 million). Investment platform revenue comprises three elements,
99% (FY23: 99%) of which is from a recurring source.
Annual charge income (an annual, ad valorem tiered fee on FUD) and wrapper fee
income (quarterly fixed wrapper fees for certain available tax wrapper types)
are recurring. Other income is composed of buy commission and dealing charges.
Buy commission was phased out during the course of FY24.
Average daily FUD for the year, arising from the performance of the assets in
client portfolios, increased by 11% in FY24 to £59.6 billion. Annual charge
income increased 9% to £126.1 million (FY23: £116.1 million). The lower
increase in annual charge income in comparison to average FUD resulted from a
reduction in the blended rate annual charge payable by clients. This naturally
occurs as a result of a greater proportion of individual client FUD benefits
from progressively lower fees as portfolios increase in value.
Recurring wrapper fee income increased by 4% to £12.8 million (FY23: £12.3
million), reflecting the increase in the number of open tax wrappers for both
existing and new clients.
Other income fell by 35% to £1.1 million (FY23: £1.7 million). This was
driven by the elimination of buy commission during the financial year, which
started during FY23. The elimination of the buy commission is an illustration
of our responsible pricing strategy, as we seek to simplify our fee structure.
Back-office technology revenue
FY24 CURO licence revenue was £4.9 million (FY23: £4.8 million), an increase
of 2%. This was driven by an increase in recurring revenue from additional
CURO user licences.
Administrative expenses
Administrative expenses increased by £10.4 million (14%) to £85.0 million.
FY24 FY23 Change
£m £m %
Employee costs 58.5 53.9 +9%
Occupancy 3.1 2.8 +11%
Regulatory and professional fees 10.6 9.8 +8%
Other costs 8.9 5.2 +71%
Depreciation and amortisation 2.2 2.5 -12%
Underlying administrative expenses 83.3 74.2 +12%
Non-underlying expenses 1.7 0.4 +325%
Administrative expenses 85.0 74.6 +14%
FY24 FY23 Change
No. No. %
Average headcount 666 631 +6%
Period end headcount 666 648 +3%
Employee costs
Employee costs increased by 9% due to a combination of increased headcount,
which grew by 6% from an average of 631 in FY23 to an average of 666 in FY24,
and providing pay rises in order to offer competitive salaries to our
employees.
Occupancy costs/depreciation and amortisation
Occupancy costs increased by £0.3 million, and depreciation and amortisation
reduced by £0.3 million. The increase in occupancy costs is due to the head
office lease ending in June 2023 and renewing in March 2024. As there was no
lease commitment in the intervening period, this meant that, as per IFRS 16,
the leases accounting standard, depreciation of the right-of-use asset was
replaced by rent expense for the final three months of FY23 and the first six
months of FY24. The lease was renewed for a limited period.
Regulatory and professional fees
Regulatory and professional fees increased by £0.8 million in FY24, with
professional fees increasing by £1.5 million mainly as result of consultancy
work and professional advice relating to discrete projects, and regulatory
fees falling by £0.7 million due to a reduction in the FSCS levy.
Other costs
Other costs increased by £3.7 million in FY24 mainly due to an increase in
irrecoverable VAT (£0.9 million), caused by higher software expenses and
professional fees, and the movement of tax relief due to shareholders (FY23:
£1.6 million credit) from administrative expenses to net gain attributable to
policyholder returns in FY24, as noted in the net gain attributable to
policyholder returns section below.
Non-underlying expenses
Non-underlying expenses relate to the deferred consideration payable as part
of the acquisition of T4A, and any other one-off items considered to not be
part of the core underlying business performance. The T4A post-combination
remuneration costs increased to £2.1 million (FY23: £0.4 million), as FY23
included a £1.7 million release of the additional consideration, after it was
confirmed that T4A would not meet the minimum threshold for highly stretching
targets to earn this. The cost will reduce to approximately £0.5 million in
FY25, with the final deferred consideration payment due in January 2025. FY24
also included £0.4 million received from HMRC for overpaid VAT and interest
relating to the FY22 IAD Pty VAT decision, upon receipt of HMRC's final
calculation of the amount due.
Interest income
Interest income rose 67% to £10.7 million (FY23: £6.4 million). The increase
was predominantly due to a higher average Bank of England base rate during the
year, higher average corporate bank balances and ongoing optimisation of
corporate cash management.
This resulted in interest income on corporate cash balances and gilt
investments rising to £10.1 million (FY23: £5.6 million). The Group also
generated another £0.6 million (FY23: £0.8 million), being a combination of
interest due from the Vertus loan facility and interest received from HMRC.
Net gain attributable to policyholder returns
Tax relief due to shareholders was £1.4 million in FY24 and relates to life
insurance company tax requirements and thus is subject to valuations at year
end, which are inherently dependent on market valuations at that date. Prior
to FY24 this was included in administrative expenses (FY23: £1.6 million).
Underlying profit before tax and earnings per share
FY24 Group FY23 Group Change
£m £m %
Reported profit before tax 68.9 62.6 +10%
Non-underlying expenses 1.7 0.4 +325%
Underlying profit before tax 70.6 63.0 +12%
Underlying earnings per share - basic 16.3p 15.2p +7%
Underlying earnings per share - diluted 16.2p 15.2p +7%
Tax
The Group has operations in three tax jurisdictions: the UK, Australia and the
Isle of Man. This results in profits being subject to tax at three different
rates. However, 96% of the Group's income is earned in the UK.
Shareholder tax on ordinary activities for the year increased by £4.1
million, or 32%, to £16.8 million (FY23: £12.7 million) due to the increase
in taxable profit and the increase in corporation tax rate to 25%, with effect
from 6 April 2023.
Our effective rate of tax over the period was 24% (FY23: 20%).
Our tax strategy can be found at: https://www.integrafin.co.uk/
legal-and-regulatory-information/.
Dividends
During the year to 30 September 2024, IHP paid a second interim dividend of
£23.2 million to shareholders in respect of financial year 2023 and a first
interim dividend of £10.5 million in respect of financial year 2024.
In respect of the second interim dividend for FY24, the board has declared a
dividend of 7.2 pence per Ordinary Share (FY23: 7.0p).
FY24 total dividends paid and declared of £34.5 million compares with full
year interim dividends of £33.7 million in respect of FY23.
Consolidated Statement of Financial Position
September 2024 September 2023 Change
£m £m %
Non-current assets 32.6 30.5 +7%
Current assets 270.0 235.4 +15%
Current liabilities (47.5) (27.5) +73%
Non-current liabilities (46.8) (48.5) -4%
208.3 189.9 +10%
Policyholder assets and liabilities
Cash held for the benefit of policyholders 1,622.8 1,419.2 +14%
Investments held for the benefit of policyholders 27,237.8 23,021.7 +18%
Liabilities for linked investment contracts (28,860.6) (24,440.9) +18%
- - -
Net Assets 208.3 189.9 +10%
Share capital 3.3 3.3 0%
Share based payment reserve 4.1 3.4 +21%
Employee Benefit Trust reserve (3.3) (2.6) +27%
Other reserves 5.6 5.6 0%
Profit or loss account 198.6 180.2 +10%
Total equity 208.3 189.9 +10%
Net assets increased 10% (FY23: 10%), or £18.4 million, in the year to
£208.3 million, and the material movements on the Consolidated Statement of
Financial Position were as follows:
Current assets
Current assets increased by 15%, or £34.6 million, during the year to £270.0
million. This was as a result of cash and cash equivalents increasing by
£66.2 million during the year to £244.1 million (FY23: £177.9 million).
This was due to the strong cash flows generated from operating activities and
the maturity of gilts. This was offset by a decrease in gilt investments of
£19.8 million from £22.3 million to £2.5 million.
We continue to operate without any need for debt, so have not incurred any
increase in financing costs from the increase in base rate through the year;
rather, we benefited due to our strong corporate cash reserves.
Current liabilities
Current liabilities increased by 73%, or £20.0 million, during the year to
£47.5 million. This was largely due to an increase in the current provision
relating to ILUK policyholder reserves, and the renewal of the London office
lease during the year, resulting in a new lease liability.
Policyholder assets and liabilities
ILUK and ILInt write only unit-linked insurance policies. They match the
assets and liabilities of their linked policies such that, in their own
individual statements of financial position, these items always net off
exactly. These line items are required to be shown under IFRS in the
Consolidated Statement of Comprehensive Income, the Consolidated Statement of
Financial Position and the Consolidated Statement of Cash Flows but have zero
net effect.
Cash and investments held for the benefit of ILUK and ILInt policyholders have
risen to £28.9 billion (FY23: £24.4 billion). This increase of 18% is
entirely consistent with the rise in total FUD on the investment platform.
Capital resources and capital management
To enable the investment platform within the Group to offer a wide range of
tax wrappers, there are three regulated entities within the Group: a UK
investment firm (IFAL), a UK life insurance company (ILUK) and an Isle of Man
life insurance company (ILInt).
Each regulated entity maintains capital above the minimum level of regulatory
capital required, ensuring sufficient capital remains available to fund
ongoing trading and future growth. Cash and investments in short-dated gilts
are held to cover regulatory capital requirements and tax liabilities.
The regulatory capital requirements and resources in ILUK and ILInt are
calculated by reference to economic capital-based regimes, which are Solvency
II for ILUK and the Isle of Man Risk-Based Capital Regime for ILInt.
IFAL is subject to Investment Firms Prudential Regime (IFPR) regulatory
capital and liquidity rules. These prudential rules require the calculation of
capital requirements reflecting "K factor" requirements that cover potential
harms arising from business activities. The K factors are calculated using
formulae for assets and cash under administration and client orders handled.
IFAL's Public Disclosure document contains further details and can be found on
our website at: https://www.integrafin.co.uk/legal-andregulatory-information/
(https://www.integrafin.co.uk/legal-andregulatory-information/) .
Regulatory capital as at 30 September 2024
Regulatory capital requirements Regulatory capital resources Regulatory cover
£m £m %
IFAL 60.4 74.8 124%
ILUK 229.5 313.1 136%
ILInt 26.4 49.0 186%
Regulatory capital as at 30 September 2023
Regulatory capital requirements Regulatory capital resources Regulatory cover
£m £m %
IFAL 33.3 44.4 133%
ILUK 215.8 269.2 125%
ILInt 27.1 46.6 172%
Liquidity
The Group holds liquid assets in the form of cash and cash equivalents and UK
Government securities ('gilts'), the majority of which are available with
immediate effect. More information can be found in notes 3, 4, 19 and 21 to
the financial statements.
The main uses of liquid assets include:
§ holdings for regulatory and operational purposes, including risk appetite;
and
§ coverage of policyholder returns in the life insurance businesses.
Surplus cash and gilts have decreased by £13.0 million during the financial
year.
FY24 FY23
£m £m
Total Group consolidated cash and UK gilts 242.1 200.3
Less: Group cash and UK gilts held for regulatory and operational purposes (118.3) (89.6)
Less: foreseeable dividend (23.9) (23.2)
Less: coverage of policyholder returns in the life insurance companies (67.8) (42.4)
Surplus cash and UK gilts 32.1 45.1
Euan Marshall
Chief Financial Officer
17 December 2024
Principal Risks and Uncertainties
The board has undertaken a review of the potential risks and uncertainties to
the Group that could undermine the successful achievement of its strategic
objectives and threaten its business model or future performance and
considered non-financial risks that could present operational disruption.
The table below presents the Group's principal risks and uncertainties
together with the related appetite, potential impacts, mitigations and the
risk trend for 2024.
Strategic Pillars
1. Leading functionality
2. Leading service
3. Value for money
Change over the year
↑ - Increasing
↔ - Stable
↓ - Reducing
Risk Impact Mitigation
Competition
The risk that the Group fails to remain competitive against its current peer Weaker than forecast net inflows, The Group continues to provide exceptionally high levels of service and can be Strategic pillars
group and new market entrants.
responsive to client and financial adviser feedback and demands through an
impacting profitability and/or the medium/long-term sustainability of the efficient operational base. 1 2 3
platform
The Group also monitors the landscape of its platform competitors, as well as Change over year
the trends impacting the financial adviser market. The Group's platform
service and developments remain award winning. We make monthly releases to our ↑
proprietary platform technology, which incorporate improvements and new
functionality. We continue to develop our digital platform strategy, expanding
our Transact Online interface allowing advisers direct processing onto the
platform. This is essential to remain relevant and competitive, improving both Risk appetite
functionality and service efficiency and allows the Group to continue to
increase the value for money of our service by reducing client charges, The Group's business model exposes it to competitive markets. This risk is
subject to profit and capital parameters when accepted and the Group's risk appetite is aligned with qualitative and
quantitative measures
deemed appropriate. The Group continues to review its business strategy and
growth potential. In this regard, it primarily considers organic opportunities
that will enhance or complement its current service offerings to the adviser
market.
The Group also continues to support the diversification of the adviser market
through the Vertus scheme which continues to be successful.
Market
The risk of adverse changes in bond, equity and property market values, Depressed equity and bond values The risk is mitigated through the platform offering a wide variety of assets Strategic pillars
currency exchange rates, credit spreads and interest rates
which ensures platform revenue is not wholly correlated with one market. This
have an impact on the revenue streams of the platform business due to a large also enables clients to switch assets in times of uncertainty. In particular, 3
proportion of revenue being dependent on FUD clients are able to switch into cash assets, which remain on the platform
supported by our top quartile interest rates. In addition, wrapper fees are
not impacted by market volatility as they are based on a fixed quarterly
charge. Change over year
↔
The Group invests its corporate assets in cash and high-quality,
highly-liquid, short-dated investments to mitigate exposure to bond asset
value fluctuations. Risk appetite
The Group's revenue model exposes it to secondary market risk and this is
accepted, with partial mitigation through limited fixed fee revenue. It has
limited appetite to market risk relating to market risk exposure through
corporate assets
Capital
The risk that the regulated entities within the Group do not maintain Inability to cover The Group's regulated entities are subject to various regulatory regimes Strategic pillars
sufficient capital resources to meet their regulatory requirements,
including the Investment Firms Prudential Regime (IFPR) and Solvency II. As a
unexpected losses result, Internal Capital Adequacy and Risk Assessment (ICARA) and Own Risk and 3
including covering unexpected losses.
Solvency Assessments (ORSAs) are conducted, which identify potential harms and
sufficient resources, and capital is held to cover potential losses (capital
requirements). In addition, the risk appetites are set in excess to the
Increase in regulatory capital assessed capital requirement and monitored against these appetites Change over year
requirements by the regulator ↔
Risk appetite
The Group aims to maintain capital resources which are sufficient in amount
and quality to exceed regulatory requirements across its regulated entities
Liquidity
The risk that the Group does not have sufficient available liquid financial Inability to meet obligations as The Group has controls in place which monitor and maintain immediately Strategic pillars
resources to enable it to meet its obligations as they fall due, or to meet
available cash balances across its regulated and unregulated entities within
its regulatory requirements, or where the Group can secure such resources only they fall due defined appetite parameters. The appetite includes the ability to withstand 3
at excessive cost. liquidity stresses and ensure it can meet liabilities as they fall due.
Change over year
↓
Risk appetite
The Group aims to maintain liquid financial resources which are sufficient in
amount and quality to exceed regulatory requirements across its regulated
entities and to ensure that all payments are met as they fall due
Service standard failure
The risk that client service levels reduce resulting in reduced ability to Deterioration in adviser and client The Group manages the risk by providing its client service teams with Strategic pillars
attract and retain business.
extensive initial and ongoing training, supported by experienced subject
retention rates matter experts and managers. 2
Weaker than forecast net inflows, Monitoring service metrics allows the Group to identify areas where there is Change over year
deviation from expected service levels or where processing backlogs have
impacting profitability and/or the medium/long-term sustainability of the arisen and deliver targeted remediation plans to ensure client outcomes and ↓
platform service standards are maintained.
Risk appetite
Heightened regulatory scrutiny The Group also conducts satisfaction surveys to ensure service levels are
still perceived as excellent by our clients and their advisers The Group has limited appetite to compromise service levels below
market-leading standard
People
The risk that the Group fails to attract, retain, motivate and develop its Employees leave due to a lack of The Group aims to minimise the level of retention risk through the promotion Strategic pillars
talent, hindering its ability to meet its strategic goals
of a culture of inclusion and empowerment, underpinned by: robust HR policies
engagement, motivation or effective management and procedures, focused on effective people management; annual engagement 1 2
surveys; performance-based variable remuneration; succession planning; and
talent mapping.
Increased difficulty in recruiting Change over year
individuals with the required talent into the Group The Group aims to minimise the level of recruitment risk through having fair ↔
and inclusive recruitment practices in place, completing an annual
remuneration review to ensure that remuneration is consistent with the market
and providing opportunities for career progression.
Lack of training and development
Risk appetite
result in deterioration in client service standards and/or limit career
The Group seeks to avoid this risk in order to achieve its strategic
progression opportunities for employees The Group aims to minimise the level of training and development risk through objectives
the implementation of ongoing competency-based training programmes, supporting
employees in obtaining external qualifications and having a robust regulatory
training programme in place.
Resilience
The risk that the Group fails to absorb, anticipate, adapt to or recover from Harm to clients, market and the Process: A variety of control approaches are in place to mitigate process Strategic pillars
shocks or stresses to its operations and business processes.
failure risk including process ownership, proactive continuous risk management
Group if there is an inability to recover from a shock or stress, particularly to identify and manage critical processes, scenario-based resilience plans and 2
impacting important business services testing. Critical processes are designed to be fault tolerant, allowing
elements to be replaced or changed without impacting the overall service.
Change over year
Financial penalties and/or
Internal technology: The use of several industry standard approaches to ↔
regulatory censure achieve this including resilience by design, proactive monitoring,
incident/change/problem management processes, scenario planning and testing
and continuous improvement.
Risk appetite
Reputational damage
The Group aims to maximise resilience with respect to identified critical
Supplier/third party: Third party providers are selected through a robust RFP operational and business services
process that carries out diligence checks and establishes
reporting/operational practices across all appropriate risk areas. Onboarded
third party providers are managed on a continuous basis within a vendor
management framework.
Information security
Risk of unauthorised access, use, disclosure, disruption, modification, or Client and/or employee harm Information security risk is mitigated using a defence in-depth approach in Strategic pillars
destruction of information assets.
alignment with industry standards, incorporating technical controls and
leading to regulatory censure and/ or fines including from the Information processes and educating our people, all of which is managed and overseen by 2
Commissioner Office (ICO) dedicated personnel.
Change over year
Harm to clients and the Group if
↔
there is an inability to recover operations
Risk appetite
Reputational damage
The Group accepts exposure to elements of risk as a result of providing access
to its platform and services over a public network
Regulatory
The risk that the Group fails to comply with regulatory requirements. Poor client outcomes The Group has an established Compliance function that analyses regulation and Strategic pillars
advises on and monitors how our financial services regulatory standards are
met. 2 3
Regulatory fines and/or censure
The financial services regulated entities in the Group ensure regulatory Change over year
standards are met through a framework of policies, procedures, governance,
Reputational damage training, horizon scanning, monitoring and engagement with our regulators. ↔
Cross-departmental projects are established to deliver significant regulatory Risk appetite
changes, with Group Internal Audit undertaking reviews during the project
phases and/or post-implementation thematic reviews. The Group aims to comply with regulatory requirements across the jurisdictions
in which it operates at all times
Financial crime
The risk of failure to protect the Group and its clients from financial crime, Loss of client assets resulting in The Group has a dedicated Financial Crime Compliance team and a framework of Strategic pillars
including internal and external fraud, money laundering, terrorist financing,
policies, processes and controls in place to reduce the likelihood of the
sanctions violations and market abuse. client harm Group being used to further financial crime. 1 2 3
Loss of corporate assets Key controls include client and supplier due diligence, bank account Change over year
verification, segregation of duties, mandatory staff training and monitoring
as a result of inadequate financial controls of activity on the platform. ↑
Regulatory censure and/or Risk appetite
penalties as a result of facilitating financial crime The Group aims to minimise its exposure through continuous improvement to
control and monitoring processes
Reputational damage
Statement of Director's Responsibilities
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable United Kingdom law and
regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have elected to prepare the Group
and parent Company financial statements in accordance with UK-adopted
international accounting standards ("IFRSs"). Under Company law the directors
must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and the Company
and of the profit or loss of the Group and the Company for that period.
In preparing these financial statements the directors are required to:
§ select suitable accounting policies in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors and then apply them
consistently;
§ make judgements and accounting estimates that are reasonable and prudent;
§ present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
§ provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the Group and
Company financial position and financial performance;
§ in respect of the Group financial statements, state whether UK-adopted
international accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
§ in respect of the parent Company financial statements, state whether
UK-adopted international accounting standards, have been followed, subject to
any material departures disclosed and explained in the financial statements;
and
§ prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company and/or the Group will continue in
business.
The Company is responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's and Group's transactions and
disclose with reasonable accuracy, at any time, the financial position of the
Company and the Group and enable the directors to ensure that the Company and
the Group financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the Group and parent Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a strategic report, directors' report, directors' remuneration
report and corporate governance statement that comply with that law and those
regulations. The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Company's website.
Directors' responsibilities pursuant to DTR4
The directors confirm, to the best of their knowledge:
§ that the consolidated financial statements, prepared in accordance with
UK-adopted international accounting standards give a true and fair view of the
assets, liabilities, financial position and profit of the parent Company and
undertakings included in the consolidation taken as a whole;
§ that the annual report, including the strategic report, includes a fair
review of the development and performance of the business and the position of
the Company and undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they
face; and
§ that they consider the annual report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to
assess the Company's position, performance, business model and strategy.
By order of the board,
Helen Wakeford
Company Secretary
17 December 2024
Consolidated statement of comprehensive income
For the year ended 30 September 2024
Note 2024 2023
£m £m
Revenue 5 144.9 134.9
Cost of sales (3.0) (3.9)
Gross profit 141.9 131.0
Expenses
Administrative expenses 8 (85.0) (74.6)
Expected credit losses on financial assets 22 0.1 (0.1)
Operating profit 57.0 56.3
Interest income 9 10.7 6.4
Interest expense 25 (0.2) (0.1)
Net policyholder returns
Net gain attributable to policyholder returns 40.2 12.1
Change in investment contract liabilities (3,051.7) (1,056.0)
Fee and commission expenses (232.7) (193.3)
Policyholder investment returns 10 3,284.4 1,249.3
Net policyholder returns 40.2 12.1
Profit on ordinary activities before taxation attributable to policyholders 107.7
and shareholders
74.7
Policyholder tax charge (38.8) (12.1)
Profit on ordinary activities before taxation attributable to shareholders 68.9 62.6
Total tax attributable to shareholder and policyholder returns 11 (55.6)
(24.8)
Less: tax attributable to policyholder returns 11 38.8 12.1
Shareholder tax on profit on ordinary activities (16.8) (12.7)
Profit for the financial year 52.1 49.9
Other comprehensive loss
Exchange losses arising on translation of foreign operations - (0.1)
Total other comprehensive losses for the financial year - (0.1)
Total comprehensive income for the financial year 52.1 49.8
EPS
Ordinary shares - basic 7 15.8p 15.1p
Ordinary shares - diluted 7 15.7p 15.1p
All activities of the Group are classed as continuing.
Notes 1 to 34 form part of these financial statements.
Consolidated statement of financial position
As at 30 September 2024
Note 2024 2023
£m £m
Non-current assets
Loans receivable 16 6.5 6.3
Intangible assets 12 20.9 21.4
Property, plant and equipment 13 1.5 1.1
Right-of-use assets 14 2.6 1.0
Deferred tax asset 26 1.1 0.7
32.6 30.5
Current assets
Investments 21 2.6 22.4
Prepayments and accrued income 22 18.8 17.2
Trade and other receivables 23 2.9 3.6
Current tax asset 1.6 14.3
Cash and cash equivalents 19 244.1 177.9
270.0 235.4
Current liabilities
Trade and other payables 24 21.7 19.5
Provisions 27 23.3 7.7
Lease liabilities 25 2.5 0.3
47.5 27.5
Non-current liabilities
Provisions 27 16.4 40.5
Lease liabilities 25 0.4 0.8
Deferred tax liabilities 26 30.0 7.2
46.8 48.5
Policyholder assets and liabilities
Cash held for the benefit of policyholders 20
1,622.8 1,419.2
Investments held for the benefit of policyholders 17
27,237.8 23,021.7
Liabilities for linked investment contracts
18 (28,860.6) (24,440.9)
- -
Net assets 208.3 189.9
Equity
Called up equity share capital 3.3 3.3
Share-based payment reserve 28 4.1 3.4
EBT reserve 29 (3.3) (2.6)
Foreign exchange reserve 30 (0.1) (0.1)
Non-distributable reserves 30 5.7 5.7
Retained earnings 198.6 180.2
Total equity 208.3 189.9
These financial statements were approved by the Board of Directors on 17
December 2024 and are signed on their behalf by:
Euan Marshall, Director
Company Registration Number: 08860879
Notes 1 to 34 form part of these financial statements.
Company statement of financial position
As at 30 September 2024
Note 2024 2023
£m £m
Non-current assets
Investment in subsidiaries 15 46.2 35.3
Loans receivable 16 6.5 6.3
52.7 41.6
Current assets
Trade and other receivables 23 0.1 0.1
Cash and cash equivalents 27.8 26.0
27.9 26.1
Current liabilities
Trade and other payables 24 3.0 2.5
Loans payable 16 1.0 1.0
4.0 3.5
Non-current liabilities
Loans payable 16 5.0 6.0
5.0 6.0
Net assets 71.6 58.2
Equity
Called up equity share capital 3.3 3.3
Share-based payment reserve 28 3.4 2.7
EBT reserve 29 (3.0) (2.4)
Profit or loss account
Brought forward retained earnings 54.6 56.7
Profit for the year 47.0 31.6
Dividends paid in the year (33.7) (33.7)
Profit or loss account 67.9 54.6
Total equity 71.6 58.2
The Company has taken advantage of the exemption in section 408 (3) of the
Companies Act 2006 not to present its own income statement in these Financial
Statements.
These Financial Statements were approved by the Board of Directors on 17
December 2024 and are signed on their behalf by:
Euan Marshall, Director
Company Registration Number: 08860879
Notes 1 to 34 form part of these financial statements.
Consolidated statement of cash flows
For the year ended 30 September 2024
2024 2023
£m £m
Cash flows from operating activities
Profit on ordinary activities before taxation attributable to policyholders 107.7 74.7
and shareholders
Adjustments for non-cash movements:
Amortisation and depreciation 2.2 2.5
Share-based payment charge 2.3 2.1
Decrease in contingent consideration - (1.7)
Interest charged on lease 0.2 0.1
Decrease in provisions (8.5) (8.6)
Adjustments for cash effecting investing and financing activities:
Interest on cash and loans (10.7) (6.4)
Adjustments for statement of financial position movements:
Increase in trade and other receivables, and prepayments and accrued income (0.9) (1.6)
Increase/(decrease) in trade and other payables 2.2 (2.0)
Adjustments for policyholder balances:
Increase in investments held for the benefit of policyholders (4,216.1) (2,305.9)
Increase in liabilities for linked investment contracts 4,419.7 2,266.5
(Decrease)/increase in policyholder tax recoverable (11.0) 10.0
Cash generated from operations 287.1 29.7
Income tax paid (9.7) (22.4)
Interest paid on lease liabilities (0.2) (0.1)
Net cash flows generated from operating activities 277.2 7.2
Investing activities
Acquisition and disposal of property, plant and equipment (0.9) (0.7)
Purchase of investments (2.5) (22.3)
Redemption of investments 22.8 3.0
Increase in loans (0.2) (0.8)
Interest on cash and loans held 10.2 6.4
Net cash generated from/(used in)investing activities 29.4 (14.4)
Consolidated statement of cash flows (continued)
For the year ended 30 September 2024
2024 2023
£m £m
Financing activities
Purchase of own shares in EBT (0.8) (0.4)
Purchase of shares for share scheme awards (1.5) (1.1)
Equity dividends paid (33.7) (33.7)
Payment of principal portion of lease liabilities (0.8) (1.9)
Net cash used in financing activities (36.8) (37.1)
Net increase/(decrease) in cash and cash equivalents 269.8 (44.3)
Cash and cash equivalents at beginning of year 1,597.1 1,641.6
Exchange losses on cash and cash equivalents - (0.1)
Cash and cash equivalents at end of year 1,866.9 1,597.1
Cash and cash equivalents consist of:
Cash and cash equivalents 244.1 177.9
Cash held for the benefit of policyholders 1,622.8 1,419.2
Cash and cash equivalents 1,866.9 1,597.1
Notes 1 to 34 form part of these financial statements.
Company statement of cash flows
For the year ended 30 September 2024
2024 2023
£m £m
Cash flows from operating activities
Loss before interest and dividends attributable to shareholders (14.1) (2.0)
Adjustments for non-cash movements:
Decrease in contingent consideration - (1.7)
Adjustment for statement of financial position movements:
Decrease in trade and other receivables, and prepayments and accrued income - 0.2
Increase in trade and other payables 0.5 0.1
Impairment of subsidiary 6.3 -
Net cash flows used in operating activities (7.3) (3.4)
Investing activities
Dividends received 60.5 33.3
Acquisition of subsidiary shares (15.0) -
Interest on cash and loans 1.2 0.9
Increase in loans (0.2) (0.8)
Net cash generated from investing activities 46.5 33.4
Financing activities
Purchase of own shares in EBT (0.6) (0.3)
Purchase of shares for share scheme awards (1.4) (1.3)
Repayment of loans (1.0) (1.0)
Interest expense on loans (0.7) (0.6)
Equity dividends paid (33.7) (33.7)
Net cash used in financing activities (37.4) (37.1)
Net increase/(decrease) in cash and cash equivalents 1.8 (7.1)
Cash and cash equivalents at beginning of year 26.0 33.1
Cash and cash equivalents at end of year 27.8 26.0
Notes 1 to 34 form part of these financial statements.
Consolidated statement of changes in equity
For the year ended 30 September 2024
Called up equity share capital Non-distributable insurance and foreign exchange reserves Share-based payment reserve EBT Retained earnings Total equity
reserve
£m £m £m £m £m £m
Balance at 1 October 2022 3.3 5.7 2.6 (2.4) 164.0 173.2
Comprehensive income for the year:
Profit for the year - - - - 49.9 49.9
Movement in currency translation - (0.1) - - - (0.1)
Total comprehensive income for the year - (0.1) - - 49.9 49.8
Share-based payment expense - - 2.1 - - 2.1
Settlement of share based payment - - (1.5) - - (1.5)
Purchase of own shares in EBT - - - (0.4) - (0.4)
Excess tax relief charged to equity - - 0.2 - - 0.2
Exercised share options - - - 0.2 - 0.2
Distributions to owners - dividends paid - - - - (33.7) (33.7)
Balance at 30 September 2023 3.3 5.6 3.4 (2.6) 180.2 189.9
Balance at 1 October 2023 3.3 5.6 3.4 (2.6) 180.2 189.9
Comprehensive income for the year:
Profit for the year - - - - 52.1 52.1
Total comprehensive income for the year - - - - 52.1 52.1
Share-based payment expense - - 2.3 - - 2.3
Settlement of share based payment - - (1.6) - - (1.6)
Purchase of own shares in EBT - - - (0.8) - (0.8)
Exercised share options - - - 0.1 - 0.1
Distributions to owners - dividends paid - - - - (33.7) (33.7)
Balance at 30 September 2024 3.3 5.6 4.1 (3.3) 198.6 208.3
Notes 1 to 34 form part of these Financial Statements.
Company statement of changes in equity
For the year ended 30 September 2024
Called up equity share capital Share-based payment reserve EBT reserve Retained earnings Total equity
£m £m £m £m £m
Balance at 1 October 2022 3.3 2.2 (2.1) 56.7 60.1
Comprehensive income for the year:
Profit for the year - - - 31.6 31.6
Total comprehensive income for the year - - - 31.6 31.6
Share-based payment expense - 1.9 - - 1.9
Settlement of share-based payments - (1.4) - - (1.4)
Purchase of own shares in EBT - - (0.3) - (0.3)
Distributions to owners - dividends paid - - - (33.7) (33.7)
Balance at 30 September 2023 3.3 2.7 (2.4) 54.6 58.2
Balance at 1 October 2023 3.3 2.7 (2.4) 54.6 58.2
Comprehensive income for the year:
Profit for the year - - - 47.0 47.0
Total comprehensive income for the year - - - 47.0 47.0
Share-based payment expense - 2.1 - - 2.1
Settlement of share-based payments - (1.4) - - (1.4)
Purchase of own shares in EBT - - (0.6) - (0.6)
Distributions to owners - dividends paid - - - (33.7) (33.7)
Balance at 30 September 2024 3.3 3.4 (3.0) 67.9 71.6
Notes 1 to 34 form part of these financial statements.
Notes to the financial statements
For the year ended 30 September 2024
1. Basis of preparation and material accounting policies
General information
IntegraFin Holdings plc (the "Company"), a public limited company incorporated
and domiciled in the United Kingdom ("UK"), along with its subsidiaries
(collectively the "Group"), offers a range of services which are designed to
help financial advisers and their clients to manage financial plans in a
simple, effective and tax efficient way.
The registered office address, and principal place of business, is 29
Clement's Lane, London, EC4N 7AE.
a) Basis of preparation
The consolidated financial statements (financial statements) have been
prepared and approved by the directors in accordance with UK-adopted
international accounting standards (IFRSs).
The financial statements have been prepared on the historical cost basis,
except for the revaluation of certain financial instruments, which are stated
at their fair value, have been prepared in pound sterling, which is the
presentational and functional currency of the Group and Company and are
rounded to the nearest hundred thousand.
Climate risks have been considered where appropriate in the preparation of
these Financial Statements, with particular consideration given to the impact
of climate risk on the fair value calculations and impairment assessments.
This has concluded that the impact of climate risk on the financial statements
is not material.
Going concern
The financial statements have been prepared on a going concern basis,
following an assessment by the board.
Going concern is assessed over the 12-month period from when the Annual Report
is approved, and the board has concluded that the Group has adequate
resources, liquidity and capital to continue in operational existence for at
least this period. This is supported by:
· The current financial position of the Group:
o The Group maintains a conservative balance sheet and manages and monitors
solvency and liquidity on an ongoing basis, ensuring that it always has
sufficient financial resources for the foreseeable future.
o As at 30 September 2024, the Group had £244.1 million of shareholder cash
on the Consolidated Statement of Financial Position, demonstrating that
liquidity remains strong.
· Detailed cash flow and working capital projections.
· Stress-testing of liquidity, profitability and regulatory
capital, taking account of principal risks and possible adverse changes in
both the economic and geopolitical climate. These scenarios provide assurance
that the Group has sufficient capital and liquidity to operate under stressed
conditions.
1. Basis of preparation and material accounting policies (continued)
When making this assessment, the board has taken into consideration both the
Group's current performance and the future outlook, including the political
and geopolitical instability, and a tough macro-environment with ongoing
higher interest rates and cost of living pressures. The environment has been
challenging during the year, but our financial and operational performance has
been robust, and the Group's fundamentals remain strong.
Stress and scenario testing has been carried out, in order to understand the
potential financial impacts of severe, yet plausible, scenarios on the Group.
This assessment incorporated a number of stress tests covering a broad range
of scenarios, including a cyber attack, system and process failures,
persistent high inflation with depressed markets, and climate related
impacts.
Having conducted detailed cash flow and working capital projections, and
stress-tested liquidity, profitability and regulatory capital; taking account
of the economic challenges mentioned above; the board is satisfied that the
Group is well placed to manage its business risks. The board is also satisfied
that it will be able to operate within the regulatory capital limits imposed
by the Financial Conduct Authority (FCA), Prudential Regulation Authority
(PRA), and Isle Man Financial Services Authority (IoM FSA).
The board has concluded that the Group has adequate resources to continue its
operations, including operating in surplus of the regulatory capital and
liquidity requirements imposed by regulators, for a period of at least twelve
months from the date this Annual Report is approved. For this reason, they
have adopted the going concern basis for the preparation of the financial
statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its subsidiaries. Where the Company has control over an
investee, it is classified as a subsidiary. The Company controls an investee
if all three of the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of the
investor to use its power to affect those variable returns. Control is
presumed to exist where the Group owns the majority of the voting rights of an
entity. Control is reassessed whenever facts and circumstances indicate that
there may be a change in any of these elements of control.
Subsidiaries are fully consolidated from the date on which control is obtained
by the Company and are deconsolidated from the date that control ceases.
Acquisitions are accounted for under the acquisition method. Intercompany
transactions, balances, income and expenses, and profits and losses are
eliminated on consolidation.
The financial statements of all of the wholly owned subsidiary companies are
incorporated into the consolidated Financial Statements. Two of these
subsidiaries, IntegraLife International Limited (ILInt) and IntegraLife UK
Limited (ILUK) issue contracts with the legal form of insurance contracts, but
which do not transfer significant insurance risk from the policyholder to the
Company, and which are therefore accounted for as investment contracts.
In accordance with IFRS 9, the contracts concerned are therefore reflected in
the Consolidated Statement of Financial Position as investments held for the
benefit of policyholders, and a corresponding liability to policyholders.
1. Basis of preparation and material accounting policies (continued)
Changes to International Reporting Standards
Interpretations and standards which became effective during the year
The following amendments and interpretations became effective during the year.
Their adoption has not had any significant impact on the Group.
IFRS 17 Insurance Contracts 1 January 2023
IAS 8 Definition of accounting estimates (Amendments) 1 January 2023
IAS 1 Disclosure of accounting policies (Amendments) 1 January 2023
IAS 12 Deferred tax related to assets and liabilities arising from a single 1 January 2023
transaction (Amendments)
IAS 12 International tax reform - Pillar two model rules (Amendments) 1 January 2023
Interpretations and standards in issue but not yet effective
The Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
b) Material accounting policies
Revenue from contracts with customers
Revenue represents the fair value of services supplied by the Group. All fee
income is recognised as revenue on an accrual basis and in line with the
provision of the services.
Fee and commission income is recognised at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for
providing the services.
The performance obligations, as well as the timing of their satisfaction, are
identified, and determined, at the inception of the contract.
When the Group provides a service to its customers, consideration is generally
due immediately upon satisfaction of a service provided at a point in time or
at the end of the contract period for a service provided over time. The Group
has generally concluded that it is the principal in its revenue arrangements
because it typically controls the services before transferring them to the
customer.
The Group has discharged all of its obligations in relation to contracts with
customers, and the amounts received or receivable from customers equal the
amount of revenue recognised on the contracts. All amounts due from customers
are therefore recognised as receivables within accrued income, and the Group
has no contract assets or liabilities.
1. Basis of preparation and material accounting policies (continued)
Fee income comprises:
Annual charge
The annual charge is for the administration of products on the Transact
platform,and is levied monthly in arrears on the average value of assets and
cash held on the platform. The value of assets and cash held on the Platform
is driven by market movements, inflows, outflows and other factors.
Wrapper charge
Wrapper charges are applied on the tax wrappers held by clients and are levied
quarterly in arrears based on fixed fees for each wrapper type.
The annual charge and wrapper charges relate to services provided on an
on-going basis, and revenue is therefore recognised on an on-going basis to
reflect the nature of the performance obligations being discharged. As the
benefit to the customer of the services is transferred evenly over the service
period, these fees are recognised as revenue evenly over the period, based on
time elapsed.
Accrued income on both the annual charge and wrapper charges is recognised as
prepayments and accrued income on the Consolidated Statement of Financial
Position, as the Group's right to consideration is conditional on nothing
other than the passage of time.
Licence income
Licence income is the rental charge for use of access to T4A's CRM software.
The rental charge is billed monthly in advance, based on the number of
users. Revenue is recognised in line with the provision of the service.
Consultancy income
Consultancy income relates to consultancy services provided by T4A on an
as-needs basis. Revenue is recognised when performance obligations are met (in
line with IFRS 15). Accrued consultancy income is recognised as a financial
asset on the statement of financial position. The Group's right to
consideration is conditional on provision of the consultancy service.
Other income
This comprises buy commission and dealing charges. These are charges levied on
the acquisition of assets, due upon completion of the transaction. Revenue is
recorded on the date of completion of the transaction, as this is the date the
services are provided to the customer. As the benefit to the customer of the
services is transferred at a point in time, these fees are recognised at the
point they are provided.
Interest income
Interest on shareholder cash, policyholder cash, loans and coupon on
shareholder gilts are the sources of interest income received. These are
recognised in the Consolidated Statement of Comprehensive Income, with
interest on shareholder assets recognised within interest income, and interest
on policyholder assets recognised within policyholder returns. Under IFRS 9,
interest income is recorded using the effective interest method for all
financial assets measured at amortised cost and is recognised in the
Consolidated Statement of Comprehensive Income.
1. Basis of preparation and material accounting policies (continued)
Cost of sales
Cost of sales relate to costs directly attributable to the supply of services
provided to the Group and are recognised in the Consolidated Statement of
Comprehensive Income on an accruals basis.
Administrative expenses
Administration expenses relate to overhead costs and are recognised in the
Consolidated Statement of Comprehensive Income on an accruals basis.
Fee and commission expenses
Fee and commission expenses are paid by ILUK and ILInt policyholders to their
financial advisers. Expenses comprise the annual charge which is levied
monthly in arrears on the average value of assets and cash held on the
platform in the month and upfront fees charged on new premiums on the
platform.
Investments
Investments in subsidiaries are stated at cost less any provision for
impairment.
Other investments comprise UK Government gilts held as shareholder
investments. Gilts were acquired in both the current and previous financial
years, which were assessed upon purchase and deemed to meet the criteria to
classify as amortised cost under IFRS 9 Financial Instruments, namely:
· they are held within a business model whose objective is to hold
assets in order to collect contractual cash flows; and,
· the contractual terms of the financial assets give rise on
specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Investment contracts - investments held for the benefit of policyholders
Investment contracts held for the benefit of policy holders are comprised of
unit-linked contracts. Investments held for the benefit of policyholders are
stated at fair value and reported on a separate line in the Consolidated
Statement of Financial Position, see accounting policy on financial
instruments for fair value determination. Investment contracts result in
financial liabilities whose fair value is dependent on the fair value of
underlying financial assets. They are designated at inception as financial
liabilities at 'fair value through profit or loss' in order to reduce an
accounting mismatch with the underlying financial assets. Gains and losses
arising from changes in fair value are presented in the Consolidated Statement
of Comprehensive Income within "policyholder investment returns".
The net gains attributable to policyholder returns arise due to releases of
tax charges reserved for policyholders to shareholder profit. These are made
throughout the year to recognise any corporate benefit on policyholder
charges, and include two elements:
1. Basis of preparation and material accounting policies (continued)
1. The Annual Management Charges (AMCs) - under HMRC rules, ILUK's corporate
I-E tax is calculated net of management expenses relating to insurance
products. Policyholders, on the other hand, are charged tax on their income
and gains before expenses are deducted. This gives rise to a difference
between the amount recorded as policyholder tax and the amount paid to HMRC as
the tax payable is based on the I-E calculation. This is a permanent
difference arising as a result of the different methodologies and it is
industry practice to recognise this as shareholder profit. ILUK uses the AMC
method of calculating tax relief on policyholder expenses to determine the
release to profit. This release to profit is taxed as corporate income at the
corporate tax rate.
2. Surplus reserves - there is also an annual release of any cash held in
reserves which cannot be refunded back to policyholders, due to the
policyholder moving provider or surrendering their policy. The surplus
released to profit is taxed as corporate income at the corporate tax rate.
Investment inflows received from policyholders are invested in funds selected
by the policyholders. The resulting liabilities for linked investment
contracts are accounted for under the 'fair value through profit or loss'
option, in line with the corresponding assets as permitted by IFRS 9.
As all investments held for the benefit of policyholders are matched entirely
by corresponding linked liabilities, any gain or loss on assets recognised
through the Consolidated Statement of Comprehensive Income are offset entirely
by the gains and losses on linked liabilities, which are recognised within the
"change in investment contract liabilities" line. The overall net impact of
"change in investment contract liabilities", "fee and commission expenses" and
"policyholder investment returns" on profit is therefore £nil.
Policyholder provisions released to shareholder profit are recognised in the
Consolidated Statement of Comprehensive Income within net gain attributable to
policyholders.
Investment contracts are measured at fair value using quoted mid prices that
are available at the reporting date and are traded in active markets. Where
this is not available, valuation techniques are used to establish the fair
value at inception and each reporting date. The Company's main valuation
techniques incorporate all factors that market participants would consider and
are based on observable market data. The financial liability is measured both
initially and subsequently at fair value. The fair value of a unit-linked
financial liability is determined using the fair value of the financial assets
contained within the funds linked to the financial liability.
Dividends
Equity dividends paid are recognised in the accounting period in which the
dividends are declared and approved.
1. Basis of preparation and material accounting policies (continued)
Intangible non-current assets
Intangible non-current assets, excluding goodwill, are stated at cost less
accumulated amortisation and comprise intellectual property software rights.
The software rights were amortised over seven years on a straight line basis,
as it was estimated that the software would be rewritten every seven years,
and therefore have a finite useful life. The software rights are now fully
amortised, but due to ongoing system development and coding updates no
replacement is required.
Goodwill is held at cost and, in accordance with IFRS, is not amortised but is
subject to annual impairment reviews.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses. Cost includes expenditures that are
directly attributable to the acquisition of the asset. Subsequent costs are
included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost can be measured reliably.
Repairs and maintenance costs are charged to the Consolidated Statement of
Comprehensive Income during the period in which they are incurred.
The major categories of property, plant, equipment are depreciated as follows:
Asset class All UK and Isle of Man entities Australian entity
Leasehold improvements Straight line over the life of the lease Straight line over 40 years
Fixtures & Fittings Straight line over 10 years Straight line over 10 years
Equipment Straight line over 3 to 10 years Straight line over 3 years
Motor vehicles N/A 25% reducing balance
Residual values, method of depreciation and useful lives of the assets are
reviewed annually and adjusted if appropriate.
Goodwill and goodwill impairment
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the identifiable net assets of the acquired
entity at the date of acquisition. Goodwill is recognised as an asset at cost
at the date when control is achieved and is subsequently measured at cost less
any accumulated impairment losses.
Goodwill is allocated to one or more cash generating units (CGUs) expected to
benefit from the synergies of the combination, where the CGU represents the
smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or group of assets.
Goodwill is reviewed for impairment at least once annually, and also whenever
circumstances or events indicate there may be uncertainty over this value. The
impairment assessment compares the carrying value of goodwill to the
recoverable amount, which is the higher of value in use and the fair value
less costs of disposal. Any impairment loss is recognised immediately in the
Consolidated Statement of Comprehensive Income and is not subsequently
reversed.
1. Basis of preparation and material accounting policies (continued)
Impairment of investments in subsidiaries
Investments in subsidiaries are recognised by the Company at cost. The Company
assesses at each reporting date, whether there is an indication that an
investment in subsidiaries may be impaired. The impairment assessment compares
the carrying value of the investment to the recoverable amount, which is the
higher of value in use and the fair value less costs of disposal. Any
impairment loss is recognised immediately in the Consolidated Statement of
Comprehensive Income. When the circumstances that caused the impairment loss
are favourably resolved, the impairment loss is reversed immediately.
Intangible assets acquired as part of a business combination
Intangible assets acquired as part of a business combination are recognised
where they are separately identifiable and can be measured reliably.
Acquired intangible assets consist of contractual customer relationships,
software and brand. These items are capitalised at their fair value, which are
based on either the 'Relief from Royalty' valuation methodology or the
'Multi-period Excess Earnings Method', as appropriate for each asset.
Subsequent to initial recognition, acquired intangible assets are measured at
cost less accumulated amortisation and any recognised impairment losses.
Amortisation is recognised in the Consolidated Statement of Comprehensive
Income within administration expenses on a straight line basis over the
estimated useful lives of the assets, which are as follows:
Asset class Useful life
Customer relationships 15 years
Software 7 years
Brand 10 years
The method of amortisation and useful lives of the assets are reviewed
annually and adjusted if appropriate.
Impairment of non-financial assets
Property, plant and equipment, right-of-use assets and intangible assets are
tested for impairment when events or changes in circumstances indicate that
the carrying amount may not be recoverable. Recoverable amount is the higher
of an asset's fair value less costs to sell and value in use (being the
present value of the expected future cash flows of the relevant asset).
The Group evaluates impairment losses for potential reversals when events or
circumstances warrant such consideration.
Goodwill is tested for impairment annually and once an impairment is
recognised this cannot be reversed. For more detailed information in relation
to this, please see note 12.
Pensions
The Group makes defined contributions to the personal pension schemes of its
employees. These are chargeable to Consolidated Statement of Comprehensive
Income in the period in which they become payable.
1. Basis of preparation and material accounting policies (continued)
Foreign currencies
Transactions in foreign currencies are translated into the functional currency
at the exchange rate in effect at the date of the transaction. Foreign
currency monetary assets and liabilities are translated to sterling at the
year end closing rate. Foreign exchange rate differences that arise are
reported net in the Consolidated Statement of Comprehensive Income as foreign
exchange gains/losses.
The assets and liabilities of foreign operations are translated to sterling
using the year end closing exchange rate. The revenues and expenses of foreign
operations are retranslated to sterling at rates approximating the foreign
exchange rates ruling at the relevant month of the transactions. Foreign
exchange differences arising on retranslation are recognised directly in the
reserves.
Taxation
Current income tax
The taxation charge is based on the taxable result for the year. The taxable
result for the year is determined in accordance with enacted legislation and
taxation authority practice for calculating the amount of corporation tax
payable.
Policyholder tax comprises corporation tax payable at the policyholder rate on
the policyholders' share of the taxable result for the year, together with
deferred tax at the policyholder rate on temporary differences relating to
policyholder items.
Current income tax assets and liabilities are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and
tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date in countries where the Group
operates and generates taxable income. Management periodically evaluates
positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability in the Consolidated Statement of Financial Position
differs from its tax base.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the reporting date and are expected
to apply when the deferred tax assets/liabilities are recovered/settled.
With regard to capital gains tax on policyholders' future tax obligations,
management has determined that reserves should be held to cover this, based on
a reserve charge rate of 20%. The deferred capital gains upon which the
reserve charges are calculated are reflected in the closing deferred tax
balance.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient tax
profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re-assessed at each reporting
date and are recognised to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be recovered.
1. Basis of preparation and material accounting policies (continued)
In assessing the recoverability of deferred tax assets, the Group relies on
the same forecast assumptions used elsewhere in the Financial Statements and
in other management reports, which, among other things, reflect the potential
impact of climate-related development on the business, such as increased cost
of production as a result of measures to reduce carbon emissions.
The Group offsets deferred tax assets and deferred tax liabilities if and only
if it has a legal enforceable right to set off current tax assets and current
tax liabilities and the deferred tax assets and deferred tax liabilities
relate to income taxes levied by the same taxation authority on either the
same taxable entity or different taxable entities which intend to either
settle current tax liabilities and assets on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in
which significant amounts of deferred tax liabilities or assets are expected
to be settled or recovered.
Policyholder Tax
HMRC requires ILUK to charge basic rate income tax on its life insurance
policies (FA 2012, s102). ILUK collects this tax quarterly, by charging 20%
tax (2023: 20%) on gains from assets held in the policies, based on the
policyholder's acquisition costs and market value at each quarter end.
Additional charges are applied on any increases in the previously charged
gain. The charge is adjusted by the fourth financial year quarter so that the
total charge for the year is based on the gain at the end of the financial
year. When assets are sold at a loss or reduce in market value by the
financial year end, a refund of the charges may be applied. Policyholder tax
is recorded as a tax expense/(tax credit) in the consolidated statement of
comprehensive income, with a corresponding asset/(liability) recognised on the
Consolidated Statement of Financial Position (under IAS 12).
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker is responsible for allocating resources and assessing
performance of the operating segments and has been identified as the Chief
Executive Officer of the Company.
Client assets and client monies
Integrated Financial Arrangements Ltd (IFAL) client assets and client monies
are not recognised in the parent and consolidated statements of financial
position as they are owned by the clients of IFAL.
Lease assets and lease liabilities
Right-of-use
assets
The Group recognises right-of-use assets on the date the leased asset is made
available for use by the Group. These assets relate to rental leases for the
office of the Group, which have varying terms clauses and renewal rights.
Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any re-measurement of lease
liabilities. The cost of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and lease payments made
at or before the commencement date.
Depreciation is applied in accordance with IAS 16: Property, Plant and
Equipment. Right-of-use assets are depreciated over the lease term. See notes
13 and 14.
1. Basis of preparation and material accounting policies (continued)
Lease liabilities
The Group measures lease liabilities in line with IFRS 16 on the Consolidated
Statement of Financial Position as the present value of all future lease
payments, discounted using an incremental borrowing rate at the date of
commencement. After the commencement date, the amount of lease liabilities is
increased to reflect the addition of interest and reduced for the lease
payments made. The Group's incremental borrowing rate is the rate at which a
similar borrowing could be obtained from an independent creditor under
comparable terms and conditions. See note 25.
Short-term leases
The Group defines short-term leases as those with a lease term of 12 months or
less and leases of low value assets. For these leases, the Group recognises
the lease payments as an operating expense on a straight line basis over the
term of lease.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances from instant access and
notice accounts, call deposits, and other short-term deposits with an original
maturity of three months or less. The carrying amount of these assets
approximates to their fair value.
Cash and cash equivalents held for the benefit of the policyholders are held
to cover the liabilities for unit linked investment contracts. These amounts
are 100% matched to corresponding liabilities.
Financial instruments
Financial assets and liabilities are recognised when the Group becomes a party
to the contractual provisions of the instrument. Financial assets are
derecognised when the rights to receive cash flows from the assets have
expired or have been transferred and the Group has transferred substantially
all risks and rewards of ownership. Financial liabilities are derecognised
when the obligation specified in the contract is discharged, cancelled or
expires.
At initial recognition, the Group classifies its financial instruments in the
following categories, based on the business model in which the assets are
managed and their cash flow characteristics:
(i) Financial assets and liabilities at fair value through profit
or loss
This category includes financial assets and liabilities acquired principally
for the purpose of selling or repurchasing in the short-term, comprising of
listed shares and securities.
Financial instruments in this category are recognised on the trade date, and
subsequently measured at fair value. Purchases and sales of securities are
recognised on the trade date. Transaction costs are expensed in the
Consolidated Statement of Comprehensive Income. Gains and losses arising from
changes in fair value are presented in the Consolidated Statement of
Comprehensive Income within "cost of sales" for corporate assets and
"policyholder investment returns" for policyholder assets in the period in
which they arise. Financial assets and liabilities at fair value through
profit or loss are classified as current except for the portion expected to be
realised or paid beyond twelve months of the Consolidated Statement of
Financial Position date, which are classified as long-term.
1. Basis of preparation and material accounting policies (continued)
(ii) Financial assets at amortised cost
These assets comprised of accrued fees, trade and other receivables,
investments in gilts and cash and cash equivalents. These are included in
current assets due to their short-term nature, except for the loan which is
included in non-current assets.
Financial assets are measured at amortised cost when they are held within the
business model whose objective is to hold assets to collect contractual cash
flows and their contractual cash flows represent solely payments of principal
and interest.
The carrying value of assets held at amortised cost are adjusted for
impairment arising from expected credit losses (ECLs).
(iii) Financial liabilities at amortised cost
Financial liabilities at amortised cost comprise trade and other payables and
loans payable. These are initially recognised at fair value. Subsequent
measurement is at amortised cost using the effective interest method. Trade
and other payables are classified as current liabilities due to their
short-term nature. The loan is split between current and non-current
liabilities, based on the repayment terms.
Impairment of financial assets
ECLS are required to be measured through a loss allowance at an amount equal
to:
· the 12-month ECLs (ECLs from possible default events within 12
months after the reporting date); or
· full lifetime ECLs (ECLs from all possible default events over
the life of the financial instrument).
A loss allowance for full lifetime ECLs is required for a financial instrument
if the credit risk of that financial instrument has increased significantly
since initial recognition, as well as to contract assets or trade receivables,
where the simplified approach is applied to assets that do not contain a
significant financing component.
For all other financial instruments, ECLs are measured at an amount equal to
the 12-month ECLs.
Impairment losses on financial assets carried at amortised cost are reversed
in subsequent periods if the ECLs decrease.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation.
If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
1. Basis of preparation and material accounting policies (continued)
The ILUK policyholder reserves, which are part of the provisions balance,
arises from tax reserve charges collected from life insurance policyholders,
which are held to cover possible future tax liabilities. If no tax liability
arises the charges are refunded to policyholders, where possible. As these
liabilities are of uncertain timing or amounts, they are recognised as
provisions on the Consolidated Statement of Financial Position.
Balances due to HMRC are considered under IAS 12 Income Taxes, whereas
balances due to policyholders are considered under IAS 37 Provisions,
Contingent Liabilities and Contingent Assets.
Share-based payments
Equity-settled share-based payment awards granted to employees are measured at
fair value at the date of grant. The awards are recognised as an expense, with
a corresponding increase in equity, spread over the vesting period of the
awards, which accords with the period for which related services are provided.
The total amount expensed is determined by reference to the fair value of the
awards as follows:
(i) Share Incentive Plan (SIP) shares
The fair value is the market price on the grant date. There are no vesting
conditions, as the employees receive the shares immediately upon grant.
(ii) Deferred bonus Share Option Plan
The fair value of share options is determined by applying a valuation
technique, usually an option pricing model, such as Black Scholes. This takes
into account factors such as the exercise price, the share price, volatility,
interest rates, and dividends.
At each reporting date, the estimate of the number of share options expected
to vest based on the non-market vesting conditions is assessed. Any change to
original estimates is recognised in the Consolidated Statement of
Comprehensive Income, with a corresponding adjustment to the Share-based
payment reserve in the Consolidated Statement of Financial Position.
2. Significant accounting estimates and judgements
The preparation of the Group's consolidated financial statements requires
management to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could result in outcomes
that require a material adjustment to the carrying amount of assets or
liabilities affected in future periods.
Judgements
In the process of applying the Group's accounting policies, management has
made the following judgements, which have the most significant effect on the
amounts recognised in the consolidated financial statements:
2. Significant accounting estimates and judgements (continued)
ILUK tax provision (Group)
The assessment to recognise the tax provision comes from an evaluation of the
likelihood of a constructive or legal obligation and whether that obligation
can be estimated reliably. The provision required has been calculated based on
an estimation of tax payable to HM Revenue & Customs (HMRC) and refunds
payable back to policyholders. While the estimates are not considered to be
significant, as they are based on reliable data, the decision to treat the
full balance of the reserves as a provision on the statement of financial
position is considered a significant judgement.
Estimates
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its estimates on
parameters available when the consolidated financial statements were prepared.
Existing circumstances and assumptions about future developments, however, may
change due to market changes or circumstances arising that are beyond the
control of the Group. Such changes are reflected in the assumptions when they
occur.
Goodwill (Group) and investments in subsidiaries (IHP company)
Impairment exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair value less
costs of disposal and its value in use. The value in use calculation is based
on a discounted cash flow (DCF) model. The cash flows are derived from the
budget for the next five years, and extrapolated beyond that based on the
long-term growth rate. The recoverable amount is sensitive to the discount
rate and long term growth rate used in the DCF model as well as the expected
future cash inflows and outflows. The key assumptions used to determine the
recoverable amount for the different CGUs, including a sensitivity analysis,
are disclosed and further explained in notes 12 and 15.
3. Financial instruments
(i) Principal financial instruments
The principal financial instruments, from which financial instrument risk
arises, are as follows:
· Trade and other receivables
· Accrued fees
· Investments - Gilts
· Investments - Listed shares and securities
· Trade and other payables
· Loans receivable
· Policyholder balances of investments and cash
· Liabilities for linked investments contracts
· Cash and cash equivalents
(ii) Financial instruments measured at fair value and
amortised cost
Financial assets and liabilities have been classified into categories that
determine their basis of measurement. For items measured at fair value, their
changes in fair value are recognised in the consolidated statement of
comprehensive income.
3. Financial instruments (continued)
The following tables show the carrying values of assets and liabilities for
each of these categories for the Group:
Fair value through profit or loss Amortised cost
Financial assets:
2024 2023 2024 2023
£m £m £m £m
Cash and cash equivalents - - 244.1 177.9
Cash held for the benefit of policyholders - - 1,622.8 1,419.2
Investments - Listed shares and securities 0.1 0.1 - -
Investments - Gilts - - 2.5 22.3
Loans receivable - - 6.5 6.3
Accrued income - - 14.2 12.5
Trade and other receivables - - 2.9 3.2
Investments held for the policyholders 27,237.8 23,021.7 - -
Total financial assets 27,237.9 23,021.8 1,893.0 1,641.4
2024 2023
Assets which are not financial instruments £m £m
Prepayments 4.7 4.7
Current tax asset 1.4 14.3
Trade and other receivables - - 0.4
repayment interest due from HMRC
6.1 19.4
Fair value through profit or loss Amortised cost
Financial liabilities:
2024 2023 2024 2023
£m £m £m £m
Trade payables - - 1.1 0.7
Lease liabilities - - 2.9 1.1
Other payables - 7.3 5.9
Liabilities for linked investments contracts 27,237.8 23,021.7 1,622.8 1,419.2
Total financial liabilities 27,237.8 23,021.7 1,634.1 1,426.9
2024 2023
Liabilities which are not financial instruments £m £m
Accruals and deferred income 8.8 7.8
PAYE and other taxation 2.1 2.6
Other payables - due to HMRC 0.9 0.9
Deferred consideration 1.5 1.6
13.3 12.9
The following tables show the carrying values of assets and liabilities for
each of these categories for the Company:
Financial assets:
Fair value through profit or loss Amortised cost
2024 2023 2024 2023
£m £m £m £m
Cash and cash equivalents - - 27.8 26.0
Trade and other receivables - - 0.1 0.1
Loans receivable - - 6.5 6.3
Total financial assets - - 34.4 32.4
3. Financial instruments (continued)
Financial liabilities:
Fair value through profit or loss Amortised cost
2024 2023 2024 2023
£m £m £m £m
Other payables - - 0.6 0.4
Loans payable - - 6.0 7.0
Due to Group undertakings - - 0.2 -
Total financial liabilities - - 6.8 7.4
2024 2023
Liabilities which are not financial instruments £m £m
Accruals and deferred income 0.7 0.4
PAYE and other taxation - 0.1
Deferred consideration 1.5 1.6
2.2 2.1
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash
equivalents, cash held for policyholders, accrued fees, investments held in
gilts, loans, trade and other receivables, trade and other payables, and
liabilities for linked investments contracts. Due to their short-term nature
and/or ECLs recognised, the carrying value of these financial instruments
approximates their fair value.
(iv) Financial instruments measured at fair value - fair
value hierarchy
The table below classifies financial instruments that are recognised on the
Consolidated Statement of Financial Position at fair value in a hierarchy that
is based on significance of the inputs used in making the measurements.
The levels of hierarchy are disclosed below:
· Level 1: quoted prices (unadjusted) in active markets for
identical instruments;
· Level 2: instruments which are not actively traded but provide
regular observable prices; and
· Level 3: inputs that are based on level 1 or level 2 data, but
for which the last known price is over a year old (unobservable inputs).
The following table shows the Group's financial instruments measured at fair
value and split into the three levels:
3. Financial instruments (continued)
Level 1 Level 2 Level 3 Total
2024
£m £m £m £m
Assets
Term deposits 221.3 - - 221.3
Investments and securities 944.3 137.5 0.4 1,082.2
Bonds and other fixed-income securities 26.1 0.3 - 26.4
Holdings in collective investment schemes 25,802.0 104.6 1.3 25,907.9
Investments held for the benefit of policyholders 26,993.7 242.4 1.7 27,237.8
Investments - listed shares and securities 0.1 - - 0.1
Total 26,993.8 242.4 1.7 27,237.9
Liabilities
Liabilities for linked investments contracts 26,993.7 242.4 1.7 27,237.8
Total 26,993.7 242.4 1.7 27,237.8
Level 1 Level 2 Level 3 Total
2023
£m £m £m £m
Assets
Term deposits 182.0 - - 182.0
Investments and securities 740.3 181.9 0.5 922.7
Bonds and other fixed-income securities 16.5 1.0 - 17.5
Holdings in collective investment schemes 21,754.5 143.3 1.7 21,899.5
Investments held for the benefit of policyholders 22,693.3 326.2 2.2 23,021.7
Investments - listed shares and securities 0.1 - - -
Total 22,693.4 326.2 2.2 23,021.8
Liabilities
Liabilities for linked investments contracts 22,693.3 326.2 2.2 23,021.7
Total 22,693.3 326.2 2.2 23,021.7
Level 1 valuation methodology
Financial instruments included in Level 1 are measured at fair value using
quoted mid prices that are available at the reporting date and are traded in
active markets. These are mainly Open-Ended Investment Companies (OEICs), Unit
Trusts, Investment trusts and Exchange Traded Funds. The price is sourced from
our 3rd party provider, who source this directly from the stock exchange or
obtain the price directly from the fund manager.
Level 2 valuation methodology
Financial instruments included in Level 2 are measured at fair value using
observable
mid prices traded in markets that have been assessed as not active but which
provide regular observable prices. These are mainly Structured products and
OEICs. The price is sourced from the structured product provider or from our
3rd party provider, who obtain the price directly from the fund manager.
3. Financial instruments (continued)
Level 3 valuation methodology
Financial instruments included in Level 3 are measured at fair value using the
last known price and for which the price is over a year old. These are mainly
OEICs and Unit Trusts. These instruments have unobservable inputs as the
current observable market information is no longer available. Where these
instruments arise management will value them based on the last known
observable market price or other relevant information.
The prices are sourced as noted in level 1 and level 2 above.
For the purposes of identifying level 3 instruments, unobservable inputs means
that current observable market information is no longer available. Where these
instruments arise management will value them based on the last known
observable market price or other relevant information. No other valuation
techniques are applied.
Level 3 sensitivity to changes in unobservable measurements
For financial instruments assessed as Level 3, based on its review of the
prices used, the Group believes that any change to the unobservable inputs
used to measure fair value would not result in a significantly higher or lower
fair value measurement at year end, and therefore would not have a material
impact on its reported results.
Review of prices
As part of its pricing process, the Group regularly reviews whether each
instrument can be valued using a quoted price and if it trades on an active
market, based on available market data and the specific circumstances of each
market and instrument.
The Group regularly assesses instruments to ensure they are categorised
correctly, and Fair Value Hierarchy (FVH) levels adjusted accordingly. The
Group monitors situations that may impact liquidity such as suspensions and
liquidations while also actively collecting observable market prices from
relevant exchanges and asset managers. Should an instrument price become
observable following the resumption of trading the FVH level will be updated
to reflect this.
Changes to valuation methodology
There have been no changes in valuation methodology during the year under
review.
Transfers between Levels
The Group's policy is to assess each financial instrument it holds at the
current financial year end, based on the last known price and market
information, and assign it to a Level.
The Group recognises transfers between Levels of the fair value hierarchy at
the end of the reporting period in which the changes have occurred. Changes
occur due to the availability of (or lack thereof) quoted prices and whether a
market is now active or not.
3. Financial instruments (continued)
Transfers between Levels between 1 October 2023 and 30 September 2024 are
presented in the table below at their valuation at 30 September 2024:
2024 2023
Transfers from Transfers to £m £m
Level 1 Level 2 2.8 33.2
Level 2 Level 1 58.3 20.9
The reconciliation between opening and closing balances of Level 3 assets are
presented in the table below:
2024 2023
£m £m
Opening balance 2.2 1.9
Unrealised gains or losses in the year ended 30 September 2024 0.1 (0.1)
Transfers in to Level 3 at 30 September 2024 valuation 0.3 0.4
Transfers out of Level 3 at 30 September 2024 valuation (0.9) -
Closing balance 1.7 2.2
Any resultant gains or losses on financial assets held for the benefit of
policyholders are offset by a reciprocal movement in the linked liability.
(v) Capital maintenance
The regulated companies in the Group are subject to capital requirements
imposed by the relevant regulators as detailed below:
Legal entity Regulatory regime
IFAL IFPR
ILUK Solvency II
ILInt Isle of Man risk-based capital regime
Group capital requirements for 2024 are driven by the regulated entities,
whose capital resources and requirements as detailed below:
IFAL ILUK ILInt
30 September 30 September 30 September
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Capital resource 74.8 44.4 313.1 269.2 49.0 46.6
Capital requirement 60.4 33.3 229.5 215.8 26.4 27.1
Coverage ratio 124% 133% 136% 125% 186% 172%
Following the FCA's periodic ICARA review process, the regulator imposed
additional capital requirements on IFAL on 27 March 2024 which resulted in a
capital deficit until it was remediated in April 2024, within the timeframes
required by the FCA. The Group has otherwise complied with the requirements
set by the regulators during the year. The Group's policy for managing capital
is to ensure each regulated entity maintains capital well above the minimum
requirement.
4. Risk and risk management
Risk assessment
The board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's risk management function.
Risk assessment is the determination of quantitative values and/or qualitative
judgements of risk related to a concrete situation and a recognised threat.
Quantitative risk assessment requires calculations of two components of risk,
the magnitude of the potential impact, and the likelihood that the risk
materialises. Qualitative aspects of risk, despite being more difficult to
express quantitatively, are also taken into account in order to fully evaluate
the impact of the risk on the organisation.
(1) Market risk
Market risk is the risk of loss arising either directly or indirectly from
fluctuations in the level and in the volatility of market prices of assets,
liabilities and other financial instruments.
(a)
Price risk
Market price risk from reduced income
The Company's dividend income from its regulated subsidiaries, IFAL, ILUK and
ILInt, is exposed to market risk. The Group's main source of income is derived
from annual charges, which are linked to the value of the clients' portfolios,
which are in turn determined by the market prices of the underlying assets.
The Group's revenue is therefore affected by the value of assets on the
platform, and consequently it has exposure to equity market levels and
economic conditions.
The Group mitigates the second order market price risk by applying fixed
charges per tax wrapper in addition to income derived from the charges based
on clients' linked portfolio values. These are recorded in note 5 as wrapper
charges and annual charges respectively. This approach of fixed and variable
charging offers an element of diversification to its income stream. The risk
of stock market volatility, and the impact on revenue, is also mitigated
through a wide asset offering which ensures the Group is not wholly correlated
with one market, and which enables clients to switch assets, including into
cash on the platform, in times of uncertainty.
Sensitivity testing has been performed to assess the impact of market
movements on the Group's profit after tax and equity for the year. The
sensitivity is applied as an instantaneous shock at the start of the year and
shows the impact of a 10% change in values across all assets held on the
platform.
Impact on profit and equity for the year
2024 2023
£m £m
10% increase in asset values 8.7 8.7
10% decrease in asset values (8.7) (8.7)
Market risk from direct asset holdings
The Group and the Company have limited exposure to primary market risk as
capital is invested in high quality, highly liquid, short-dated investments.
4. Risk and risk management (continued)
Market risk from unit-linked assets
The Group and the Company have limited exposure to primary market risk from
the value of unit-linked assets as fluctuations are borne by the
policyholders.
(b) Interest rate risk
The Group receives interest on its cash and cash equivalents of £244.1
million (2023: 177.9 million), on its loans £6.5 million (2023: £6.3
million) and on financial investments of £2.6 million (2023: £22.4 million).
The Group mitigates interest rate risk by diversifying its investments into
government gilts, which have a fixed rate of interest.
Sensitivity testing has been performed to assess the impact of a 1% change in
interest rates. This would be expected to increase/decrease interest received
on cash and cash equivalents by £1.7 million (2023: £1.7 million) and on
loans by £0.1 million (2023: £0.1 million), which would increase/decrease
profit after tax and equity by £1.4 million (2023: £1.4 million).
(c) Currency risk
The Group is not directly exposed to significant currency risk however it is
exposed to currency risk which arises on the platform software maintenance and
support fees charged by IAD Pty, which are charged in Australian Dollars. The
total amount of software maintenance and support fees in FY24 amounted to
£8.3 million (FY23: £7.2 million).
Sensitivity testing has been performed to assess the impact of a 10% change in
the GBP-AUD exchange rate. This would be expected to cause an
increase/decrease of £0.8 million (2023: £0.7 million) on the software
maintenance and support fees.
The table below shows a breakdown of the material foreign currency exposures
for the unit-linked policies within the Group:
2024 2024 2023 2023
Currency £m % £m %
GBP 28,678.4 99.4 24,279.2 99.3
USD 147.0 0.5 133.4 0.5
EUR 21.9 0.1 15.9 0.1
Others 13.3 - 12.4 0.1
Total 28,860.6 100.0 24,440.9 100.0
99.4% of investments and cash held for the benefit of policyholders are
denominated in GBP, its base currency. Remaining currency holdings greater
than 0.1% of the total are shown separately in the table. However, it is
recognised that the majority of investments held for the benefit of
policyholders are in collective investment schemes and some of their
underlying assets are denominated in currencies other than GBP, which
increases the funds under direction currency risk exposure. A significant rise
or fall in sterling exchange rates would not have a significant first order
impact on the Group's results since any adverse or favourable movement in
policyholder assets is entirely offset by a corresponding movement in the
linked liability.
4. Risk and risk management (continued)
(2) Credit (counterparty default) risk
Credit risk is the risk that the Group or Company is exposed to a loss if
another party fails to meet its financial obligations. For the Company, the
exposure to counterparty default risk arises primarily from loans directly
held by the Company, while for the Group this risk also arises from fees owed
by clients.
Assets held at amortised cost
(a) Accrued income
This comprises fees owed by clients. These are held at amortised cost, less
ECLs.
Under IFRS 9, a forward-looking approach is required to assess ECLs, so that
losses are recognised before the occurrence of any credit event. The Group
estimates that pending fees three months or more past due are unlikely to be
collected and are written off. Based on management's experience, pending fees
one or two months past due are generally expected to be collected, but
consideration is also given to potential losses on these fees. Historical loss
rates have been used to estimate expected future losses, while consideration
is also given to underlying economic conditions, in order to ensure that
expected losses are recognised on a forward-looking basis. In FY24 the ECLs in
relation to this were immaterial.
Details of the ECLs recognised in relation to accrued income can be seen in
note 22.
(b) Loans
Loans subject to the 12 month ECL are £6.5m (2023: £6.3m). While there
remains a level of economic uncertainty in the current climate, leading to
potentially higher credit risk, there is not considered to be a significant
increase in credit risk, as all of the loans are currently performing to
schedule, and there are no significant concerns regarding the borrowers. There
is therefore no need to move from the 12 month ECL model to the lifetime ECL
model. Expected losses are recognised on a forward-looking basis, which has
led to the additional recognition of an immaterial amount of ECLs.
In addition to the above, the Company has committed a further £5.0m (2023:
£5.0m) in undrawn loans.
Details of the ECLs recognised in relation to loans can be seen in note 16. No
ECLs have been recognised on the undrawn loan commitments, as any ECLs would
not be considered to be material.
(c) Cash and equivalents
The Group has a low risk appetite for credit risk, which is mainly limited to
exposures to credit institutions for its bank deposits. A range of major
regulated UK high street banks is used. A rigorous annual due diligence
exercise is undertaken to assess the financial strength of these banks, with
those used having a minimum credit quality step of 3, which is a minimum Fitch
rating of BBB-.
4. Risk and risk management (continued)
In order to actively manage the credit and concentration risks, the board
approved risk appetite limits for the regulated entities of the amount of
corporate and client cash that can be deposited with any one bank, which is
represented by a set percentage of the respective bank's total customer
deposits. Monthly monitoring of these positions, along with movements in Fitch
ratings, is undertaken, with reports presented to the Directors for review.
Collectively these measures ensure that the Group diligently manages the
exposures and provide the mitigation scope to be able to manage credit and
concentration exposures on behalf of itself and its customers.
Counterparty default risk exposure to loans
The Company has loans of £6.5m (2023: £6.3m). There are no other loans held
by the Group.
Counterparty default risk exposure to Group companies
As well as inconvenience and operational issues arising from the failure of
the other Group companies, there is also a risk of a loss of assets. The
Company is due £k (2023: £81k) from other Group companies.
Counterparty default risk exposure to other receivables
The Company has no other receivables arising, due to the nature of its
business, and the structure of the Group.
Across the Group, there is exposure to counterparty default risk arising
primarily from:
· investments held directly by the Group;
· exposure to clients; and
· exposure to other receivables.
The other exposures to counterparty default risk include a credit default
event which affects assets held on behalf of clients and occurs at one or more
of the following entities:
· a bank where cash is held on behalf of clients;
· a custodian where the assets are held on behalf of clients; and
· Transact Nominees Limited (TNL), which is a Group entity and the
legal owner of the assets held on behalf of clients.
There is no first order impact on the Group from one of the events in the
preceding paragraph. This is because any credit default event in respect of
these holdings will be borne by clients, both in terms of loss of value and
loss of liquidity. Terms and conditions have been reviewed by external lawyers
to ensure that these have been drafted appropriately. However, there is a
second order impact whereby future revenues for the Group are reduced in the
event of a credit default which affects the value of FUD.
There are robust controls in place to mitigate credit risk, for example,
holding corporate and client cash across a range of banks in order to minimise
the risk of a single point of counterparty default failure. Additionally,
maximum counterparty limits and minimum credit quality steps are set for
banks.
Cash and cash equivalents and investments are classed as stage 1 on the ECL
model (meaning that they are not credit-impaired on initial recognition and
have not experienced a significant increase in credit risk since initial
recognition) with no material ECL provision held.
4. Risk and risk management (continued)
Assets and funds held on behalf of clients
There is no significant risk exposure to any one UK clearing bank.
Counterparty default risk exposure to clients
The Group is due £14.2m (2023: £12.5m) from fee income owed by clients.
Impact of credit risk on fair value
Due to the limited direct exposure that the Group and the Company have to
credit risk, credit risk does not have a material impact on the fair value
movement of financial instruments for the year under review. The fair value
movements on these instruments are predominantly due to changes in market
conditions.
(3) Liquidity risk
Liquidity risk is the risk that funds are not accessible such that the
Company, although solvent, does not have sufficient liquid financial resources
to meet obligations as they fall due, or can secure such resources only at
excessive cost.
As a holding company, the Company's main liquidity risk is related to payment
of shareholder dividends and operating expenses it may incur. Additionally, as
noted in the loans section above, the Company has made short term commitments,
in the form of a capped facility arrangement, to Vertus Capital SPV1 Limited
('Vertus') (as one of Vertus' sources of funding) to assist Vertus in
developing its business, which is to provide tailored niche debt facilities to
adviser firms to fund acquisitions, management buy-outs and other similar
transactions.
Across the Group, the following key drivers of liquidity risk have been
identified as:
· failure of one or more of the banks that holds funds for the
Group;
· bank system failure which prevents access to Group funds; and
· clients holding insufficient cash to settle fees when they become
due; and
· expenses rise faster than anticipated or from one-off "shocks"
such as fines or client compensation.
The Group's liquidity risk arises from a lack of readily realisable cash to
meet debts as they become due. This takes a number of forms - clients'
liabilities coming due, other liabilities (e.g. expenses) coming due.
The first of these, clients' liabilities is primarily covered through the
terms and conditions with clients' taking their own liquidity risk, if their
assets cannot be immediately surrendered for cash.
Payment of other liabilities depends on the Group having sufficient liquidity
at all times to meet obligations as they fall due. This requires access to
liquid funds, i.e. working banks and it also requires that the Group's main
source of liquidity, charges on its clients' assets, can also be converted
into cash.
The payment of loan obligations is covered by the upward dividends from
subsidiary entities which were assessed against the financial plans and
capital projections of the regulated entities to ensure the level of
affordability of the future dividends.
4. Risk and risk management (continued)
The Group has set out two key liquidity requirements: first, to ensure that
clients maintain a percentage of liquidity in their portfolios at all times in
order to have sufficient funds to pay charges relating to their wrappers, and
second, to maintain access to corporate cash through a spread of cash holdings
in bank accounts to reduce the exposure to any one bank.
There are robust controls in place to mitigate liquidity risk, for example,
through regular monitoring of expenditure, closely managing expenses in line
with the business plan, and, in the case of the Vertus facility, capping the
value of loans. Additionally, the Group holds corporate and client cash across
a range of banks in order to mitigate the liquidity impact of a counterparty
default failure.
Maturity schedule
The following table shows an analysis of the financial assets and financial
liabilities by remaining expected maturities as at 30 September 2024 and 30
September 2023. All financial liabilities are undiscounted.
In addition to the financial assets and financial liabilities shown in the
tables below, the Company committed a further £5.0 million (2023: £5.0
million) in undrawn loans. These are available to be drawn down immediately.
Financial assets:
2024 Up to 3 months 3-12 months 1-5 Over 5 years Total
years
£m £m £m £m £m
Investments held for the policyholders 27,237.8 - - - 27,237.8
Investments - - 2.6 - 2.6
Accrued income 14.2 - - - 14.2
Trade and other receivables 2.9 - - - 2.9
Loans - - 6.5 - 6.5
Cash and cash equivalents 244.1 - - - 244.1
Cash held for the benefit of policyholders 1,622.8 - - - 1,622.8
Total 29,121.8 - 9.1 - 29,130.9
2023 Up to 3 months 3-12 months 1-5 Over 5 years Total
years
£m £m £m £m £m
Investments held for the policyholders 23,021.7 - - - 23,021.7
Investments - - 22.4 - 22.4
Accrued income 12.5 - - - 12.5
Trade and other receivables 3.2 - - - 3.2
Loans - - 6.3 - 6.3
Cash and cash equivalents 177.9 - - - 177.9
Cash held for the benefit of policyholders 1,419.2 - - - 1,419.2
Total 24,634.5 - 28.7 - 24,663.2
4. Risk and risk management (continued)
Financial liabilities:
2024 Up to 3 months 3-12 months 1-5 Over 5 years Total
years
£m £m £m £m £m
Liabilities for linked investment contracts 28,860.6 - - - 28,860.6
Trade and other payables 8.5 - - - 8.5
Lease liabilities 1.2 1.4 0.5 - 3.1
Total 28,870.3 1.4 0.5 - 28,872.2
2023 Up to 3 months 3-12 months 1-5 Over 5 years Total
years
£m £m £m £m £m
Liabilities for linked investment contracts 24,440.9 - - - 24,440.9
Trade and other payables 6.6 - - - 6.6
Lease liabilities 0.1 0.3 0.9 - 1.3
Total 24,447.6 0.3 0.9 - 24,448.8
(4) Outflow risk
Outflows occur when funds are withdrawn from the platform for any reason.
Outflows typically occur where clients' circumstances and requirements change.
However, these outflows can also be triggered by operational failure, changes
to the competitive and industry landscape or external events such as
regulatory or economic changes.
Outflow risk is mitigated by focusing on providing exceptionally high levels
of service. Outflow rates are closely monitored and unexpected experience is
investigated. Despite the current challenging and uncertain economic and
geopolitical environment, outflow rates remain stable.
5. Disaggregation of revenue
The Group has the following categories of revenue:
· Annual charge - based on a fixed percentage applied to the value
of the client's portfolio each month.
· Wrapper charge - based on a fixed quarterly charge per wrapper.
· Other income - dealing charges are charged based on a fixed fee
for each type of transaction. Buy commissions were discontinued on 1(st) March
2024.
· Adviser back-office technology - licence income based on a fixed
monthly charge per number of users. Consultancy income is charged based on
the services provided.
For the financial year ended
30 September
2024 2023
£m £m
Annual charge 126.1 116.1
Wrapper charge 12.8 12.3
Other income 1.1 1.7
Adviser back-office technology 4.9 4.8
Total revenue 144.9 134.9
6. Segmental reporting
The revenue and profit before tax are attributable to activities carried out
in the UK and the Isle of Man.
The Group has three classes of business, which have been organised primarily
based on the products they offer, as detailed below:
· Investment administration services - this relates to services
performed by IFAL, which is the provider of the Transact wrap service. It is
the provider of the General Investment Account (GIA), is a Self-Invested
Personal Pension (SIPP) operator, an ISA manager and is the custodian for all
assets held on the platform (except for those held by third party custodians).
· Insurance and life assurance business - this relates to ILUK and
ILInt, insurance companies which provide the Transact Personal Pension,
Executive Pension, Section 32 Buy-Out Bond, Transact Onshore and Offshore
Bonds, and Qualifying Savings Plan on the Transact platform.
· Adviser back-office technology - this relates to T4A, provider of
financial planning technology to adviser and wealth management firms via the
CURO adviser support system.
Other Group entities relates to the rest of the Group, which provide services
to support the Group's core operating segments.
Analysis by class of business is given below.
6. Segmental reporting (continued)
Consolidated Statement of Comprehensive Income - segmental information for the
year ended 30 September 2024:
Investment administration services Insurance and life assurance business Adviser back-office technology Other Group entities Consolidation adjustments Total
£m £m £m £m £m £m
Revenue
Annual charge 67.8 58.3 - - - 126.1
Wrapper charge 3.1 9.7 - - - 12.8
Adviser back-office technology - - 4.9 - - 4.9
Other income 0.8 0.3 - 84.5 (84.5) 1.1
Total revenue 71.7 68.3 4.9 84.5 (84.5) 144.9
Cost of sales (1.3) (0.9) (0.8) - - (3.0)
Gross profit/(loss) 70.4 67.4 4.1 84.5 (84.5) 141.9
Administrative expenses (44.0) (32.8) (5.1) (87.1) 84.0 (85.0)
Impairment losses 0.1 - - (4.9) 4.9 0.1
Operating profit/(loss) 26.5 34.6 (1.0) (7.5) 4.4 57.0
Interest expense - - - (0.8) 0.6 (0.2)
Interest income 2.8 6.7 - 1.8 (0.6) 10.7
Net policyholder returns
Net income attributable to policyholder returns - 40.2 - - - 40.2
Change in investment contract liabilities - (3,051.7) - - - (3,051.7)
Fee and commission expenses - (232.7) - - - (232.7)
Policyholder investment returns - 3,284.4 - - - 3,284.4
Net policyholder returns - 40.2 - - - 40.2
Profit/(loss) on ordinary activities before taxation attributable to 29.3 81.5 (1.0) (6.5) 4.4 107.7
policyholders and shareholders
Policyholder tax charge - (38.8) - - - (38.8)
Profit/(loss) on ordinary activities before taxation attributable to 29.3 42.7 (1.0) (6.5) 4.4 68.9
shareholders
Total tax (charge) / benefit attributable to shareholder and policyholder (6.1) (48.5) 0.2 (1.4) 0.2 (55.6)
returns
Less: tax attributable to policyholder returns - 38.8 - - - 38.8
Shareholder tax (charge) / benefit on profit on ordinary activities (6.1) (9.7) 0.2 (1.4) 0.2 (16.8)
Profit/(loss) for the period 23.2 33.0 (0.8) (7.9) 4.6 52.1
6. Segmental reporting (continued)
Consolidated Statement of Comprehensive Income - segmental information for the
year ended 30 September 2023:
Investment administration services Insurance and life assurance business Adviser back-office technology Other Group entities Consolidation adjustments Total
£m £m £m £m £m £m
Revenue
Annual charge 63.1 53.0 - - - 116.1
Wrapper charge 3.0 9.3 - - - 12.3
Adviser back-office technology - - 4.8 - - 4.8
Other income 1.2 0.5 - 76.0 (76.0) 1.7
Total revenue 67.3 62.8 4.8 76.0 (76.0) 134.9
Cost of sales (2.1) (0.6) (0.7) (0.5) - (3.9)
Gross profit/(loss) 65.2 62.2 4.1 75.5 (76.0) 131.0
Administrative expenses (42.2) (30.2) (5.5) (72.3) 75.6 (74.6)
Impairment losses - - - (0.1) - (0.1)
Operating profit/(loss) 23.0 32.0 (1.4) 3.1 (0.4) 56.3
Interest expense - - - (0.7) 0.6 (0.1)
Interest income 1.2 4.4 - 1.4 (0.6) 6.4
Net policyholder returns
Net income attributable to policyholder returns - 12.1 - - - 12.1
Change in investment contract liabilities - (1,056.0) - - - (1,056.0)
Fee and commission expenses - (193.3) - - - (193.3)
Policyholder investment returns - 1,249.3 - - - 1,249.3
Net policyholder returns - 12.1 - - - 12.1
Profit/(loss) on ordinary activities before taxation attributable to 24.2 48.5 (1.4) 3.8 (0.4) 74.7
policyholders and shareholders
Policyholder tax credit charge - (12.1) - - - (12.1)
Profit/(loss) on ordinary activities before taxation attributable to 24.2 36.4 (1.4) 3.8 (0.4) 62.6
shareholders
Total tax (charge) / benefit attributable to shareholder and policyholder (5.0) (18.7) 0.5 (1.7) 0.1 (24.8)
returns
Less: tax attributable to policyholder returns - 12.1 - - - 12.1
Shareholder tax (charge) / benefit on profit on ordinary activities (5.0) (6.6) 0.5 (1.7) 0.1 (12.7)
Profit/(loss) for the period 19.2 29.8 (0.9) 2.1 (0.3) 49.9
6. Segmental reporting (continued)
Statement of Financial Position - segmental information for the year ended 30
September 2024:
Investment administration services Insurance and life assurance business Total
Adviser back-office technology
£m £m £m £m
Assets
Non-current assets 11.7 19.7 1.2 32.6
Current assets 108.6 159.1 2.3 270.0
Total assets 120.3 178.8 3.5 302.6
Liabilities
Current liabilities 10.8 35.7 1.0 36.3
Non-current liabilities 0.8 58.0
0.3 45.7
Total liabilities 11.1 81.4 1.8 94.3
Policyholder assets and liabilities
Cash held for the benefit of policyholder
- 1,622.8 - -
Investments held for the benefit of policyholders
- 27,237.8 - -
Liabilities for linked investment contracts
- (28,860.6) - -
Total policyholder assets and liabilities - - - -
Net assets 109.2 97.4 1.7 208.3
Non-current asset additions
0.5 0.5 - 1.0
6. Segmental reporting (continued)
Restated Statement of Financial Position - segmental information for the year
ended 30 September 2023:
Investment administration services Insurance and life assurance business Total
Adviser back-office technology
£m £m £m £m
Assets
Non-current assets 10.3 19.1 1.1 30.5
Current assets 78.0 154.6 2.8 235.4
Total assets 88.3 173.7 3.9 265.9
Liabilities
Current liabilities 8.4 18.1 1.0 27.5
Non-current liabilities 0.2 48.5
0.8 47.5
Total liabilities 9.2 65.6 1.2 76.0
Policyholder assets and liabilities
Cash held for the benefit of policyholder
- 1,419.2 - -
Investments held for the benefit of policyholders
- 23.021.7 - -
Liabilities for linked investment contracts
- (24,440.9) - -
Total policyholder assets and liabilities - - - -
Net assets 79.1 108.1 2.7 189.9
Non-current asset additions
0.3 0.3 0.0 0.6
Segmental information: Split by geographical location
2024 2023
£m £m
Revenue
United Kingdom 138.8 129.4
Isle of Man 6.1 5.5
Total 144.9 134.9
2024 2023
£m £m
Non-current assets
United Kingdom 24.9 23.4
Isle of Man 0.1 0.1
Total 25.0 23.5
7. Earnings per share
2024 2023
Profit
Profit for the year and earnings used in basic and diluted earnings per share £52.1m £49.9m
Weighted average number of shares
Weighted average number of Ordinary shares 331.3m 331.3m
Weighted average numbers of Ordinary Shares held by EBT (0.7m) (0.5m)
Weighted average number of Ordinary Shares for the purposes of basic EPS 330.6m 330.8m
Adjustment for dilutive share option awards 0.7m 0.5m
Weighted average number of Ordinary Shares for the purposes of diluted EPS 331.3m 331.3m
Earnings per share
Basic 15.8p 15.1p
Diluted 15.7p 15.1p
Earnings per share ("EPS") is calculated based on the share capital of
IntegraFin Holdings plc and the earnings of the consolidated Group.
Basic EPS is calculated by dividing profit after tax attributable to ordinary
equity shareholders of the Company by the weighted average number of Ordinary
Shares outstanding during the year. The weighted average number of shares
excludes shares held within the Employee Benefit Trust to satisfy the Group's
obligations under employee share awards.
Diluted EPS is calculated by adjusting the weighted average number of Ordinary
Shares outstanding to assume conversion of all potentially dilutive Ordinary
Shares.
8. Expenses by nature
The following expenses are included within administrative expenses:
Group
2024 2023
£m £m
Depreciation 1.8 2.1
Amortisation 0.4 0.4
Wages and employee benefits expense 57.8 52.8
Other staff costs 0.7 1.1
Auditor's remuneration:
- auditing of the Financial Statements of the Company pursuant to the 0.2 0.2
legislation
- auditing of the Financial Statements of subsidiaries 0.6 0.6
- other assurance services 0.4 0.4
Other professional fees 6.2 4.8
Regulatory fees 3.2 3.9
Non-underlying expenses:
- Non-underlying expenses - backdated VAT (0.1) -
- Non-underlying expenses - interest on backdated VAT (0.4) -
- Other non-underlying expenses - deferred consideration 2.1 2.1
- Other non-underlying expenses - contingent consideration - (1.7)
- Other non-underlying expenses - office move 0.1 -
Short-term lease payments:
- land and buildings 1.1 0.6
Other occupancy costs 2.0 2.2
Irrecoverable VAT 4.5 3.6
Other costs 4.4 3.1
Other income - tax relief due to shareholders - (1.6)
Total administrative expenses 85.0 74.6
Wages and employee benefits expense
The average number of staff (including executive directors) employed by the
Group during the financial year amounted to:
2024 2023
No. No.
IT & Change Delivery 187 177
Client Operations 246 236
Operations 83 81
Sales & Marketing 38 40
Group Services 112 97
666 631
8. Expenses by nature (continued)
We have changed the presentation of this table to provide information that is
more
relevant to users of the financial statements. This revised structure is
likely to continue
going forward and prior year comparative information has also been
reclassified.
The Company has no employees (2023: nil).
Wages and employee (including executive directors) benefits expenses during
the year, included within administrative expenses, were as follows:
2024 2023
£m £m
Wages and salaries 46.1 43.9
Social security costs 5.1 4.8
Other pension costs 4.3 2.0
Share-based payment costs 2.3 2.1
57.8 52.8
Compensation of key management personnel
Key management personnel are defined as those persons having authority and
responsibility for planning, directing, and controlling the activities of the
entity and as such, only directors are considered to meet this definition.
2024 2023
£m £m
Short-term employee benefits 2.3 3.0
Post-employment benefits 0.1 0.2
Share based payment 0.4 0.5
Social security costs 0.4 0.5
Highest paid director:
Short-term employee benefits 0.6 0.6
Other benefits 0.1 0.2
No. No.
Number of directors for whom pension contributions are paid 3 8
Short-term employee benefits comprise salary and cash bonus.
Compensation of key management personnel has fallen compared with FY23. This
is due to a reassessment of individuals considered to be key management
personnel. Previously this included directors of subsidiary companies, while
in FY24 this only includes the IHP board of directors.
9. Interest income
Group Company Group Company
2024 2024 2023 2023
£m £m £m £m
Interest income on bank deposits 9.1 0.7 5.3 0.5
Interest income on tax repayments 0.1 - 0.4 -
Interest income on loans 0.5 0.5 0.4 0.4
Interest income on financial investments 1.0 - 0.3 -
10.7 1.2 6.4 0.9
All interest income is calculated using the effective interest rate method,
except for Interest income on tax repayments.
10. Policyholder investment returns
2024 2023
£m £m
Change in fair value of underlying assets 3,005.2 1,024.2
Investment income 279.2 225.1
Total policyholder investment returns 3,284.4 1,249.3
11. Tax on profit on ordinary activities
The UK estimated weighted average effective tax rate was 25% for the
twelve-month period ended 30 September 2024 (30 September 2023: 22%),
representing the tax rate enacted at the reporting date. For the entities
within the Group operating outside of the UK, tax is charged at the relevant
rate in each jurisdiction.
Group
a) Analysis of charge in year
The income tax expense comprises:
2024 2023
£m £m
Corporation tax
Current year - corporation tax 17.0 12.7
Adjustment in respect of prior years 0.2 (0.1)
Total corporation tax 17.2 12.6
Deferred tax
Current year (0.4) 0.1
Total shareholder tax charge for the year 16.8 12.7
Policyholder taxation
UK policyholder tax at 20% (2023: 20%) 15.7 -
Deferred tax at 25% (2023: 25%) 22.8 11.8
Tax deducted on overseas dividends 0.3 0.3
Total policyholder taxation 38.8 12.1
Total tax attributable to shareholder and policyholder returns 55.6 24.8
11. Tax on profit on ordinary activities (continued)
b) Factors affecting tax charge for the year
The tax on the Group's profit before tax differs from the amount
that would arise using the weighted average tax rate applicable to profits of
the consolidated entities as follows:
2024 2023
£m £m
Profit on ordinary activities before taxation attributable to shareholders 68.9 62.6
Profit on ordinary activities multiplied by effective rate of Corporation Tax 17.2 13.8
25% (2023: 22%)
Effects of:
Non-taxable dividends (0.1) -
Income / expenses not taxable / deductible for tax purposes multiplied by 0.2 (0.6)
effective rate of corporation tax
Adjustments in respect of prior years 0.3 0.1
Effect of overseas tax rate jurisdiction (0.8) (0.6)
16.8 12.7
Add policyholder tax 38.8 12.1
55.6 24.8
Company
a) Analysis of charge in year
2024 2023
£m £m
Deferred tax charge/(credit) (see note 26) - -
b) Factors affecting tax charge for the year
2024 2023
£m £m
Profit on ordinary activities before tax 48.4 31.6
Profit on ordinary activities multiplied by effective rate of Corporation Tax 12.1 7.0
25% (2023: 22%)
Effects of:
Non-taxable dividends (15.1) (7.3)
Expenses not deductible for tax purposes 1.7 -
Group loss relief 1.3 0.3
- -
12. Intangible assets - Group
Software and IP rights Goodwill Customer relationships Software Brand Total
Cost £m £m £m £m £m £m
At 1 October 2023 12.5 18.3 2.1 2.0 0.3 35.2
At 30 September 2024 12.5 18.3 2.1 2.0 0.3 35.2
Amortisation
At 1 October 2023 12.5 - 0.4 0.8 0.1 13.8
Charge for the year - - 0.1 0.3 - 0.4
At 30 September 2024 12.5 - 0.5 1.1 0.1 14.2
Net Book Value
At 30 September 2023 - 18.3 1.7 1.2 0.2 21.4
At 30 September 2024 - 18.3 1.6 0.9 0.2 20.9
Software and IP rights Goodwill Customer relationships Software Brand Total
Cost £m £m £m £m £m £m
At 1 October 2022 12.5 18.3 2.1 2.0 0.3 35.2
At 30 September 2023 12.5 18.3 2.1 2.0 0.3 35.2
Amortisation
At 1 October 2022 12.5 - 0.3 0.5 0.1 13.4
Charge for the year - - 0.1 0.3 - 0.4
At 30 September 2023 12.5 - 0.4 0.8 0.1 13.8
Net Book Value
At 30 September 2022 - 18.3 1.8 1.5 0.2 21.8
At 30 September 2023 - 18.3 1.7 1.2 0.2 21.4
All intangible assets are externally generated.
Goodwill impairment assessment
In accordance with IFRS, goodwill is not amortised, but is assessed for
impairment on an annual basis. The impairment assessment compares the carrying
value of goodwill to the recoverable amount, which is the higher of value in
use and the fair value less costs of disposal. The recoverable amount is
determined based on value in use calculations using cash flow projections from
financial budgets approved by senior management covering a five-year period.
The goodwill relates to the acquisition of IAD Pty in July 2016 and T4A in
January 2021.
The carrying amount of the IAD Pty goodwill is allocated to the two cash
generating units ("CGUs") that relate to the Transact platform, as these are
benefitting from the IAD PTY acquisition. The carrying amount of the goodwill
for T4A is allocated to the CGU that relates to the CURO software as this is
the source of revenue for T4A.
12. Intangible assets - Group (continued)
IAD Pty
2024 2023
£m £m
Investment administration services 7.2 7.2
Insurance and life assurance business 5.7 5.7
Total 12.9 12.9
T4A
2024 2023
£m £m
Adviser back-office technology 5.3 5.3
The recoverable amounts of the above CGUs have been determined from value in
use calculations based on cash flow projections from management-approved
budgets covering a five year period to 30 September 2029. Post the five year
business plan, the growth rate used to determine the terminal value of the
cash generating units was based on the long-term growth rates shown below. The
discount rate is assessed on an annual basis and has been calculated using the
weighted average cost of capital.
Key assumptions used in the value in use calculations are as follows:
IAD Pty T4A
2024 2023 2024 2023
Discount rate 13.0% 13.2% 14.4% 14.0%
Forecast period 5 years 5 years 5 years 5 years
Long-term growth rate 2.0% 2.0% 3.0% 2.0%
Key assumptions used in the underlying cash flow projections are as follows:
IAD Pty
· Equity market levels - this is the key driver of FUD levels and
therefore annual charges
· Net inflows - this is the other core component of FUD growth, and
demonstrates the ongoing ability of the platform to continue to grow
organically
T4A
· Licence user growth - T4A is continuing to develop its CURO
offering and build up its client base to support future profitability, and
growth in CURO users is key to this
· Expense inflation - as the T4A business grows, so will the cost
base, which is being managed to help support the projections of future
profitability
The annual impairment tests relating to both acquisitions indicated that no
goodwill impairment is required, as the recoverable amount is higher than the
carrying value of the CGUs. However, there is only £0.5 million headroom in
the T4A assessment. As disclosed in note 2, the analysis indicates that there
is a close proximity of the forecast to requiring impairment, and there is
significant sensitivity in the projections of ongoing growth of the licence
users.
12. Intangible assets - Group (continued)
Sensitivity to changes in assumptions
The Group considers that projected cash flows of the investment administration
services and insurance and life assurance business CGUs are most sensitive to
movements in equity markets, because they have a direct impact on the level of
the Group's fee income, while the adviser back-office technology CGU is most
sensitive to the number of CURO users, as this forms the basis of its licence
income. Additionally, given the close proximity of the T4A assessment to
requiring impairment, this calculation is also sensitive in the discount rate.
A sensitivity analysis has been performed, with key assumptions being revised
adversely to reflect the potential for future performance being below expected
levels. This estimated that any of the following changes to the assumptions
would be required for the cash flows to result in a material impairment to
goodwill:
IAD Pty
· a fall in equity markets of approximately 40%
T4A
· a reduction in the projected compound annual growth rate of CURO
licence users of 2.3% per year
· An increase in the T4A discount rate from 14.4% to 21.0%
13. Property, plant and equipment - Group
Leasehold improvements Equipment Fixtures and Fittings Motor Vehicles Total
Cost £m £m £m £m £m
At 1 October 2023 1.8 3.4 0.5 0.1 5.8
Additions 0.1 0.9 - - 1.0
Disposals - (0.2) (0.1) - (0.3)
At 30 September 2024 1.9 4.1 0.4 0.1 6.5
Depreciation
At 1 October 2023 1.5 2.9 0.3 - 4.7
Charge in the year - 0.5 - - 0.5
Disposals - (0.2) - - (0.2)
At 30 September 2024 1.5 3.2 0.3 - 5.0
Net Book Value
At 30 September 2023 0.3 0.5 0.2 0.1 1.1
At 30 September 2024 0.4 0.9 0.1 0.1 1.5
13. Property, plant and equipment - Group (continued)
Leasehold improvements Equipment Fixtures and Fittings Motor Vehicles Total
Cost £m £m £m £m £m
At 1 October 2022 1.7 3.7 0.2 - 5.6
Additions 0.1 0.4 0.1 0.1 0.7
Disposals - (0.4) - - (0.4)
Reclassification - (0.2) 0.2 - -
Foreign exchange - (0.1) - - (0.1)
At 30 September 2023 1.8 3.4 0.5 0.1 5.8
Depreciation
At 1 October 2022 1.4 2.9 0.1 - 4.4
Charge in the year 0.1 0.7 0.1 - 0.9
Disposals - (0.5) - - (0.5)
Reclassification - (0.1) 0.1 -
Foreign exchange - (0.1) - - (0.1)
At 30 September 2023 1.5 2.9 0.3 - 4.7
Net Book Value
At 30 September 2022 0.3 0.8 0.1 - 1.2
At 30 September 2023 0.3 0.5 0.2 0.1 1.1
The Company holds no property, plant and equipment.
14. Right-of-use assets - Property - Group
Cost £m
At 1 October 2023 1.7
Additions 2.7
At 30 September 2024 4.4
Depreciation £m
At 1 October 2023 0.7
Charge in the year 1.1
At 30 September 2024 1.8
Net Book Value
At 30 September 2023 1.0
At 30 September 2024 2.6
Cost £m
At 1 October 2022 6.6
Additions 0.4
Disposals (5.2)
Foreign exchange (0.1)
At 30 September 2023 1.7
Depreciation £m
At 1 October 2022 4.5
Charge in the year 1.4
Disposals (5.2)
At 30 September 2023 0.7
Net Book Value
At 30 September 2022 2.1
At 30 September 2023 1.0
14. Right-of-use assets - Property - Group (continued)
Depreciation is calculated on a straight-line basis over the term of the
lease.
The original lease on the Group's Clement's Lane office came to an end in June
2023. A new lease was signed in March 2024, and a corresponding right of use
asset and lease liability recognised. Costs of the lease from July 2023 to
March 2024 were recognised directly in the Consolidated Statement of
Comprehensive Income as occupancy costs.
15. Investments in subsidiaries
2024 2023
£m £m
Carrying value at 1 October 35.3 33.3
Investment in subsidiary shares - IFAL 15.0 -
Impairment of investment (6.3) -
Share-based payments 2.2 2.0
Carrying value at 30 September 46.2 35.3
The increase in subsidiary shares relates to the purchase of £15.0 million
worth of new shares issued by IFAL. See note 3. Financial instruments, section
(v) Capital maintenance, for further information.
Impairment of investment
As disclosed in note 1, investments in subsidiaries are recognised by the
Company at cost. The Company assesses at each reporting date, whether there is
an indication that an investment in subsidiaries may be impaired.
The Company's investment in T4A has a carrying value of £13.0 million. While
T4A business performance has improved this year, it is still yet to become
profitable, and as at 30 September 2024 it had negative net assets of £0.4
million. There is therefore an indication of impaired, which has led to an
impairment assessment being performed.
The impairment assessment compares the carrying value of the investment to the
recoverable amount, which is the higher of value in use and the fair value
less costs of disposal. The recoverable amount has been determined from value
in use calculations based on cash flow projections from formally approved
budgets covering a five year period to 30 September 2029. Post the five year
business plan, the growth rate used to determine the terminal value of the
cash generating units was based on the long-term growth rate shown below. The
discount rate is assessed on an annual basis and has been calculated using the
weighted average cost of capital.
Key assumptions used in the value in use calculations are as follows:
2024 2023
Discount rate 17.0% 14.0%
Forecast period 5 years 5 years
Long-term growth rate 3.0% 2.0%
15. Investment in subsidiaries (continued)
Key assumptions used in the underlying cash flow projections are as follows:
T4A
· Licence user growth - T4A is continuing to develop its CURO
offering and build up its client base to support future profitability, and
growth in CURO users is key to this
· Expense inflation - as the T4A business grows, so will the cost
base, which is being managed to help support the projections of future
profitability
The analysis indicates that the recoverable amount of the investment is £6.7
million. As a result, management has recognised an impairment charge of £6.3
million in the current year against the investment. The impairment charge is
recorded within administrative expenses in the Company statement of
comprehensive income. As disclosed in note 2, the analysis indicates that
there is a close proximity of the forecast to requiring impairment, and there
is significant sensitivity in the projections of ongoing growth of the licence
users.
Sensitivity to changes in assumptions
As the IHP investment in T4A is impaired, any adverse changes to the
assumption noted above i.e. increases to the discount rate or expense
assumption, and reductions in the licence user growth or long-term growth rate
assumption, would lead to a further impairment.
The Company has investments in the ordinary share capital of the following
subsidiaries at 30 September 2024:
Name of Company Holding % Held Incorporation and significant place of business Business
Direct holdings
Integrated Financial Arrangements Ltd Ordinary Shares 100% United Kingdom Investment Administration
IntegraFin Services Limited Ordinary Shares 100% United Kingdom Services Company
Transact IP Limited Ordinary Shares 100% United Kingdom Software provision & development
Integrated Application Development Pty Ltd Ordinary Shares 100% Australia Software maintenance
Transact Nominees Limited Ordinary Shares 100% United Kingdom Non-trading
IntegraLife UK Limited Ordinary Shares 100% United Kingdom Life Insurance
IntegraLife International Limited Ordinary Shares 100% Isle of Man Life Assurance
Transact Trustees Limited Ordinary Shares 100% United Kingdom Non-trading
Objective Funds Limited Ordinary Shares 100% United Kingdom Dormant
Objective Wealth Management Limited Ordinary Shares 100% United Kingdom Dormant
Time For Advice Limited Ordinary Shares 100% United Kingdom Financial planning software
Indirect holdings
IntegraFin Limited Ordinary Shares 100% United Kingdom Non-trading
ObjectMastery (UK) Limited Ordinary Shares 100% United Kingdom Dormant
IntegraFin (Australia) Pty Limited Ordinary Shares 100% Australia Non-trading
15. Investment in subsidiaries (continued)
The Group has 100% voting rights on shares held in each of the subsidiary
undertakings.
All the UK subsidiaries have their registered office address at 29 Clement's
Lane, London, EC4N 7AE. ILInt's registered office address is at 18-20 North
Quay, Douglas, Isle of Man, IM1 4LE. IntegraFin (Australia) Pty's and
Integrated Application Development Pty Ltd.'s registered office address's are
19-25 Camberwell Road, Melbourne, Australia.
The above subsidiaries have all been included in the Financial Statements.
16. Loans
This note analyses the loans payable by and receivable to the Company. The
carrying amounts of loans are as follows:
Loans receivable
2024 2023
£m £m
Loans receivable from third parties 6.6 6.5
Interest receivable on loans 0.2 0.1
Total gross loans 6.8 6.6
Expected credit losses allowance (0.3) (0.3)
Total net loans 6.5 6.3
Movement in the ECLs for the loan is as follows:
2024 2023
£m £m
Opening expected credit losses (0.3) (0.2)
Increase during the year - (0.1)
Balance at 30 September (0.3) (0.3)
The loans receivable are measured at amortised cost with the ECLs charged
straight to the statement of comprehensive income.
Loans payable
2024 2023
£m £m
Loan payable to subsidiary 6.0 7.0
To be settled within 12 months 1.0 1.0
To be settled after 12 months 5.0 6.0
Total loan payable 6.0 7.0
The loan payable was initially recognised at fair value. Subsequent
measurement is at amortised cost using the effective interest method. The
interest charge is recognised on the Company statement of comprehensive
income.
Interest on the loan is paid quarterly, whilst the remaining capital
repayments are annual over the next 6 years.
17. Investments held for the benefit of policyholders
2024 2024 2023 2023
Cost Fair value Cost Fair value
£m £m £m £m
ILINT 2,486.7 2,873.0 2,155.5 2,310.3
ILUK 20,746.4 24,364.8 19,249.9 20,711.4
Total 23,233.1 27,237.8 21,405.4 23,021.7
All amounts are current as customers are able to make same-day withdrawal of
available funds and transfers to third-party providers are generally performed
within a month.
These assets are held to cover the liabilities for unit linked investment
contracts. All contracts with customers are deemed to be investment contracts
and, accordingly, assets are 100% matched to corresponding liabilities.
18. Liabilities for linked investment contracts
2024 2023
Unit linked liabilities Fair value Fair value
£m £m
ILInt 3,110.7 2,481.5
ILUK 25,749.9 21,959.4
Total 28,860.6 24,440.9
Analysis of change in liabilities for linked investment contracts
2024 2023
£m £m
Opening balance 24,440.9 22,174.4
Investment inflows 3,490.7 2,670.3
Investment outflows (2,057.2) (1,400.5)
Changes in fair value of underlying assets 3,005.2 1,024.1
Investment income 279.2 225.1
Other fees and charges - Transact (65.5) (59.2)
Other fees and charges - third parties (232.7) (193.3)
Closing balance 28,860.6 24,440.9
The benefits offered under the unit-linked investment contracts are based on
the risk appetite of policyholders and the return on their selected collective
fund investments, whose underlying investments include equities, debt
securities, property and derivatives. This investment mix is unique to
individual policyholders. When the diversified portfolio of all policyholder
investments is considered, there is a clear correlation with the FTSE 100
index and other major world indices, providing a meaningful comparison with
the return on the investments.
The maturity value of these financial liabilities is determined by the fair
value of the linked assets at maturity date. There will be no difference
between the carrying amount and the maturity amount at maturity date.
19. Cash and cash equivalents
2024 2023
£m £m
Bank balances - instant access 198.1 165.9
Bank balances - notice accounts 46.0 12.0
Total 244.1 177.9
Bank balances held in instant access accounts are current and available for
use by the Group. All of the bank balances held in notice accounts require
less than 35 days' notice before they are available for use by the Group.
£67.8 million (2023: £42.7 million) of the total balance is corporate cash
held in respect of provisions for policyholder tax that will become payable
either to HMRC or returned to policyholders.
20. Cash held for the benefit of policyholders
2024 2023
£m £m
Cash and cash equivalents held for the benefit of the policyholders - instant
access - ILUK
1,385.0 1,248.0
Cash and cash equivalents held for the benefit of the policyholders - instant
access - ILInt
237.8 171.2
Total 1,622.8 1,419.2
Cash and cash equivalents held for the benefit of the policyholders are held
to cover the liabilities for unit linked investment contracts. These amounts
are 100% matched to corresponding liabilities.
21. Investments
Group Group
2024 2023
£m £m
Fair value through profit or loss
Listed shares and securities 0.1 0.1
Total 0.1 0.1
Amortised cost
Gilts 2.5 22.3
Total 2.5 22.3
2.6 22.4
The gilts show above are interest-bearing and the associated income is
referenced in Note 9 as "interest on financial investments".
22. Prepayments and accrued income
Group Company Group Company
2024 2024 2023 2023
£m £m £m £m
Accrued income 15.1 - 13.5 -
Less: expected credit losses (0.9) - (1.0) -
Accrued income - net 14.2 - 12.5 -
Prepayments 4.6 - 4.7 -
Total 18.8 - 17.2 -
Movement in the ECLs (for accrued income and trade and other receivables) is
as follows:
2024 2023
£m £m
Opening expected credit losses (1.0) (1.0)
Decrease during the year 0.1 -
Balance at 30 September (0.9) (1.0)
23. Trade and other receivables
Group Company Group Company
2024 2024 2023 2023
£m £m £m £m
Other receivables 3.0 - 3.2 -
Less: expected credit losses
(0.1) - (0.1) -
Other receivables net 2.9 - 3.1 -
Amounts owed by Group undertakings - 0.1 - 0.1
Repayment interest due from HMRC - - 0.4 -
Total 2.9 0.1 3.6 0.1
Amount due from HMRC is in respect of tax claimed on behalf of policyholders
for tax deducted at source.
24. Trade and other payables
Group Company Group Company
2024 2024 2023 2023
£m £m £m £m
Trade payables 1.1 - 0.7 -
PAYE and other taxation 2.1 - 2.6 0.1
Other payables 8.2 0.6 6.8 0.4
Accruals 8.8 0.7 7.8 0.4
Deferred consideration 1.5 1.5 1.6 1.6
Due to group undertakings - 0.2 - -
Total 21.7 3.0 19.5 2.5
24. Trade and other payables (continued)
Other payables mainly comprises £6.5 million (2023: £5.3 million) in
relation to bonds awaiting approval.
25. Lease liabilities
2024 2023
£m £m
Opening balance 1.1 2.8
Additions 2.6 0.2
Lease payments (1.0) (2.0)
Interest expense 0.2 0.1
Balance at 30 September 2.9 1.1
Amounts falling due within one year 2.5 0.3
Amounts falling due after one year 0.4 0.8
The Group has various leases in respect of property as a lessee. Lease terms
are negotiated on an individual basis and run for a period of one to five
years.
The lease extension for the Group's Clement's Lane office was signed in March
2024.
26. Deferred tax
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 20% (2023: 20%) on policyholder assets
and liabilities and 25% (2023: 25%) on non-policyholder items.
Deferred Tax Asset Accelerated Capital Allowances Share based payments Policyholder Excess management expenses and deferred acquisition costs Other deductible temporary differences Total
Policyholder Unrealised losses/ (unrealised gains) Policyholder Unrealised losses on investment trusts
£m £m £m £m £m £m £m
At 1 October 2022 0.1 0.5 2.9 2.2 0.2 0.1 6.0
Excess tax relief charged to equity 0.2 0.2
Charge to income (0.2) (2.9) 0.3 0.4 0.1 (2.3)
Offset Deferred Tax Liability - (2.5) (0.6) (0.1) (3.2)
At 30 September 2023 0.1 0.5 - - - 0.1 0.7
Excess tax relief charged to equity - - - - - - -
Charge to income - 0.5 - (1.5) (0.8) - (1.8)
Offset Deferred Tax Liability (0.1) - - 1.5 0.8 - 2.2
At 30 September 2024 - 1.0 - - - 0.1 1.1
26. Deferred tax (continued)
Deferred Tax Liability Accelerated capital allowances Policyholder tax on unrealised gains Other taxable differences Total
£m £m £m £m
At 1 October 2022 0.9 0.9
Charge to income 9.6 (0.1) 9.5
Offset against Deferred Tax asset (3.1) (0.1) (3.2)
At 30 September 2023 - 6.5 0.7 7.2
Charge to income 0.1 20.6 (0.1) 20.6
Offset against Deferred Tax asset (0.1) 2.3 - 2.2
At 30 September 2024 - 29.4 0.6 30.0
The Company has no deferred tax assets or liabilities.
27. Provisions - Group
2024 2023
£m £m
Balance brought forward 48.2 56.8
Additional provisions made in the period, including increases to existing ILUK 7.1 5.3
provision
Reduction in provisions made in the period (7.6) (3.5)
Amounts used from the ILUK provision during the period (7.1) (9.9)
Unused amounts reversed from the ILUK provision during the period (1.5) (1.6)
Increase in other provisions 0.6 1.1
Balance carried forward 39.7 48.2
Amounts falling due within one year 23.3
7.7
Amounts falling due after one year 16.4 40.5
Dilapidations provisions 0.2 0.2
ILUK policyholder reserves 37.8 46.9
Other provisions 1.7 1.1
Total 39.7 48.2
ILUK policyholder reserve comprises claims received from HMRC that are yet to
be returned to policyholders, charges taken from unit-linked funds and claims
received from HMRC to meet current and future policyholder tax obligations.
These are expected to be paid to policyholders over the course of the next
seven years.
28. Share-based payments
Share-based payment reserve
Group Company Group Company
2024 2024 2023 2023
£m £m £m £m
Balance brought forward 3.4 2.7 2.6 2.2
Movement in the year 0.7 0.7 0.8 0.5
Balance carried forward 4.1 3.4 3.4 2.7
28. Share-based payments (continued)
Share schemes
(i) SIP 2005
IFAL implemented a SIP trust scheme for its staff in October 2005. The SIP is
an approved scheme under Schedule 2 of the Income Tax (Earnings &
Pensions) Act 2003.
This scheme entitled all the staff who were employed in October 2005 to Class
C shares in IFAL, subject to their remaining in employment with the Company
until certain future dates.
The Trustee for this scheme is IntegraFin Limited, a wholly owned non-trading
subsidiary of IFAL.
Shares issued under the SIP may not be sold until the earlier of three years
after issue or cessation of employment by the Group. If the shares are held
for five years, they may be sold free of income tax or capital gains tax.
There are no other vesting conditions.
The cost to the Group in the financial year to 30 September 2024 was £nil
(2023: £nil). There have been no new share options granted.
(ii) SIP 2018
The Company implemented an annual SIP awards scheme in January 2019. This is
an approved scheme under Schedule 2 of the Income Tax (Earnings &
Pensions) Act 2003 and entitles all eligible employees to ordinary shares in
the Company. The shares are held in a UK Trust.
The scheme includes the following awards:
Free Shares
The Company may give Free Shares up to a maximum value, calculated at the date
of the award of such Free Shares, of £3,600 per employee in a tax year.
The share awards are made by the Company each year, dependent on 12 months
continuous service on 30 September. The cost to the Group in the financial
year to 30 September 2024 was £0.9 million (2023: £0.8 million).
Partnership and Matching Shares
The Company provides employees with the opportunity to enter into an agreement
with the Company to enable such employees to use part of their pre-tax salary
to acquire Partnership Shares. If employees acquire Partnership Shares, the
board grants relevant Matching Shares at a ratio of 2:1.
The cost to the Group in the financial year to 30 September 2024 was £0.5
million (2023: £0.5 million).
28. Share-based payments (continued)
(iii) Deferred bonus Share Option Plan
The Company implemented an annual deferred bonus Share Option Plan in December
2018. Awards granted under this plan take the form of options to acquire
Ordinary Shares for nil consideration. These are awarded to Executive
Directors, Senior Managers and other employees of any Group Company, as
determined by the Remuneration Committee.
The exercise of the awards is conditional upon the achievement of a
performance condition set at the time of grant and measured over a three-year
performance period.
The cost to the Group in the financial year to 30 September 2024 was £0.8
million (2023: £0.9 million). This is based on the fair value of the share
options at grant date, rather than on the purchase cost of shares held in the
Employee Benefit Trust reserve, in line with IFRS 2 Share-based Payment.
Details of the movements in the share scheme during the year are as follows:
2024 2024 2023 2023
Weighted average exercise price Shares Weighted average exercise price Shares
(pence) (number) (pence) (number)
SIP 2005
Outstanding at start of the year 0.0 762,705 0.0 805,509
Shares withdrawn from the plan 0.0 (101,955) 0.0 (42,804)
Shares in the plan at end of year 0.0 660,750 0.0 762,705
Available to withdraw from the plan at end of year 0.0 660,750 0.0 762,705
The weighted average share price at the date of withdrawal for shares
withdrawn from the plan during the year was 281.1 pence (2023: 273.1 pence).
At 30 September 2024, the exercise price was £nil as they were all nil cost
options.
Details of the share awards outstanding are as follows:
2024 2023
Shares Shares
(number) (number)
SIP 2018
Shares in the plan at start of the year 1,205,612 854,247
Granted 554,178 504,113
Shares withdrawn from the plan (167,217) (152,748)
Shares in the plan at end of year 1,592,573 1,205,612
Available to withdraw from the plan at end of year 678,656 557,544
28. Share-based payments (continued)
2024 2024 2023 2023
Weighted average exercise price Share options Weighted average exercise price Share options
(pence) (number) (pence) (number)
Deferred bonus Share Option Plan
Outstanding at start of the year 0.00 899,664 0.00 675,307
Granted 0.00 386,145 0.00 293,376
Forfeited 0.00 - 0.00 -
Exercised 0.00 (41,673) 0.00 (69,019)
Outstanding at end of year 0.00 1,244,136 0.00 899,664
Exercisable at end of year 0.00 337,654 0.00 249,985
The fair value of options granted during the year has been estimated using the
Black-Scholes model. The principal assumptions used in the calculation were as
follows:
2024 2024 Additional Grant 2023
Deferred bonus Share Option Plan
Share price at date of grant 299.4 293.0 287.8
Exercise price Nil Nil Nil
Expected life 3 years 3 years 3 years
Risk free rate 3.7% 3.7% 3.5%
Dividend yield 3.4% 3.5% 3.5%
Weighted average fair value per option 270.3p 263.9p 258.8p
The additional grant relates to shares provided as part of a one-off
compensation arrangement.
29. EBT reserve
Group:
2024 2023
£m £m
Balance brought forward (2.6) (2.4)
Purchase of own shares (0.7) (0.2)
Balance carried forward (3.3) (2.6)
Company:
2024 2023
£m £m
Balance brought forward (2.4) (2.1)
Purchase of own shares (0.6) (0.3)
Balance carried forward (3.0) (2.4)
29. EBT reserve (continued)
The Employee Benefit Trust ("EBT") was settled by the Company pursuant to a
trust deed entered into between the Company and Intertrust Employee Benefit
Trustee Limited ("Trustee"). The Company has the power to remove the Trustee
and appoint a new trustee. The EBT is a discretionary settlement and is used
to satisfy awards made under the Deferred bonus Share Option Plan.
The Trustee purchases existing Ordinary Shares in the market, and the amount
held in the EBT reserve represents the purchase cost of IHP shares held to
satisfy options awarded under the Deferred bonus Share Option Plan. IHP is
considered to be the sponsoring entity of the EBT, and the assets and
liabilities of the EBT are therefore recognised as those of IHP. Shares held
in the trust are treated as own shares and shown as a deduction from equity.
30. Other reserves - Group
2024 2023
£m £m
Foreign exchange reserves (0.1) (0.1)
Non-distributable merger reserve 5.7 5.7
Foreign exchange reserves are gains/losses arising on retranslating the net
assets of
IAD Pty into sterling.
Non-distributable reserves relate to the non-distributable merger reserve held
by one of the Company's subsidiaries, IFAL, which is classified within other
reserves on a Group level.
31. Related parties
Transactions with Group companies
During the year the Company entered into the following transactions with
related parties within the Group:
2024 2023
£m £m
Service charges (3.3) -
Interest expense (0.6) (0.6)
Dividends received 60.5 33.4
Share subscription (see note 15) (15.0) -
At the year end the Company had the following intra-Group payables
outstanding:
2024 2023
£m £m
IntegraFin Services Limited 0.1 -
ILUK 6.0 5.0
The amount owed to ILUK relates to a loan of £10 million issued in FY21, with
interest charged at a commercial rate. The Company is paying the loan off over
ten years and made its annual payment of £1 million, plus accrued interest,
during the year. The loan balance at year end was £6 million.
All transactions with fellow Group companies are provided on an arm's length
basis.
31. Related parties (continued)
Other than as disclosed below regarding the subsidiary audit exemption, the
Group has not been given or received any guarantees during 2024 or 2023
regarding related party transactions.
Subsidiary Audit Exemptions
In accordance with section 479A of the Companies Act 2006, IHP, has guaranteed
the liabilities of the following subsidiary undertaking for the financial year
ended 30 September 2024:
IntegraFin Limited (IL)
Company Registration Number: 03756516
As a result, IL is exempt from the requirement to have its accounts audited
under the provisions of section 479A.
IHP confirms that it has issued a guarantee under section 479C of the
Companies Act 2006 in respect of all outstanding liabilities of these
subsidiaries as at the end of the financial year.
Transactions with key management personnel
Payments to key management personnel, defined as members of the IHP board of
directors, are shown in the Remuneration Report. Key management personnel of
the Company received a total of £3.6 million (2023: £3.6 million) in
dividends during the year and benefitted from staff discounts for using the
platform of £4k (2023: £4k). The number of IHP shares held at the end of the
year by key management personnel was 34,450,505 (2023: 35,321,348), a decrease
of 870,843 (2023: increase 132,224) from last year.
Schrodinger Pty Ltd, the company which leases office space to IAD Pty in
Melbourne, Australia, is considered a related party of the Company, as Michael
Howard has control or joint control of Schrodinger and is a member of the key
management personnel (as a director) of the Company. During the year IAD Pty
paid Schrodinger £0.3 million (FY23: £0.3 million) in relation to the lease.
The lease has been in place since April 2012 and was last renewed in May 2021.
ObjectMastery Services Pty Ltd (OM) provides the service of executive
directors consultancy services to IAD Pty, and IAD Pty provides consultancy
and book-keeping services to OM. OM is considered a related party of the
Company, as Michael Howard has control or joint control of it. IAD Pty paid OM
£68k (FY23: £71k) for services received during the year, £42k (FY23: £44k)
of which related to Michael Howard's services. IAD Pty received £45k (FY23:
£43k) from OM for services provided during the year. IAD owed £1k to OM as
at 30 September 2024 (30 September 2023: £2k).
All of the above transactions are commercial transactions undertaken in the
normal course of business.
32. Contingent liability
There are some assets in ILUK policyholder linked funds which are under
review. Our current best estimate of possible future outflow, in the event of
remediation, is £2.4 million (2023: £1.2 million). A future outflow is
possible but not probable and the timing of any outflow is uncertain.
Accordingly, no provision for any liability has been made in these Financial
Statements.
33. Events after the reporting date
As per the Chair's statement on page 3, a second interim dividend of 7.2 pence
per share was declared on 17 December 2024. This dividend has not been accrued
in the Consolidated Statement of Financial Position.
34. Dividends
During the year to 30 September 2024 the Company paid interim dividends of
£33.7 million (2023: £33.7 million) to shareholders. The Company received
dividends from subsidiaries of £40.6 million (2023: £33.4 million).
Other Information
Executive directors
Michael Howard
Alexander Scott
Jonathan Gunby (Retired on 30 September 2024)
Euan Marshall
Non-executive directors
Richard Cranfield
Christopher Munro (Retired on 15 July 2024)
Rita Dhut
Caroline Banszky
Victoria Cochrane
Robert Lister
Company Secretary
Helen Wakeford
Independent auditor
Ernst and Young LLP, 25 Churchill Place, Canary Wharf, London E14 5EY
Solicitors
Eversheds Sutherland (International LLP), One Wood Street, London EC2V 7WS
Corporate advisers
Peel Hunt LLP, 7th Floor 100 Liverpool Street, London EC2M 2AT
Barclays Bank PLC, 1 Churchill Place, Canary Wharf, London E14 5HP
Principal bankers
National Westminster Bank Plc, 250 Bishopsgate, London EC2M 4AA
Registrars
Equiniti Group plc, Sutherland House, Russell Way, Crawley, West Sussex RH10
1UH
Registered office
29 Clement's Lane, London EC4N 7AE
Investor relations
Luke Carrivick 020 7608 5463
Website
www.integrafin.co.uk (http://www.integrafin.co.uk)
Company number
8860879
Glossary of Alternative Performance Measures (APMs)
Various alternative performance measures are referred to in the Annual Report,
which are not defined by IFRS. They are used in order to provide better
insight into the performance of the Group. Further details are provided below.
APM Financial data page ref Definition and purpose
Operational performance measures
Funds under direction (FUD) Data sourced internally Calculated as the total market value of all cash and assets on the platform,
valued as at the respective year end.
Year end 2024 2023
£bn £bn
Cash 5.1 3.9
Assets 59.0 51.1
FUD 64.1 55.0
%change on the previous year 17% 10%
Average daily FUD 2024 2023
£bn £bn
Cash 4.6 3.5
Assets 55.0 50.1
FUD 59.6 53.6
%change on the previous year 11% 3%
The measurement of FUD is the primary driver of the largest component of the
Group's revenue. FUD is used to derive the annual charges due to the Group.
These values are not reported within the Financial Statements or the
accompanying notes.
Gross inflows and Net inflows Data sourced internally Calculated as gross inflows onto the platform less outflows leaving the
platform by clients during the respective financial year.
Inflows and outflows are measured as the total market value of assets and cash
joining or leaving the platform.
2024 2023
£bn £bn
Gross inflows 8.1 6.4
Outflows 5.6 3.7
Net inflows 2.5 2.7
%change on the previous year (7%) (40%)
The measurement of net inflows onto the platform shows the net movement of
cash and assets on the platform during the year. This directly contributes to
FUD and therefore revenue.
These values are not reported within the Financial Statements or the
accompanying notes.
Adviser and platform client numbers Data sourced internally Calculated as the total number of advisers or clients as at the financial year
end.
Advisers are calculated as the registered number of advisers on the Platform.
Clients are calculated as the total number of clients on the platform.
T4A licence users calculated as the total number of core licence users active
on the CURO platform.
2024 2023
Advisers 8,048 7,683
%increase 5% 2%
Clients 234,998 230,294
%increase 2% 2%
T4A licence users 3,098 2,752
%increase 13% 22%
This measurement is an indicator of our presence in the market.
These values are not reported within the Financial Statements or the
accompanying notes.
Client retention Data sourced internally Calculated as the total number of clients with a non-zero valuation present in
the final month of both financial periods, as a percentage of total clients in
the current financial period.
2024 2023
Client retention 94% 95%
This is a measurement of client loyalty and an indicator of customer
satisfaction with our services provided.
These values are not reported within the Financial Statements or the
accompanying notes.
Income statement measures
Non-underlying expenses Consolidated Statement of Comprehensive Income Calculated as costs which have been incurred outside of the ordinary course of
the business.
Non-underlying expenses 2024 2023
£m £m
VAT costs (0.1) -
VAT interest (0.4) -
Deferred consideration 2.1 2.1
Contingent consideration - (1.7)
Office move 0.1 -
Non-underlying expenses 1.7 0.4
Our non-underlying expenses represent costs which do not relate to our
recurring business operations and hence should be separated from operating
expenses in the income statement.
Other costs consist of post-combination remuneration. Post-combination
remuneration relates to the payment to the original shareholders of T4A.
This is comprised of the deferred consideration payable in relation to the
acquisition of T4A and is recognised as remuneration over four years from
January 2021 to December 2024.
Underlying EPS Financial review Calculated as profit after tax net of non-underlying expenses, divided by
called up equity share capital.
2024 2023
£m £m
Profit after tax 52.1 49.9
Non-underlying expenses 1.7 0.4
Underlying profit after tax 53.8 50.3
Divide by: Called up equity share capital 3.3 3.3
Underlying earnings per share - diluted 16.2 pence 15.2 pence
Underlying PBT Financial review Calculated as profit before tax net of non-underlying expenses.
2024 2023
£m £m
Profit before tax 68.9 62.6
Add: Non-underlying expenses 1.7 0.4
Underlying profit before tax 70.6 63.0
Platform revenue margin Financial review Calculated as platform revenue divided by average daily FUD for the year.
2024 2023
Platform revenue (£m) 140.0 130.2
Divide by: average daily FUD (£bn) 59.57 53.64
Revenue margin (bps 23.5 24.3
PBT margin Financial review Calculated as profit before tax divided by revenue.
2024 2023
£m £m
PBT 68.9 62.6
Divided by: revenue 144.9 134.9
PBT margin 48% 46%
Cash flow measures
Shareholder returns Consolidated Statement of Comprehensive Income Calculated as dividend per share paid to shareholders, which relate to the
respective financial years.
2024 2023
1(st) interim dividend 3.2 p 3.2. p
2(nd) interim dividend 7.2 p 7.0 p
Shareholder returns 10.4 p 10.2 pence
%increase on previous financial year 2.0% 0.0%
There are generally two dividend payments made relating to each financial
year. Shareholder returns is a measurement of the total cash dividend received
by each shareholder for each individual share held by them.
Dividend policy Consolidated statement of comprehensive income Calculated as total cash dividends paid in relation to the respective
financial year, divided by the post-tax profit relating to that same financial
year.
2024 2023
£m £m
Total cash dividends paid 34.5 33.7
Profit for the financial year 52.1 49.9
Dividends as a % of profit 66% 68%
Our policy is to pay approximately 60% to 65% of full year profit after tax as
two interim dividends.
Delivery on dividend policy is a measurement of the ability of the business to
generate distributable profits.
The measurement of FUD is the primary driver of the largest component of the
Group's revenue. FUD is used to derive the annual charges due to the Group.
These values are not reported within the Financial Statements or the
accompanying notes.
Gross inflows and Net inflows
Data sourced internally
Calculated as gross inflows onto the platform less outflows leaving the
platform by clients during the respective financial year.
Inflows and outflows are measured as the total market value of assets and cash
joining or leaving the platform.
2024 2023
£bn £bn
Gross inflows 8.1 6.4
Outflows 5.6 3.7
Net inflows 2.5 2.7
% change on the previous year (7%) (40%)
The measurement of net inflows onto the platform shows the net movement of
cash and assets on the platform during the year. This directly contributes to
FUD and therefore revenue.
These values are not reported within the Financial Statements or the
accompanying notes.
Adviser and platform client numbers
Data sourced internally
Calculated as the total number of advisers or clients as at the financial year
end.
Advisers are calculated as the registered number of advisers on the Platform.
Clients are calculated as the total number of clients on the platform.
T4A licence users calculated as the total number of core licence users active
on the CURO platform.
2024 2023
Advisers 8,048 7,683
% increase 5% 2%
Clients 234,998 230,294
% increase 2% 2%
T4A licence users 3,098 2,752
% increase 13% 22%
This measurement is an indicator of our presence in the market.
These values are not reported within the Financial Statements or the
accompanying notes.
Client retention
Data sourced internally
Calculated as the total number of clients with a non-zero valuation present in
the final month of both financial periods, as a percentage of total clients in
the current financial period.
2024 2023
Client retention 94% 95%
This is a measurement of client loyalty and an indicator of customer
satisfaction with our services provided.
These values are not reported within the Financial Statements or the
accompanying notes.
Income statement measures
Non-underlying expenses
Consolidated Statement of Comprehensive Income
Calculated as costs which have been incurred outside of the ordinary course of
the business.
Non-underlying expenses 2024 2023
£m £m
VAT costs (0.1) -
VAT interest (0.4) -
Deferred consideration 2.1 2.1
Contingent consideration - (1.7)
Office move 0.1 -
Non-underlying expenses 1.7 0.4
Our non-underlying expenses represent costs which do not relate to our
recurring business operations and hence should be separated from operating
expenses in the income statement.
Other costs consist of post-combination remuneration. Post-combination
remuneration relates to the payment to the original shareholders of T4A.
This is comprised of the deferred consideration payable in relation to the
acquisition of T4A and is recognised as remuneration over four years from
January 2021 to December 2024.
Underlying EPS
Financial review
Calculated as profit after tax net of non-underlying expenses, divided by
called up equity share capital.
2024 2023
£m £m
Profit after tax 52.1 49.9
Non-underlying expenses 1.7 0.4
Underlying profit after tax 53.8 50.3
Divide by: Called up equity share capital 3.3 3.3
Underlying earnings per share - diluted 16.2 pence 15.2 pence
Underlying PBT
Financial review
Calculated as profit before tax net of non-underlying expenses.
2024 2023
£m £m
Profit before tax 68.9 62.6
Add: Non-underlying expenses 1.7 0.4
Underlying profit before tax 70.6 63.0
Platform revenue margin
Financial review
Calculated as platform revenue divided by average daily FUD for the year.
2024 2023
Platform revenue (£m) 140.0 130.2
Divide by: average daily FUD (£bn) 59.57 53.64
Revenue margin (bps 23.5 24.3
PBT margin
Financial review
Calculated as profit before tax divided by revenue.
2024 2023
£m £m
PBT 68.9 62.6
Divided by: revenue 144.9 134.9
PBT margin 48% 46%
Cash flow measures
Shareholder returns
Consolidated Statement of Comprehensive Income
Calculated as dividend per share paid to shareholders, which relate to the
respective financial years.
2024 2023
1(st) interim dividend 3.2 p 3.2. p
2(nd) interim dividend 7.2 p 7.0 p
Shareholder returns 10.4 p 10.2 pence
% increase on previous financial year 2.0% 0.0%
There are generally two dividend payments made relating to each financial
year. Shareholder returns is a measurement of the total cash dividend received
by each shareholder for each individual share held by them.
Dividend policy
Consolidated statement of comprehensive income
Calculated as total cash dividends paid in relation to the respective
financial year, divided by the post-tax profit relating to that same financial
year.
2024 2023
£m £m
Total cash dividends paid 34.5 33.7
Profit for the financial year 52.1 49.9
Dividends as a % of profit 66% 68%
Our policy is to pay approximately 60% to 65% of full year profit after tax as
two interim dividends.
Delivery on dividend policy is a measurement of the ability of the business to
generate distributable profits.
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