Integrafin Holdings Plc · LSE:IHP
Integrafin — H1 2021 Earnings Presentation
33 slides from Integrafin's earnings presentation, May 2021
Slide 1: Results Presentation – Half year ended 31 March 2021
Results Presentation Half year ended 31 March 2021
Slide 2: Presentation team
Presentation team Alex Scott Jonathan Gunby Chief Executive Officer Executive Director – IFAL CEO • Joined IntegraFin in 2009 • Joined IntegraFin in 2011 • 1997 – Twelve years in • 1999 – Twelve years as Director insurance licence provision of NMG Holdings • 25 years of insurance • 30 years of finan
Slide 3: Key messages
Key messages Total revenue £59.4m, + 10% compared to H1 20 Profit before tax £31.2m for the period, + 12% compared to H1 20 Operating margin increased to 53% from operating margin of 52% in H1 20 Operating profit £31.2m, + 12% compared to operating profit in H1 20 Cash flow and group balance sheet r
Slide 4: Transact growth
2: IntegraFin Transact growth
Slide 5: Impressive FUD growth
Impressive FUD growth Growth in Funds Under Direction (£bn) compared to the MSCI World Index 300.00 £46.9bn 50 • Transact has enjoyed FUD 2020 COVID-19 Pandemic growth every year since 45 £41.1bn 2000. 250.00 2018 40 IHP lists £37.8bn on the • FUD growth maintained London 35 200.00 Stock £33.1bn thr
Slide 6: H1 Gross inflows of £3.73bn, highest ever recorded
H1 21 Gross inflows of £3.73bn, highest ever recorded £m H1 2021 £2.25 £2.15bn Opening FUD 41,093 £2.00 Inflows 3,734 £1.75 £1.70bn £1.58bn £1.54bn £1.50 £1.47bn Outflows (1,427) £1.29bn £1.23bn £1.25 Net inflows 2,307 £1.10bn £bn £1.00 £0.96bn £0.80bn £0.84bn Market 3,632 £0.75 £0.73bn movements £0
Slide 7: FUD by wrapper split
FUD by wrapper split 50 45 £11.43bn • Strong growth in all 40 wrapper types over the 35 £10.08bn period. ISAs £9.27bn 30 £10.68bn • Pensions and ISA CAGRs FUD(£bn) £8.05bn £9.38bn GIA in excess of 16%. 25 £6.89bn £8.79bn £1.94bn £8.00bn £1.64bn £1.35bn Offshore • GIAs and Bond CAGRs in 20 Bond £7.08
Slide 8: Pension transfers in split by DB/DC
Pension transfers in split by DB/DC £800m £700m • Pension transfer £600m business has remained strong. £500m £400m £456m £612m DC • Large increase in DC £480m £446m £483m DB transfers in H1 21 £300m £302m compared with H1 20. £200m • 10% fall in DB £100m £133m £162m £126m £133m £131m £119m transfers
Slide 9: Financial performance
2: IntegraFin Financial performance
Slide 10: Transact platform – responsible pricing
Transact platform – responsible pricing We share the benefits of scale economies with our clients and reduce our charges when confident it will not negatively impact our award-winning service. Annual Commission • Charges reduced from 0.29% to 0.28% and from 0.19% to 0.18% (for the respective chargin
Slide 11: Total revenue up 10%
Total revenue up 10% £m H1 2021 H1 2020 Change • There are now two streams of Group revenue: platform revenue and T4A revenue. Platform revenue Annual commission income - • Total platform revenue growth YoY of 9%. 51.8 47.4 +9% recurring Annual basis point charge levied on (88%) (88%) assets and cas
Slide 12: Well controlled expenses
Well controlled expenses £m H1 2021 H1 2020 Change (restated) Staff costs 20.3 18.3 +11% • Staff costs increased due to acquisition of T4A, additional 53 T4A staff, replacement of leavers and Occupancy 0.4 1.0 -60% general inflationary staff costs. Regulatory and professional fees 3.2 3.5 -9% • Occu
Slide 13: Non-underlying expenses
Non-underlying expenses • IHP incurred non-underlying expenses totalling £1.9m in the six months to March 2021. One off costs • The non-underlying expenses consist of: • Expenses incurred relating to the acquisition of T4A • Work performed on the initial consideration of the acquisition of Nucleus •
Slide 14: Acquisition of T4A – financials
Acquisition of T4A – financials • The entire share capital of T4A has been purchased • T4A is fully consolidated into the Group results with effect from 11 January 2021 • In the period from 11 January 2021 to 31 March 2021 T4A generated: • Revenue £732k • Gross profit £648k • Operating loss £271k •
Slide 15: Staff numbers
Staff numbers Group Group Change H1 2021 H1 2020 • The acquisition of T4A has contributed to the increase in total staff headcount. IT & technology 124 117 +6% • Expect headcount at T4A to expand as the Operational & support 341 334 +2% company grows. Sales & marketing 39 41 -5% • Investment in soft
Slide 16: H1 2020 restatement
H1 2020 restatement Profit & loss IHP Group IHP Group Transact Transact Total Total H1 FY21 H1 FY20 H1 FY21 H1 FY20 Restated £m Restated • H1 20 Group operating profit has been restated to Revenue 59.4 53.8 58.6 53.8 £27.8 million from £27.2m. • This is due to pro-rating the release of tax reserves
Slide 17: P&L and cash flows
P&L and cash flows Profit & loss Cash flows £m IHP Group IHP Group £m IHP Group IHP Group Total Total Total Total H1 21 H1 20 H1 21 H1 20 Restated Restated FUD (£bn) 46.9 35.0 Operating profit 31.2 27.8 Revenue 59.4 53.8 Cost of sales (0.6) (0.4) Depreciation & amortisation 1.4 1.3 Gross Profit 58.8
Slide 18: Adjusted operating profit and margin trends
We continue to achieve strong profit growth while also reducing fees CAGR: 11% £107.3m £99.2m £91.2m £80.2m • IHP Group has an impressive record of consistently growing both Revenue £59.4m revenue and operating profit, underpinned by the core business proposition and expense management. • Given its
Slide 19: Group balance sheet remains strong
Group balance sheet remains strong H1 2021 £m • Transact operates with a conservative balance sheet position: Non-current assets Loans 2.8 Intangible assets 21.9 • No debt Property, plant and equipment 2.2 Right of use assets 3.1 • Policyholder assets and liabilities fully matched Deferred tax asset
Slide 20: Business Update
2: IntegraFin Business Update
Slide 21: Transact has a strong client base and addressable market
Transact has a strong client base and addressable market Increasing client and adviser numbers Large market with growth opportunities 200,000 7,000 UK House Hold 180,000 Wealth £6.7trn 6,000 160,000 140,000 5,000 UK Advised Platform 120,000 Market £514.53bn 4,000 100,000 3,000 80,000 60,000 2,000 40
Slide 22: Continued technological advances of the platform to meet client needs
Continued technological advances of the platform to meet client needs We expect that adviser users will continue to move their clients onto Transact, as they experience the benefits that our service brings, and those clients already using us will put more money into their portfolios. We have launche
Slide 23: Transact is consistently rated top for service
Transact is consistently rated top for service UK Investment Trends Adviser Technology & Business Report 2020 • Transact was rated the top platform in the UK Investment Trends Adviser Technology & Business Report 2020. • In this year’s study, Transact is rated first for overall satisfaction, for ove
Slide 24: Recent Inflows Data For The Largest Players
Recent Inflows Data For The Largest Players TOP 5 ADVISER PLATFORMS BY GROSS INFLOWS Q2 FY21 Standard Life £2.33bn Transact were 3rd for gross inflows in Q2. Old Mutual Wealth £2.26bn Transact £2.15bn Aviva £2.06bn Fidelity £1.83bn TOP 5 ADVISER PLATFORMS BY NET INFLOWS Q2 FY21 Transact £1.47bn
Slide 25: Transact charging structure
Transact charging structure New Transact annual commission charging New Transact buy commission charging structure effective from 01/04/2021 structure effective from 01/03/2021 Single or consolidated portfolios of less than £100,000 Monthly average portfolio Refund Effective rate Cash & investments
Slide 26: Regulation
Regulation • 1. Covid We expect that throughout 2021 the FCA will continue closely supervising authorised firms by reference to the impact of Covid. • 2. Operational resilience In March 2021 the FCA published final rules on 'Building operational resilience' in certain sectors of financial services,
Slide 27: T4A acquisition
T4A acquisition • 11 January 2021 we announced the acquisition of T4A. • T4A is a specialist software provider for financial planning and wealth management firms. • CURO is built on Microsoft Dynamics 365 and provides a modern solution for client and practice management. • CURO is an adviser technol
Slide 28: Transact enjoys a strong growth profile
Summary: Transact enjoys a strong growth profile Growth in UK wealth market Industry drivers Growth in assets managed by financial advisers Growth in wealth managed by current advisers Increasing penetration of current advisers penetration Market New advisers joining Transact Strong growth profile f
Slide 29: IHP Strategy
IHP Strategy Deliver high quality financial services infrastructure and services to UK advisers and our mutual clients Drive organic growth: • Grow FUD by attracting and retaining advisers and their clients. • Deliver a superior service and value for money. Consider acquisition opportunities • Small
Slide 30: Disclaimer
Disclaimer The information contained in this presentation has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein
Slide 31: Appendix 1 - Pre-Look through position
Appendix 1 - Pre-Look through position Direct investment breakdown Type Value (£bn) Percentage of total FUD Shares FI & Gilts Structured Mutual funds 39.72 84.63% 2% 0% products ETFs 1% Cash (pooled) 3.10 6.58% 2% Others Investment trusts 1.69 3.61% 0% ETFs 1.08 2.31% Investment trusts 4% Shares 0.8
Slide 32: Appendix 2 - Cohort analysis
Appendix 2 - Cohort analysis Cohort Analysis by Adviser for Inflows Split by FY Year of First £m Relationship Inflows breakdown £7,000 FY 21 -Inflows from current investors putting more onto FY 20 £6,000 the Platform: 37% FY 19 FY 18 FY 17 -Inflows from advisers with established relationship £5,000
Slide 33: Appendix 3 - Growth in Funds Under Direction (2000-2010)
Appendix 3 - Growth in Funds Under Direction (£bn) compared to the MSCI World Index (2000-2010) 120.000 10 2007 First dividend paid yearly thereafter £8.8bn 9 100.000 8 £7.1bn 7 80.000 6 £5.6bn 60.000 £4.7bn 5 2000 First assets 4 2003 Transact onto moves into 40.000 platform £3.1bn operational 3 in