Integrafin Holdings Plc · LSE:IHP
Integrafin — FY2020 Earnings Presentation
28 slides from Integrafin's earnings presentation, December 2020
Slide 1: Results Presentation – Year ended 30 September 2020
Results Presentation Year ended 30 September 2020
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 £107.3m, up 8% compared to FY19 Profit before tax £55.3m for the period, up 11% compared to FY19 Operating profit £55.3m, up 11% compared to operating profit in FY19 Operating margin increased to 52%, from operating margin of 50% in FY19 Cash flow and group balance sheet r
Slide 4: Growth in Funds under Direction
Growth in Funds under Direction
Slide 5: Impressive FUD growth
Impressive FUD growth Growth in Funds Under Direction (£bn) compared to the MSCI World Index 250.000 45 • Transact has enjoyed FUD 2003 Transact moves into 2007 41.1 growth every year since First dividend paid 40 operational yearly thereafter 2020 37.8 2000. profit during 200.000 2003 COVID-19 Pande
Slide 6: FY20 Net inflows were up 3%
FY20 Net inflows were up 3% £1.8bn £1.70bn £m FY20 £1.6bn £1.54bn £1.48bn £1.44bn £1.4bn £1.39bn £1.39bn Opening FUD 37,799 £1.29bn £1.23bn £1.2bn £1.10bn Inflows 5,750 £1.0bn (2,160) £0.96bn £0.88bn £0.93bn £0.89bn Outflows £0.80bn £0.80bn £0.8bn £0.73bn Net inflows 3,590 £0.6bn Market movements (2
Slide 7: FUD by wrapper split
FUD by wrapper split 45 40 • Strong growth in all wrapper types over the £10.08bn 35 period. £9.27bn ISAs 30 • Pensions and ISA CAGRs £8.05bn GIA in excess of 16%. £9.38bn 25 £6.89 bn Offshore GIAs and Bond ISAs FUD(£bn) £8.79bn Bond • 20 £8.00bn £1.64bn Onshore CAGR in excess of 10%. £1.54bn £1.16b
Slide 8: Pension transfers split by DB vs. DC
Pension transfers split by DB vs. DC £700m £600m • Pension transfer business has remained strong. £500m • 3Q20 reduction in DC £400m £512m £480m £456m transfers as COVID-19 £446m DC impacts took effect. DB £300m £302m • Recovery in DC transfers £200m in 4Q20 but still not back to 4Q19 levels. £100m
Slide 9: Financial Performance
2: IntegraFin Financial Performance
Slide 10: Fee Income - Responsible Pricing
Fee Income - 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 • No change to Annual Commission charges in 2019. • Annual Commission charges reduced from 0.29%
Slide 11: Total fee income up 8%
Total fee income up 8% 97% of total fee income is recurring FY20 FY19 Change £m £m Annual Fee Annual basis point charge levied on 94.5 86.7 +9% Income assets and cash held on the platform (88%) (87%) Wrapper Fee Annual fixed fee levied on all Transact 9.7 9.0 +8% Income wrappers (9%) (9%) Buy Commis
Slide 12: Well controlled expenses
Well controlled expenses £m FY20 FY19 Change Restated Staff costs 36.9 36.3 +2% Occupancy(1) 2.0 3.6 -44% Regulatory and professional fees 7.0 5.5 +27% Other income – tax relief to (1.1) (1.0) +10% shareholders Other costs 3.8 3.7 +3% Total expenses 48.6 48.1 +1% Depreciation and amortisation(1) 2.6
Slide 13: Staff numbers
Staff numbers 30 Sep 20 30 Sep 19 Change • Small increase in IT staff to increase development capabilities. IT & technology 121 115 +5% • Small reduction in Operational and support staff numbers as a Operational & support 327 332 -2% result of efficiency gained through Sales & marketing 39 39 0% pla
Slide 14: P&L and cash flows
P&L and cash flows Profit & loss Restatement £m FY19 FY19 • FY19 Profit after tax has been restated to £41.1 million from Restated Published £40.1 million. FUD (£bn) 37.8 37.8 • FY19 opening retained earnings has been restated with an increase of £5.4m. Total fee income 99.2 99.2 • The restatement i
Slide 15: P&L and cash flows
P&L and cash flows Profit & loss Cash flows £m FY20 FY19 £m FY20 FY19 Restated Restated FUD (£bn) 41.1 37.8 Operating profit 55.3 49.6 Total fee income 107.3 99.2 Depreciation & amortisation 2.6 0.7 Working capital requirements 5.0 4.2 Cost of sales (0.8) (0.8) Capex (0.9) (1.2) Net revenue 106.5 98
Slide 16: Adjusted operating profit & adjusted operating profit margin
We continue to achieve strong profit growth while also reducing fees CAGR: 11% • Transact has an impressive record of consistently £91.2m £99.2m £107.3m growing both revenue and operating profit. £80.2m Total fee income £63.6m £68.4m • Given its scale and operating leverage, Transact has been able t
Slide 17: Group balance sheet remains strong
Group balance sheet remains strong 30 September ‘20 £m Non-current assets • Transact operates with a conservative balance Loans 2.6 Intangible assets 13.0 sheet position: Property, plant and equipment 2.3 Rights of use assets 3.9 Deferred tax assets 0.5 • No debt Deferred acquisition costs 53.5 75.8
Slide 18: Business Update
2: IntegraFin Business Update
Slide 19: Strong client base and addressable market
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 Market £460.52bn 120,000 4,000 100,000 3,000 80,000 60,000 2,000 Transact FY20 FUD
Slide 20: Continued technological advances to meet client needs
Continued technological advances to meet client needs Platform investment up 9% to £9.8m for the year, making further enhancements that benefit the client and adviser online experience. We expect that adviser users will continue to move their clients onto Transact, as they experience the benefits th
Slide 21: 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 22: New Charging structure
New 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 value
Slide 23: Regulation
Regulation • COVID-19 We expect that throughout 2021 the FCA will continue to devote considerable effort to supervising authorised firms in relation to the impact of COVID-19. • Operational resilience A joint Bank of England, PRA and FCA policy statement is expected in 2021 addressing requirements f
Slide 24: Summary: 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 25: Strategy
Strategy Drive organic growth: • Grow FUD by attracting and retaining advisers and their clients. • Deliver a superior service and value for money. Consider acquisition opportunities • Innovative development opportunities to broaden our proposition. • Scale opportunities to increase shareholder valu
Slide 26: 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 27: Appendix 1 - Pre-Look through position
Appendix 1 - Pre-Look through position Direct investment breakdown Type Value (£bn) Percentage of total FI & Gilts Others FUD Shares 0% 0% ETFs 2% Mutual funds 34.45 83.84% 2% Structured products Cash (pooled) 3.12 7.59% 1% Investment Investment trusts 1.41 3.43% trusts ETFs 0.88 2.14% 3% Shares 0.7
Slide 28: 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 20 -Inflows from current investors putting more onto FY 19 £6,000 the Platform: 31% FY 18 FY 17 FY 16 -Inflows from advisers with established relationship £5,000