Integrafin Holdings Plc · LSE:IHP
Integrafin — H1 2020 Earnings Presentation
24 slides from Integrafin's earnings presentation, 2020
Slide 1: Results Presentation: Half Year ended 31 March 2020
Results Presentation Half Year ended 31 March 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 £53.8m, up 13% compared to 1H19 Profit before tax £27.3m for the period, up 22% compared to 1H19 Operating margin increased to 51% from operating margin of 47% in 1H19 Operating profit £27.2m, up 23% compared to operating profit in 1H19 Cash flow and group balance sheet re
Slide 4: Impressive long term FUD growth
Impressive long term FUD growth Growth in Funds Under Direction (£bn) compared to the MSCI World Index 250.000 40 2000 37.8 First assets 2003 2007 35.0 onto platform in 2000 Transact First dividend 2018 33.1 35 • FUD growth remains 200.000 moves into paid yearly IHP lists on the strong despite perio
Slide 5: 1H20 Gross inflows of £3.2bn, highest ever recorded
1H20 Gross inflows of £3.2bn, highest ever recorded £1.70bn £m 1H 2020 £1.7bn £1.54bn Opening FUD 37,799 £1.48bn £1.5bn £1.44bn £1.39bn £1.39bn Inflows 3,234 £1.3bn £1.10bn £1.1bn Outflows (1,172) £0.96bn £0.93bn £0.88bn £0.89bn £0.9bn £0.80bn Net inflows 2,062 £0.7bn Market (4,872) £0.5bn movements
Slide 6: Regulation
Regulation • The Platform market study • Process began in July 2017 • Policy statement issued last 13 December 2019 • Two pages of rules to speed up transfers • We have always complied anyway • Good news – as we are net importers • No ban on exit fees (this is still under review) • We have never cha
Slide 7: Transact is consistently rated top for service
Transact is consistently rated top for service • 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 overall adviser support services and for overall investment capabi
Slide 8: Total fee income up 13%
Total fee income up 13% 97% of total fee income is recurring 1H 2020 1H 2019 Change £m £m Annual Fee Annual basis point charge levied on 47.4 41.3 +15% Income assets and cash held on the platform (88%) (87%) Wrapper Fee Annual fixed fee levied on all Transact 4.8 4.4 +9% Income wrappers (9%) (9%) Bu
Slide 9: Well controlled expenses
Well controlled expenses £m 1H 2020 1H 2019 Staff costs 18.3 18.4 Occupancy(1) 1.0 1.8 Regulatory and professional fees 3.5 2.5 Other costs 2.2 1.9 Total expenses 25.0 24.6 Depreciation and amortisation(1) 1.2 0.3 Total operating expenses 26.2 24.9 (1) Impact of IFRS 16 reduces occupancy costs by £0
Slide 10: Staff numbers
Staff numbers 1H 2020 1H 2019 Change • Staff numbers have decreased from natural attrition and efficiency gains IT & technology delivered through platform 117 110 6% development Operational & support 334 361 -7% Sales & marketing 41 43 -5% Total staff 492 514 -4% Results Presentation 10
Slide 11: P&L and cash flows
P&L and cash flows Profit & loss Cash flows £m 1H 2020 1H 2019 £m 1H 2020 1H 2019 FUD (£bn) 35.0 34.4 Operating profit 27.2 22.2 Total fee income 53.8 47.6 Cost of sales (0.4) (0.5) Depreciation & amortisation 1.3 0.3 Net revenue 53.4 47.1 Working capital requirements 0.6 (3.0) Capex (0.3) (0.6) Sta
Slide 12: Adjusted operating profit and fee income growth
We continue to achieve strong profit growth while also reducing fees CAGR: 12% • Transact has an impressive record of consistently £80.2m £91.2m £99.2m growing both revenue and operating profit Total fee £68.4m income £53.8m • Given its scale and operating leverage, Transact has been able to impleme
Slide 13: Group balance sheet remains strong
Group balance sheet remains strong 1H 2020 £m Non-current assets • Transact operates with a conservative balance Loans 2.2 Intangible assets 13.0 sheet position: Property, plant and equipment 2.3 Right of use assets 4.7 • No debt Deferred tax assets 8.1 Deferred acquisition costs 52.9 83.2 • Policyh
Slide 14: Strategy
Strategy • Remain focused: • UK only • Intermediary only • Maintain high service standards • Reinvest in business: • Continue to enhance online functionality • Continue to enhance proposition by adding new financial planning components for advisers • Control expenses • Continue to grow inflows • Min
Slide 15: 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 16: 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 17: Appendix – Pension transfers in split by DB/DC
Appendix 1 – Pension transfers in split by DB/DC £700m £600m £500m £400m £456m £512m £480m DC £400m £469m DB £300m £200m £100m £162m £131m £129m £133m £98m £0m Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Quarter Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 DB as a % 24.6% 17.2% 20.1% 21.7% 26.2% Results Pres
Slide 18: Appendix – Growth in number of clients and advisers
Appendix 2 – Growth in number of clients and advisers 200,000 7,000 180,000 6,000 160,000 140,000 5,000 Investor count Adviser count 120,000 4,000 100,000 3,000 80,000 60,000 2,000 40,000 1,000 20,000 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H 20 Count of investors Count of advisers Re
Slide 19: Appendix – Operational update
Appendix 3 – Operational update • We have further enhanced our pensions proposition by processing transfers more quickly and by extending the functionality of how we facilitate pensions drawdown. • We released new enhancements to software for our internal and external systems (Transact Online), demo
Slide 20: Appendix – New charging structure
Appendix 4 – New charging structure New Transact annual commission charging New Transact buy commission charging structure effective from 1 April 2020 structure effective from 1 March 2020 Single or consolidated portfolios of less than £100,000 Monthly average portfolio Refund Effective rate Cash &
Slide 21: Appendix – Pre-Look through position
Appendix 5 - Pre-Look through position Direct investment breakdown Shares FI & Gilts Structured products ETFs 2% 0% 1% 2% Investment trusts Others 3% 0% Cash Cash (term deposits) 9% 1% Lookthrough by asset class Mutual Funds 82% Results Presentation 21
Slide 22: Appendix – FUD by asset class breakdown
Appendix 6 - FUD by asset class breakdown Type Value (£bn) Percentage of total FUD Mutual funds 28.75 82.18% Cash (pooled) 3.21 9.19% Investment trusts 1.14 3.22% ETFs 0.72 2.06% Shares 0.63 1.80% FI & Gilts 0.11 0.30% Structured products 0.24 0.69% Cash (term deposits) 0.15 0.42% Others 0.04 0.14%
Slide 23: Appendix – FUD by wrapper split
Appendix 7 - FUD by wrapper split 40 35 £9.27bn ISAs £8.48bn 30 £8.05bn GIA 25 £6.89 bn £8.78bn Offshore Bond FUD(£bn) £8.15bn £5.69bn £7.99bn 20 £1.54bn Onshore Bond £7.08 bn £1.05bn £1.45bn £4.53 bn £0.99bn £1.41bn 15 £6.14 bn £0.94bn Pension £1.25 bn Wrappers £5.09 bn £0.84 bn £2.90bn 10 £0.69bn
Slide 24: Appendix – Cohort analysis
Appendix 8 - Cohort analysis FY 20 Cohort Analysis by Adviser for Inflows Split by FY Year of First £m Relationship FY 19 Inflows breakdown £7,000 FY 18 FY 17 -Inflows from current investors putting more onto FY 16 £6,000 the Platform: 33% FY 15 FY 14 -Inflows from advisers with established relation