Integrafin Holdings Plc · LSE:IHP
Integrafin — H1 2023 Earnings Presentation
35 slides from Integrafin's earnings presentation, May 26, 2023
Slide 1: Results Presentation – Half year ended 31 March 2023
Results Presentation Half year ended 31 March 2023
Slide 2: Key Highlights
Key Highlights Resilient performance in volatile Award winning platform Winning market share markets Resilient net flows of £1.6bn Transact has been rated as #1 UK Transact’s share of the UK adviser (representing annualised net flows of adviser platform by all major industry platform market has grow
Slide 3: IHP Group – clear strategy and a simple business model
IHP Group – we have a clear strategy and a simple business model Our aim is to be the number 1 provider of software and services for clients and UK financial advisers Our strategy is focused: • We make financial planning easier for clients and their UK financial advisers • We do this by harnessing t
Slide 4: IHP Group – our business model delivers growth
IHP Group – our business model delivers growth Leveraging our leading customer service, technology, and scalable operations to drive business growth HY23 results Maintain cash Invest in the generation and a Deliver on Drive growth business and grow strong balance dividend policy earnings sheet • Adv
Slide 5: IHP Group – update on our operational plan
IHP Group – update on our operational plan HY22 - Plans for enhanced digitalisation: 1 • Recruitment of c. 50 IT and software professionals, including a UK CTO, to help deliver the following: • Digital-first online self-serve for adviser firms, with core Transact platform straight through processing
Slide 6: Transact platform – resilient net inflows
Transact platform – resilient net inflows Half year net inflows to the Transact platform as a % of opening FUD (annualised) £3.0 18% Billions 16% £2.5 14% £2.0 12% 10% £1.5 8% £1.0 6% 4% £0.5 2% £0.0 0% H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 H1 20 H2 20 H1 21 H2 21 H1 22 H2 22 H1 23 Net Inflows Net inf
Slide 7: Transact platform – growing share of FUD and net flows
Transact platform – growing share of FUD and net flows in the UK adviser platform market 22% 20% 19.2% 18% 15.6% 16% 14.8% 14.4% 14% 13.0% 12.0% 12% 9.3% 9.5% 9.7% 10% 8.7% 8.9% 8.9% 8% 6% 4% 2% 0% FY18 FY19 FY20 FY21 FY22 HY23 Transact share of adviser platform FUD Transact share of adviser platfor
Slide 8: Group developments including sustainability
Group developments including sustainability • Update on senior management additions: • the new CTO and Group CRO, both based in the UK, joined in January 2023 • finalising recruitment of the Group CFO • The Consumer Duty programme of work is being successfully implemented and we have issued communic
Slide 9: Platform update and adviser market outlook
Platform update and adviser market outlook
Slide 10: Transact growth opportunity from substantial UK assets off platform
Transact growth opportunity from substantial UK assets off platform Significant growth opportunities - with assets coming to advisers from: savings; consolidation of pensions and ISAs from other providers; inheritance; and, pension accumulation, including under the Government required pension auto e
Slide 11: UK government encourages long term savings through tax incentive wrappers
The UK government encourages long term savings and investment through tax incentive wrappers The UK is the fifth largest wealth market in the world and growing Type of UK tax incentive wrapper UK profile 30.2 million people in the UK have a private pension in accumulation. There could also be platfo
Slide 12: Forecast adviser platform market growth
Forecast adviser platform market growth Adviser platform assets – forecast by Fundscape 2022-27 CAGR £1,200bn £1,100bn 16% £1,000bn £900bn 11% £800bn 8% £700bn CAGR 8% 2018-2022 £600bn £500bn £400bn £300bn 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Historical Pessimistic Realistic Optimistic
Slide 13: Transact continues to meet financial adviser needs
Transact continues to meet financial adviser needs What are the most important factors advisers Key factors consider when choosing a platform? • Transact rated top by Advisers for service provided by a large platform Customer Service Levels (>£10bn) in the Investment Trends Report 2023 • Transact ra
Slide 14: Transact digital-first capabilities to support adviser needs
Transact has developed its digital-first capabilities to support adviser needs for online platform functionality Adviser support team highlights HY23 • Live chat usage increased 18% from HY22 • 97% Live chat resolution success rate • Co-browse requests are up 64% from HY22 • Completed 22k co-browse
Slide 15: Market leading rate of interest on cash earned by clients
Market leading rate of interest on cash earned by clients • The interest rate paid on client cash by Transact for April 2023 was 3.81%. • Interest earned on client cash is fully paid onto clients. c. 7% of total Transact platform FUD is held by clients as cash. • Only banks with UK banking licenses
Slide 16: Our award winning service proposition
Our award winning service proposition The Transact platform: • Maintained the highest NPS in the industry amongst primary users for the last 5 years* • Received a Platinum Platform rating by Adviser Asset in 2023 • Is the most considered platform amongst advisers looking to switch in the next 12 mon
Slide 17: Transact is a top 3 platform by size of FUD
Transact is a top 3 platform, by size of FUD, in the UK adviser platform market Percentage Technology FUD as at of adviser Platform Provider 31.03.23 market FUD 1 Abrdn £69.7bn 13% 2 Quilter £69.0bn 12% 3 Transact £54.0bn 10% Proprietary 4 Aegon £50.3bn 9% 5 AJ Bell Investcentre £47.3bn 8% 6 Fidelit
Slide 18: Transact had the 2nd highest net inflows across adviser platforms in HY23
Transact had the 2nd highest net inflows across adviser platforms in HY23 Adviser platforms with net inflows of >£1bn in HY23 True Potential £2.05bn • Transact had a 19% market share of adviser platform net inflows for HY23 Transact £1.63bn • Transact’s growth in FUD, clients and advisers is wholly
Slide 19: Transact platform - resilient growth
Transact platform - resilient growth Transact FUD and clients continue to grow over time Source of gross inflows (HY23) £60 240 Thousands Billions 2% £55 220 £50 200 42% £45 180 £40 160 56% £35 140 £30 £25 120 Inflows from current investors putting more onto the Platform £20 100 Inflows from adviser
Slide 20: Transact platform update for HY23
Transact platform update for HY23 • Average daily FUD for the half-year £52.6bn (HY22 £53.0bn) • Closing FUD £54.0bn (HY22 £53.5bn) Advisers Clients 7.6k up 3% (HY22: 7.4K) 228.2k up 4% (HY22: 218.8K) Adviser Concentration: Average Client Profile : • Low levels of adviser concentration • £237k portf
Slide 21: Increasing number of registered advisers on Transact
We continue to increase the number of registered advisers on Transact, whilst also gaining greater ‘share of adviser wallet’ There are c.35k registered financial advisers in the UK – we estimate c.13k is contestable 3,000 c.22k c.35k 36,000 36,000 UK registered financial advisers c.5.4k c.7.6k (HY22
Slide 22: Financial update
2: IntegraFin Financial update
Slide 23: Financial headlines HY23
Financial headlines HY23 £m IHP Group IHP Group HY 23 HY 22 Group revenue (£m) 66.5 67.0 • The underlying and reported Group PBT for HY23 has declined as a result of: 29.4 32.4 Underlying Group PBT (£m) (1) • Revenue down marginally due to market volatility and targeted price cuts implemented Underl
Slide 24: Platform revenue growth with moderate yield decreases from price cuts
Platform revenue has consistently grown, with moderate revenue yield decreases from price cuts Platform revenue (£m), and revenue yield (bps) £140 35 bps £m £130 29.6 £120 28.6 30 27.7 £110 25.7 24.7 24.4 £100 25 £90 £80 20 £70 £129.7 £60 £121.3 15 £107.3 £50 £99.2 £91.2 £40 10 £30 £64.1 £20 5 £10 £
Slide 25: Group revenue analysis
Group revenue analysis HY23 Total Platform HY22 Total Platform Revenue: £64.1m Revenue: £65.3m Platform revenue includes a mix of: 0.9 1.2 5.7 • recurring annual commission (dependent on 6.1 Transact (£m) FUD levels) • wrapper fees (fixed £ charge, dependent on the number of wrappers) • other income
Slide 26: Group costs have been managed in an inflationary environment
Group costs have been managed, in an inflationary environment Staff Costs (£m) • Staff costs have increased in HY23 due to an increase in total average staff headcount, staff pay increases in recognition of the 26.5 23.7 cost of living, and a salary/bonus restructure in October 2022 HY23 HY22 Regula
Slide 27: Group staff numbers
Group staff numbers 31 31 March March 23 22 Software development and IT 140 117 • Since 31 March 2022 we have added a infrastructure net of 25 software development and IT infrastructure and security staff, Operational and support activities 418 419 including two at T4A • A UK-based Chief Technology
Slide 28: Group liquidity position, and dividends
Group liquidity position, and dividends Group liquidity position As at 31.03.23 Dividend FY23 FY22 FY21 (£m) Per share Total Group consolidated cash 184.4 Ordinary – first 3.2 pence 3.2 pence 3.0 pence interim Ordinary – Not yet Total Group cash held for: regulatory 7.0 pence 7.0 pence second interi
Slide 29: Update on Time4Advice
Update on Time4Advice • Time4Advice (T4A) continue to sign up new users, the total number of fee-paying users rose 41% in the last year to 2.5k • T4A total revenue of £2.4m for HY23 (HY22: £1.7m), comprising £1.9m of recurring revenue from adviser firms licensed to use CURO (HY22: £1.5m) • Costs con
Slide 30: Guidance
2: IntegraFin Guidance
Slide 31: Financial guidance - cost guidance for FY23 and FY24 unchanged
Financial guidance - cost guidance for FY23 and FY24 remains unchanged (as issued in December 2022) FY23 FY24 Staff costs Expected to be a c.18% increase on FY22 (£47.1m) Expected to be a 9% increase on FY23. Regulatory and professional fees Expected to be a c.8% increase on FY22 (£9.8m) Expected to
Slide 32: Other Guidance
Other Guidance FY23 FY24 Platform revenue No further price cuts Planning to erode the platform buy commission Net interest income on corporate cash held Net interest income on Group corporate cash - expected to be base rate less bank margin of c.150bps Time4Advice - PBT Narrowing PBT loss for FY23 c
Slide 33: Summary
Summary Resilient performance in volatile markets Compelling market opportunity Award winning proposition driving growth in market share Continued digitalisation driving efficiency and scalability 33
Slide 34: Q&A
Q&A 2: IntegraFin
Slide 35: 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