Integrafin Holdings Plc · LSE:IHP
Integrafin — FY2019 Earnings Presentation
20 slides from Integrafin's earnings presentation, December 2019
Slide 1: Results Presentation: Year ended 30 September 2019
Results Presentation Year ended 30 September 2019
Slide 2: Presentation team
Presentation team Ian Taylor Alex Scott Chief Executive Officer Group Director • Co-founded IntegraFin in 1999 • Joined IntegraFin in 2009 • 1992 – Seven years in asset • 1997 – Twelve years in insurance management licence provision • 1987 – Five years in life industry • 1991 – Six years in life ind
Slide 3: Key messages
Key messages Profit after tax £40.1m, up 22% compared to FY18, up 13% compared to adjusted profit after tax in FY18 Operating profit £48.6m, up 12% compared to adjusted operating profit in FY18 Operating margin increased to 49% from adjusted operating margin of 47% in FY18 FUD is up 14% since Septem
Slide 4: Impressive FUD growth
Impressive FUD growth Growth in Funds Under Direction (£bn) compared to the MSCI World Index 250.000 2007 40 • Transact has enjoyed FUD 37.8 2003 First dividend 2007 2018 growth every year since 2003 paid yearly IHP lists on the 2000 Transact First dividend 33.1 35 2000 Transact thereafter First mov
Slide 5: FY19 Gross inflows down 4%, net inflows largest in adviser market
FY19 Gross inflows down 4%, net inflows largest in adviser market £1.6bn £1.53bn £1.52bn £m FY19 £1.46bn £1.48bn £1.45bn £1.44bn £1.39bn £1.39bn £1.4bn Opening FUD 33,113 £1.2bn £1.09bn Inflows 5,700 £1.07bn £0.98bn £1.0bn £0.96bn £0.93bn Outflows (2,203) £0.88bn £0.89bn £0.80bn £0.8bn Net inflows 3
Slide 6: Total fee income up 9%
Total fee income up 9% 96% of total fee income is recurring FY19 FY18 Change £m £m Annual Fee Annual basis point charge levied on 86.7 79.2 +9% Income assets and cash held on the platform (87%) (87%) Wrapper Fee Annual fixed fee levied on all Transact 9.0 8.1 +11% Income wrappers (9%) (9%) Buy Commi
Slide 7: Well controlled expenses
Well controlled expenses £m FY19 FY18 Staff costs 36.3 35.0 Occupancy 3.6 3.6 Regulatory and professional fees 5.5 6.8 (1) Other costs 3.7 3.7 Total expenses 49.1 49.1 Depreciation and amortisation 0.7 0.6 Total operating expenses 49.8 49.7 (1)Of which £2.6m related to one-off IPO related costs Resu
Slide 8: Staff numbers
Staff numbers • Staff numbers have decreased as 30 Sep 19 30 Sep 18 Change a result of efficiency gained through platform development IT & technology 115 111 +4% • Staff costs have increased due to: Operational & support 332 366 -9% • Introduction of staff share Sales & marketing 39 42 -7% incentive
Slide 9: P&L and cash flows
P&L and cash flows Profit & loss Cash flows £m FY19 FY18 £m FY19 FY18 FUD (£bn) 37.8 33.1 Adjusted operating profit 48.6 43.3 Adjustments (IPO) - (2.6) Total fee income 99.2 91.2 Operating profit 48.6 40.7 Cost of sales (0.8) (0.8) Depreciation & amortisation 0.6 0.6 Net revenue 98.4 90.4 Working ca
Slide 10: Strong profit growth while also reducing fees
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 £63.6m • Given its scale and operating leverage, Transact has been able to impleme
Slide 11: Group balance sheet remains strong
Group balance sheet remains strong 30 September ‘19 £m Non-current assets • Transact operates with a conservative balance Loans 1.2 Intangible assets 13.0 sheet position: Property, plant and equipment 2.4 Deferred tax assets 0.1 • No debt Deferred acquisition costs 50.4 67.1 • Policyholder assets an
Slide 12: Regulation
Regulation • The Platform market study • Process began in July 2017 • Policy statement issued last week!* • 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 charged exit
Slide 13: 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 14: 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 15: Board changes at Transact and its parent company
Board changes at Transact and its parent company • On 2nd March 2020, Alex Scott will become Chief Executive of IntegraFin Holdings plc (IntegraFin), the listed holding company that owns the Transact group of companies. Alex is currently Group Director of IntegraFin. • On the same date, Jonathan Gun
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 £446m £400m £452m £512m DC £400m £469m £300m DB £200m £100m £216m £175m £131m £129m £98m £0m Q4 FY 17/18 Q1 FY 18/19 Q2 FY 18/19 Q3 FY 18/19 Q4 FY 18/19 Source: Unaudited internal data Results Presentation 17
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 Count of investors Count of advisers Results
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 &