Integrafin Holdings Plc · LSE:IHP
Integrafin — FY2021 Earnings Presentation
36 slides from Integrafin's earnings presentation, 2021
Slide 1: Results Presentation – Year ended 30 September 2021
Results Presentation Year ended 30 September 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 • 30 years of insurance • 30 years of finan
Slide 3: Financial year 2021 – operating environment headlines
Financial year 2021– operating environment headlines H1 FY21 H2 FY21 FY21 Acquisition of Time for Advice Limited (T4A) Annual commission charge reduction. Record year end FUD of £52.11bn. on 11 January 2021. Strong tax year end performance. Record gross and net annual inflows. Highest ev
Slide 4: Financial year 2021 - key financials
Financial year 2021 - key financials Financial Highlights Total revenue £123.7m, up 15%. (includes T4A revenue of £2.4m) FUD Clients Operating profit £63.2m, up 14%. (Includes £3.3m non-underlying expenses - T4A and Nucleus) 27% 209k (FY21: £52.11bn) (up 9% from FY20) Profit before tax £63.1
Slide 5: Funds Under Direction
2: IntegraFin Funds Under Direction
Slide 6: FUD growth outperforms MSCI World Index in FY21
FUD growth outperforms MSCI World Index in FY21 Growth in Funds Under Direction (£bn) compared to the MSCI World Index 300.000 2020 60 • Transact has achieved FUD COVID-19 Pandemic £52.1bn growth every year since 250.000 50 2000. 2018 IHP lists on the £41.1bn • FUD growth maintained 200.000 40 Londo
Slide 7: FY21 net inflows up 38%
FY21 net inflows up 38% £2.5bn £m FY21 £2.15bn Opening FUD 41,093 £1.99bn £1.97bn £2.0bn Inflows 7,695 £1.70bn £1.58bn £1.54bn £1.47bn Outflows (2,744) £1.5bn £1.34bn £1.31bn £1.29bn £1.23bn Net inflows 4,951 £1.10bn £0.96bn Market £1.0bn £0.84bn movements 6,297 £0.80bn £0.73bn Other movements (229)
Slide 8: FUD by wrapper split
FUD by wrapper split £55 Key points Billions £50 £12.71bn £45 Strong growth in all £40 wrapper types over the period. £10.08bn £35 £9.27bn £11.80bn Pensions and ISA FUD(£bn) £30 £8.05bn £9.38bn £2.20bn ISAs CAGRs in excess of £25 £6.89bn £8.79bn £1.49bn GIA 17%. £8.00bn £1.64bn £20 Offshore Bond
Slide 9: Pension transfers split by DB vs. DC
Pension transfers split by DB vs. DC £900m Key points £800m £700m Pension transfer business £600m has remained strong. £500m £651m DC Strong growth in DC £612m £647m £400m £483m DB transfers in Q4 FY21 £446m £300m compared to Q4 FY20. £200m DB transfers remained £100m stable over the year. £13
Slide 10: Financial performance
2: IntegraFin Financial performance
Slide 11: Transact platform – responsible pricing
Transact platform – responsible pricing Transact annual commission charges Transact buy commission charges Single or consolidated portfolios of less than £100,000 Pre 01/03/2021 Cash & investments Post 01/04/21 Pre 01/04/2021 Monthly Average Refund Effective Rate portfolio value £0 - £60,000 0.50% 0
Slide 12: Total revenue up 15%
Total revenue up 15% £m FY21 FY20 Change Platform revenue Annual commission income - Group revenue shown in two 107.7 94.5 +14% recurring streams: three elements of platform revenue, and T4A revenue. Annual basis point charge levied on (89%) (88%) assets and cash held on the platform Total platform
Slide 13: Well controlled expenses
Well controlled expenses £m FY21 FY20 Change • T4A’s staff costs of £2.4 million, from acquisition date to 30 September 2021. Staff costs 41.6 36.9 +13% • Excluding T4A, staff costs increased by £2.4 million, Occupancy 1.4 2.0 -30% or 7%. Regulatory and professional fees 7.6 7.0 +9% • Occupancy cost
Slide 14: Non-underlying expenses
Non-underlying expenses In line with statements in our interim annual report and results presentation, IHP incurred non-underlying expenses in FY21 totalling £3.3m. Non-underlying expenses that will not recur • Expenses incurred relating to the acquisition of T4A. • Expenses incurred due to work per
Slide 15: T4A – financials
T4A – financials T4A is a specialist software provider for financial planning and wealth management firms. Acquisition Revenue Investment • The entire share capital of T4A has been • From acquisition, 11 January 2021 to 30 • IHP injected £4.0 million of cash. purchased. September 2021 T4A generated
Slide 16: T4A operational performance
T4A operational performance • T4A generates revenue through license fees from advisers using its CURO technology. Advisers using CURO • Advisers using CURO increased by 266 (18%) from January 2021 to increased by 18% September 2021. • T4A license revenue increased by 29% from January 2021 to Septemb
Slide 17: Staff numbers
Staff numbers Group Group Excluding T4A, staff numbers increased 5%. 30 Sept 21 30 Sept 20 Including T4A, total group headcount increased IT & technology 114 121 18%. Operational & support 362 327 Sales & marketing 36 39 T4A headcount expected to expand in line with growth. IHP Staff 512 487 Investm
Slide 18: Profit & loss and cash flows
Profit & loss and cash flows Profit & loss Cash flows £m FY21 FY20 £m FY21 FY20 FUD (£bn) 52.1 41.1 Operating profit 63.2 55.3 Total fee income 123.7 107.3 Depreciation & amortisation 3.1 2.6 Working capital requirements (2.3) 5.0 Cost of sales (1.5) (0.8) Capex (0.7) (0.9) Net revenue 122.2 106.5 T
Slide 19: Group underlying performance
Group underlying performance Profit & loss £m FY21 FY20 Underlying expenses of £55.7m. FUD (£bn) 52.1 41.1 Total fee income 123.7 107.3 Non-underlying expenses, outside the normal course of business of £3.3m Acquisition of T4A and consideration of Nucleus. Cost of sales (1.5) (0.8) Net revenue 122.2
Slide 20: Strong profit growth while also reducing fees
We continue to achieve strong profit growth while also reducing fees CAGR: 13% £107.3m £123.7m Key points £99.2m £91.2m £80.2m Total fee income £68.4m • The Group has an impressive record of consistently growing revenue, at a CAGR of 13% since FY16. FY16 FY17 FY18 FY19 FY20 FY21 • Adjusted operating
Slide 21: Group balance sheet remains strong
Group balance sheet remains strong 30 Sept 21 £m • Transact operates with a conservative balance sheet position: Non-current assets Loans 3.4 Intangible assets 22.3 • No debt. Property, plant and equipment 1.8 Rights of use assets 3.6 • Cash reduced by up-front payment for T4A of £8.6 Deferred tax a
Slide 22: Business update
2: IntegraFin Business update
Slide 23: 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 £553.28bn 120,000 4,000 100,000 3,000 80,000 60,000 2,000 Transact FY20 FUD
Slide 24: Continued technological advances of the platform to meet client needs
Continued technological advances of the platform to meet client needs Platform investment increased to £10m 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 experie
Slide 25: Transact is consistently rated top for service
Transact is consistently rated top for service UK Investment Trends Adviser Technology & Business Report 2021 • Transact was rated the top platform in the UK Investment Trends Adviser Technology & Business Report 2021. • This is the 12th year running that Transact has been rated top. • The study is
Slide 26: Recent inflow data for the largest players
Recent inflow data for the largest players TOP 5 ADVISER PLATFORMS TOP 5 ADVISER PLATFORMS BY GROSS INFLOWS FY21 BY NET INFLOWS FY21 abrdn £8.50bn Aviva £5.05bn Quilter £8.20bn Transact £4.95bn Transact £7.70bn AJ Bell £3.80bn Aviva £7.53bn abrdn £3.31bn Fidelity £6.80bn Fidelity £3.15bn Source: Fun
Slide 27: Regulation
Regulation • 1. Financial and operational resilience The FCA has developed its close supervision of authorised firms during the Covid-19 pandemic, and throughout 2022 we can expect more focus on firms’ financial resilience. In March 2022, firms must comply with FCA and PRA rules on operational resil
Slide 28: Regulation – cont’d
Regulation – cont’d • 4. Diversity and inclusion Following publication of Discussion Paper 21/2, during 2022 we expect the PRA and FCA to develop regulation on diversity and inclusion in financial services. It is aimed at: more diverse representation at all levels; fostering cultures to generate sta
Slide 29: 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 30: T4A operational update
T4A operational update • T4A is a specialist software provider for financial planning and wealth management firms. This expands the Group’s offering of adviser services through T4A’s CURO software, an adviser back office system. • CURO is built on Microsoft Dynamics 365 and provides a modern solutio
Slide 31: Group ESG development
Group ESG development • During the year, Willis Towers Watson (WTW) performed a review to gather insight and provide us with recommendations and benchmarking feedback regarding our climate and Environmental, Social and Governance (ESG) reporting, as well as Taskforce on Climate Related Financial Dis
Slide 32: IHP Strategy
IHP Strategy Deliver high quality financial services infrastructure and services to UK advisers and our mutual clients Drive organic growth: • Grow Transact FUD by attracting and retaining advisers and their clients. • Deliver a superior service and value for money. • Grow number of CURO users at T4
Slide 33: 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 34: Appendix 1 - Pre-Look through position
Appendix 1 - Pre-Look through position Direct investment breakdown Type Value (£bn) Percentage of total FUD FI & Gilts Structured Mutual funds 44.66 85.69.% Shares 0% products ETFs 2% 0% Cash (pooled) 2.91 5.59% 2% Investment trusts 1.90 3.64% Others Investment ETFs 1.19 2.29% 0% trusts Shares 1.00
Slide 35: Appendix 2 - Cohort analysis
Appendix 2 - Cohort analysis Cohort Analysis by Adviser for Inflows Split by FY Year of First £m Relationship Inflows breakdown £9,000 FY 21 -Inflows from current investors putting more onto £8,000 FY 20 the Platform: 35% FY 19 £7,000 FY 18 FY 17 -Inflows from advisers with established relationship
Slide 36: Appendix 3 - Growth in Funds Under Direction compared to the MSCI World Index (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