19 September 2023

Half Year Results for the Six Months ended 30 June 2023

Positive performance; strategic investments to accelerate future growth

“Fintel delivered a positive financial and operational performance during the first half of 2023 and continued to make significant progress in line with its strategic plan. We have increased investment into our technology and service platform, with earnings enhancing acquisitions expanding our unique proposition and driving future growth opportunities.

Our diverse client base and proposition, combined with the cash generative nature of our business, provide resilience to tough market conditions and ensure we are well placed to capitalise on the growth opportunities arising from an evolving UK financial services landscape.

Current trading remains encouraging and in line with our expectations. Together with the strength of our balance sheet and positive qualified M&A pipeline, we are confident of delivering further strategic progress and accelerating growth, as we continue to inspire better outcomes for retail financial services.”

Matt Timmins, Joint CEO

 

 

HY23

HY22

Change

Core business

 

 

 

Core1 revenue

£27.6m

£27.1m

2%

Core SaaS & subscription revenue

£18.8m

£17.8m

6%

Core adjusted EBITDA2

£8.8m

£8.2m

8%

Core adjusted EBITDA margin

31.9%

30.1%

180bps

 

Fintel alternative performance measures

 

 

 

Adjusted EBITDA

£9.0m

£8.7m

3%

Adjusted EBITDA margin

28.3%

27.0%

130pbs

Adjusted EPS2

5.0p

5.3p

-6%

Cash conversion3

104%

124%

-2,000bps

 

Statutory measures

 

 

 

Statutory revenue

£31.7m

£32.2m

-2%

Statutory EBITDA

£6.7m

£8.0m

-16%

Statutory EPS

3.2p

4.6p

-30%

Cash position

£13.3m

£7.6m

75%

Interim dividend per share

1.1p

1.0p

10%

 

Financial highlights
  • Core1 revenue growth to £27.6m (HY22: £27.1m) up 2%; and up 4% on a like for like basis
  • Core adjusted EBITDA2 increased to £8.8m (HY22: £8.2m) up 8%
  • SaaS and subscription revenue up 6% to £18.8m (HY22: £17.8m), now representing 68% of core revenue
  • Strong liquidity with cash position of £13.3m (HY22: £7.6m), as a result of consistently strong cash conversion3 of 104% (HY22: 124%)
  • Strength of balance sheet together with undrawn £80m Revolving Credit Facility (“RCF”) provides significant financial flexibility and headroom to capitalise on organic and M&A opportunities
  • Statutory revenue of £31.7m (HY22: £32.2m), down 2%, reflects both new net revenue recognition on major software reseller contract extension in current period and reduced activity in non-core business
  • Adjusted EBITDA2 up 3% to £9.0m (HY22: £8.7m) delivered during a period of significant investment
  • Solid adjusted EBITDA2 margin of 28.3% (HY22: 27.0%), up 130bps, driven by improved revenue mix and growth on higher margin business lines
  • Adjusted EPS2 down 6% to 5.0 pence per share (HY22: 5.3 pence per share) driven largely by the UK wide increase in corporation tax rate from 19% to 25%
  • Interim dividend of 1.1p (HY22: 1.0p) proposed, recognising the strength of the underlying business

 

Strategic and operational highlights
  • Strategic developments and investments expected to accelerate future growth:
    • Acquisition of MICAP by Defaqto extending its reach into the tax-advantaged market, expanding both its data footprint and research capabilities
    • Acquisition of Competent Adviser, a dynamic learning platform enabling advisers to meet increasing regulatory competency requirements
    • Investment in Plannr through Fintel Labs technology incubator, expanding Fintel’s technology proposition and extending the capabilities of Defaqto Engage through a two-way integration
    • A new five-year minimum term technology contract with long-standing supplier Intelliflo on improved terms, reducing pass through costs and the associated revenues, and increasing EBITDA margin
  • Maintained a steady improvement in earnings quality, enhancing visibility of future earnings:
    • Solid growth in core SaaS and Subscription revenue up 6% to £18.8m (HY22: £17.8m), now representing 68% of core revenue
    • Strong progress in conversion to Distribution as a Service (“DaaS”); 79% of Distribution Partner revenue converted to multi-year subscription agreements (HY22: >60%; Target: 60%)
  • Enhanced and expanded proposition, driving organic growth:
    • Intermediary Services
      • Expanded regulatory technology capability with four new software distribution agreements
      • Strengthened core compliance offering including expanded Consumer Duty support and digital compliance services
    • Distribution Channels
      • Scaled DaaS proposition into mortgage and protection markets and further growth of Strategic Asset Allocation service
      • Deepened insights for product providers with partner portal phase two launched and digital events platform upgraded
      • Strengthened distribution agreement with BlackRock
    • Fintech & Research
      • Expanded competitor intelligence and benchmarking software
      • Launch of new financial planning software modules
      • Expanded research and insights platform

 

Current trading and outlook
  • Trading continues to be in line with the Board’s expectations
  • Sustainable organic growth expected with expansion of proposition and increasing technology penetration
  • Qualified M&A pipeline, underpinned by enhanced financial resources, expected to accelerate medium term growth
  • Increased demand as a result of positive market dynamics and structural growth drivers including regulatory pressure, demand for technology and insights, and market consolidation and disaggregation

Notes

1Core business excludes revenues from panel management and surveying.

2Core adjusted EBITDA and adjusted EPS are alternative performance measures for which a reconciliation to a GAAP measure is provided in note 8 and note 10.

3Underlying operating cash flow conversion is calculated as underlying cash flow from operations (adjusted operating profit, adjusted for changes in working capital, depreciation, amortisation, CAPEX and share-based payments) as a percentage of adjusted operating profit.

 

For further information please contact:

Fintel plc

Matt Timmins (Joint Chief Executive Officer)

Neil Stevens (Joint Chief Executive Officer)

David Thompson (Chief Financial Officer)

via MHP Group

Zeus (Nominated Adviser and Joint Broker)

Martin Green

Dan Bate

Kieran Russell

+44 (0) 20 3829 5000

Investec Bank (Joint Broker)

Bruce Garrow

David Anderson

Harry Hargreaves   

+44 (0) 20 7597 5970

MHP Group (Financial PR)

Reg Hoare

Robert Collett-Creedy

 

+44 (0) 20 3128 8147

Fintel@mhpgroup.com

Notes to Editors

Fintel is the UK's leading fintech and support services business, combining the largest provider of intermediary business support, SimplyBiz, and the leading research, ratings and Fintech business, Defaqto.

Fintel provides technology, compliance and regulatory support to thousands of intermediary businesses, data and targeted distribution services to hundreds of product providers and empowers millions of consumers to make better informed financial decisions. We serve our customers through three core divisions:

The Intermediary Services division provides technology, compliance, and regulatory support to thousands of intermediary businesses through a comprehensive membership model. Members include directly authorised IFAs, Wealth Managers and Mortgage Brokers.

The Distribution Channels division delivers market Insight and analysis and targeted distribution strategies to financial institutions and product providers. Clients include major Life and Pension companies, Investment Houses, Banks, and Building Societies.

The Fintech and Research division (Defaqto) provides market leading software, financial information and product research to product providers and intermediaries. Defaqto also provides product ratings (Star Ratings) on thousands of financial products. Financial products are expertly reviewed by the Defaqto research team and are compared and rated based on their underlying features and benefits. Defaqto ratings help consumers compare and buy financial products with confidence.

 

For more information about Fintel, please visit the website: www.wearefintel.com

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