TIDMIHP
RNS Number : 7286A
IntegraFin Holdings plc
26 May 2023
LEI Number: 213800CYIZKXK9PQYE87
26 May 2023
IntegraFin Holdings plc
Announcement of half year results for the six months ended 31
March 2023
Headlines
-- Robust Transact platform net inflows of GBP1.6bn (HY22:
GBP2.7bn), representing over 6% of opening funds under direction
('FUD') (annualised).
-- Record Transact platform client numbers of 228k (HY22: 219k),
a 4% increase from prior year.
-- Total Group revenue of GBP66.5m (HY22: GBP67.0m), during a
period with a 1% fall in Transact platform average daily FUD due to
adverse market movements (HY23: GBP52.6bn; HY22: GBP53bn).
-- Resilient underlying Group profit before tax of GBP29.4m
(HY22: GBP32.4m), and IFRS profit before tax of GBP27.9m (HY22:
GBP31.7m), as we continue investment in the business for future
growth.
-- The underlying result for FY23 is after adjusting for
non-underlying expenses of GBP1.5m (T4A post combination
remuneration). FY22 underlying Group PBT now includes GBP0.8m of
VAT costs which were paid in September 2022, but were underlying
costs for the HY22 period.
-- Underlying Group earnings per share of 7.1p (HY22: 8.0p).
IFRS Group earnings per share of 6.6p (HY22: 7.7p).
-- The digitalisation programme for the Transact platform is
well underway and is being positively received. The recruitment of
IT and software professionals is progressing well, though at a
slower pace than originally planned, whilst the market for IT
professionals remains competitive. Recruitment will continue into
FY24, but with no increase in the planned total additional
headcount.
-- The detailed cost guidance, which we disclosed in December
2022, for financial years ending 30 September 2023 and 30 September
2024 remains unchanged.
-- Declared first interim dividend of 3.2 pence per share (HY22: 3.2pps).
IHP Group - Financial highlights
Six months Six months
to 31 March to 31 March
2023 2022
Total Group revenue GBP66.5m GBP67.0m
------------------------ ------------------------
Underlying profit before GBP29.4m GBP32.4m
tax
------------------------ ------------------------
IFRS profit before tax GBP27.9m GBP31.7m
------------------------ ------------------------
Underlying earnings per share 7.1p 8.0p
------------------------ ------------------------
IFRS earning per share 6.6p 7.7p
------------------------ ------------------------
First interim dividend per
share 3.2p 3.2p
------------------------ ------------------------
Transact platform:
Six months Six months
to 31 March to 31 March
2023 2022
Net new business inflows GBP1.6bn GBP2.7bn
------------------------ -------------------------
Closing funds under direction GBP54.0bn GBP53.5bn
('FUD')
------------------------ -------------------------
GBP52.6bn GBP53.0bn
Average daily FUD
------------------------ -------------------------
Transact platform clients
(as at 31 March) 228,232 218,787
------------------------ -------------------------
Transact platform registered
advisers (as at 31 March) 7,563 7,356
------------------------ -------------------------
Time4Advice:
Six months Six months
to 31 March to 31 March
2023 2022
GBP2.4m GBP1.7m
Time4Advice revenue
------------------------ -------------------------
Total number of CURO software
users (as at 31 March) 2.5k 1.8k
------------------------ -------------------------
Alex Scott, IHP Group Chief Executive Officer, commented:
"I am pleased to report another solid performance, despite the
six months to 31 March 2023 presenting a challenging backdrop for
UK consumers and businesses, with persistently high inflation,
macroeconomic uncertainty and volatile asset markets. The
combination of the strength of the UK advisers we work with and the
services provided by the Transact investment platform and the CURO
adviser back office solution, ensured that we delivered a resilient
performance.
Net inflows to the Transact platform were over 6% of opening
period FUD and we now serve a record 228k clients, and 7.6k
registered advisers.
During the period, market performance resulted in investment
platform average daily FUD falling by 1% year on year. The main
component of Group revenue is earned on average FUD, so this
resulted in steady Group revenue. Furthermore, during a period of
continuing investment in the business for future growth, we
delivered a resilient underlying profit before tax for the Group of
GBP29.4 million.
We continue to implement our Transact platform digitalisation
programme to deliver comprehensive online functionality for
advisers and clients, as well as straight through processing for
core internal administration activities. This means that we will be
able to make our business more scalable, and our customer services
people will be able to spend more of their time on the most
important value adding activities for clients and advisers.
Time4Advice continues to progress well, with registered users of
the CURO software increasing by over 10% since year end.
In a period of ongoing economic and market volatility, clients
rely more than ever on their advisers. Clients receive high
quality, personal, financial planning and support delivered by UK
authorised advisers.
As we've always done, we'll continue to support UK financial
advisers and clients by providing our combination of in house
technology and well trained people delivering high quality service.
This creates a holistic financial planning solution for clients,
which is both easier to deliver and more scalable for UK financial
advisers.
Overall, we remain focused on our aim to be the number one
provider of software and services for clients and UK financial
advisers."
Enquiries
Investors
Luke Carrivick, IHP Head of Investor
Relations +44 020 7608 5463
Media
Lansons: Tony Langham +44 (0)7979692287
Lansons: Maddy Morgan-Williams +44 (0)7947364578
2023 Half year results presentation
IHP will be hosting a virtual analyst presentation at 09:30am on
26 May 2023. This will be available at
https://brrmedia.news/IntegraFin_Interims/ . A recording of the
presentation will be available for playback after the event at
https://www.integrafin.co.uk/ . Slides accompanying the analyst
presentation will also be available this morning at
https://www.integrafin.co.uk/annual-reports/ .
Cautionary Statement
These Interim Results have been prepared in accordance with the
requirements of English Company Law and the liabilities of the
Directors in connection with these Interim Results shall be subject
to the limitations and restrictions provided by such law.
These Interim Results are prepared for and addressed only to the
Company's shareholders as a whole and to no other person. The
Company, its Directors, employees, agents or advisers do not accept
or assume responsibility to any other person to whom these Interim
Results are shown or into whose hands it may come and any such
responsibility or liability is expressly disclaimed.
These Interim Results contain forward looking statements, which
are unavoidably subject to risk and uncertainty because they relate
to events and depend upon circumstances that will occur in the
future. It is believed that the expectations set out in these
forward looking statements are reasonable but they may be affected
by a wide range of variables which could cause future outcomes to
differ from those foreseen. All statements in these Interim Results
are based upon information known to the Company at the date of this
report. Except as required by law, the Company undertakes no
obligation to publicly update or revise any forward looking
statement, whether as a result of new information, future events or
otherwise.
Financial review
Operational performance
Transact funds under direction and flows
Closing funds under direction (FUD) at HY23 of GBP53.97 billion
have grown 8% from year end, and 1% year on year (HY22: GBP53.50
billion).
Transact's net inflows for the first half year of the financial
year were GBP1.63 billion and proved resilient, net flows represent
an annualised net flow rate of over 6% of opening period FUD. This
is testament to the strength of the advised investment platform
proposition, attracting flows from both new and existing
clients.
All metrics reflect the global market instability prevailing
since the Russian invasion of Ukraine in early 2022, which has also
contributed significantly to an inflationary global economic
environment.
HY23 HY22 YE 2022
GBPm GBPm GBPm
Opening FUD 50,070 52,112 52,112
Inflows 3,294 4,068 7,275
Outflows (1,669) (1,385) (2,873)
---------------------------------- -------- -------- --------
Net flows 1,625 2,683 4,402
Market movements 2,313 (1,169) (6,248)
Other movements(1) (35) (126) (196)
---------------------------------- -------- -------- --------
Closing FUD 53,973 53,500 50,070
Average daily FUD for the period 52,643 53,038 52,544
(1) Other movements includes fees, tax charges and rebates,
dividends and interest.
Our investment platform gross inflows remain wholly organic and
although they decreased year on year by 19%, this was when compared
with our best ever half year in 2022. Outflows increased by 20%,
however they remain within expectation, at an annualised rate of 7%
of opening FUD.
Client numbers increased by 4% and registered advisers by 3%.
Both metrics were impacted by a review of portfolios with small
residual balances, which resulted in the reduction of 4.2k clients
on the platform and 270 advisers. This ongoing exercise will help
improve operational efficiency.
Time for Advice (T4A)
The number of paying users of CURO has increased 41% year on
year, to 2.5k. The live testing of the next generation CURO
software continues to progress well.
Group financial performance
HY23 HY23 HY22 HY22 YE 2022
Group *Platform Group *Platform Group
GBPm GBPm GBPm GBPm GBPm
Revenue 66.5 64.1 67.0 65.3 133.6
Cost of sales (2.3) (1.8) (0.9) (0.5) (2.1)
----------------------------------------- ----------- ------- ----------- -------- -------
Gross profit 64.2 62.3 66.1 64.8 131.5
Operating expenses (37.0) (35.8) (32.9) (31.3) (66.4)
Non-underlying expenses (1.5) - (1.5) - (11.5)
----------------------------------------- ----------- ------- ----------- -------- -------
Operating profit 25.7 26.5 31.7 33.5 53.6
Net interest income 2.2 1.9 0.0 0.2 0.7
----------------------------------------- ----------- ------- ----------- -------- -------
Profit before tax 27.9 28.4 31.7 33.7 54.3
Tax on ordinary activities (5.9) (5.5) (6.2) (6.1) (10.3)
----------------------------------------- ----------- ------- ----------- -------- -------
Profit after tax 22.0 22.9 25.5 27.6 44.0
Operating margin 39% 41% 47% 51% 41%
Earnings per share - basic and diluted 6.6p 7.7p
* The Platform represents the activities conducted on Transact
and excludes the activities of T4A. The T4A activities are included
in the Group column. The Platform is equivalent to the investment
administration services and insurance and life assurance business
segments in note 3.
Revenue
There are two streams of Group revenue: investment platform
revenue and T4A revenue.
HY23 HY22 YE 2022
Platform revenue GBPm GBPm GBPm
Recurring annual commission income 57.1 58.4 115.9
Recurring wrapper fee income 6.1 5.7 11.6
Other income 0.9 1.2 2.2
------------------------------------ ----- ----- --------
Total platform revenue 64.1 65.3 129.7
T4A revenue 2.4 1.7 3.9
------------------------------------ ----- ----- --------
Total revenue 66.5 67.0 133.6
Investment platform revenue
Platform revenue comprises three elements, two of which are
recurring. The recurring revenue streams are annual commission
income (an annual, ad valorem tiered fee on FUD) and wrapper
administration fee income (quarterly fixed wrapper fees for each of
the tax wrapper types available). The third platform revenue stream
is other income, which is composed of buy commission, which is a
charge levied on asset purchases in portfolios of less than GBP0.1
million in value, and dealing charges.
Recurring revenue streams constituted 99% (HY22: 98%) of total
platform revenue in the six months to 31 March 2023.
Annual commission income fell by GBP1.3 million (2%) in the
period, when compared against HY22. This is due to a combination of
average daily FUD for the period falling 1% year on year, plus the
price reduction of one basis point (from 27bps to 26bps), which
effected on 1 July 2022 and, therefore, impacted the whole of
HY23.
Wrapper administration fee income increased by GBP0.4 million
(7%) year on year, reflecting the increase in the number of open
tax wrappers.
Buy commission of GBP0.5 million was included in other income
(HY22: GBP0.9 million) and it halved year on year. The reason for
this fall was primarily the reduction in the buy commission rebate
threshold in March 2022. The required portfolio value for client
family groups to receive the rebate was reduced from GBP0.3 million
to GBP0.2 million from 1 March 2022, and it was further reduced
with effect from 1 March 2023 to GBP0.1 million.
The purpose of the reductions remains that of removing an
increasing proportion of clients out of the buy commission charge,
simplifying the fee structure and delivering better value for money
for clients.
T4A revenue
T4A's revenue was GBP2.4 million in the half year to March 2023,
compared with GBP1.7 million in HY22, an increase of 41%, which is
consistent with the increase in paying CURO users of 41% year on
year.
T4A's main revenue stream is licence fee income, which is
recurring revenue generated from adviser firms who sign up to the
CURO software, and accounts for 80% (HY22: 88%) of its revenue.
The other significant revenue stream is consultancy fee income,
accounting for 18% (HY22: 10%) of its revenue. Consultancy fee
income doubled year on year to GBP0.4 million, from GBP0.2 million
in HY22.
Interest income
The main component of our net assets is cash, with cash holdings
of GBP184.4 million (HY22: GBP177.7 million), which has benefited
us in a rising interest rate environment. This has led to interest
income of GBP2.2 million (HY22: GBP0.1 million) in the half year to
31 March 2023.
Operating expenses
HY23 HY22 YE 2022
GBPm GBPm GBPm
Staff costs 26.5 23.7 47.1
Occupancy 1.2 1.2 2.3
Regulatory and professional fees 5.0 4.6 9.8
Non-underlying expenses -
backdated VAT and interest - - 8.8
Non-underlying expenses - other 1.5 1.5 2.7
Current year VAT 1.7 0.7 3.2
Other income -
tax relief due to shareholders (0.5) (0.6) (2.4)
Other costs 1.7 1.6 3.2
---------------------------------- ------ ------ --------
Total expenses 37.1 32.7 74.7
Depreciation and amortisation 1.4 1.6 3.0
---------------------------------- ------ ------ --------
Total operating expenses 38.5 34.3 77.7
In the six months to March 2023, total operating expenses
increased by GBP4.2 million (12%), when compared with the six
months to March 2022. This was in line with stated expectation.
Of note:
Staff costs
Staff costs have increased by GBP2.8 million (12%) to GBP26.5
million in the six months to March 2023.
The uplift is due to a number of factors: average Group
headcount over the period increased by 4%, from 590 in HY22 to 616
in HY23, increasing costs by GBP0.8 million; enhanced pay rises of
7.5%, to reflect the rise in cost of living, were awarded in
mid-2022 and increased salary costs year on year by GBP1.5 million;
an increase in overtime costs of GBP0.2 million, as service
initiatives were undertaken; and, salary/bonus restructure in
October 2022, following feedback from employees and to better
reflect the job market, also led to a higher overall cost of GBP0.1
million in the six months to 31 March 2023.
The above increases in staff costs, when annualised, are broadly
in line with guidance given to the market in late 2022.
The planned increase in systems and software headcount,
announced at HY22, is progressing steadily, with over half of the
roles filled, including a Chief Technology Officer.
Regulatory and professional fees
Regulatory fees and professional fees have risen 9% (GBP0.4
million) year on year to GBP5.0 million (HY22: GBP4.6 million).
Professional fees are up GBP0.1 million (4%) year on year to
GBP2.8 million (HY22: GBP2.7 million).
The remaining GBP0.3 million of the uplift is largely due to an
increase in the regulatory fees levied on the UK insurance company
in the Group, IntegraLife UK Limited (ILUK). All components of the
fees levied were increased, with the FOS element, in particular,
doubling.
Current year VAT
Current year VAT increased by GBP1.0 million, or 143% to GBP1.7
million, year on year.
This is due to us having to account for VAT on sums paid for
software development and maintenance services to our wholly owned
subsidiary, Integrated Application Development Pty Ltd (IAD), as a
result of HMRC having terminated IAD's membership of our UK VAT
group in January 2020. We dispute the grounds for this termination
and have served HMRC with a notice of appeal.
Group profit
Group profit before tax decreased by GBP3.8 million to GBP27.9
million, or 12% year on year.
This was expected, due to the planned investment in our people,
as detailed above, as well as the impact of paying VAT on software
fees. The resilience of revenue, plus the increase in interest
income on Group cash, in a volatile macroeconomic environment, has
mitigated some of the impact of the increase in costs.
Operating margin has reduced year on year, but remains at 39%.
We see emerging efficiencies and growth, driven by investment in
development resource and the ongoing digitalisation programme.
Financial position
Capital and liquidity
The Group's financial resources remain robust, with net assets
of GBP172.0 million at HY23.
The Group's operations are highly cash generative, with profits
emerging as cash. The Group continues to have no debt.
The Group maintains strong levels of liquid capital, over and
above regulatory requirements, in line with risk appetites. The
Group also considers the impact of regulatory capital requirements
and risk appetites, before paying any dividend from the regulated
subsidiaries to the parent company.
Dividends
During the six month period to 31 March 2023, the Company paid a
second interim dividend of GBP23.2 million to shareholders in
respect of financial year 2022. This was in addition to the first
interim dividend of GBP10.6 million, which was paid in June
2022.
In respect of the six months to 31 March 2023 (and in line with
the full year dividend policy of paying 60 to 65% of profits after
tax), the Board has declared a first interim dividend of GBP 10.6
million, or 3.2 pence per ordinary share. This will be payable on
30 June 2023 to ordinary shareholders on the register on 9 June
2023, the ex-dividend date will be 8 June 2023. This compares with
an interim dividend of GBP10.6 million, or 3.2 pence per ordinary
share, for the same period in the prior year.
Directors' responsibility statement
The Directors are responsible for preparing the condensed
consolidated financial statements in accordance with applicable law
and regulations. A list of current directors is maintained on the
Group's website: https://www.integrafin.co.uk.
The Directors confirm that, to the best of their knowledge, the
condensed consolidated financial statements have been prepared in
accordance with UK adopted International Accounting Standard 34,
and give a true and fair view of the assets, liabilities, financial
position and profit or loss of the issuer, or the undertakings
included in the consolidation as a whole as required by DTR 4.2.4
R.
The Directors further confirm that the interim management report
include a fair review of the information required by DTR 4.2.7R and
DTR 4.2.8R, namely:
-- an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of consolidated Financial Statements, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- material related-party transactions in the first six months
and any material changes in the related party transactions
described in the last Annual Report.
By Order of the Board
Helen Wakeford
Company Secretary
Registered Office
29 Clement's Lane
London
EC4N 7AE
25 May 2023
Independent review report to IntegraFin Holdings plc
Introduction
We have been engaged by IntegraFin Holdings plc (the 'Company')
to review the condensed set of financial statements in the
half-yearly financial report for the six months ended 31 March 2023
which comprises Condensed Consolidated Statement of Comprehensive
Income, the Condensed Consolidated Statement of Financial Position,
the Condensed Statement of Cash Flows, the Condensed Statement of
Changes in Equity and the related notes 1 to 18. We have read the
other information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Company are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
March 2023 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
25 May 2023
Unaudited Condensed Consolidated Statement of Comprehensive
Income
Six months to Six months to
Note 31 March 2023 31 March 2022
GBPm GBPm
Revenue
Fee income 3 66.5 67.0
Cost of sales (2.3) (1.0)
--------------------------------------------------------------------------- ------- --------------- ---------------
Gross profit 64.2 66.0
Administrative expenses (38.5) (34.3)
Operating profit 25.7 31.7
--------------------------------------------------------------------------- ------- --------------- ---------------
Interest income 2.2 0.1
Interest expense - (0.1)
Net policyholder returns (1)
Net income/(loss) attributable to policyholder returns 12.9 (8.2)
Change in investment contract liabilities (1,038.7) 544.1
Fee and commission expenses (91.5) (101.9)
Policyholder investment returns 1,130.2 (442.2)
--------------------------------------------------------------------------- ------- --------------- ---------------
Net policyholder returns 12.9 (8.2)
Profit on ordinary activities before taxation attributable to
policyholders and shareholders 40.8 23.5
Tax (charge)/credit attributable to policyholder returns (12.9) 8.2
--------------------------------------------------------------------------- ------- --------------- ---------------
Profit on ordinary activities before taxation attributable to shareholders 27.9 31.7
Total tax attributable to shareholder and policyholder returns (18.8) 2.0
Less: tax charge/(credit) attributable to policyholder returns 12.9 (8.2)
--------------------------------------------------------------------------- ------- --------------- ---------------
Shareholder tax on profit on ordinary activities (5.9) (6.2)
Profit for the period 22.0 25.5
Other comprehensive (loss)/income
Exchange gains/(losses) arising on translation of foreign operations (0.1) 0.1
Total other comprehensive income/(loss) for the period (0.1) 0.1
Total comprehensive income for the period 21.9 25.6
--------------------------------------------------------------------------- ------- --------------- ---------------
Earnings per share
Ordinary shares - basic and diluted 4 6.6p 7.7p
(1)See note 1 for details on the presentational changes to
policyholder balances.
All activities of the Group are classed as continuing.
Notes 1 to 18 form part of these Financial Statements.
Unaudited Condensed Consolidated Statement of Financial
Position
31 March 30 September
Note 2023 2022
GBPm GBPm
Non-current assets
Loans 5.3 5.5
Intangible assets 7 21.6 21.8
Property, plant and equipment 1.0 1.2
Right of use assets 1.3 2.1
Deferred tax assets 6 0.7 6.0
29.9 36.6
Current assets
Financial assets at fair value through profit or loss 3.1 3.1
Other prepayments and accrued income 17.1 17.2
Trade and other receivables 13 4.4 2.0
Cash and cash equivalents 11 184.4 183.0
Current tax asset 13.5 15.0
222.5 220.3
Current liabilities
Trade and other payables 14 21.6 21.5
Provisions 8 2.6 10.7
Lease liabilities 0.8 1.9
25.0 34.1
Non-current liabilities
Provisions 8 44.1 46.1
Contingent consideration 2.2 1.7
Lease liabilities 0.8 0.9
Deferred tax liabilities 6 8.3 0.9
55.4 49.6
Policyholder assets and liabilities (1)
Cash held for the benefit of policyholders 12 1,372.0 1,458.6
Investments held for the benefit of policyholders 9 22,487.6 20,715.8
Liabilities for linked investment contracts 10 (23,859.6) (22,174.4)
- -
Net assets 172.0 173.2
------------------------------------------------------- ----- ----------- -------------
Capital and reserves
Called up equity share capital 3.3 3.3
Share-based payment reserve 2.8 2.6
Employee Benefit Trust reserve (2.6) (2.4)
Non-distributable reserves 5.7 5.7
Retained earnings 162.8 164.0
------------------------------------------------------- ----- ----------- -------------
Total equity 172.0 173.2
------------------------------------------------------- ----- ----------- -------------
(1)See note 1 for details on the presentational changes to
policyholder balances.
These interim financial statements were approved by the Board of
Directors on 25 May 2023 and are signed on their behalf by:
Alexander Scott, Director
Company Registration Number: 08860879
Notes 1 to 18 form part of these Financial Statements.
Unaudited Condensed Consolidated Statement of Cash Flows
Six months to Six months to
31 March 2023 31 March 2022
GBPm GBPm
Cash flows from operating activities
Profit on ordinary activities before taxation attributable to policyholders and
shareholders 40.8 23.5
Adjustments for income statement non-cash movements:
Amortisation and depreciation 1.4 1.6
Share-based payments charge 1.1 1.0
Release of actuarial provision - (0.5)
(Decrease)/increase in provisions (10.1) 15.9
Increase in contingent consideration 0.5 0.5
Adjustments for cash affecting investing activities:
Interest on cash and loans (2.2) (0.1)
Interest charged on lease - 0.1
Increase/(decrease) in current asset investments - (0.1)
Adjustments for statement of financial position movements:
Increase in receivables (2.4) (6.3)
Increase in payables 0.2 0.8
Decrease in share-based payment reserve (0.8) (0.7)
Adjustments for policyholder balances:
Increase in investments held for the benefit of policyholders (1,771.8) (414.3)
Increase in liabilities for linked investment contracts 1,685.2 562.7
Increase/(decrease) in policyholder tax recoverable 23.2 (5.9)
Cash (used in)/generated from operations (34.9) 178.2
Income taxes paid (27.9) (2.4)
Interest paid on lease liabilities - (0.1)
Net cash flows from operating activities (62.8) 175.7
Investing activities
Acquisition of tangible assets (0.2) (0.2)
Decrease/(increase) in loans 0.2 (0.8)
Interest on cash and loans held 2.2 0.1
Net cash used in investing activities 2.2 (0.9)
Financing activities
Purchase of own shares in Employee Benefit Trust (0.2) (0.4)
Equity dividends paid (23.2) (23.2)
Repayment of lease liabilities (1.2) (1.2)
------------------------------------------------------------------------------------ --------------- ---------------
Net cash used in financing activities (24.6) (24.8)
Net increase/(decrease) in cash and cash equivalents (85.2) 150.0
Cash and cash equivalents at beginning of period 1,641.6 1,442.4
Exchange gains/(losses) on cash and cash equivalents - 0.1
------------------------------------------------------------------------------------ --------------- ---------------
Cash and cash equivalents at end of period 1,556.4 1,592.5
------------------------------------------------------------------------------------ --------------- ---------------
Cash and cash equivalents consist of:
Cash and cash equivalents 184.4 177.8
Cash held for the benefit of policyholders 1,372.0 1,414.7
------------------------------------------------------------------------------------ --------------- ---------------
Cash and cash equivalents 1,556.4 1,592.5
------------------------------------------------------------------------------------ --------------- ---------------
Notes 1 to 18 form part of these Financial Statements.
Unaudited Condensed Consolidated Statement of Changes in
Equity
Non-distributable Share-based
insurance and payment Employee Retained
Share capital other reserves reserve benefit trust earnings Total equity
GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1
October 2021 3.3 6.1 2.4 (2.1) 153.5 163.3
Comprehensive
income for the
year:
Profit for the
year - - - - 25.5 25.5
Movement in
currency
translation - 0.1 - - - 0.1
Total
comprehensive
income for the
year - 0.1 - - 25.5 25.6
Share-based
payment
expense - - 0.9 - - 0.9
Settlement of
share-based
payment - - (1.1) - - (1.1)
Purchase of own
shares in EBT - - - (0.4) - (0.4)
Exercised share
options - - - 0.1 (0.1) -
Release of
actuarial
reserve - (0.5) - - 0.5 -
Distributions
to owners -
Dividends paid - - - - (23.2) (23.2)
Balance at 31
March 2022 3.3 5.7 2.2 (2.4) 156.2 165.1
---------------- -------------- ------------------ --------------- --------------- --------------- -------------
Balance at 1
October 2022 3.3 5.7 2.6 (2.4) 164.0 173.2
Comprehensive
income for the
year:
Profit for the
year - - - - 22.0 22.0
Movement in
currency
translation - (0.1) - - - (0.1)
Total
comprehensive
income for the
year - (0.1) - - 22.0 21.9
Share-based
payment
expense - - 1.1 - - 1.1
Settlement of
share-based
payment - - (1.1) - - (1.1)
Purchase of own
shares in EBT - - - (0.2) - (0.2)
Excess tax
relief charged
to equity - - 0.2 - - 0.2
Other movements - 0.1 - - - 0.1
Distributions
to owners -
Dividends paid - - - - (23.2) (23.2)
Balance at 31
March 2023 3.3 5.7 2.8 (2.6) 162.8 172.0
---------------- -------------- ------------------ --------------- --------------- --------------- -------------
Notes 1 to 18 form part of these Financial Statements.
Notes to the Financial Statements (unaudited)
1. Basis of preparation
The interim condensed consolidated financial statements have
been prepared in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules (the DTR) of the UK's Financial Conduct Authority (the UK
FCA).
The interim condensed consolidated set of financial statements
has been prepared by applying the accounting policies and
presentation that were applied in the preparation of the Group's
published consolidated financial statements for the year ended 30
September 2022, which were prepared in accordance with UK-adopted
International Accounting Standards (IASs).
The financial information contained in these interim financial
statements are unaudited and do not constitute statutory accounts
within the meaning of Section 434 of the Companies Act 2006. The
information has been reviewed by the company's auditor, Ernst &
Young LLP, and their report is presented on pages 10-11.
The comparative financial information for the year ended 30
September 2022 in this interim report does not constitute statutory
accounts for that year.
The statutory accounts for 30 September 2022 have been delivered
to the Registrar of Companies. The auditor's report on those
accounts was unqualified, did not draw attention to any matters by
way of emphasis, and did not contain a statement under 498(2) or
498(3) of the Companies Act 2006.
These interim financial statements should be read in conjunction
with the Annual Report and Accounts for the year ended 30 September
2022. The Group's accounting policies, areas of significant
judgement and the key sources of estimation uncertainty are
consistent with those applied to the consolidated financial
statements as at, and for, the year ended 30 September 2022.
Presentational changes to Policyholder items
In line with the statutory accounts for 30 September 2022, the
following voluntary presentational changes have been made to the
consolidated statement of comprehensive income and the consolidated
statement of financial position in order to provide information
that is more relevant to users of the financial statements, by
splitting out the policyholder and shareholder values.
-- The statement of comprehensive income has been updated with
regard to the classification of net income/(loss) attributable to
policyholder returns, which has moved into the net policyholder
returns section, so that operating profit is presented as
attributable to shareholders only.
-- Profit on ordinary activities before taxation has first been
presented on a total basis, showing profits attributable to both
shareholders and policyholders. The tax attributable to
policyholder returns has then been deducted from this to show the
shareholder only profit before taxation. The tax charge or credit
has also been presented in this way, with total tax attributable to
shareholder and policyholders shown first, and tax attributable to
policyholder returns then deducted to show the shareholder only tax
charge.
-- The statement of financial position has been updated with
regard to the presentation of assets and liabilities; the
policyholder assets and liabilities have been grouped together to
enable the users of the accounts to see that these balances net off
directly against each other. This includes splitting out cash
attributable to policyholders from shareholder cash and cash
equivalents and showing this in the policyholder assets and
liabilities section.
Comparative information has also been updated, where
relevant.
These changes will clearly allow users of the accounts to
distinguish the Group performance separately to the performance of
policyholder balances.
Going Concern
The interim financial statements have been prepared on a going
concern basis, following an assessment by the board.
Going concern is assessed over the 12 month period from when the
Interim Results are approved, and the board has concluded that the
Group has adequate resources, liquidity and capital to continue in
operational existence for the 12 months from the approval of the
Interim Results. This is supported by:
-- The current financial position of the Group;
o The Group maintains a conservative balance sheet and manages
and monitors solvency and liquidity on an ongoing basis, ensuring
that it always has sufficient financial resources for the
foreseeable future.
o As at 31 March 2023, the Group had GBP184.4 million of
shareholder cash on the balance sheet, demonstrating that liquidity
remains strong.
-- Detailed cash flow and working capital projections; and
-- Stress-testing of liquidity, profitability and regulatory
capital, taking account of possible adverse changes in trading
performance.
When making this assessment, the board has taken into
consideration both the Group's current performance and the future
outlook, including the impact of events in Ukraine and rising
inflation rates. Market volatility and uncertainty is expected to
continue for some time, due to these evolving world events and the
effect of measures taken to combat it, but the Group's fundamentals
remain strong.
Having conducted detailed cash flow and working capital
projections, and stress-tested liquidity, profitability and
regulatory capital, the board is satisfied that the Group is well
placed to manage its business risks.
The board is also satisfied that it will be able to operate
within the regulatory capital limits imposed by the Financial
Conduct Authority (FCA), Prudential Regulation Authority (PRA), and
Isle Man Financial Services Authority (IoM FSA). Accordingly, the
board does not believe a material uncertainty exists that would
have an effect on the going concern of the Group and have prepared
the interim financial statements on a going concern basis.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries.
2. Financial instruments
Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash
and cash equivalents, cash held for the benefit of policyholders,
accrued fees, loans, trade and other receivables, and trade and
other payables. Due to their short-term nature and/or expected
credit losses recognised, the carrying value of these financial
instruments approximates their fair value.
Financial instruments measured at fair value
The following tables show the carrying values of assets and
liabilities held at fair value:
Financial assets:
Fair value through profit or
loss
31 March 2023 30 September 2022
GBPm GBPm
Listed shares and securities 0.1 0.1
Investments in quoted debt instruments 3.0 3.0
Investments held for the policyholders 22,487.6 20,715.8
Total financial assets 22,490.7 20,718.9
---------------------------------------- -------------- ------------------
Financial liabilities:
Fair value through profit or
loss
31 March 2023 30 September 2022
GBPm GBPm
Liabilities for linked investment
contracts 23,859.6 22,174.4
----------------------------------- -------------- ------------------
Total financial liabilities 23,859.6 22,174.4
----------------------------------- -------------- ------------------
Financial instruments measured at fair value - fair value
hierarchy
The table below classifies financial assets and liabilities that
are recognised on the statement of financial position at fair value
in a hierarchy that is based on significance of the inputs used in
making the measurements.
Investments held for the benefit of policyholders are stated at
fair value and reported on a separate line in the statement of
financial position.
Assets held at fair value also comprises investments held in
gilts, and these are held at fair value through profit and
loss.
Liabilities for linked investment contracts are stated at fair
value and reported on a separate line in the statement of financial
position.
The following table shows the three levels of the fair value
hierarchy (FVH):
Fair value hierarchy Description of hierarchy Types of investments classified at each level
Level 1 Quoted prices (unadjusted) in active markets Listed equity securities, gilts, actively
for identical assets traded pooled investments such as OEICS and
unit
trusts.
----------------------------------------------- ----------------------------------------------
Level 2 Inputs other than quoted prices included Actively traded unlisted equity securities
within Level 1 that are observable for the where there is no significant unobservable
asset inputs,
either directly (i.e. as prices) or indirectly structured products and regularly priced but
(i.e. derived from prices) not actively traded instruments.
----------------------------------------------- ----------------------------------------------
Level 3 Inputs that are not based on observable market Unlisted equity securities with significant
data (unobservable inputs). unobservable inputs, inactive pooled
investments.
----------------------------------------------- ----------------------------------------------
Note that the classification of the liabilities for linked
investment contracts follows that of the financial assets to which
they are linked.
For the purposes of identifying level 3 assets, unobservable
inputs means that current
observable market information is no longer available. Where
these assets arise management
will value them based on the last known observable market price.
No other valuation techniques
are applied.
The following table shows the Group's assets and liabilities
measured at fair value and split into the three levels:
At 31 March 2023
Financial assets:
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Investments and assets held for the benefit of policyholders
Term deposits 127.6 - - 127.6
Investments and securities 744.7 171.8 1.2 917.7
Bonds and other fixed-income securities 13.2 0.6 - 13.8
Holdings in collective investment schemes 21,301.6 126.0 0.9 21,428.5
------------------------------------------------------------- --------- -------- -------- ---------
1 22,187.1 298.4 2.1 22,487.6
Other investments 3.1 - - 3.1
------------------------------------------------------------- --------- -------- -------- ---------
Total 22,190.2 298.4 2.1 22,490.7
------------------------------------------------------------- --------- -------- -------- ---------
Financial liabilities:
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Liabilities for linked investment contracts 23,559.1 298.4 2.1 23,859.6
At 30 September 2022
Financial assets:
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Investments and assets held for the benefit of policyholders
Term deposits 63.9 - - 63.9
Investments and securities 631.9 137.9 0.3 770.1
Bonds and other fixed-income securities 10.9 1.2 - 12.1
Holdings in collective investment schemes 19,730.4 137.7 1.6 19,869.7
-------------------------------------------------------------- --------- -------- -------- ---------
20,437.1 276.8 1.9 20,715.8
Other investments 3.1 - - 3.1
-------------------------------------------------------------- --------- -------- -------- ---------
Total 20,440.2 276.8 1.9 20,718.9
-------------------------------------------------------------- --------- -------- -------- ---------
Financial liabilities:
Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Liabilities for linked investment contracts 21,895.7 276.8 1.9 22,174.4
The Group regularly reviews whether a market is active or not,
based on available market data and the specific circumstances of
each market.
Level 1 valuation methodology
Financial assets and liabilities included in Level 1 are
measured at fair value using quoted mid prices that are available
at the reporting date and are traded in active markets. These
financial assets are mainly collective investment schemes and
listed equity instruments.
Level 2 and Level 3 valuation methodology
Financial assets and liabilities included in Level 2 are
measured at fair value using observable mid prices traded in
markets that have been assessed as not active enough to be included
in Level 1.
Otherwise, financial assets and liabilities are included in
Level 3. These assets and liabilities have unobservable inputs as
the current observable market information is no longer available.
Where these assets and liabilities arise management will value them
based on the last known observable market price. No other valuation
techniques are applied.
Level 3 sensitivity to changes in unobservable measurements
For financial assets and liabilities assessed as Level 3, based
on its review of the prices used, the Group believes that any
change to the unobservable inputs used to measure fair value would
not result in a significantly higher or lower fair value
measurement at year end, and therefore would not have a material
impact on its reported results.
Changes to valuation methodology
There have been no changes in valuation methodology during the
period under review.
Transfers between Levels
The Company's policy is to assess each financial asset and
liability it holds at the period end, based on the last known price
and market information, and assign it to a Level.
The Company recognises transfers between Levels of the fair
value hierarchy at the end of the reporting period in which the
changes have occurred. Changes occur due to the availability of (or
lack thereof) quoted prices, whether a market is now active or
not.
Transfers between Levels 1 and 2 between 30 September 2022 and
31 March 2023 are presented in the table below at their valuation
at 31 March 2023:
Transfers from Transfers to GBPm
Level 1 Level 2 1.7
Level 2 Level 1 22.7
The reconciliation between opening and closing balances of Level
3 assets and liabilities are presented in the table below:
GBPm
Opening balance 1(st) October 2022 1.9
Unrealised gains or losses in the year ended 31 March 2023 -
Purchases, sales, issues and settlement 1.0
Transfers in to Level 3 at 31 March 2023 valuation 0.2
Transfers out of Level 3 at 31 March 2023 valuation (1.0)
Closing balance 31(st) March 2023 2.1
------------------------------------------------------------ ------
Any resultant gains or losses on financial assets held for the
benefit of policyholders are offset by a reciprocal movement in the
linked liability.
The Group regularly assesses assets and liabilities to ensure
they are categorised correctly and FVH levels adjusted accordingly.
The Group monitors situations that may impact liquidity such as
suspensions and liquidations while also actively collecting
observable market prices from relevant exchanges and asset
managers. Should an asset price become observable following the
resumption of trading the FVH level will be updated to reflect
this.
3. Segmental reporting
The revenue and profit before tax are attributable to activities
carried out in the UK and the Isle of Man.
The Group has three classes of business, which have been
organised primarily based on the products they offer, as detailed
below:
-- Investment administration services - this relates to services
performed by IFAL, which is the provider of the Transact wrap
service. It is the provider of the General Investment Account
(GIA), is a Self-Invested Personal Pension (SIPP) operator, an ISA
manager and is the custodian for all assets held on the platform
(except for those held by third party custodians).
-- Insurance and life assurance business - this relates to ILUK
and IntegraLife International Limited (ILInt), insurance companies
which provide the Transact Personal Pension, Executive Pension,
Section 32 Buy-Out Bond, Transact Onshore and Offshore Bonds, and
Qualifying Savings Plan on the Transact platform.
-- Adviser back-office technology - this relates to T4A,
provider of financial planning technology to adviser and wealth
management firms via the CURO adviser support system.
Other Group entities relates to the rest of the Group, which
provide services to support the Group's core operating segments.
Analysis by class of business is given below.
Statement of comprehensive income - segmental information for
the six months ended 31 March 2023:
Investment Insurance and Adviser
administration life assurance back-office Other Group Consolidation
services business technology entities adjustments Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Annual
commission
income 31.1 26.0 - - - 57.1
Wrapper fee
income 1.5 4.6 - - - 6.1
Adviser
back-office
technology - - 2.4 - - 2.4
Other income 0.6 0.3 - 36.9 (36.9) 0.9
Total revenue 33.2 30.9 2.4 36.9 (36.9) 66.5
Cost of sales (1.6) (0.3) (0.3) (0.1) - (2.3)
Gross
profit/(loss) 31.6 30.6 2.1 36.8 (36.9) 64.2
Administrative
expenses (21.0) (14.9) (2.9) (36.4) 36.7 (38.5)
Operating
profit/(loss) 10.6 15.7 (0.8) 0.4 (0.2) 25.7
Interest expense - - - (0.3) 0.3 -
Interest income 0.4 1.5 - 0.6 (0.3) 2.2
Net
policyholder
returns
Net
income/(loss)
attributable to
policyholder
returns - 12.9 - - - 12.9
Change in
investment
contract
liabilities - (1,038.7) - - - (1,038.7)
Fee and
commission
expenses - (91.5) - - - (91.5)
Policyholder
investment
returns - 1,130.2 - - - 1,130.2
Net policyholder
returns - 12.9 - - - 12.9
Profit/(loss) on
ordinary
activities
before taxation
attributable to
policyholders
and
shareholders 11.0 30.1 (0.8) 0.7 (0.2) 40.8
Policyholder tax
credit/(charge) - (12.9) - - - (12.9)
Profit on
ordinary
activities
before taxation
attributable to
shareholders 11.0 17.2 (0.8) 0.7 (0.2) 27.9
Total tax
attributable to
shareholder and
policyholder
returns (2.3) (16.0) 0.2 (0.7) - (18.8)
Less: tax
attributable to
policyholder
returns - 12.9 - - - 12.9
----------------- --------------- --------------- --------------- ---------------- ---------------- ----------
Shareholder tax
on profit on
ordinary
activities (2.3) (3.1) 0.2 (0.7) - (5.9)
----------------- --------------- --------------- --------------- ---------------- ---------------- ----------
Profit/(loss)
for the period 8.7 14.1 (0.6) - (0.2) 22.0
----------------- --------------- --------------- --------------- ---------------- ---------------- ----------
Statement of comprehensive income - segmental information for
the six months ended 31 March 2022:
Investment Insurance and Adviser
administration life assurance back-office Other Group Consolidation
services business technology entities adjustments Total
GBPm GBPm GBPm GBPm GBPm GBP'000
Revenue
Annual
commission
income 31.9 26.5 - - - 58.4
Wrapper fee
income 1.4 4.3 - - - 5.7
Adviser
back-office
technology - - 1.7 - - 1.7
Other income 0.8 0.4 - 32.1 (32.1) 1.2
Total revenue 34.1 31.2 1.7 32.1 (32.1) 67.0
Cost of sales (0.4) (0.2) (0.2) (0.2) - (1.0)
Gross
profit/(loss) 33.7 31.0 1.5 31.9 (32.1) 66.0
Administrative
expenses (18.6) (12.6) (2.6) (32.4) 31.9 (34.3)
Credit loss - - - - - -
allowance on
financial assets
Operating
profit/(loss) 15.1 18.4 (1.1) (0.5) (0.2) 31.7
Interest expense - - - (0.3) 0.2 -
Interest income - 0.2 - 0.1 (0.2) -
Net
policyholder
returns
Net
income/(loss)
attributable to
policyholder
returns - (8.2) - - - (8.2)
Change in
investment
contract
liabilities - 544.1 - - - 544.1
Fee and
commission
expenses - (101.9) - - - (101.9)
Policyholder
investment
returns - (442.2) - - - (442.2)
Net policyholder
returns - (8.2) - - - (8.2)
Profit/(loss) on
ordinary
activities
before taxation
attributable to
policyholders
and
shareholders 15.1 10.4 (1.1) (0.7) (0.2) 23.5
Policyholder tax
credit/(charge) - 8.2 - - - 8.2
Profit on
ordinary
activities
before taxation
attributable to
shareholders 15.1 18.6 (1.1) (0.7) (0.2) 31.7
Total tax
attributable to
shareholder and
policyholder
returns (2.9) 5.0 0.2 (0.4) 0.1 2.0
Less: tax
attributable to
policyholder
returns - (8.2) - - - (8.2)
----------------- ---------------- ---------------- ---------------- ----------------- ---------------- --------
Shareholder tax
on profit on
ordinary
activities (2.9) (3.2) 0.2 (0.4) 0.1 (6.2)
----------------- ---------------- ---------------- ---------------- ----------------- ---------------- --------
Profit/(loss)
for the period 12.2 15.4 (0.9) (1.1) (0.1) 25.5
----------------- ---------------- ---------------- ---------------- ----------------- ---------------- --------
Statement of financial position - segmental information as at 31
March 2023:
Investment Insurance and life Adviser back-office
administration services assurance business technology Total
GBPm GBPm GBPm GBPm
Assets
Non-current assets 9.5 19.5 0.9 29.9
Current assets 73.2 146.3 3.0 222.5
Total assets 82.7 165.8 3.9 252.4
Liabilities
Current liabilities 9.0 15.0 1.0 25.0
Non-current liabilities 2.0 53.2 0.2 55.4
------------------------- ------------------------- ------------------------ ------------------------- -----------
Total liabilities 11.0 68.2 1.2 80.4
Policyholder assets and
liabilities
Cash held for the
benefit of policyholder - 1,372.0 - 1,372.0
Investments held for the
benefit of policyholder - 22,487.6 - 22,487.6
Liabilities for linked
investment contracts - (23,859.6) - (23,859.6)
------------------------- ------------------------- ------------------------ ------------------------- -----------
Total policyholder
assets and liabilities - 0.0 - 0.0
Net assets 71.7 97.6 2.7 172.0
Non-current asset
additions - 0.2 - 0.2
Statement of financial position - segmental information as at 30
September 2022:
Investment Insurance and life Adviser back-office
administration services assurance business technology Total
GBPm GBPm GBPm GBPm
Assets
Non-current assets 10.4 30.6 0.8 41.8
Current assets 71.8 144.7 3.8 220.3
Total assets 82.2 175.3 4.6 262.1
Liabilities
Current liabilities 10.5 22.5 1.1 34.1
Non-current liabilities 1.9 52.8 0.1 54.8
------------------------- ------------------------- ------------------------ ------------------------- -----------
Total liabilities 12.4 75.3 1.2 88.9
Policyholder assets and
liabilities
Cash held for the
benefit of policyholder - 1,458.6 - 1,458.6
Investments held for the
benefit of policyholder - 20,715.8 - 20,715.8
Liabilities for linked
investment contracts - (22,174.4) - (22,174.4)
------------------------- ------------------------- ------------------------ ------------------------- -----------
Total policyholder - - - -
assets and liabilities
Net assets 69.8 100.0 3.4 173.2
Non-current asset
additions 0.2 0.1 - 0.3
Segmental information: Split by geographical location
Revenue Six months to 31 March 2023 Six months to 31 March 2022
GBPm GBPm
United Kingdom 63.8 64.4
Isle of Man 2.7 2.6
Total 66.5 67.0
---------------- ---------------------------- ----------------------------
Non-current assets 31 March 30 September 2022
2023
GBPm GBPm
United Kingdom 23.8 25.1
Isle of Man 0.1 -
-------------------- --------- ------------------
Total 23.9 25.1
-------------------- --------- ------------------
4. Earnings per share
Six months to 31 March 2023 Six months to 31 March 2022
Profit
Profit for the year and earnings used in basic and GBP22.0m GBP25.5m
diluted earnings per share
Weighted average number of shares
Weighted average number of Ordinary shares 331.3m 331.3m
Weighted average numbers of Ordinary Shares held by
Employee Benefit Trust (0.5m) (0.4m)
Weighted average number of Ordinary Shares for the
purposes of basic EPS 330.8m 330.9m
Adjustment for dilutive share option awards 0.5m 0.4m
Weighted average number of Ordinary Shares for the
purposes of diluted EPS 331.3 331.3
Earnings per share
Basic earnings per share 6.6p 7.7p
Diluted earnings per share 6.6p 7.7p
5. Tax on profit on ordinary activities
The UK estimated weighted average effective tax rate was 22% for
the six month period ended 31 March 2023 (31 March 2022: 19%),
representing the tax rate enacted at the reporting date. For the
entities within the Group operating outside of the UK, tax is
charged at the relevant rate in each jurisdiction.
6. Deferred tax
Deferred tax is calculated in full on temporary differences
using a tax rate of 25% (2022: 25%). The increase in the UK
corporation tax rate to 25% was substantively enacted in May 2021.
This new rate has been applied to deferred tax balances which are
expected to reverse after 1 April 2023, the date on which that new
rate became effective.
Deferred Tax Asset
Policyholder
excess
Policyholder management Policyholder
unrealised expenses and unrealised Other
Accelerated losses/ deferred losses on deductible
capital Share based (unrealised) acquisition investment temporary
allowances payments gains costs trusts differences Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 30
September
2021 - 0.6 - - - 0.1 0.7
Excess tax
relief
charged to
equity - (0.3) - - - - (0.3)
Offset
deferred tax
liability - - (5.2) - - - (5.2)
Charge to
income 0.1 0.2 8.1 2.2 0.2 - 10.8
--------------- -------------- -------------- -------------- ------------- -------------- -------------- ------
At 30
September
2022 0.1 0.5 2.9 2.2 0.2 0.1 6.0
Charge to
income - 0.1 (2.9) 2.6 0.1 (0.2)
Offset
deferred tax
liability - - - (4.8) (0.3) - (5.1)
As at 31 March
2023 0.1 0.6 - - 0.1 0.7
--------------- -------------- -------------- -------------- ------------- -------------- -------------- ------
Deferred Tax Liability
Accelerated capital Policyholder tax on Other taxable
allowances Share based payments unrealised gains differences Total
GBPm GBPm GBPm GBPm GBPm
At 30 September 2021 0.1 - 28.4 1.0 29.5
Offset against
deferred tax asset - - (5.2) - (5.2)
Charge to income (0.1) - (23.2) (0.1) (23.4)
----------------------- ---------------------- --------------------- --------------------- -------------- -------
At 30 September 2022 - - - 0.9 0.9
Offset against
deferred tax asset - - (5.2) - (5.2)
Charge to income - - 12.6 - 12.6
----------------------- ---------------------- --------------------- --------------------- -------------- -------
As at 31 March 2023 - - 7.4 0.9 8.3
----------------------- ---------------------- --------------------- --------------------- -------------- -------
7. Intangible assets
Software
and IP Customer
rights Goodwill relationships Software Brand Total
Cost GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October
2022 12.5 18.3 2.1 2.0 0.3 35.2
At 31 March
2023 12.5 18.3 2.1 2.0 0.3 35.2
---------------- --------- --------- --------------- --------- ------ ------
Amortisation
At 1 October
2022 12.5 - 0.3 0.5 0.1 13.4
Charge for the
year - - 0.1 0.1 - 0.3
---------------- --------- --------- --------------- --------- ------ ------
At 31 March
2023 12.5 - 0.4 0.6 0.1 13.7
---------------- --------- --------- --------------- --------- ------ ------
Net Book Value
At 1 October
2022 - 18.3 1.8 1.5 0.2 21.8
At 31 March
2023 - 18.3 1.7 1.4 0.2 21.6
Cost
At 1 October
2021 12.5 18.3 2.1 2.0 0.3 35.2
At 31 March
2022 12.5 18.3 2.1 2.0 0.3 35.2
---------------- --------- --------- --------------- --------- ------ ------
Amortisation
At 1 October
2021 12.5 - 0.1 0.2 0.0 12.8
Charge for the
year - - 0.1 0.1 0.0 0.2
---------------- --------- --------- --------------- --------- ------ ------
At 31 March
2022 12.5 - 0.2 0.3 0.0 13.0
---------------- --------- --------- --------------- --------- ------ ------
Net Book Value
At 1 October
2021 - 18.3 2.0 1.8 0.2 22.3
At 31 March
2022 - 18.3 1.9 1.6 0.2 22.0
Amortisation of intangible assets is recognised within
administrative expenses in the statement of comprehensive
income.
8. Provisions
31 March 30 September
2023 2022
GBPm GBPm
Balance brought forward 56.8 17.8
Decrease in dilapidations provision - (0.3)
Decrease in ILInt non-linked unit provision - (0.1)
(Decrease)/increase in ILUK policyholder reserves (11.3) 45.0
Increase/(decrease) in other provisions 1.2 (5.6)
Balance carried forward 46.7 56.8
Amounts falling due within one year 2.8 10.7
Amounts falling due after one year 43.9 46.1
Dilapidations provisions 0.2 0.2
Current ILUK policyholder reserves 1.4 10.7
Non-current ILUK policyholder reserves 43.9 45.9
Other provisions 1.2 -
46.7 56.8
--------------------------------------------------- --------- ----------------------
ILUK tax provision comprises claims received from HMRC that are
yet to be returned to policyholders, charges taken from unit-linked
funds and claims received from HMRC to meet current and future
policyholder tax obligations. These are expected to be paid to
policyholders over the course of the next seven years.
9. Investments held for the benefit of policyholders
30 September
31 March 2023 31 March 2023 30 September 2022 2022
Cost Fair value Cost Fair value
ILInt GBPm GBPm GBPm GBPm
Investments held for the benefit of policyholders 2,076.9 2,243.2 1,988.9 2,057.2
--------------------------------------------------- -------------- -------------- ------------------ -------------
2,076.9 2,243.2 1,988.9 2,057.2
ILUK
Investments held for the benefit of policyholders 21,796.0 20,244.4 19,215.4 18,658.6
--------------------------------------------------- -------------- -------------- ------------------ -------------
21,796.0 20,244.4 19,215.4 18,658.6
Total 23,872.9 22,487.6 21,204.3 20,715.8
--------------------------------------------------- -------------- -------------- ------------------ -------------
All amounts are current as customers are able to make same-day
withdrawal of available funds and transfers to third-party
providers are generally performed within a month.
These assets are held to cover the liabilities for unit linked
investment contracts. All contracts with customers are deemed to be
investment contracts and, accordingly, assets are 100% matched to
corresponding liabilities.
10. Liabilities for linked investment contracts
31 March
2023 30 September 2022
Fair value Fair value
ILInt GBPm GBPm
Unit linked liabilities 2,377.5 2,201.4
------------------------- ----------- ------------------
2,377.5 2,201.4
ILUK
Unit linked liabilities 21,482.1 19,973.0
------------------------- ----------- ------------------
21,482.1 19,973.0
Total 23,859.6 22,174.4
------------------------- ----------- ------------------
Analysis of change in liabilities for linked investment
contracts
31 March 30 September
2023 2022
GBPm GBPm
Opening balance 22,174.4 23,053.4
Investment inflows 1,297.4 3,113.9
Investment outflows (620.5) (1,163.1)
Changes in fair value of underlying assets 1,026.6 (2,729.0)
Investment income 103.6 151.5
Other fees and charges - Transact (30.4) (59.7)
Other fees and charges - other third parties (91.5) (192.6)
---------------------------------------------- --------- -------------
Closing balance 23,859.6 22,174.4
---------------------------------------------- --------- -------------
The benefits offered under the unit-linked investment contracts
are based on the risk appetite of policyholders and the return on
their selected collective fund investments, whose underlying
investments include equities, debt securities, property and
derivatives. This investment mix is unique to individual
policyholders. When the diversified portfolio of all policyholder
investments is considered, there is a clear correlation with the
FTSE 100 index and other major world indices, providing a
meaningful comparison with the return on the investments.
The maturity value of these financial liabilities is determined
by the fair value of the linked assets at maturity date. There will
be no difference between the carrying amount and the maturity
amount at maturity date.
11. Cash and cash equivalents
31 March 30 September
2023 2022
GBPm GBPm
Bank balances - Instant access 174.9 173.5
Bank balances - Notice accounts 9.5 9.5
Total 184.4 183.0
--------------------------------- --------- -------------
Bank balances held in instant access accounts are current and
available for use by the Group.
All of the bank balances held in notice accounts require less
than 35 days' notice before they are available for use by the
Group.
12. Cash held for the benefit of policyholders
31 March 30 September
2023 2022
GBPm GBPm
Cash and cash equivalents held for the benefit of the policyholders - instant access - ILUK 1,237.6 1,314.4
Cash and cash equivalents held for the benefit of the policyholders - instant access -
ILINT 134.4 144.2
Total 1,372.0 1,458.6
-------------------------------------------------------------------------------------------- --------- -------------
The cash and cash equivalents held for the benefit of the
policyholders are held to cover the liabilities for unit linked
investment contracts. These amounts are 100% matched to
corresponding liabilities.
13. Trade and other receivables
31 March 30 September
2023 2022
GBPm GBPm
Other receivables 4.5 2.1
Less: credit loss allowance (0.1) (0.1)
----------------------------- --------- -------------
Total 4.4 2.0
----------------------------- --------- -------------
14. Trade and other payables
31 March 30 September
2023 2022
GBPm GBPm
Trade payables 2.6 1.6
PAYE and other taxation 2.4 2.2
Other payables 8.4 7.7
Accruals and deferred income 7.6 8.3
Deferred consideration 0.6 1.7
------------------------------ --------- -------------
Total 21.6 21.5
------------------------------ --------- -------------
15. Related parties
There were no material changes to the related party transactions
during the period.
16. Principal risks and uncertainties
Within the Risk and Risk Management section of the 2022 Annual
Report and Financial Statements is a comprehensive view of what the
board considered to be the Principal Risks and Uncertainties that
could undermine the successful achievement of the Group's strategic
objectives and threaten its business model or future
performance.
The executive and board continually review these principal risks
and uncertainties and believe that their nature remains unchanged
from those presented within the 2022 Annual Report and Financial
Statements. The Group's principal revenue stream is asset value
based, accounting for 86% of total revenue. Political and
geopolitical instability, coupled with inflationary pressures have
continued during HY23 and so challenging conditions prevail in the
markets. This in turn impacts investor confidence and sentiment
which has, as expected, muted investment flows to the platform.
Nonetheless, flows, FUD and revenues remain within projection. The
Group will continue to monitor and respond to any new developments
which may impact the Group.
17. Events after the reporting date
There are no events subsequent to the reporting period that
require disclosure in, or amendment to the interim financial
statements.
18. Dividends
During the six month period to 31 March 2023 the Company paid an
interim dividend of GBP23.2 million (7.0 pence per share) to
shareholders in respect of financial year 2022. This was in
addition to the first interim dividend of GBP10.5 million (3.2
pence per share) in respect of financial year 2022, which was paid
in June 2022. The total of GBP33.7 million (10.2 pence per share)
compares with a full year interim dividend of GBP33.1 million (10.0
pence per share) in respect of the full financial year 2021.
DIRECTORS, COMPANY DETAILS, ADVISERS
Executive Directors
Michael Howard
Alexander Scott
Jonathan Gunby
Non-Executive Directors
Richard Cranfield
Christopher Munro
Rita Dhut
Caroline Banszky
Victoria Cochrane
Robert Lister
Company Secretary
Helen Wakeford
Independent Auditors
Ernst and Young LLP, 25 Churchill Place, Canary Wharf, London,
E14 5EY
Solicitors
Eversheds Sutherland, One Wood Street, London, EC2V 7WS
Corporate Advisers
Peel Hunt LLP, 100 Liverpool Street, London, England, EC2M
2AT
Barclays Bank PLC, 5 The North Colonnade, Canary Wharf, London,
E14 4BB
Principal Bankers
NatWest Bank Plc, 135 Bishopsgate, London, EC2M 3UR
Registrars
Equiniti Group plc, Sutherland House, Russell Way, Crawley, RH10
1UH
Registered Office
29 Clement's Lane, London, EC4N 7AE
Investor Relations
Luke Carrivick 020 7608 4900
Website
www.integrafin.co.uk
Company number
8860879
IntegraFin Holdings plc, 29 Clement's Lane, London, EC4N 7AE
Tel: (020) 7608 4900 Fax: (020) 7608 5300
(Registered office: as above; Registered in England and Wales
under number: 8860879)
The holding company of the Integrated Financial Arrangements Ltd
group of companies.
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END
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