FNTL Fintel Plc

TIDMFNTL

RNS Number : 3161H

Fintel PLC

27 July 2023

27 July 2023

Fintel plc

("Fintel", the "Company" or the "Business")

Trading Update, Acquisitions and Notice of Half Year Results

Positive start to 2023; strategic investments to accelerate future growth

Fintel (AIM: FNTL), the leading provider of ntech and support services to the UK Retail Financial Services sector today issues a trading update for the six months ended 30 June 2023.

"Fintel has made a positive start to 2023, with a solid performance in our Core business and significant strategic progress through a series of successful investments and acquisitions.

"During the period, Fintel successfully negotiated a new five-year technology contract for its member firms with an existing vendor on improved terms, which will reduce pass through costs and the associated revenues, whilst increasing EBITDA margin.

"In addition, Fintel is pleased to announce today the acquisition of MICAP and Competent Adviser, two technology platforms serving in excess of 15,000 users, complementing our recent investment in Plannr Technologies through Fintel Labs and further strengthening our product and service proposition. "

Matt Timmins, Joint CEO

Financial highlights

-- Core(1) revenue increased to GBP27.6m (HY22: GBP27.1m, LfL: GBP26.6m) up 1.6% in total and 4% on a like for like basis

   --      Core adjusted EBITDA(2) increased to GBP8.8m (HY:22 GBP8.2m) up c.8% 

-- Statutory revenue GBP31.7m (HY22: GBP32.2m), down c.2%, reflects both new net revenue recognition on major software reseller contract extension in current period and reduced activity in non-core business

   --      Adjusted EBITDA(3) increased to GBP9.0m (HY22: GBP8.7m) up c.4% 

-- Strong liquidity with cash position of GBP13.3m (FY22: GBP12.8m; HY22: GBP7.6m), driven by continued strong operating cash flow conversion, which is expected to exceed 100% (HY22: 124%)

-- Four year GBP80m Revolving Credit Facility remains undrawn, providing significant headroom for organic investment and M&A opportunities

Strategic highlights

-- Acquisition of MICAP by subsidiary business Defaqto, the leading provider of financial information, ratings and fintech

   o   MICAP provides independent research and advice tools for tax advantaged investment products 

o The strategic acquisition will extend Defaqto's reach into the tax-advantaged market, expanding both its data footprint and research capabilities to further enhance scale and IP, whilst further growth is expected from strong customer and proposition adjacencies

o Completed in July 2023, the transaction was funded entirely from cash reserves with upfront cash consideration of GBP3m representing a 10x EV EBITDA multiple. In addition, GBP1m cash consideration is deferred for 1 year and a GBP500k contingent earnout is based on certain trading criteria being delivered in the first year of ownership

-- Acquisition of Competent Adviser via Fintel IQ, a newly formed technology and knowledge platform

o Competent Adviser is a dynamic learning platform enabling advisers to meet increasing regulatory competency requirements

o Completed in July 2023, the transaction was funded entirely from cash reserves with upfront cash consideration of GBP2.5m representing a 9x EV EBITDA multiple. In addition, a GBP500k contingent earnout is based on certain trading criteria being delivered in the first year of ownership

   --      Inaugural investment in Plannr through Fintel Labs technology incubator 

o 25% equity stake taken in Plannr Technologies Ltd, provider of financial technology and specialist CRM capability for financial advisers, planners and wealth managers

o Subsidiary business Defaqto will integrate Plannr's CRM system, extending the capabilities of its Engage financial advice and planning technology to realise efficiency benefits for the 8000 financial advisers who use its platform

-- Longstanding partnership with technology supplier Intelliflo strengthened through a new five-year minimum term technology contract with improved terms

o The agreement enables continued expansion of Fintel's end-to-end technology platform, whilst ensuring ongoing member access to an established back office solution, which is fully integrated with Defaqto Engage, our proprietary advice and planning technology

o Taking the form of a reseller agreement, the new contract will reduce pass through costs and the associated revenues, and increase EBITDA margin

o Signed in May 2023, the contract is expected to reduce FY23 statutory revenue and costs by c. GBP3.2m

Operational highlights

Fintel has continued to trade in line with Board's expectations in the first six months of 2023, whilst making significant progress towards our strategic goals and maintaining steady improvement in our earnings quality.

A diverse customer base and proposition ensures Fintel is resilient to market conditions, with the impact of less favourable mortgage market conditions offset by strong growth in our fintech and research division. Software adoption and average revenue per customer continue to increase as we expand our end-to-end service and technology platform through new products and partnerships.

Leveraging the cash generative nature of our business, we have launched a new technology incubator enabling us to invest in and scale modern technology solutions to the intermediary market.

Outlook

Fintel's long term growth is underpinned by regulatory and structural changes in the UK financial services market, with continued expansion of our products and services supporting our customers through this evolving landscape.

A strong balance sheet with significant liquidity, coupled with recent acquisitions and a strong M&A pipeline, positions us well to accelerate growth.

The Board is confident of delivering further strategic progress in line with its expectations for the full year.

Notice of Interim Results

Fintel intends to publish its interim results for the six months ended 30 June 2023 on 19 September 2023.

Matt Timmins, Joint CEO of Fintel plc, said:

"We are pleased to report significant strategic progress achieved in the first half of 2023. Through a series of successful acquisitions and investments, we have expanded our unique service and technology platform, propelling us towards accelerated growth.

"We are confident that our strategic progress, coupled with strong organic growth drivers, firmly positions us for sustainable growth and ongoing success, as we continue to inspire better outcomes for all."

Notes

(1) Core business excludes revenues from Panel Management and Surveying.

(2) Core adjusted EBITDA represents earnings before interest, tax, depreciation, amortisation, share option charges and operating exceptional costs excluding Panel Management and Surveying.

(3) Adjusted EBITDA represents earnings before interest, tax, depreciation, amortisation, share option charges and operating exceptional costs.

For further information please contact:

 
   Fintel plc                              via MHP Group 
     Matt Timmins (Joint Chief Executive 
     Officer) 
     Neil Stevens (Joint Chief Executive 
     Officer) 
     David Thompson (Chief Financial 
     Officer) 
    Zeus (Nominated Adviser and 
     Joint Broker) 
     Martin Green 
     Dan Bate                               +44 (0) 20 3829 5000 
    Investec Bank (Joint Broker) 
     Bruce Garrow 
     David Anderson 
     Harry Hargreaves                       +44 (0) 20 7597 5970 
    MHP Group (Financial PR)                +44 (0) 20 3128 8147 
     Reg Hoare                               Fintel@mhpgroup.com 
     Robert Collett-Creedy 
 
   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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July 27, 2023 02:00 ET (06:00 GMT)