REG - IntegraFin Holdings - Half-year Report
22/05/2024 07:00
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RNS Number : 3739P IntegraFin Holdings plc 22 May 2024
LEI Number: 213800CYIZKXK9PQYE87
22 May 2024
IntegraFin Holdings plc
Half year results for the six months ended 31 March 2024
IntegraFin Holdings plc ("IHP", or "the Group"), operator of Transact, the
UK's premium investment platform for clients and UK financial advisers, is
pleased to report its half year results for the period ended 31 March 2024.
The Group continued to build on its strong financial and operational
performance while maintaining its focus on positive consumer outcomes.
Group Highlights
* Record high closing funds under direction ('FUD') of £61.0bn on the Transact
platform, as at 31 March, up 13% from HY23 (£54.0bn).
* Resilient net inflows of £1.1bn during HY24 (HY23: £1.6bn), representing
4.0% of opening FUD (annualised).
* Group revenue of £70.4m, 6% higher than HY23 (HY23: £66.5m) driven by higher
average daily FUD. Average daily FUD for the period was £57.0bn, compared to
£52.6bn in HY23.
* IFRS profit before tax up 16% to £32.4m (HY23: £27.9m). Underlying Group
profit before tax up 14%, at £33.5m (HY23: £29.4m), after adjusting for
non-underlying expenses of £1.1m (HY23: £1.5m).
* IFRS Group earnings per share of 7.4p, up 12% (HY23: 6.6p), and underlying
Group earnings per share of 7.7p, up 8% (HY23: 7.1p).
* The Board has declared a first interim dividend in accordance with the
Company's dividend policy. In respect of the six months to 31 March 2024, an
interim dividend of 3.2 pence per share (HY23: 3.2pps) will be payable on 5
July 2024 to ordinary shareholders on the register on 7 June 2024. The
ex-dividend date will be 6 June 2024.
* The Group is performing in-line with our expectations and our financial
guidance for the full year ending 30 September 2024, issued at year end FY23,
remains unchanged.
Operational Highlights
* Performance of the Transact platform remains solid, with continuing growth
across our key metrics and resilient net inflows of £1.1bn during HY24.
- We delivered a 4% increase in the Transact platform's adviser base to
c.7.9k advisers (HY23: 7.6k) and a 1% increase in the number of clients using
the Transact platform to c.232k (HY23: 228k).
* Continued improvements from our digitalisation programme, delivering
operational efficiencies for Transact and an improved experience for our
clients and advisers.
- In HY24, we continued to deliver enhanced digital interfaces and
straight-through processes on the Transact platform.
* Continued steady growth at Time4Advice with total chargeable users of over
3.0k, 20% higher than at HY23 (2.5k).
Commenting on the half year results, Alexander Scott, IHP Group Chief
Executive Officer said:
"I am pleased to report that the Group has delivered resilient performance for
the first half of the year with revenue up 6% and underlying profit before tax
up 14%. Our people continue to diligently deliver a first-class service to our
clients and their advisers through the Group's leading technology proposition
and deep, trusted relationships.
Transact continues to grow its client and adviser numbers, as well as deliver
resilient net inflows over the period. The record levels of client and adviser
numbers also present us with a solid pipeline for future flows.
We remain dedicated to ensuring positive consumer outcomes, underpinned by our
platform digitalisation programme which enhances service and efficiency. Above
all, we are focused on our goal of being the number one provider of investment
platform software and services for clients and UK financial advisers."
Financial information
IHP Group
Half-year to 31 March 2024 Half-year to 31 March 2023 % Movement
£70.4m £66.5m +6%
Total Group revenue
£32.4m £27.9m +16%
IFRS profit before tax
£33.5m £29.4m +14%
Underlying profit before tax
IFRS earnings per share 7.4p 6.6p +12%
7.7p 7.1p +8%
Underlying earnings per share
3.2p 3.2p 0%
First interim dividend per share
Transact platform:
Half-year to 31 March 2024 Half-year to 31 March 2023 % Movement
£1.1bn £1.6bn -31%
Net new business inflows
£61.0bn £54.0bn +13%
Closing funds under direction ('FUD')
£57.0bn £52.6bn +8%
Average daily FUD
231,581 228,232 +1%
Transact platform clients*
7,849 7,563 +4%
Transact platform registered advisers*
*As at 31 March
Time4Advice:
As at 31 March 2024 As at 31 March 2023 % Movement
3.0k 2.5k +20%
Total number of chargeable CURO software users*
Enquiries
Investors
Luke Carrivick, IHP Head of Investor Relations +44 020 7608 5463
Media
FGS Global: Mike Turner +44 7775992415
FGS Global: Chris Sibbald +44 7855955531
2024 Half year results presentation
IHP will be hosting a virtual analyst audio presentation at 09:30am on 22 May
2024. This will be available at https://brrmedia.news/IHP_HY_24.
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/
(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
Transact platform FUD showed strong growth during the period, reaching a
record high of £61.0bn at the end of HY24. This was complemented by continued
additions to the number of advisers and clients on the platform. Closing FUD
at HY24 of £61.0 billion have grown 11% from year end, and 13% period on
period (HY23: £54.0 billion).
The Transact platform continues to prove its attraction to advisers and
clients within the current market environment. Gross inflows of £3.9 billion
were 19% higher than HY23, although outflows were 72% higher in comparison to
HY23. This resulted in net inflows of £1.1 billion (HY23: £1.6 billion),
which were in line with H2 FY23 levels. This was a reflection of the ongoing
challenging macro-economic conditions including ongoing higher interest rates
and cost of living, which have driven elevated levels of off-platform
withdrawals, in combination with an increasingly competitive adviser platform
market.
HY24 HY23 YE 2023
£m £m £m
Opening FUD 54,959 50,070 50,070
Inflows 3,925 3,294 6,406
Outflows (2,867) (1,669) (3,753)
Net flows 1,058 1,625 2,653
Market movements 4,982 2,313 2,272
Other movements(1) 21 (35) (36)
Closing FUD 61,020 53,973 54,959
Average daily FUD for the period 57,012 52,643 52,544
Transact platform clients 231,581 228,232 230,294
Transact platform registered advisers 7,849 7,563 7,685
(1) Other movements includes fees, tax charges and rebates, dividends and
interest.
Client numbers increased by 1% and registered advisers by 4%. Both metrics
were impacted by a review and closure of portfolios with small residual
balances. This ongoing exercise helps improve operational efficiency and has
no material effect on our revenues or FUD levels on the platform.
Time for Advice (T4A)
The number of paying users of CURO has increased 20% period on period, to 3.0k
with a 10% uplift in recurring licence fee income.
HY24 HY23 YE 2023
Total number of chargeable CURO software users 3,026 2,493 2,752
Group financial performance
HY24 HY24 HY23 HY23 YE 2023
Group *Platform Group *Platform Group
£m £m £m £m £m
Revenue 70.4 68.0 66.5 64.1 134.9
Cost of sales (1.6) (0.9) (2.3) (1.8) (3.9)
Gross profit 68.8 67.1 64.2 62.3 131.0
Operating expenses (41.0) (37.4) (37.0) (35.8) (74.3)
Non-underlying expenses (1.1) - (1.5) - (0.4)
Operating profit 26.7 29.7 25.7 26.5 56.3
Net interest income 5.1 4.4 2.2 1.9 6.3
Net gain attributable to policyholder returns 0.6 0.6 - - -
Profit before tax 32.4 34.7 27.9 28.4 62.6
Tax on ordinary activities (8.0) (7.5) (5.9) (5.5) (12.7)
Profit after tax 24.4 27.2 22.0 22.9 49.9
Operating margin 38% 44% 39% 41% 42%
Earnings per share - basic and diluted 7.4p 6.6p
* 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.
Underlying profit before tax and earnings per share
HY24 HY23 YE 2023
Group Group Group
£m £m £m
IFRS Profit before tax 32.4 27.9 62.6
Non-underlying expenses 1.1 1.5 0.4
Underlying profit before tax 33.5 29.4 63.0
Underlying earnings per share - basic and diluted 7.7p 7.1p 15.2p
Revenue
There are two streams of Group revenue: investment platform revenue and T4A
revenue.
HY24 HY23 YE 2023
Platform revenue £m £m £m
Recurring annual charges 61.0 57.1 116.1
Recurring wrapper charges 6.3 6.1 12.3
Other income 0.7 0.9 1.7
Total platform revenue 68.0 64.1 130.1
T4A revenue 2.4 2.4 4.8
Total revenue 70.4 66.5 134.9
Investment platform revenue
Platform revenue comprises three elements, two of which are recurring. The
recurring revenue streams consist of annual charges (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
dealing charges and buy commission, though as noted below the latter has now
been discontinued from our systems, with no client incurring a Transact buy
commission charge from 1 March 2024.
Recurring revenue streams constituted 99% (HY23: 99%) of total platform
revenue during HY24.
Annual charges, the largest platform revenue driver, increased by £3.9
million (7%) to £61.0 million in comparison to HY23. This was due to average
daily FUD for the period increasing 8% period on period.
Wrapper charges increased by £0.2 million (3%) period on period, reflecting
the increase in the number of open tax wrappers.
Other income fell compared to HY23 due to a reduction in buy commission from
£0.5 million to £0.1 million. This was due to the reduction in client buy
commission rebate threshold from £0.2 million to £0.1 million in March 2023,
and the discontinuation of buy commission in March 2024.
The changes to pricing demonstrate our ongoing commitment to simplify the
platform fee structure and deliver better value for money for clients.
T4A revenue
T4A's revenue was £2.4 million in the half year to March 2024, which is in
line with that of HY23. Licence income increased, as the numbers of paying
CURO users increased by 20% period on period. A fall in consultancy income
offset the licence income increase.
Interest income
The main component of the Group's net assets is cash, with holdings of £192.4
million (31 March 2023: £184.4 million). The yield on these balances
increased in comparison to HY23 due to the higher interest rate environment
and has led to an increase in interest income to £5.1 million (HY23: £2.2
million) in HY24. Net interest income also includes the yield from short-dated
government bonds.
Operating expenses
HY24 HY23 YE 2023
£m £m £m
Employee costs 28.9 26.5 53.9
Occupancy 2.4 1.2 2.8
Regulatory and professional fees 5.0 5.0 9.8
Non-underlying expenses 1.1 1.5 0.4
Net gain attributable to policyholder returns - (0.5) (1.6)
Other costs 4.1 3.4 6.8
Total expenses 41.5 37.1 72.1
Depreciation and amortisation 0.6 1.4 2.5
Expected credit losses on financial assets - - 0.1
Total operating expenses 42.1 38.5 74.7
Total operating expenses increased by £3.6million (9%) in HY24 in comparison
to HY23.
Of note:
Employee costs
Employee costs have increased by £2.4 million (9%) to £28.9 million in HY24.
The uplift is due to pay rises awarded to employees and a 9% increase in the
average Group headcount over the period, from 616 in HY23 to 672 in HY24.
The above increase in staff costs remains in line with guidance given to the
market and includes the recruitment of 12 IT resources during the half year,
as we continue to implement plans announced in FY22 to significantly increase
system development capacity across the Group and drive future efficiencies.
Regulatory and professional fees
Regulatory fees and professional fees have remained in line with the HY23.
Professional fees of £3.3 million are up £0.5 million (19%), but this is
offset by regulatory fees of £1.7 million, which are down £0.5 million
(19%).
Other costs
Other costs have increased by £0.7 million (21%) in comparison to HY23. The
main driver of this is VAT, which increased by £0.4 million, in line with the
uplift in professional fees and also increases in the intragroup software
development and maintenance services provided by our wholly owned Australian
subsidiary, Integrated Application Development Pty Ltd (IAD). VAT is currently
recognised and paid on these services as a result of HMRC having terminated
IAD's membership of our UK VAT group in January 2020. We continue to dispute
the grounds for this termination and have served HMRC with a notice of appeal.
Non-underlying expenses
This relates to the post combination deferred consideration payable to the
original T4A shareholders in respect of the T4A acquisition.
Group profit
Group profit before tax increased by £4.5 million (16%) to £32.4 million
period on period. This was driven by increased revenue of £3.9 million, as
the value of FUD and the number of wrappers increased, as well as a £2.9
million (132%) increase in net interest income, as the Group works to optimise
yields earned on corporate cash and investments in this higher interest
environment. These factors were offset by higher operating expenses, as
guided, due to the continuing investment in our people and the general impact
of inflation.
Operating margin is at 38% (HY23: 39%), which is robust for the sector. 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 £190.8
million at HY24 (FY23: £189.9 million) and cash and cash equivalents of
£192.4 million (FY23: £177.9 million).
The Group's operations are highly cash generative, with profits emerging as
cash and 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 2024, the Company paid a second
interim dividend of £23.2 million to shareholders in respect of financial
year 2023. This was in addition to the first interim dividend of £10.6
million, which was paid in June 2023.
In respect of the six months to 31 March 2024 (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 3.2 pence per ordinary share, or £10.6
million (2023: 3.2 pence per ordinary share). This will be payable on 5 July
2024 to ordinary shareholders on the register on 7 June 2024, the ex-dividend
date will be 6 June 2024. This is in line with the interim dividend paid for
the same period in the prior year.
Directors' responsibilities 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
21 May 2024
INDEPENDENT REVIEW REPORT TO INTEGRAFIN HOLDINGS PLC
Conclusion
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 2024 which comprises the Interim Condensed
Consolidated Statement of Comprehensive Income, the Interim Condensed
Consolidated Statement of Financial Position, the Interim Condensed
Consolidated Statement of Cash Flows, the Interim Condensed Consolidated
Statement of Changes in Equity and the related notes 1 to 19. 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.
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 2024 is not prepared, in
all material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. 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.
As disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of 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.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. 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.
Ernst & Young LLP
London
Date: 21 May 2024
Interim Condensed Consolidated Statement of Comprehensive Income
Six months to Six months to
Note 31 March 2024 31 March 2023
Unaudited Unaudited
£m £m
Revenue 3 70.4 66.5
Cost of sales (1.6) (2.3)
Gross profit 68.8 64.2
Expenses
Administrative expenses (42.1) (38.5)
Operating profit 26.7 25.7
Interest income 5.1 2.2
Net policyholder returns
Net gain attributable to policyholder returns 29.9 12.9
Change in investment contract liabilities (2,305.9) (1,038.7)
Fee and commission expenses (104.6) (91.5)
Policyholder investment returns 2,410.5 1,130.2
Net policyholder returns 29.9 12.9
Profit on ordinary activities before taxation attributable to policyholders 61.7 40.8
and shareholders
Policyholder tax charge (29.3) (12.9)
Profit on ordinary activities before taxation attributable to shareholders 32.4 27.9
Total tax attributable to shareholder and policyholder returns (37.3) (18.8)
Less: tax attributable to policyholder returns 29.3 12.9
Shareholder tax on profit on ordinary activities (8.0) (5.9)
Profit for the period 24.4 22.0
Other comprehensive loss
Exchange loss arising on translation of foreign operations - (0.1)
Total other comprehensive loss for the period - (0.1)
Total comprehensive income for the period 24.4 21.9
Earnings per share
Ordinary shares - basic and diluted 4 7.4p 6.6p
All activities of the Group are classed as continuing.
Notes 1 to 19 form part of these Financial Statements.
Interim Condensed Consolidated Statement of Financial Position
31 March 30 September
Note 2024 2023
Unaudited Audited
£m £m
Non-current assets
Loans receivable 6.7 6.3
Intangible assets 7 21.2 21.4
Property, plant and equipment 1.5 1.1
Right of use assets 3.4 1.0
Deferred tax asset 6 0.8 0.7
33.6 30.5
Current assets
Investments 22.7 22.4
Prepayments and accrued income 18.5 17.2
Trade and other receivables 13 12.7 3.6
Current tax asset - 14.3
Cash and cash equivalents 11 192.4 177.9
246.3 235.4
Current liabilities
Trade and other payables 14 17.7 19.5
Current tax liability 0.5 -
Provisions 8 7.6 7.7
Lease liabilities 2.2 0.3
28.0 27.5
Non-current liabilities
Provisions 8 30.2 40.5
Lease liabilities 1.1 0.8
Deferred tax liabilities 6 29.8 7.2
61.1 48.5
Policyholder assets and liabilities
Cash held for the benefit of policyholders 12 1,520.2 1,419.2
Investments held for the benefit of policyholders 9 25,785.5 23,021.7
Liabilities for linked investment contracts 10 (27,305.7) (24,440.9)
- -
Net assets 190.8 189.9
Capital and reserves
Called up equity share capital 3.3 3.3
Share-based payment reserve 3.3 3.4
Employee Benefit Trust reserve (2.8) (2.6)
Foreign exchange reserve (0.1) (0.1)
Non-distributable reserves 5.7 5.7
Retained earnings 181.4 180.2
Total equity 190.8 189.9
These interim condensed consolidated financial statements were approved by the
Board of Directors on 21 May 2024 and are signed on their behalf by:
Euan Marshall, Director
Company Registration Number: 08860879
Notes 1 to 19 form part of these Financial Statements.
Interim Condensed Consolidated Statement of Cash Flows
Six months to Six months to
31 March 2024 31 March 2023
Unaudited Unaudited
£m £m
Cash flows from operating activities
Profit on ordinary activities before taxation attributable to policyholders 61.7 40.8
and shareholders
Adjustments for non-cash movements:
Amortisation and depreciation 0.7 1.4
Share-based payment charge 1.2 1.1
Increase in contingent consideration - 0.5
Decrease in provisions (10.4) (10.1)
Adjustments for cash affecting investing and financing activities:
Interest on cash and loans (5.1) (2.2)
Adjustments for statement of financial position movements:
Increase in trade and other receivables, and prepayments and accrued income (10.4) (2.4)
(Decrease)/increase in trade and other payables (1.8) 0.2
Adjustments for policyholder balances:
Increase in investments held for the benefit of policyholders (2,763.8) (1,771.8)
Increase in liabilities for linked investment contracts 2,864.8 1,685.2
(Decrease)/increase in policyholder tax recoverable (3.8) 23.2
Cash generated from/(used in) operations 133.1 (34.1)
Income tax benefit/(paid) 3.8 (27.9)
Net cash flows from/(used in) operating activities 136.9 (62.0)
Investing activities
Acquisition of property, plant and equipment (0.7) (0.2)
(Increase)/decrease in loans (0.4) 0.2
Interest on cash and loans 4.8 2.2
Net cash flows from investing activities 3.7 2.2
Financing activities
Purchase of own shares in Employee Benefit Trust (0.3) (0.2)
Purchase of shares for share scheme awards (1.2) (0.8)
Equity dividends paid (23.2) (23.2)
Payment of principal portion of lease liabilities (0.4) (1.2)
Net cash flows used in financing activities (25.1) (25.4)
Net increase/(decrease) in cash and cash equivalents 115.5 (85.2)
Cash and cash equivalents at beginning of period 1,597.1 1,641.6
Cash and cash equivalents at end of period 1,712.6 1,556.4
Cash and cash equivalents consist of:
Cash and cash equivalents 192.4 184.4
Cash held for the benefit of policyholders 1,520.2 1,372.0
Cash and cash equivalents 1,712.6 1,556.4
Notes 1 to 19 form part of these Financial Statements.
Interim Condensed Consolidated Statement of Changes in Equity
Called up equity share capital Non-distributable Share-based payment reserve Employee Benefit Trust reserve Retained earnings Total equity
insurance and foreign exchange reserves
£m £m £m £m £m £m
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 (unaudited) 3.3 5.7 2.8 (2.6) 162.8 172.0
Balance at 1 October 2023 3.3 5.6 3.4 (2.6) 180.2 189.9
Comprehensive income for the year:
Profit for the year - - - - 24.4 24.4
Total comprehensive income for the year - - - - 24.4 24.4
Share-based payment expense - - 1.2 - - 1.2
Settlement of share-based payment - - (1.3) - - (1.3)
Purchase of own shares in EBT - - - (0.3) - (0.3)
Exercised share options - - - 0.1 - 0.1
Distributions to owners -
Dividends paid - - - - (23.2) (23.2)
Balance at 31 March 2024 3.3 5.6 3.3 (2.8) 181.4 190.8
(unaudited)
Notes 1 to 19 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 2023, which were prepared in
accordance with UK-adopted International Accounting Standards (IASs).
The financial information contained in these interim condensed consolidated
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 11-12.
The comparative financial information for the year ended 30 September 2023 in
this interim report constitute statutory accounts for that year.
The statutory accounts for 30 September 2023 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 condensed consolidated financial statements should be read in
conjunction with the Annual Report and Accounts for the year ended 30
September 2023. 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 2023.
Going Concern
The interim condensed consolidated 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
next 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 has sufficient
financial resources at all times for the foreseeable future.
o As at 31 March 2024, the Group had £192.4 million of shareholder cash on
the condensed consolidated statement of financial position, 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 and
operational risks.
When making this assessment, the board has taken into consideration both the
Group's current performance and the future outlook, including political and
geopolitical instability, and a tough macro-environment with ongoing higher
interest rates and cost of living pressures. The environment has been
challenging during the period, but our financial and operational performance
has been robust, and the Group's fundamentals remain strong.
Stress and scenario testing has been carried out, in order to understand the
potential financial impacts of severe, yet plausible, scenarios on the Group.
This assessment incorporated a number of stress tests covering a broad range
of scenarios, including a cyber attack, system and process failures, and
persistent high inflation with continued market uncertainty.
Having conducted detailed cash flow and working capital projections, and
stress-tested liquidity, profitability and regulatory capital; taking account
of the economic challenges mentioned above; 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).
The board has concluded that the Group has adequate resources and there are no
material uncertainties to the Group's ability to continue to operate for the
foreseeable future, being a period of at least twelve months from the date the
condensed consolidated financial statements are approved. For this reason,
they have adopted the going concern basis for the preparation of the financial
statements.
Changes in accounting policies
i) There have been no new standards, amendments to standards or
interpretations adopted during the financial year that had a material effect.
ii) Future standards, amendments to standards, and interpretations not
yet effective are noted below.
The following amendments are effective for periods beginning on or after 1
January 2023:
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2)
In February 2021, the IASB issued amendments to IAS 1 to assist in determining
which accounting policies to disclose, with reference to materiality and how
to determine which policies fall into this category. IFRS Practice Statement 2
includes guidance to support this.
The Group has assessed the impact of this amendment and does not note any
significant impact on the Group's interim condensed consolidated financial
statements.
Definition of Accounting Estimates (Amendments to IAS 8)
In February 2021, the IASB issued amendments to IAS 8 to clarify how to
distinguish changes in accounting policies from changes in accounting
estimates. That distinction being that changes in accounting estimates are
applied prospectively to future transactions and events, but changes in
accounting policies are applied retrospectively to past transactions and
events.
The Group has assessed the impact of this amendment and does not note any
significant impact on the Group's interim condensed consolidated financial
statements.
Deferred Tax Related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)
In May 2021, the IASB issued amendments to IAS 12 which will require
recognition of deferred taxes on particular transactions which, on initial
recognition, give rise to equal amounts of taxable and deductible temporary
differences.
The Group has assessed the impact of this amendment and does not note any
significant impact on the Group's interim condensed consolidated financial
statements.
1. Basis of preparation and significant accounting policies (continued)
Amendments to IAS 12: International Tax Reform Pillar Two Model Rules
Amendments to IAS 12 Income Taxes have been introduced in response to the
OECD's BEPS Pillar Two Model Rules. The amendments include a temporary
mandatory exception from accounting for deferred taxes arising from the Pillar
Two model rules and a requirement to disclose that the exception has been
applied immediately and retrospectively. IHP has taken up this exemption for
FY23.
The Group is continuing to assess whether it will be in scope of the Pillar
Two model Rules. If so, the rules would be expected to apply to the Group
from 1 October 2024 and give rise to a financial impact. However, the Group
does not anticipate that any tax liabilities that may arise from its overseas
operations will be material to the Group, as most of its revenue and profits
are generated in the UK and taxed at a rate of 25%.
The following amendments are effective for periods beginning on or after 1
January 2024:
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
In October 2022, the IASB issued amendments to IAS 1 regarding how conditions
with which an entity must comply within twelve months after the reporting
period, affect the classification of a liability.
The Group has assessed the impact of this amendment and does not note any
significant impact on the Group's interim condensed consolidated financial
statements.
No other future standards, amendments to standards, or interpretations are
expected to have a material effect on the Group's interim condensed
consolidated financial statements.
2. Financial instruments
(i) Principal financial instruments
The principal financial instruments, from which financial instrument risk
arises, are as follows:
· Trade and other receivables
· Accrued fees
· Investments - Gilts
· Investments - Listed shares and securities
· Trade and other payables
· Loans receivable
· Policyholder balances of investments and cash
· Cash and cash equivalents
(ii) Financial instruments measured at fair value
Financial assets and liabilities have been classified into categories that
determine their basis of measurement. For items measured at fair value, their
changes in fair value are recognised in the condensed consolidated statement
of comprehensive income. The following tables show the carrying values of
assets and liabilities for each of these categories for the Group:
Financial assets: Fair value through profit or loss Amortised cost
31 March 30 September 31 March 30 September
2024 2023 2024 2023
£m £m £m £m
Cash and cash equivalents - - 192.4 177.9
Cash held for the benefit of policyholders - - 1,520.2 1,419.2
Investments - Listed shares and securities 0.1 0.1 - -
Investments - Gilts - - 22.7 22.3
Loans receivable - - 6.7 6.3
Accrued income - - 13.8 12.5
Trade and other receivables - - 12.5 3.2
Investments held for the policyholders 25,785.5 23,021.7 - -
Total financial assets 25,785.6 23,021.8 1,768.3 1,641.4
30 September
31 March 2023
2024
Assets which are not financial instruments £m £m
Prepayments 4.7 4.7
Current tax asset - 14.3
Trade and other receivables - 0.2 0.4
repayment interest due from HMRC
4.9 19.4
Financial liabilities: Fair value through profit or loss Amortised cost
31 March 30 September 31 March 30 September
2024 2023 2024 2023
Trade payables - - 2.2 0.7
Lease liabilities - - 3.3 1.1
Other payables - - 3.8 5.9
Liabilities for linked investments contracts 25,785.5 23,021.7 1,520.3 1,419.2
Total financial liabilities 25,785.5 23,021.7 1,529.6 1,426.9
31 March 30 September
2024 2023
Liabilities which are not financial instruments £m £m
Accruals and deferred income 6.6 7.8
Current tax liability 0.5 -
PAYE and other taxation 3.6 2.6
Other payables - due to HMRC 1.0 0.9
Deferred consideration 0.5 1.6
12.2 12.9
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash
equivalents, cash held for policyholders, accrued fees, investments held in
gilts, loans, leases, trade and other receivables, trade and other payables,
and liabilities for linked investments contracts. Due to their short-term
nature and/or expected credit losses recognised, the carrying value of these
financial instruments approximates their fair value.
(iv) Financial instruments measured at fair value - fair
value hierarchy
The table below classifies financial instruments that are recognised on the
condensed statement of financial position at fair value in a hierarchy that is
based on significance of the inputs used in making the measurements.
The following table shows the three levels of the fair value hierarchy:
· Level 1: quoted prices (unadjusted) in active markets for
identical instruments;
· Level 2: instruments which are not actively traded but provide
regular observable prices; and
· Level 3: inputs that are based on level 1 or level 2 data, but
for which the last known price is over a year old (unobservable inputs).
The following table shows the Group's financial instruments measured at fair
value and split into the three levels:
At 31 March 2024
Level 1 Level 2 Level 3 Total
Assets £m £m £m £m
Term deposits 248.8 - - 248.8
Investments and securities 815.0 210.7 0.6 1,026.3
Bonds and other fixed-income securities 21.6 0.8 - 22.4
Holdings in collective investment schemes 24,366.0 121.0 1.0 24,488.0
1 Investments and assets held for the benefit of policyholders 25,451.4 332.5 1.6 25,785.5
Investments - Listed shares and securities 0.1 - - 0.1
Total 25,451.5 332.5 1.6 25,785.6
Level 1 Level 2 Level 3 Total
Liabilities £m £m £m £m
Liabilities for linked investment contracts 25,451.4 332.5 1.6 25,785.5
Total 25,451.4 332.5 1.6 25,785.5
At 30 September 2023
Level 1 Level 2 Level 3 Total
Assets £m £m £m £m
Term deposits 182.0 - - 182.0
Investments and securities 740.3 181.9 0.5 922.7
Bonds and other fixed-income securities 16.5 1.0 - 17.5
Holdings in collective investment schemes 21,754.5 143.3 1.7 21,899.5
Investments held for the benefit of the policyholders 22,693.3 326.2 2.2 23,021.7
Investments - listed shares and securities 0.1 - - 0.1
Total 22,693.4 326.2 2.2 23,021.8
Level 1 Level 2 Level 3 Total
Liabilities £m £m £m £m
Liabilities for linked investment contracts 22,693.3 326.2 2.2 23,021.7
Total 22,693.3 326.2 2.2 23,021.7
Level 1 valuation methodology
Financial instruments 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 are mainly Open-Ended Investment Companies (OEICs), Unit
Trusts, Investment trusts and Exchange Traded Funds.
The price is sourced from our 3rd party provider, who source this directly
from the stock exchange or obtain the price directly from the fund manager.
Level 2 valuation methodology
Financial instruments included in Level 2 are measured at fair value using
observable mid prices traded in markets that have been assessed as not active
but which provide regular observable prices. These are mainly Structured
products and OEICs.
The price is sourced from the structured product provider or from our 3rd
party provider, who obtain the price directly from the fund manager.
Level 3 valuation methodology
Financial instruments included in Level 3 are measured at fair value using the
last known price and for which the price is over a year old. These are mainly
OEICs and Unit Trusts. These instruments have unobservable inputs as the
current observable market information is no longer available. Where these
instruments arise management will value them based on the last known
observable market price or other relevant information.
The prices are sourced as noted in level 1 and level 2 above.
For the purposes of identifying level 3 instruments, unobservable inputs means
that current observable market information is no longer available. Where these
instruments arise management will value them based on the last known
observable market price or other relevant information. No other valuation
techniques are applied.
Level 3 sensitivity to changes in unobservable measurements
For financial instruments 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 31 March 2024, and therefore would not have a
material impact on its reported results.
Review of prices
As part of its pricing process, the Group regularly reviews whether each
instrument can be valued using a quoted price and if it trades on an active
market, based on available market data and the specific circumstances of each
market and instrument.
The Group regularly assesses instruments to ensure they are categorised
correctly and Fair Value Hierarchy (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 instrument price become
observable following the resumption of trading the FVH level will be updated
to reflect this.
Changes to valuation methodology
There have been no changes in valuation methodology during the period under
review.
Transfers between Levels
The Group's policy is to assess each financial instrument it holds at the
period end, based on the last known price and market information, and assign
it to a Level.
The Group 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 2023 and 31 March 2024
are presented in the table below at their valuation at 31 March 2024:
Transfers from Transfers to £m
Level 1 Level 2 22.3
Level 2 Level 1 33.3
The reconciliation between opening and closing balances of Level 3 assets and
liabilities are presented in the table below:
2024 2023
£m £m
Opening balance as at 1 October 2023/2022 2.1 1.9
Unrealised gains or losses for the period ended 31 March 2024 - -
Transfers in to Level 3 at 31 March 2024 valuation 0.4 0.2
Transfers out of Level 3 at 31 March 2024 valuation (0.9) (1.0)
Purchases, sales, issues and settlement - 1.0
Closing balance as at 31 March 2024/2023 1.6 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.
(v) Capital maintenance
The regulated companies in the Group are subject to capital requirements
imposed by the relevant regulators as detailed below:
Legal entity Regulatory regime
Integrafin Financial Arrangements Ltd (IFAL) Investment Firm Prudential regime (IFPR)
ILUK Solvency II
ILInt Isle of Man risk based capital regime
Group capital requirements for 2024 are driven by the regulated entities,
whose minimum capital resources and requirements as detailed below:
IFAL ILUK ILInt
31 March 2024 30 September 2023 31 March 2024 30 September 2023 31 March 2024 30 September 2023
£m £m £m £m £m £m
Capital resource 47.8 44.4 350.4 269.2 46.4 46.6
Capital requirement 52.6* 33.3 224.9 215.8 27.3 27.1
Coverage ratio 91%* 133% 156% 125% 170% 172%
*As a result of the FCA's periodic ICARA review process, the regulator imposed
additional capital requirements on IFAL on 27 March 2024 which resulted in a
capital deficit as at 31 March 2024. The capital deficit was remediated in
April 2024, within the timeframes required by the FCA.
The Group's policy for managing capital is to ensure each regulated entity
maintains capital well above the minimum regulatory requirement plus any
additional capital requirement imposed by the regulator as a result of its
supervisory review and evaluation processes.
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 condensed consolidated comprehensive income - segmental
information for the six months ended 31 March 2024:
Investment administration services Insurance and life assurance business Adviser back-office technology Other Group entities Consolidation adjustments Total
£m £m £m £m £m £m
Revenue
Annual commission income 32.9 28.1 - - - 61.0
Wrapper fee income 1.5 4.8 - - - 6.3
Adviser back-office technology - - 2.4 - - 2.4
Other income 0.5 0.2 - 40.9 (40.9) 0.7
Total revenue 34.9 33.1 2.4 40.9 (40.9) 70.4
Cost of sales (0.3) (0.6) (0.4) (0.3) - (1.6)
Gross profit/(loss) 34.6 32.5 2.0 40.6 (40.9) 68.8
Administrative expenses (21.5) (15.9) (2.7) (42.6) 40.6 (42.1)
Operating profit/(loss) 13.1 16.6 (0.7) (2.0) (0.3) 26.7
Interest expense - - - (0.3) 0.3 -
Interest income 1.2 3.2 - 1.0 (0.3) 5.1
Net policyholder returns
Net income/(loss) attributable to policyholder returns - 29.9 - - - 29.9
Change in investment contract liabilities - (2,305.9) - - - (2,305.9)
Fee and commission expenses - (104.6) - - - (104.6)
Policyholder investment returns - 2,410.5 - - - 2,410.5
Net policyholder returns - 29.9 - - - 29.9
Profit/(loss) on ordinary activities before taxation attributable to 14.3 49.7 (0.7) (1.3) (0.3) 61.7
policyholders and shareholders
Policyholder tax charge - (29.3) - - - (29.3)
Profit/(loss) on ordinary activities before taxation attributable to 14.3 20.4 (0.7) (1.3) (0.3) 32.4
shareholders
Total tax (charge) / benefit attributable to shareholder and policyholder (2.9) (33.9) 0.2 (0.8) 0.1 (37.3)
returns
Less: tax attributable to policyholder returns - 29.3 - - - 29.3
Shareholder tax (charge)/benefit on profit on ordinary activities (2.9) (4.6) 0.2 (0.8) 0.1 (8.0)
Profit/(loss) for the period 11.4 15.8 (0.5) (2.1) (0.2) 24.4
Statement of condensed consolidated comprehensive income - segmental
information for the six months ended 31 March 2023:
Investment administration services Insurance and life assurance business Adviser back-office technology Other Group entities Consolidation adjustments Total
£m £m £m £m £m £m
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 11.0 30.1 (0.8) 0.7 (0.2) 40.8
policyholders and shareholders
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 financial position - segmental information as at 31 March 2024:
Investment administration services Insurance and life assurance business Total
Adviser back-office technology
£m £m £m £m
Assets
Non-current assets 11.6 20.7 1.3 33.6
Current assets 78.4 165.6 2.3 246.3
Total assets 90.0 186.3 3.6 279.9
Liabilities
Current liabilities 9.8 17.0 1.2 28.0
Non-current liabilities 0.9 59.8 0.4 61.1
Total liabilities 10.7 76.8 1.6 89.1
Policyholder assets and liabilities
Cash held for the benefit of policyholders - 1,520.2 - 1,520.2
Investments held for the benefit of policyholders - 25,785.5 - 25,785.5
Liabilities for linked investment contracts - (27,305.7) - (27,305.7)
Total policyholder assets and liabilities - 0.0 - 0.0
Net assets 79.3 109.5 2.0 190.8
Non-current asset additions 0.4 0.3 - 0.7
Statement of financial position - segmental information as at 30 September
2023:
Investment administration services Insurance and life assurance business Total
Adviser back-office technology
£m £m £m £m
Assets
Non-current assets 10.3 19.1 1.1 30.5
Current assets 78.0 154.6 2.8 235.4
Total assets 88.3 173.7 3.9 265.9
Liabilities
Current liabilities 8.4 18.1 1.0 27.5
Non-current liabilities 0.8 47.5 0.2 48.5
Total liabilities 9.2 65.6 1.2 76.0
Policyholder assets and liabilities
Cash held for the benefit of policyholders
- 1,419.2 - -
Investments held for the benefit of policyholders
- 23,021.7 - -
Liabilities for linked investment contracts
- (24,440.9) - -
Total policyholder assets and liabilities - - - -
Net assets 79.1 108.1 2.7 189.9
Non-current asset additions 0.3 0.3 - 0.6
Segmental information: Split by geographical location
Revenue Six months to 31 March 2024 Six months to 31 March 2023
£m £m
United Kingdom 67.4 63.8
Isle of Man 3.0 2.7
Total 70.4 66.5
Non-current assets 31 March 30 September 2023
2024
£m £m
United Kingdom 26.0 23.4
Isle of Man 0.1 0.1
Total 26.1 23.5
4. Earnings per share
Six months to 31 March 2024 Six months to 31 March 2023
Profit
Profit for the year and earnings used in basic and diluted earnings per share £24.4m £22.0m
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 (0.6m) (0.5m)
Weighted average number of Ordinary Shares for the purposes of basic EPS 330.7m 330.8m
Adjustment for dilutive share option awards 0.6m 0.5m
Weighted average number of Ordinary Shares for the purposes of diluted EPS 331.3 331.3
Earnings per share
Basic earnings per share 7.4p 6.6p
Diluted earnings per share 7.4p 6.6p
5. Tax on profit on ordinary activities
The UK estimated weighted average effective tax rate was 25% for the six-month
period ended 31 March 2024 (31 March 2023: 22%), 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.
Amendments to IAS 12: International Tax Reform Pillar Two Model Rules
Amendments to IAS 12 Income Taxes have been introduced in response to the
OECD's BEPS Pillar Two Model Rules. The amendments include a temporary
mandatory exception from accounting for deferred taxes arising from the Pillar
Two model rules and a requirement to disclose that the exception has been
applied immediately and retrospectively. The Group has taken up this exemption
for FY24.
The Group is continuing to assess whether it will be in scope of the Pillar
Two model Rules. If so, the rules would be expected to apply to the Group from
1 October 2024 and give rise to a financial impact. However, the Group does
not anticipate that any tax liabilities that may arise from its overseas
operations will be material to the Group, as most of its revenue and profits
are generated in the UK and taxed at a rate of 25%.
6. Deferred tax
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 25% (2023: 25%).
Deferred Tax Asset
Deferred Tax Asset Accelerated capital allowances Share based payments Policyholder unrealised losses/ (unrealised) Policyholder excess management expenses and deferred acquisition costs Policyholder unrealised losses on investment trusts Other deductible temporary differences Total
gains
£m £m £m £m £m £m £m
At 01 October 2022 0.1 0.5 2.9 2.2 0.2 0.1 6.0
Excess tax relief charged to equity - 0.2 - - - - 0.2
Charge to income - (0.2) (2.9) 0.3 0.4 0.1 (2.3)
Offset against deferred tax liability - - - (2.5) (0.6) (0.1) (3.2)
At 30 September 2023 0.1 0.5 - - - 0.1 0.7
Charge to income - 0.1 - (1.3) (0.5) - (1.7)
Offset against deferred tax liability - - - 1.3 0.5 - 1.8
As at 31 March 2024 0.1 0.6 - - - 0.1 0.8
Deferred Tax Liability
Deferred Tax Liability Accelerated capital allowances Share based payments Policyholder tax on unrealised gains Other taxable differences Total
£m £m £m £m £m
At 01 October 2022 - - - 0.9 0.9
Charge to income - - 9.6 (0.1) 9.5
Offset against deferred tax asset - - (3.1) (0.1) (3.2)
At 30 September 2023 - - 6.5 0.7 7.2
Charge to income 0.2 - 20.6 - 20.8
Offset against deferred tax asset - - 1.8 - 1.8
As at 31 March 2024 0.2 - 28.9 0.7 29.8
7. Intangible assets
Software and IP rights Goodwill Customer relationships Software Brand Total
Cost £m £m £m £m £m £m
At 1 October 2023 12.5 18.3 2.1 2.0 0.3 35.2
At 31 March 2024 12.5 18.3 2.1 2.0 0.3 35.2
Amortisation
At 1 October 2023 12.5 - 0.4 0.8 0.1 13.8
Charge for the period - - 0.1 0.1 - 0.2
At 31 March 2024 12.5 - 0.5 0.9 0.1 14.0
Net Book Value
At 1 October 2023 - 18.3 1.7 1.2 0.2 21.4
At 31 March 2024 - 18.3 1.6 1.1 0.2 21.2
Cost
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 period - - 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
Amortisation of intangible assets is recognised within administrative expenses
in the condensed consolidated statement of comprehensive income.
8. Provisions
31 March 30 September
2024 2023
£m £m
Balance brought forward 48.2 56.8
Decrease in ILUK policyholder reserves (10.3) (9.7)
(Decrease)/increase in other provisions (0.1) 1.1
Balance carried forward 37.8 48.2
Amounts falling due within one year 7.6 7.7
Amounts falling due after one year 30.2 40.5
Dilapidations provisions 0.2 0.2
ILUK policyholder reserves 36.6 46.9
Other provisions 1.0 1.1
37.8 48.2
ILUK policyholder reserves 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
31 March 2024 31 March 2024 30 September 2023 30 September
2023
Cost Fair value Cost Fair value
ILInt £m £m £m £m
Investments held for the benefit of policyholders 2,295.9 2,645.5 2,155.5 2,310.3
2,295.9 2,645.5 2,155.5 2,310.3
ILUK
Investments held for the benefit of policyholders 19,810.9 23,140.0 19,249.9 20,711.4
19,810.9 23,140.0 19,249.9 20,711.4
Total 22,106.8 25,785.5 21,405.4 23,021.7
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 30 September 2023
2024
Fair value Fair value
ILInt £m £m
Unit linked liabilities 2,819.7 2,481.5
2,819.7 2,481.5
ILUK
Unit linked liabilities 24,486.0 21,959.4
24,486.0 21,959.4
Total 27,305.7 24,440.9
Analysis of change in liabilities for linked investment contracts
Six months to 31 March Year to Six months to
2024 30 September 31 March
2023 2023
£m £m £m
Opening balance 24,440.9 22,174.4 22,174.4
Investment inflows 1,733.8 2,670.3 1,297.4
Investment outflows (1,144.0) (1,400.5) (620.5)
Changes in fair value of underlying assets 2,277.3 1,024.1 1,026.6
Investment income 133.3 225.1 103.6
Other fees and charges - Transact (31.0) (59.2) (30.4)
Other fees and charges - other third parties (104.6) (193.3) (91.5)
Closing balance 27,305.7 24,440.9 23,859.6
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
2024 2023
£m £m
Bank balances - Instant access 180.4 165.9
Bank balances - Notice accounts 12.0 12.0
Total 192.4 177.9
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
2024 2023
£m £m
Cash and cash equivalents held for the benefit of the policyholders - instant 1,346.0 1,248.0
access - ILUK
Cash and cash equivalents held for the benefit of the policyholders - instant 174.2 171.2
access - ILINT
Total 1,520.2 1,419.2
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
2024 2023
£m £m
Other receivables 2.8 3.2
Less: expected credit losses (0.1) (0.1)
Other receivables net 2.7 3.1
Repayment interest due from HMRC 0.2 0.4
Amount due from policyholders to meet current tax liability 9.8 -
Total 12.7 3.6
14. Trade and other payables
31 March 30 September
2024 2023
£m £m
Trade payables 2.2 0.7
PAYE and other taxation 3.6 2.6
Other payables 4.8 6.8
Accruals and deferred income 6.6 7.8
Deferred consideration 0.5 1.6
Total 17.7 19.5
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 2023 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, threaten its business model
or future performance or that might present significant operational
disruption.
The executive and board regularly review these principal risks and
uncertainties and believe that their nature remains unchanged from those
presented within the 2023 Annual Report and Financial Statements. The Group's
principal revenue stream is asset value based, accounting for 87% of total
revenue. Political and geopolitical instability have continued to increase
over HY24 with forthcoming elections, ongoing conflict in Eastern Europe
combined with the escalation of tensions in the Middle East. Inflationary
pressures in the UK have continued to ease with markets reacting positively.
However, the wider macro-environment remains challenging with ongoing higher
interest rates and the higher cost of living driving elevated off-platform
withdrawals. These withdrawals, in combination with an increasingly
competitive platform market and with adviser consolidation, resulted in muted
net inflows to the platform. Nonetheless, FUD and revenues remain within
projection. The Group will continue to monitor and respond to any new
developments which may impact the Group.
17. Contingent liability
There are some assets in ILUK policyholder linked funds which are under
review. The internal assessment has been sub-divided into 5 groups. A
provision totalling £0.2 million has been recorded in respect of one of the
groups where the likelihood of an economic outflow is probable and a
contingent liability of £1.4 million has been disclosed in respect of another
group where the likelihood of an economic outflow is not probable, but more
than remote. No provision or contingent liability has been recognised in
respect of the other groups as the likelihood of an economic outflow is
considered to be remote.
18. Events after the reporting date
There are no events subsequent to the reporting period that require disclosure
in, or amendment to the interim condensed consolidated financial statements.
19. Dividends
During the six month period to 31 March 2024 the Company paid an interim
dividend of £23.2 million (7.0 pence per share) to shareholders in respect of
financial year 2023. This was in addition to the first interim dividend of
£10.6 million (3.2 pence per share) in respect of financial year 2023, which
was paid in June 2023. The total of £33.7 million (10.2 pence per share)
compares with a full year interim dividend of £33.7 million (10.2 pence per
share) in respect of the full financial year 2022.
DIRECTORS, COMPANY DETAILS, ADVISERS
Executive Directors
Michael Howard
Alexander Scott
Jonathan Gunby
Euan Marshall
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 (International) LLP, One Wood Street, London, EC2V 7WS
Corporate Advisers
Peel Hunt LLP, 7th Floor 100 Liverpool Street, London, England, EC2M 2AT
Barclays Bank PLC, 1 Churchill Place, Canary Wharf, London, E14 5HP
Principal Bankers
National Westminster Bank Plc, 250 Bishopsgate, London, EC2M 4AA
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 (http://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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