30 January 2024
Fintel plc
("Fintel", the "Company", the "Business" or the
"Group")
Year End Trading Update,
Acquisition and Notice of Full Year Results
Resilient financial
performance and significant acquisitive growth
Fintel (AIM: FNTL), the leading
provider of fintech and support services to the UK Retail Financial
Services sector, today announces a trading update for the year
ended 31 December 2023, the acquisition of Owen James Events ("Owen
James"), the leading provider of strategic engagement events in the
UK financial services industry, and the successful completion of
the acquisition of Synaptic Software following regulatory
approval.
Financial highlights
· Resilient performance, with full year results expected to be
in line with Board expectations
· Adjusted EBITDA1 growth of c.6% to £20.5m (FY22: £19.4m), in a
period of continued investment in our core products and
services
· Strong
balance sheet with £12.7m of cash, and £69m of headroom in our £80m
Revolving Credit Facility
· Net
cash position2 of £1.7m (FY22: £12.8m), having invested
significantly in four acquisitions
· Core3 revenue increased to £56.6m (FY22: £56.4m);
(LfL4: FY23: £51.7m; FY22: £50.2m), slightly ahead of
the same period last year and up
c.0.3%.
· Core
SaaS & Subscription revenue up c.2% to £37.6m (FY22: £36.8m); up c.8% on a like-for-like basis
excluding the changed software reseller revenues and acquisitions
(FY23: £33.0m; FY22: £30.6m)
Financial performance - revenue
Our core business continued to
perform well, growing 5.6% excluding volatility in mortgage related
commissions. Whilst mortgage related activities
experienced a significant 21.2% revenue decline during 2023, this
segment remained profitable, and is well positioned for a rapid
return to previous performance levels as the UK housing
market normalises.
As notified in our half year
results, core organic revenue was impacted by the change to the
accounting treatment of our largest software reseller agreement.
Whilst the EBITDA contribution from this contract remains resilient
at historical levels, the statutory accounting treatment applied
since May 2023 now represents purely a net revenue and
profitability position.
We completed four acquisitions
throughout 2023 and the combined core revenue on those acquisitions
recognised in the period was £1.5m. A further two acquisitions were
completed in January 2024.
The non-core business performed in
line with expectations against the UK housing market backdrop, with
revenues of £8.4m in the year (FY22: £10.1m). Combined with the
core business, statutory revenue was £64.9m (FY22:
£66.5m).
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31 Dec 23
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31 Dec 22
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Change
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Change
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Core organic revenue ex. mortgage
commissions
|
£47.7m
|
£45.2m
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£2.5m
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5.6%
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Core organic revenue from mortgage
commissions
|
£4.0m
|
£5.0m
|
(£1.0m)
|
(21.2%)
|
Core organic revenue, like-for-like
basis4
|
£51.7m
|
£50.2m
|
£1.5m
|
2.9%
|
Core organic revenue from software
reseller agreements
|
£3.4m
|
£6.2m
|
(£2.8m)
|
(46.0%)
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Total core organic revenue
|
£55.1m
|
£56.4m
|
(£1.3m)
|
(2.5%)
|
Core revenue from
acquisitions
|
£1.5m
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£Nil
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£1.5m
|
100%
|
Total core revenue
|
£56.6m
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£56.4m
|
£0.2m
|
0.3%
|
Regulatory approval received to complete acquisition of
Synaptic Software
· As
announced on 5 December 2023, we conditionally agreed to acquire
Synaptic Software for a net upfront cash consideration of £3.5m
subject to FCA approval
· We are
pleased to announce that regulatory approval was received in late
January 2024 and the acquisition fully completed shortly
thereafter
· We
have agreed to invest £0.5m of development expenditure to enhance
and integrate its products into the wider Fintel platform of
service offerings
Acquisition of Owen James Events
· Acquisition of Owen James via Fintel IQ, Fintel's technology
and knowledge platform
o Owen James is the leading
provider of strategic engagement events in UK financial
services
o Owen James will continue to
operate independently within Fintel IQ, while benefitting from
Fintel's investment and wide network within the UK financial
services market
o The acquisition will extend
Fintel's flagship industry events programme and data and insights
strategy through Owen James' unique market position
o Completed in late January
2024, the transaction was funded entirely from cash reserves with a
net upfront cash consideration of £0.7m representing an EBITDA
multiple of 3.8 times. In addition, up to £1.6m contingent earnout
is based on certain trading criteria being delivered in the first
three years of ownership
o The acquisition is
in line with Fintel's strategy to enter key
adjacencies, expand its service platform, and connect a fragmented
UK retail financial services market
Operational highlights
· Continued growth in the underlying core SaaS and Subscriptions
revenue, with diversified customer base providing resilience and
offsetting mortgage market headwinds
· Operating cost management throughout 2023 has been dynamic in
response to market volatility, enabling protection and enhancement
of margins, whilst providing the capacity for organic and inorganic
investments into our future growth
· Six
acquisitions completed during the past twelve months:
o Owen
James - January 2024
o Synaptic Software - January 2024
o VouchedFor - November 2023
o AKG
- November 2023
o Competent Adviser - July 2023
o Micap - July 2023
· These
acquisitions are in line with the Company's strategy to expand into
adjacent markets, adding scale, IP and quality data sets to help
the market understand and improve the suitability and appeal of
financial products
Outlook
The core business continues to
deliver resilient earnings in line with Board expectations for
FY23, with the ongoing pressures in the UK housing market largely
offset by ongoing growth in fintech software revenue and software
license sales.
Fintel's market leading position and
diverse customer base provide resilience against these
macroeconomic headwinds. With expectations that interest rates and
market activity will adjust positively in 2024, we are well placed
to benefit from a recovery in the mortgage market.
We continue to benefit from
structural drivers including increasing regulatory requirements as
a result of the FCA Consumer Duty regulation, being well positioned
to support both financial intermediaries and product providers in
evidencing suitability during the financial product development and
sales lifecycle.
Our sustainable growth is
complemented by strategic investments to improve and expand our
offering, allowing us to better support our customers as they
navigate an evolving UK financial services market. We maintain a
strong M&A pipeline to continue to acquire complementary
service offerings to our growing platform of services, underpinned
by significant headroom in our £80m revolving Credit
Facility.
Our strategy of creating a wider
support platform for UK retail financial services will continue to
enhance our future earnings, proposition and growth
opportunities.
Matt Timmins, Joint CEO of Fintel plc, said:
"In 2023 we made significant
strategic progress, increased our scale, and reach through the
acquisition of four businesses to our platform, and delivered a
resilient financial performance in line with expectations. We have
demonstrated continued evidence of our capacity and ability to
drive organic growth, source and execute complementary
acquisitions, and invest in our technology and data
propositions.
"In line with our strategy, we are
completely focused on consolidating a fragmented market to enhance
our scale, proposition, and IP, as we continue to inspire better
outcomes for UK retail financial services. Today, we welcome yet
another market leader in Owen James Events, a business with huge
potential, and our sixth acquisition in twelve months.
"We are confident of delivering
further progress in the year ahead as we continue to scale our
proposition, realise our very active M&A pipeline and invest in
our service and technology platform, with our growth underpinned by
recuring incomes and positive structural market
drivers."
Notice of Full Year Results
Fintel intends to announce its Full
Year Results for the year ended 31 December 2023 on 19 March
2024.
Footnotes
1Adjusted EBITDA is earnings
before interest, tax, depreciation, amortisation, share option
charges and exceptional operating costs.
2 Net cash position excludes
any adjustment under IFRS16 "Lease Accounting" and compares gross
cash balances to gross borrowings under the Group's £80m Revolving
Credit Facility.
3Core business excludes revenues from panel management and
surveying.
4Like-for-like basis strips
out the impact of acquisitions and the changes in revenue
recognition of a software reseller agreement.
For
further information, please contact:
Fintel plc
Matt Timmins (Joint Chief Executive
Officer)
Neil Stevens (Joint Chief Executive
Officer)
David Thompson (Chief Financial
Officer)
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via MHP Group
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Zeus (Nominated Adviser and Joint Broker)
Martin Green
Dan Bate
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+44 (0) 20 3829 5000
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Investec Bank (Joint Broker)
Bruce Garrow
David Anderson
Harry
Hargreaves
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+44 (0) 20 7597 5970
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MHP Group (Financial PR)
Reg Hoare
Robert Collett-Creedy
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+44 (0) 7736 464749
Fintel@mhpgroup.com
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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