TIDMIHP
RNS Number : 8511M
IntegraFin Holdings plc
26 May 2022
IntegraFin Holdings plc - Interim results for the six months
ended
31 March 2022
IntegraFin Holdings plc (IHP) today announces its interim
results for the six months to 31 March 2022.
Headlines
-- Net inflows up 16% to GBP2.68bn (H1 2021: GBP2.31bn)
-- Group revenue up 13% to GBP67.0m (H1 2021: GBP59.4m)
-- Transact platform profit before tax up 10% to GBP33.7m (H1 2021: GBP30.7m)
-- Investment in T4A - loss for H1 2022 of GBP1.1m, and post
combination payments of GBP1.5m
-- Group profit before tax up 2% to GBP31.7m (H1 2021: GBP31.2m)
-- Further investment through adding 50 additional software
development and systems staff during H2 2022 and H1 2023 to
strengthen the competitive advantage of our proprietary software
and operations
Alex Scott, Chief Executive Officer, commented:
"We are pleased to announce our results for the first half of
the year. In a challenging environment we have continued to grow
Group revenue and profits.
Our Transact platform has delivered its highest ever gross and
net inflows. This is despite reduced market confidence in the
second quarter, driven by geopolitical events and rising
inflation.
Growth in revenue over the period has been dampened, as the fall
in world equity markets has impacted growth in Funds Under
Direction (FUD), even with record net inflows. That said, platform
revenue has still grown at 11%, after fee reductions, as we have
continued improving the price our Transact clients pay, making our
service even better value for money.
The number of clients on the platform increased by 9% year on
year and in the same period the number of advisers using Transact
increased by 5%.
Delivered by Time for Advice, our adviser practice management
tool, CURO, has also shown steady growth over the period. The
number of user licences in force has increased 31%, driving up core
revenues. Ongoing contractual revenues have increased 53% year on
year. The Time for Advice development of its new CURO 365 software
has been impacted because some of their development partners are
based in Ukraine. However, initial release of the new CURO365
system is still expected before the end of the calendar year.
Testament to the quality of both Transact and CURO, is the
recent awards of: Investment Trends number 1 rated for service for
Transact, Professional Adviser Best Large Adviser Platform for
Transact, and Best Adviser Technology Provider for Time for
Advice.
We will also continue to invest in our proprietary software and
operational systems to ensure that we retain our competitive
advantage. We plan to incrementally add 50 additional software
development and systems staff during the remainder of 2022 and
early 2023. This will further enable us to maintain our strong
position as a focused provider of services to clients and their UK
advisers, to efficiently scale the business and to deliver enhanced
future profitability.
The general economic outlook has deteriorated from that
prevailing this time last year. We have negotiated the safe return
of staff to our offices and the implementation of flexible working
plans, whilst continuing to deliver award winning services, but now
we are faced with major global uncertainty arising from Russia's
invasion of Ukraine and the significant, resultant effects. When
added to the existing inflationary pressures, these are negative
drivers for Transact revenue, and for all round expenses.
However, the Group is in a strong financial position and is
committed to developing the Transact platform and CURO, as well as
investing in our people and delivering value to all key
stakeholders.
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 2022, an interim dividend of 3.2 pence per ordinary share
(H1 2021: 3.0 pence) will be payable on 30 June 2022 to ordinary
shareholders on the register on 10 June 2022. The ex-dividend date
will be 9 June 2022."
Contacts
Investors
Luke Carrivick +44 (0)20 7608 5463
Media
Lansons
Maddy Morgan Williams +44 (0)79 4736 4578
Analyst presentation
IntegraFin Holdings plc will be hosting an analyst presentation
on 26 May 2022, following the release of these results for the half
year ended 31 March 2022. Attendance is by invitation only. Slides
accompanying the analyst presentation will be available on the
IntegraFin Holdings plc website.
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 inflows and outflows
Transact's gross inflows for the first half year of the
financial year were a record GBP4.07 billion, and this was coupled
with outflows that were lower than the first half of financial year
2021. The combined effect of strong inflows and lower outflows is a
16% increase in net inflows for the first half of the financial
year 2022 (GBP2.68 billion), compared to the first half of
financial year 2021 (GBP2.31 billion).
H1 2022 H1 2021 YE 2021
GBPm GBPm GBPm
Opening FUD 52,112 41,093 41,093
Inflows 4,068 3,734 7,695
Outflows (1,385) (1,427) (2,744)
-------------------- -------- -------- --------
Net flows 2,683 2,307 4,951
Market movements (1,169) 3,632 6,297
Other movements(1) (126) (103) (229)
-------------------- -------- -------- --------
Closing FUD 53,500 46,929 52,112
(1) Other movements includes fees, tax charges and rebates,
dividends and interest.
Our investment platform gross inflows remain organic and
increased by GBP334 million (9%) for the six months to 31 March
2022, when compared with the same period in the prior year. Gross
outflows decreased by GBP42 million (3%) in the six months,
representing an annualised outflow of 5%, which remains well within
the range we expect.
Operational performance - Time for Advice (T4A)
T4A was acquired by IHP in January 2021 and has now been part of
the IHP Group for over 12 months. In that time, and as expected,
T4A has steadily progressed the development of its CURO365 adviser
back office software, and this has been achieved through increasing
the number of software developers and people that can support
sales, and ongoing user training and experience.
The number of core CURO user licences has increased from 1,348
as at March 2021, to 1,765 as at March 2022, an impressive increase
of 31%. These numbers exclude a large user that had commenced the
process of terminating their CURO licences at the point T4A was
acquired by IHP.
Group financial performance
H1 2022 H1 2022 H1 2021 H1 2021 YE 2021
Group **Platform Group **Platform Group
GBPm GBPm GBPm GBPm GBPm
Revenue 67.0 65.3 59.4 58.6 123.7
Amortisation of - - *3.8 *3.8 -
deferred income
liability
Cost of sales (0.9) (0.5) (0.6) (0.4) (1.5)
----------------------- -------- ------------ -------- ------------ --------
Gross profit 66.1 64.8 62.6 62.0 122.2
Operating expenses (32.9) (31.3) (25.7) (27.6) (55.7)
Amortisation of - - *(3.8) *(3.8) -
deferred acquisition
costs
Non-underlying
expenses (1.5) (1.9) - (3.3)
----------------------- -------- ------------ -------- ------------ --------
Operating profit
attributable to
shareholder returns 31.7 33.5 31.2 30.6 63.2
Net interest income 0.0 0.2 0.0 0.1 (0.1)
----------------------- -------- ------------ -------- ------------ --------
Profit before
tax attributable
to shareholder
returns 31.7 33.7 31.2 30.7 63.1
Tax on ordinary
activities (6.2) (6.1) (6.2) (5.6) (12.5)
----------------------- -------- ------------ -------- ------------ --------
Profit after
tax attributable
to shareholders 25.5 27.6 25.0 25.1 50.6
Profit after tax
attributable to
policyholders - - - - 0.5
----------------------- -------- ------------ -------- ------------ --------
Profit after
tax 25.5 27.6 25.0 25.1 51.1
Operating margin 47% 51% 53% 52% 51%
* Derecognition of deferred income liability and deferred
acquisition costs
H1 2022 no longer includes revenue due to amortisation of
deferred income liability, or expense due to amortisation of
deferred acquisition costs. This is due to the derecognition of
both deferred income liabilities and deferred acquisition costs at
financial 2021 year end, and the amortisation through the statement
of comprehensive income thereof. The derecognition had no impact on
net profit as the two accounting entries were always equal and
opposite, as detailed in note 17 of the 2021 Annual Report and
Accounts
To ensure a true comparative, the H1 2021 numbers that are
quoted in the narrative that follows have been adjusted to reflect
the accounting treatment no longer applying, so gross profit
figures have been reduced, as have total expenses, both by GBP3.8
million.
** 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.
Group profit
Gross profit for the six months to 31 March 2022 rose by GBP7.3
million (12%), to GBP66.1 million, from GBP58.8 million. This is a
solid increase in gross profit, despite the dampening of investment
platform revenue in the three months to March 2022, as the prospect
and then reality of Russia further annexing Ukraine emerged. The
rapid escalation of the situation caused international financial
markets to fall and also contributed to an already inflationary
economic environment, as energy prices soared. However, due to the
proven strength of the business model, combining strength in FUD
and inflows, plus growth in the number of clients and their tax
wrappers on the platform, the Group continues to grow gross
profit.
Group gross profit also includes T4A's gross profit of GBP1.5
million for the six month period, compared against the inclusion of
GBP0.6 million for the three months from acquisition in January
2021 to March 2021.
Group profit before tax increased by GBP0.5 million to GBP31.7
million, or 2% year on year. Underpinning this was an increase in
the investment platform profit before tax of 10% to GBP33.7
million. However, Group profit before tax was reduced, as projected
and expected, by losses before tax relief generated in T4A of
GBP1.1 million (H1 2021: (GBP0.3 million)).
Group profit after tax has grown by GBP0.5 million year on year,
from GBP25.0 million at half year 2021 to GBP25.5 million at half
year 2022.
Investment platform profit
The Transact investment platform is the primary driver of Group
revenue and profitability. Platform FUD has grown year on year by
14%, increasing from GBP46.93 billion at half year 2021 to GBP53.50
billion at half year 2022.The rise in FUD is principally behind the
increase in the investment platform's profit before tax from
GBP30.7 million to GBP33.7 million, an increase of 10%. Profit
after tax has grown GBP2.5 million at GBP27.6 million, also an
increase of 10%. We are also pleased to note that our platform
operating margin is at a level of 51% (H1 2021: 52%) which remains
impressive.
Revenue
Following the acquisition of T4A in January 2021, there have
been two streams of Group revenue: investment platform revenue and
T4A revenue.
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 and dealing
charges.
H1 2022 H1 2021 YE 2021
Platform revenue GBPm GBPm GBPm
Annual commission
income 58.4 51.8 107.7
Wrapper fee income 5.7 5.2 10.6
Other income 1.2 1.6 3.0
-------------------- -------- -------- --------
Total platform
revenue 65.3 58.6 121.3
T4A revenue 1.7 0.7 2.4
-------------------- -------- -------- --------
Total revenue 67.0 59.4 123.7
Recurring revenue streams constituted 98% (H1 2021: 97%) of
total fee income in the six months to 31 March 2022.
Annual commission income increased by GBP6.6 million (13%) in
the period versus the same period in the prior financial year,
after allowing for the fee reduction effective after the prior
comparative period. Whilst average FUD over the H1 2022 period was
GBP53.04 billion, an increase of 19% on H1 2021, the quarter to
December 2021 outperformed the quarter to March 2022, with average
FUD falling from GBP53.51 billion in the first quarter, to an
average of GBP52.55 billion in the second quarter and, hence, this
impacted annual revenue in the second quarter.
Wrapper administration fee income increased by GBP0.5 million
(9%) year on year, reflecting the increase in the number of open
tax wrappers.
Buy commission, included in other income, reduced by GBP0.4
million year on year. The primary reason for this fall was the
reduction in the buy commission rebate threshold in March 2021 and
March 2022. The required portfolio value for client family groups
to receive the rebate was reduced from GBP0.4 million to GBP0.3
million from 1 March 2021 and further reduced from GBP0.3 million
to GBP0.2 million from 1 March 2022. The purpose of the reductions
was to take an increasing proportion of clients out of the buy
commission charge, simplifying the fee structure and delivering
better value for money for them.
T4A revenue
T4A's revenue was GBP1.7 million to March 2022, compared with
GBP0.7 million from 11 January 2021 to 31 March 2021. 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 88% of its revenue, or GBP1.5 million of the total
revenue of GBP1.7 million. Removing licence fee revenue from the
user that has been in the process of terminating their contract
since prior to acquisition, then total revenue has increased from
GBP0.5 million from 11 January 2021 to March 2021, to GBP1.6
million in H1 2022.
The other significant revenue stream is consultancy fee income,
accounting for 10% of its revenue.
T4A has grown average monthly revenue, excluding the user in the
process of terminating their contract, from GBP172k per month from
11 January to 31 March 2021 to GBP286k per month in H1 2022, an
increase of 53%.
Operating expenses
H1 2022 H1 2021 YE 2021
GBPm GBPm GBPm
Staff costs 23.7 20.3 41.6
Occupancy 1.2 0.4 1.4
Regulatory and
professional fees 4.6 3.2 7.6
Non-underlying
expenses 1.5 1.9 3.3
Other income -
tax relief due
to shareholders (0.6) (1.6) (2.2)
Other costs 2.3 2.0 3.9
-------------------- -------- -------- --------
Total expenses 32.7 26.2 55.6
Depreciation and
amortisation 1.6 1.4 3.1
-------------------- -------- -------- --------
Total operating
expenses 34.3 27.6 58.7
In the six months to March 2022, total operating expenses
increased by GBP6.7 million (24%), compared with the six months to
March 2021. This is attributable to a number of factors.
Staff costs
Staff costs have increased by GBP3.4 million (17%) to GBP23.7
million in the six months to March 2022.
A significant element of the increase in staff costs is the
inclusion of six months of T4A staff costs in H1 2022 of GBP2.0
million, whereas only three months of costs - GBP694k - were
included in H1 2021. T4A has increased headcount from 54 employees
at March 2021, to 67 employees at March 2022. This is in line with
the business plan and is with the intent of increasing sales
capacity, as well as software development and ongoing training and
support capacity. The average monthly payroll has risen by 26% from
March 2021 to March 2022, which is broadly in line with the
increase in staff of 24% and demonstrates that growth in payroll
costs is not outstripping headcount.
Excluding T4A, staff costs for the remainder of the Group have
increased by 11% to GBP21.7 million, from GBP19.6 million at the
end of March 2021, with a corresponding increase in headcount from
504 at H1 2021 to 536 (6%) at H1 2022. Over half of this increase
in headcount is due to investing in roles that will enhance the
investment platform adviser and client onboarding and ongoing user
experience, with 17 roles added in these areas, reflecting growth
in the number of advisers and clients using the platform. The
remainder of the increase in headcount and costs is attributable to
pre lockdown vacancies being filled post-lockdown and general
inflationary cost increases.
Regulatory fees
Regulatory fees and FSCS costs increased by GBP300k (19%), from
GBP1.6 million in H1 2021 to GBP1.9 million in H1 2022. This is
attributed to an increase in fees levied on two of the regulated
entities in the Group: Integrated Financial Arrangements Ltd (IFAL)
and IntegraLife UK Ltd (ILUK). The uplift in these costs is due to
increasing business volumes and impact the financial services
industry as a whole.
Professional fees
Professional fees have increased year on year by GBP1.1 million
(69%), from GBP1.6 million in H1 2021 to GBP2.7 million in H1 2022.
However, due to VAT on non-underlying costs and stamp duty on the
acquisition of T4A, totalling GBP0.2 million, being included in
other costs in H1 2021, rather than professional fees, the true
uplift in professional fees year on year is GBP0.9 million, or
56%.
As with other expenses, six months of T4A expenses are included
in H1 2022, versus three months in H1 2021. This also applies to
professional fees and has resulted in an uplift of GBP0.2 million
in the six months to March 2022.
The remainder of the uplift in professional fees of GBP0.7
million relates to one off consultancy and advisory engagements
relating to the rest of the Group.
The streams of work worthy of mention have involved: a survey on
staff engagement and making sure our office was fully ready for a
safe return to work by our people; work on IT and cyber security,
to ensure a hybrid working environment was fully secure; and, a
review of the Group structure, with the aim of improving liquidity
flows through the Group. Incurring such costs is vital to ensure
the Group is secure and capital efficient, that we can continue to
meet all regulatory requirements, and that we are listening to our
people.
Occupancy
Occupancy costs have increased by GBP0.8 million in the half
year to March 2022, principally due to recognition of a rates
rebate of GBP0.7 million in H1 2021 for the Clement's Lane Head
Office. The balance of the rebate is being recognised over the
remainder of the lease, the impact of which is a reduction in
occupancy costs of GBP0.1 million in the half year to March
2022.
Occupancy costs have also been affected by a very sharp
inflationary increase in energy costs from December 2021 onwards.
The impact of the increase in H1 2022 is an increase of GBP0.2
million. The increase in energy costs will continue for the
remainder of the financial year and beyond.
Non-underlying expenses
Non-underlying expenses of GBP1.5 million arose in H1 2022 (H1
2021: GBP0.7 million), due to recognising post combination deferred
and additional consideration payable to the original T4A
shareholders in relation to the acquisition of T4A, as remuneration
over the four years from January 2021 to December 2024. H1 2021
also included GBP1.2 million of one off costs relating to the
purchase of T4A and consideration of Nucleus.
Other income
Other income has reduced by GBP1.0 million in the half year to
March 2022. This is due to an additional release of aged
policyholder tax provisions to the profit and loss in the half year
to March 2021.
Net income attributable to policyholder returns, and
policyholder tax
Net income/expense attributable to policyholder returns related
to IntegraLife UK Ltd (ILUK, the UK insurance company in the
Group), decreased by GBP26.0 million from net income of GBP17.8
million in March 2021, to net expense of GBP8.2 million in March
2022.
ILUK's policyholder tax decreased by GBP26.0 million, from a tax
charge of GBP17.8 million in March 2021 to a tax credit of GBP8.2
million in March 2022.
Both movements were due to a decrease in the gains on
investments held for the benefit of ILUK's policyholders, as a
result of the fall in financial markets from January 2022 to the
end of the reporting period. This led to policyholder tax
recoverable on losses suffered, and a corresponding expense due to
a reduction in the reserve charges taken from policyholders to
cover future tax payments.
Financial position
The material items on the consolidated statement of financial
position that merit comment are as follows:
Investments and cash held for the benefit of policyholders and
liabilities for linked investment contracts
ILUK and IntegraLife International Limited (ILInt, the offshore
insurance company in the Group) only write unit-linked insurance
policies. They match the assets and liabilities of their linked
policies such that, in their own individual statements of financial
position, these items always net off exactly. These line items are
required to be shown under IFRS in the consolidated statement of
comprehensive income, the consolidated statement of financial
position and the consolidated statement of cash flows, but they
have zero net effect on the financial statements.
Investments and cash held for the benefit of ILUK and ILInt
policyholders and the corresponding liabilities for linked
investment contracts have increased by GBP562.7 million (2%) due to
strong net inflows over the period but offset by significant drops
in investment value, as financial markets fell from January
onwards.
Deferred tax
Deferred ILUK policyholder tax liabilities have decreased by
GBP10.3 million from GBP28.4 million at 30 September 2021 to
GBP18.1 million at 31 March 2022. The decrease is due to the falls
in the market in the quarter to March 2021. Sufficient cash is held
by ILUK to meet this liability.
Provisions
Provisions have increased by GBP15.9 million. This is largely
due to tax charges deducted from ILUK policyholders when markets
rose being held in reserve for future tax liabilities, and may be
paid back to policyholders if asset values do not recover such that
the tax liability unwinds.
Dividends
During the six month period to 31 March 2022, the Company paid a
second interim dividend of GBP23.2 million to shareholders in
respect of financial year 2021. This was in addition to the first
interim dividend of GBP9.9 million, which was paid in June 2021.
The financial year total of GBP33.1 million compares with full year
interim dividends of GBP27.4 million in respect of financial year
2020.
In respect of the six months to 31 March 2021 (and in line with
dividend policy), the Board has declared a first interim dividend
of GBP 10.6 million, or 3.2 pence per ordinary share. This compares
with an interim dividend of GBP9.9 million, or 3.0 pence per
ordinary share, for the same period in the prior year.
Earnings per share
H1 2022 H1 2021
Profit after tax for the period GBP25.5m GBP25.0m
Number of shares in issue 331.3m 331.3m
Earnings per share - basic and
diluted 7.7p 7.5p
Earnings per share grew to 7.7p per share up 2% on the six
months to 31 March 2021.
Principal risks and uncertainties
The Risk and Risk Management section on pages 40 to 46 of the
2021 Annual Report and Accounts, provided a comprehensive view of
what the board considered to be the potential risks to the Group
that could undermine the successful achievement of its strategic
objectives, and threaten its business model or future performance.
Effective risk management is key to the Group delivering on its
strategy. The directors, with support from the business, have
maintained a robust assessment of the principal risks facing the
business in terms of its business model, future performance,
solvency and liquidity as well as non-financial risks. These are
captured and reviewed and reported to the IHP Group Audit and Risk
Committee, which is also supported by the Risk Committee covering
the Group's regulated entities.
The impacts of the Group's approach towards the COVID-19
pandemic were set out in the 2021 Annual Report and Accounts. Since
then, we have continued to follow all appropriate government
guidance and requirements. In light of that guidance, we have now
implemented a flexible working arrangement combining office based
and remote working, which is aligned to support our colleagues and
meet our business requirements. We continue to put the health and
safety of our colleagues at the forefront of our considerations,
and in so doing we have followed the recommendations from
government health and safety risk assessments and ensured all
colleagues are aware of the safety measures put in place, including
guidance on identifying and acting on COVID-19 symptoms. We have
piloted this approach in our UK London office, which allows us to
trial a range of working arrangements to ensure business operations
and our adviser and customer experiences are optimised.
Notwithstanding the transition out of lockdown, updates to the
key risks and uncertainties associated with our strategic
objectives over the next six months are as follows:
1. Increased operational risk: The implementation of the hybrid
office based and remote working arrangements has invoked a
requirement for a new set of operating protocols to be established
across a flexible workforce. The extensive use of portable IT
equipment with remote access is an essential feature for the future
operating model and as such will continue to increase the inherent
threat of external fraud and cyber-attack. Information security
risk is potentially heightened with highly confidential, personal
or price sensitive information at risk of being transported offsite
as part of flexible working arrangements. The standards of delivery
under the hybrid model of our critical business services may need
to be reviewed and, in some instances, it may be necessary to amend
the usual routines and procedures. The events in Ukraine require
additional compliance and monitoring of sanctions over investment
activities coupled with the increasing need for awareness and
vigilance around cyber threats to ourselves and our external
service suppliers e.g. banking, dealing and custody services.
Risk management and control: The return to office strategy
involved consultation and agreement from the senior management team
across the business. Senior business managers have been proactive
in defining the service metrics for operational effectiveness and
are using the UK London office pilot to review and optimise their
tailored approach to the provision of the Transact service. All
related modifications to operating procedures are reviewed by
senior management and assessed by Risk Management for impact, prior
to approval. Senior management will also consider any potential
impact on clients with the aim to avoid client detriment. Key
phases of the IT strategy have been delivered which includes backup
servers, a more robust WiFi service and enhanced remote access
controls. A series of pilot arrangements will be implemented to
test on a phased basis the resilience of the office and remote
working interface. Feedback from colleagues on their experiences
and suggestions provides valuable insight and opportunities to
improve processes. In this regard, proactive colleague engagement
surveys will be undertaken to ensure the views and comments of our
people are reflected to support them and the operating and
strategic objectives of the business. The Group is supporting the
UK Government's response to events in Ukraine and managing the
necessary sanctions and investments recorded and added to the
platform. The board has assessed its suppliers and feels that it
has limited exposure to operations affected by restrictions imposed
against Russia and from suppliers based in Ukraine.
2. Stock market volatility: World equity markets to date in
2022, have experienced a range of uncertain factors that has
resulted in the initial bullish market response to COVID-19 in 2020
and 2021 becoming more volatile and reactive to other events. On a
global basis, geo-political factors are creating uncertainty and
markets are responding to events and news on a daily basis. In
addition, a combination of economic indicators such as interest
rates and inflation coupled with UK tax increases has influenced
the sentiment of investors and provided significant uncertainty
towards economic performance and recovery rates. Whilst we are
learning to live with COVID-19, the potential for new variants
remains and for further lockdown measures to be invoked. It is
unclear exactly how this might impact markets further, with the
current factors being very different from those two years earlier.
This combination means that there remains potential for financial
distress at individual and corporate levels. The sentiment for
global growth over the remainder of 2022 therefore remains unclear
and fragile and any unexpected outcomes individually, or
collectively, from these factors will create uncertainty and
potentially volatile movements in stock markets. This has an effect
upon the value of FUD which then affects revenue.
Risk management and control: Stock market volatility, and its
impact on revenue, is partly mitigated by the wide range of assets
in which FUD is invested. This ensures that FUD based revenue is
not wholly correlated to any one market. Clients are also able to
switch into cash, which is experiencing an uptick in interest rates
earned, and this is likely to remain on the platform. The wrapper
fees are also not reduced by falls in the value of assets, as they
are levied at a fixed rate. Additionally, expenses are closely
monitored and controlled.
3. Service standards failure: Failure to maintain or to respond
to reduced levels of service standards would affect our ability to
attract and retain business. As highlighted above, circumstances
and external influences have necessitated changes to working
practices and crystallised a fuller understanding and appreciation
of the dependencies the Group has on the services and resilience of
third party suppliers. The changing and uncertain external
environment as well as the shift towards the hybrid working pattern
has the potential to make the sustainability of our high service
levels harder to deliver.
Risk management and control: The risk of service standards
failure is managed by providing client service teams with extensive
initial and ongoing training. Collectively the Group is supported
by experienced subject matter experts and managers. We now have a
more detailed view of remote working capabilities and capacity
which support service levels. We plan to use the London based
working pilot approach, as set out above, to provide more insight
on a flexible operating model and we will share these experiences
collectively across the Group, as appropriate, to optimise
operations and aim to ensure service standards are maintained. In
addition, the business prepares regular market insights reports
which compare our ratings against our peers on key indicators such
as FUD increase, market share of inflows, transfer ratios and new
adviser registrations. This provides a useful indication of service
standards overall. Our continuous engagement with advisers allows
us to gather further feedback in order to improve our service
standards. Key business processes have been reviewed for efficiency
and as a means of identifying opportunities for investment to
improve delivery through process enhancements and the effective
deployment of IT technical functionality of the platform. Counter
measures have been established to reduce the dependency on third
party suppliers in the event of their operational failure which is
supported by a rigorous supplier due diligence process to assess
operational resilience.
4. Increased competition: The market is competitive. Increased
levels of competition for clients and advisers; improvements in
offerings from other investment platforms; new entrants to the
advised investment platform space; and consolidation in the
financial adviser market may all make it more challenging to
attract and retain business. Adviser and client expectations
towards the use and deployment of technology as a means of
completing business has increased with a higher demand for
automation. The ease of completing business is becoming an
increasing competitive factor.
Risk management and control: Competition is countered by
focussing on providing exceptionally high levels of service and
being responsive to client and financial adviser demands. The Group
has embraced technology enhancements and continues to develop our
market leading proprietary software for the Transact platform and
the Time4Advice adviser back office system. Regular reviews ensure
that processes and procedures support the most effective customer
experience with prioritised improvements. Having a good level of
insight on processes allows for the timely capture of efficiencies
and also helps make possible a continued proposition of "value for
money" involving the reduction of charges. Our service quality
continues to be of paramount importance to the Group with record
levels of inflows acting as testament that this has been
strategically a sound and successful approach.
5. Reduced investment: The maintenance of quality and relevance
requires ongoing investment. Any reduction in investment due to
diversion of resources to other non-discretionary expenditure may
affect our competitive position.
Risk management and control: This risk, whilst not significantly
increasing has been brought more sharply into focus as we emerge
from the COVID-19 pandemic. The customer drive to conduct business
through technology has increased with a shift in expectations.
Retaining a strong investment strategy is paramount to maintaining
the operational resilience and capability of the Group. Our IT
strategy is investing in the technological enablers to support the
operating model whilst reducing the dependency on legacy systems.
The risk of reduced investment in the business is managed through a
disciplined approach to expense management and forecasting. In
particular, forthcoming regulatory regime changes are noted and
planned for and a contingency sum is maintained to allow for
unexpected expenses.
6. Expense overrun: The current and short term outlook of
inflation rates remain high and this will impact on the expenses of
the business. It remains important to retain competitive market
rates of pay in times where the employment market is buoyant in
order to ensure we retain and attract experienced and capable
staff. We are particularly aware that certain skills are in high
demand across the recruitment market, particularly in the
technology development and IT support sector, where experience,
both in the UK and Australia, is commanding a salary premium.
Geo-political events have significantly impacted utility supply
chains and the cost of services, e.g. electricity prices will be
higher than expected and budgeted. With these factors in mind, we
expect to experience an associated increase in the cost base this
year. The inflationary pressures on certain costs this year e.g.
salaries, are likely to be retained as a new baseline, which,
coupled with additional tax and on costs e.g. pension contributions
linked to salaries, will be reflected in the fixed costs of the
Group. Whilst the key constituent of expenses is salary cost, other
expenses, such as legal, compliance or regulatory costs and levies
are more likely to change unexpectedly. The outcome of a
reconsideration of HMRC's view that Integrated Application
Development Pty Ltd should be excluded from the UK VAT group, as
set out in the RNS issued on 28 January 2020, is currently awaited.
Following that, a formal review may be required and, possibly, a
referral to the Tribunal and/or litigation before the matter is
finally resolved. It is possible that a retrospective additional
VAT charge (plus interest and/or a penalty) and/or a prospective
increase in VAT charges might be applied.
Risk management and control: The most significant element of the
expense base is staff cost. This is monitored through modelling
staff requirements against forecast business volumes and factoring
in expected efficiencies from platform and other systems
developments. Expenditure requests that deviate from plan are
rigorously challenged and must receive prior approval. The
consolidated group costs are expected to increase as a result of
external factors highlighted which are reflected in the updated
group financial planning model.
7. Capital and liquidity strain: Unexpected, additional capital
or liquidity requirements imposed by regulators could negatively
impact solvency and liquidity coverage ratios.
Risk management and control: Specific resources are allocated to
monitor the current and anticipated regulatory environment to
ensure that all regulatory obligations are met. Assessments of
capital and liquidity requirements are also undertaken, which
includes running extreme stress and scenario tests to the point of
regulatory failure. A buffer over and above the regulatory minimum
solvency capital requirements is maintained. The capital position
has not significantly changed in this regard and in the context of
the implementation of the Investment Firm Prudential Regulations
(IFPR). The regulated companies within the Group continue to
maintain healthy solvency coverage ratios. The majority of
corporate assets are highly liquid, such as UK Gilts and instant
access deposits with regulated UK retail banks. No term deposits
exceed 95 days with Board risk appetites set to monitor the
adequacy of the liquidity profile. This is expected to remain the
case over the remainder of the financial year.
All other principal risks and uncertainties not mentioned above
are materially unchanged from those disclosed in the Annual Report
for the year ending 30 September 2021.
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 International Accounting Standard 34 (IAS 34)
Interim Financial Reporting as adopted for use in the UK, 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 2022
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 2022
which comprises the 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
to17. 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 2022 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 and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. 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 will be 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".
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.
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 is 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 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.
Ernst & Young LLP
London
25 May 2022
Unaudited Condensed Consolidated Statement of Comprehensive
Income
Six months Six months
Note to 31 March to 31 March
2022 2021
GBP'000 GBP'000
Revenue
Fee income 3 67,032 59,393
Amortisation of deferred income
liability - 3,841
Cost of sales (957) (575)
----------------------------------------- ------- ------------- -------------
Gross profit 66,075 62,659
Administrative expenses (34,297) (27,572)
Amortisation of deferred acquisition
costs - (3,841)
Credit loss allowance on financial
assets (92) (33)
Net (expense)/income attributable
to policyholder returns 7 (8,155) 17,802
Operating profit 23,531 49,015
----------------------------------------- ------- ------------- -------------
Operating (loss)/profit attributable
to policyholder returns 7 (8,155) 17,802
Operating profit attributable
to shareholder returns 31,686 31,213
Change in investment contract
liabilities 544,100 (1,594,215)
Fee and commission expenses (101,861) (81,204)
Investment returns (442,242) 1,675,404
Interest income 86 43
Interest expense (75) (90)
Profit on ordinary activities
before taxation 23,539 48,953
----------------------------------------- ------- ------------- -------------
(Loss)/profit on ordinary activities
before taxation attributable to
policyholder returns (8,155) 17,802
Profit on ordinary activities
before taxation attributable to
shareholder returns 31,694 31,151
Policyholder tax 7 8,155 (17,802)
Tax on profit on ordinary activities 5 (6,184) (6,176)
Profit for the period 25,510 24,975
Other comprehensive (loss)/income
Exchange gains/(losses) arising
on translation of foreign operations 67 (18)
Total other comprehensive income/(loss)
for the period 67 (18)
Total comprehensive income for
the period 25,577 24,957
----------------------------------------- ------- ------------- -------------
Earnings per share
Ordinary shares - basic and diluted 4 7.7p 7.5p
All activities of the Group are classed as continuing.
Unaudited Condensed Consolidated Statement of Financial
Position
31 March 30 September
Note 2022 2021
GBP'000 GBP'000
Non-current assets
Loans 2 4,251 3,420
Intangible assets 8 22,063 22,286
Property, plant and equipment 1,481 1,827
Right of use assets 2,883 3,632
Deferred tax assets 6 716 716
31,394 31,881
Current assets
Financial assets at fair value
through profit or loss 5,212 5,134
Other prepayments and accrued income 16,130 15,951
Trade and other receivables 13 9,842 3,719
Investments held for the benefit
of policyholders 10 22,201,415 21,787,106
Cash and cash equivalents 12 1,592,483 1,442,362
Current tax asset 1,042 1,122
23,826,124 23,255,394
Current liabilities
Trade and other payables 14 18,262 17,466
Provisions 9 11,624 11,624
Lease liabilities 2,362 2,362
Liabilities for linked investment
contracts 11 23,616,116 23,053,390
23,648,364 23,084,842
Non-current liabilities
Provisions 9 22,062 6,180
Contingent consideration 1,262 791
Lease liabilities 1,579 2,675
Deferred tax liabilities 6 19,161 29,518
44,064 39,164
Net assets 165,090 163,269
-------------------------------------- ----- ----------- -------------
Capital and reserves
Called up equity share capital 3,313 3,313
Capital redemption reserve 2 2
Share-based payment reserve 2,256 2,404
Employee Benefit Trust reserve (2,356) (2,055)
Foreign exchange reserve (27) (94)
Non-distributable reserves 5,722 5,722
Non-distributable insurance reserves - 501
Profit or loss account 156,180 153,476
-------------------------------------- ----- ----------- -------------
Total equity 165,090 163,269
-------------------------------------- ----- ----------- -------------
These interim financial statements were approved by the Board of
Directors on 25 May 2022 and are signed on their behalf by:
Alexander Scott, Director
Company Registration Number: 08860879
Unaudited Condensed Consolidated Statement of Cash Flows
Six months Six months
to 31 March to 31 March
2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 23,539 48,953
Adjustments for:
Amortisation and depreciation 1,624 1,356
Share-based payments charge 989 920
Interest on cash and loans held (86) (43)
Interest charged on lease liability 75 89
Investment returns 3 15
Release of actuary reserve (501) -
Increase in policyholder tax recoverable (5,895) (6,225)
Increase in current asset investments (78) (58)
------------------------------------------------ ------------- -------------
19,670 45,007
Increase in receivables (6,302) (973)
(Decrease)/increase in payables 796 (1,423)
(Decrease)/increase in provisions 15,882 (7,469)
Increase in contingent consideration 471 -
Decrease in share-based payment
reserve (657) (916)
Increase in investments held for
the benefit of policyholders (414,309) (2,889,259)
Increase in liabilities for linked
investment contracts 562,726 2,811,260
Cash generated from/(used in)
operations 178,277 (43,773)
Income taxes paid (2,411) (6,802)
Interest paid on lease liabilities (75) (89)
Net cash flows from operating
activities 175,791 (50,664)
Investing activities
Acquisition of tangible assets (233) (408)
Acquisition of subsidiary, net
of cash acquired - (7,903)
Increase in loans (831) (195)
Interest on cash and loans held 86 43
Investment returns (3) (15)
Net cash used in investing activities (981) (8,478)
Financing activities
Purchase of own shares in Employee
Benefit Trust (430) (438)
Equity dividends paid (23,158) (18,532)
Repayment of lease liabilities (1,168) (1,159)
Net cash used in financing activities (24,756) (20,129)
Net increase/(decrease) in cash
and cash equivalents 150,054 (79,272)
Cash and cash equivalents at
beginning of period 1,442,362 1,539,843
Exchange gains/(losses) on cash
and cash equivalents 67 (18)
------------------------------------------------ ------------- -------------
Cash and cash equivalents at
end of period 1,592,483 1,460,555
Unaudited Condensed Consolidated Statement of Changes in
Equity
Share-based Non-distributable Employee
Share Non-distributable Other payment insurance benefit Retained Total
capital reserves reserves reserve reserves trust earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
at 1 October
2020 3,313 5,722 (20) 1,698 501 (1,103) 130,809 140,920
Comprehensive
income for
the year:
Profit for
the year - - - - - - 24,975 24,975
Movement
in currency
translation - - (18) - - - - (18)
Other movement - - - - - - - -
Total
comprehensive
income for
the year - - (18) - - - 24,975 24,957
Distributions
to owners:
Dividends - - - - - - (18,531) (18,531)
Share-based
payment
expense - - - 919 - - - 919
Settlement
of
share-based
payment - - - (916) - - - (916)
Purchase
of own shares
in EBT - - - - - (439) - (439)
Total
distributions
to owners - - - 3 - (439) (18,531) (18,967)
--------------- -------- ------------------ ---------- ------------ ------------------ --------- --------- ---------
Balance
at 31 March
2021 3,313 5,722 (38) 1,701 501 (1,542) 137,253 146,910
--------------- -------- ------------------ ---------- ------------ ------------------ --------- --------- ---------
Balance
at 1 October
2021 3,313 5,722 (92) 2,404 501 (2,055) 153,476 163,269
Comprehensive
income for
the year:
Profit for
the year - - - - - - 25,510 25,510
Movement
in currency
translation - - 67 - - - - 67
Total
comprehensive
income for
the year - - 67 - - - 25,510 25,577
Distributions
to owners:
Share-based
payment
expense - - - 989 - - - 989
Settlement
of
share-based
payment - - - (1,137) - - - (1,137)
Purchase
of own shares
in EBT - - - - - (430) - (430)
Exercised
share options - - - - - 129 (149) (20)
Release
of actuarial
reserve - - - - (501) - 501 -
Dividends - - - - - - (23,158) (23,158)
Total
distributions
to owners - - - (148) (501) (301) (22,806) (23,756)
--------------- -------- ------------------ ---------- ------------ ------------------ --------- --------- ---------
Balance
at 31 March
2022 3,313 5,722 (25) 2,256 - (2,356) 156,180 165,090
--------------- -------- ------------------ ---------- ------------ ------------------ --------- --------- ---------
Notes to the Financial Statements (unaudited)
1. Basis of preparation
The interim condensed consolidated financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted for use in the UK 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 2021, which were prepared in accordance with
International Financial Reporting Standards (IFRSs) adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union and in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006, which are materially the same as UK-adopted international
accounting standards. The annual financial statements of the Group
for the year ended 30 September 2022 will be prepared in accordance
with UK-adopted international accounting standards.
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 14-15.
The comparative financial information for the year ended 30
September 2021 in this interim report does not constitute statutory
accounts for that year.
The statutory accounts for 30 September 2021 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
2021. 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 2021.
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 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 2022, the Group had GBP177.8 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, including the impact of events in Ukraine, rising
inflation rates and COVID-19.
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, rising
inflation rates and COVID-19. 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 these, 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.
Principal risks and uncertainties
The Group's principal risks and uncertainties are listed on
pages 9-12.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries.
Business combinations
The acquisition method of accounting is used to account for all
business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the:
-- fair values of the assets transferred ;
-- liabilities incurred to the former owners of the acquired business;
-- equity interests issued by the group;
-- fair value of any asset or liability resulting from a
contingent consideration arrangement; and
-- fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred over the fair value
of the net identifiable assets acquired is recorded as goodwill. If
those amounts are less than the fair value of the net identifiable
assets of the business acquired, the difference is recognised
directly in the statement of comprehensive income.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity's incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent financier
under comparable terms and conditions.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value, with changes in fair
value recognised in the statement of comprehensive income.
Contingent arrangements payable to selling shareholders that
continue providing services are assessed to determine if there is
an element of payment for post-combination services. The element
that is determined to relate to post-combination services is
recognised in in the statement of comprehensive income across the
periods to which the services relate.
2. Financial instruments
Principal financial instruments
The principal financial instruments, from which financial
instrument risk arises, are as follows:
-- Trade and other receivables
-- Accrued fees
-- Cash and cash equivalents
-- Investments in quoted debt instruments
-- Listed shares and securities
-- Trade and other payables
-- Loans
Financial instruments by category
Financial assets and liabilities have been classified into
categories that determine their basis of measurement and, for items
measured at fair value, whether changes in fair value are
recognised in the 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 Amortised cost
profit or loss
31 Mar 30 Sep 31 Mar 30 Sep
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents - - 1,592,483 1,442,362
Listed shares and securities 258 165 - -
Loans - - 4,251 3,420
Investments in quoted
debt instruments 4,954 4,969 - -
Accrued income - - 12,179 12,030
Trade and other receivables - - 1,987 934
Investments held for the
benefit of policyholders 22,201,415 21,787,106 - -
------------------------------ -----------
Total financial assets 22,206,627 21,792,240 1,610,900 1,458,746
Financial liabilities:
Fair value through Amortised cost
profit or loss
31 Mar 30 Sep 31 Mar 30 Sep
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables - - 7,613 7,056
Accruals - - 4,355 7,906
Lease liabilities - - 3,941 5,037
Deferred consideration - - 634 1,741
Contingent consideration 1,262 791 - -
Liabilities for linked
investments contracts 23,616,115 23,053,390 - -
----------------------------- ----------- ----------- --------------- --------
Total financial liabilities 23,617,377 23,054,181 16,543 21,740
The following tables show the carrying values of assets and
liabilities for each of these categories for the Company:
Financial assets:
Fair value through Amortised cost
profit or loss
31 Mar 30 Sep 31 Mar 30 Sep
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents - - 20,571 30,962
Trade and other receivables - - 142 -
Loans - - 4,251 3,420
-----------------------------
Total financial assets - - 24,964 34,382
Financial liabilities:
Fair value through Amortised cost
profit or loss
31 Mar 30 Sep 31 Mar 30 Sep
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables - - 340 22
Loans - - 9,000 9,000
Deferred consideration - - 634 2,533
Contingent consideration 1,262 791 - -
Accruals - - 164 359
----------------------------- ---------- --------- --------------- --------
Total financial liabilities 1,262 791 10,138 11,914
Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash
and cash equivalents, accrued fees, loans, trade and other
receivables, and trade and other payables. Due to their short-term
nature and/or annual impairment review, The Group considers that
the carrying amount of these financial instruments are a reasonable
approximation of their fair value.
Financial instruments measured at fair value - fair value
hierarchy
The table below classifies financial assets 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. The assets are classified using the 'fair value
through profit or loss' option with any resultant gain or loss
recognised through the statement of comprehensive income .
Assets held at fair value also comprises investments held in
gilts, and these are held at fair value through profit and
loss.
The following table shows the three levels of the fair value
hierarchy:
Fair value Description of hierarchy Types of investments
hierarchy classified at each level
Level 1 Quoted prices (unadjusted) Listed equity securities,
in active markets for identical gilts, actively traded
assets pooled investments such
as OEICS and unit trusts.
--------------------------------- ---------------------------------
Level 2 Inputs other than quoted Actively traded unlisted
prices included within Level equity securities where
1 that are observable for there is no significant
the asset either directly unobservable inputs, structured
(i.e. as prices) or indirectly products and regularly
(i.e. derived from prices) priced but not actively
traded instruments.
--------------------------------- ---------------------------------
Level 3 Inputs that are not based Unlisted equity securities
on observable market data with significant unobservable
(unobservable inputs). inputs, inactive pooled
investments.
--------------------------------- ---------------------------------
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 measured at fair
value and split into the three levels:
At 31 March 2022 Level 1 Level Level Total
2 3
GBP'000 GBP'000 GBP'000 GBP'000
Investments and assets
held for the benefit
of policyholders
* Term deposits - 35,777 - 35,777
* Investments and securities 676,923 152,386 325 829,634
* Bonds and other fixed-income securities 14,315 632 - 14,947
* Holdings in collective investment schemes 21,186,611 133,428 1,018 21,321,057
------------------------------------------------ ----------------- -------------- -------------- -----------------
1 21,877,849 322,223 1,343 22,201,415
Other investments 4,949 - - 4,949
------------------------------------------------ ----------------- -------------- -------------- -----------------
Total 21,882,798 322,223 1,343 22,206,364
------------------------------------------------ ----------------- -------------- -------------- -----------------
At 30 September Level 1 Level 2 Level 3 Total
2021
GBP'000 GBP'000 GBP'000 GBP'000
Investments and
assets held for
the benefit of
policyholders
* Investments and securities 633,602 163,940 440 797,982
* Bonds and other fixed-income securities 14,846 589 - 15,435
* Holdings in collective investment schemes 20,848,948 113,265 1,476 20,973,689
-------------------------------------------------- ----------------- -------------- --------- ------------
21,507,396 277,794 1,916 21,787,106
Other investments 4,964 - - 4,964
-------------------------------------------------- ----------------- -------------- --------- ------------
Total 21,512,360 277,794 1,916 21,792,070
-------------------------------------------------- ----------------- -------------- --------- ------------
Level 1 valuation methodology
Financial assets 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
The Group regularly reviews whether a market is active, based on
available market data and the specific circumstances of each
market. Where the Group assesses that a market is not active, then
it applies one or more valuation methodologies to the specific
financial asset. These valuation methodologies use quoted market
prices, where available, and may in certain circumstances require
the Group to exercise judgement to determine fair value.
Financial assets 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 are included in Level 3. These are
assets where one or more inputs to the valuation methodology are
not based on observable market data. The key unobservable input is
the pre-tax operating margin needed to price asset holdings.
Level 3 sensitivity to changes in unobservable measurements
For financial assets assessed as Level 3, based on its review of
the prices used, the Company
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
period 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 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,
and whether there are indications of impairment.
Transfers between Levels 1 and 2 between 31 March 2022 and 30
September 2021 are presented in the table below at their valuation
at 31 March 2021:
Transfers from Transfers to GBP'000
Level 1 Level 2 17,940
Level 2 Level 1 3,498
The large movement from Level 1 to Level 2 is due to the
suspension of several funds with exposure to Russian securities
which suspended following the Russian invasion of Ukraine.
Consequently these funds are no longer actively trading.
The reconciliation between opening and closing balances of Level
3 assets are presented in the table below:
31 March 30 September
2022 2021
GBP'000 GBP'000
Opening balance 1,916 1,676
Unrealised gains or losses in the
year ended 31 March 2022 - (236)
Transfers in to Level 3 at 31 March
2022 valuation 662 1,114
Transfers out of Level 3 at 31 March
2022 valuation (1,101) (578)
Purchases, sales, issues and settlement (133) (60)
Closing balance 1,344 1,916
----------------------------------------- ---------- -------------------
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 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.
The Group has three classes of business as follows:
- provision of investment administration services;
- transaction of ordinary long term insurance and underwriting
life assurance; and
- Adviser back-office technology.
Adviser back-office technology relates to the acquisition of T4A
during the financial period ending 30 September 2021.
Further other Group entities comprise the entities within the
group who provide functions which are not directly revenue
generating for one of the three classes of business, such as the
provision of shared services across the Group.
Analysis by class of business is given below.
Statement of comprehensive income - segmental information for
the six months ended 31 March 2022:
Insurance Other Group
Investment and life Adviser entities
administration assurance back-office Consolidation
services business technology adjustments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Annual
commission
income 31,922 26,460 - - - 58,382
Wrapper fee
income 1,381 4,291 - - - 5,672
Adviser
back-office
technology - - 1,713 - - 1,713
Other income 760 505 - 32,141 (32,141) 1,265
Total revenue 34,063 31,256 1,713 32,141 (32,141) 67,032
Cost of sales (293) (180) (246) (238) - (957)
Gross
profit/(loss) 33,770 31,076 1,467 31,903 (32,141) 66,075
Administrative
expenses (18,644) (12,604) (2,603) (32,586) 32,141 (34,297)
Credit loss
allowance
on financial
assets (47) 10 - (35) - (92)
Net expense
attributable
to
policyholder
returns - (8,155) - - - (8,155)
---------------- --------------------- ---------- ------------ -------------------- -------------- ----------------
Operating
profit/(loss) 15,079 10,307 (1,136) (718) - 23,531
---------------- --------------------- ---------- ------------ -------------------- -------------- ----------------
Operating loss
attributable
to
policyholder
returns - (8,155) - - - (8,155)
Operating
profit/(loss)
attributable
to shareholder
returns 15,079 18,462 (1,136) (718) - 31,686
Change in
investment
contract
liabilities - 544,100 - - - 544,100
Fee and
commission
expenses - (101,861) - - - (101,861)
Investment
returns - (442,242) - - - (442,242)
Interest
expense (3) - - (224) 152 (75)
Interest
income 5 183 - 50 (152) 86
Profit/(loss)
on ordinary
activities
before
tax 15,081 10,487 (1,136) (892) - 23,539
Loss on
ordinary
activities
before
taxation
attributable
to
policyholder
returns - (8,155) - - - (8,155)
Profit/(loss)
on ordinary
activities
before
taxation
attributable
to shareholder
returns 15,082 18,641 (1,136) (892) - 31,694
Policyholder
tax - 8,155 - - - 8,155
Tax on profit
on ordinary
activities (2,866) (3,234) 206 (290) - (6,184)
Profit/(loss)
for the period 12,217 15,407 (931) (1,183) - 25,510
---------------- --------------------- ---------- ------------ -------------------- -------------- ----------------
Statement of comprehensive income - segmental information for
the six months ended 31 March 2021:
Insurance
Investment and life Other
administration assurance Adviser group Consolidation
services business back-office entities adjustments
(restated) (restated) technology (restated) (restated) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Annual commission
income 28,368 23,479 - - - 51,847
Wrapper fee
income 1,253 3,936 - - - 5,189
Adviser
back-office
technology - - 732 - - 732
Other income 924 687 - 30,360 (30,346) 1,625
------------------ --------------- -------------- ------------ ----------- -------------- --------------
Total income 30,545 28,102 732 30,360 (30,346) 59,393
Amortisation
of deferred
income liability - 3,841 - - - 3,841
Cost of sales (210) (148) (84) (133) - (575)
------------------ --------------- -------------- ------------ ----------- -------------- --------------
Gross
profit/(loss) 30,335 31,795 648 30,227 (30,346) 62,659
Administrative
expenses (17,200) (10,348) (918) (29,452) 30,346 (27,572)
Amortisation
of deferred
acquisition
costs - (3,841) - - - (3,841)
Credit loss
allowance on
financial assets (17) (8) - (8) - (33)
Net
income/(expense)
attributable to
policyholder
returns - 17,802 - - - 17,802
------------------ --------------- -------------- ------------ ----------- -------------- --------------
Operating
profit 13,118 35,400 (270) 767 - 49,015
Operating
profit
attributable
to policyholder
returns - 17,802 - - - 17,802
Operating
profit/(loss)
attributable
to shareholder
returns 13,118 17,598 (270) 767 - 31,213
Change in
investment
contract
liabilities - (1,594,215) - - - (1,594,215)
Fee and
commission
expenses - (81,204) - - - (81,204)
Investment
returns - 1,675,404 - - - 1,675,404
Interest income 1 75 - 37 (70) 43
Interest
expense - - - (160) 70 (90)
Profit/(loss)
on ordinary
activities
before tax 13,119 35,460 (270) 644 - 48,953
------------------ --------------- -------------- ------------ ----------- -------------- --------------
Profit on
ordinary
activities
before
taxation
attributable
to policyholder
returns - 17,802 - - - 17,802
Profit/(loss)
on ordinary
activities
before taxation
attributable to
shareholder
returns 13,119 17,658 (270) 644 - 31,151
Policyholder
tax - (17,802) - - - (17,802)
Tax on profit
on ordinary
activities (2,493) (3,101) - (582) - (6,176)
Profit/(loss)
for the period 10,626 14,557 (270) 62 - 24,975
------------------ --------------- -------------- ------------ ----------- -------------- --------------
The comparative segmental analysis has been restated to reflect
the revised presentation format used in the current year.
Statement of financial position - segmental information as at 31
March 2022:
Insurance
Investment administration and life assurance
services business Licences Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current
assets 11,636 19,715 43 31,394
Current assets 68,653 23,754,560 2,911 23,826,124
Total assets 80,289 23,774,275 2,954 23,857,518
Liabilities
Current liabilities 8,608 23,639,021 735 23,648,364
Non-current liabilities 2,281 41,783 - 44,064
----------------------------- -------------------------- -------------------- ----------- -----------
Total liabilities 10,889 23,680,804 735 23,692,428
Net assets 69,400 93,471 2,219 165,090
Non-current asset additions 74 69 23 166
Statement of financial position - segmental information as at 30
September 2021:
Insurance
Investment administration and life assurance
services business Licences Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current
assets 11,884 19,967 30 31,881
Current assets 67,309 23,184,219 3,866 23,255,394
Total assets 79,193 23,204,186 3,896 23,287,275
Liabilities
Current liabilities 8,163 23,075,931 748 23,084,842
Non-current liabilities 2,616 36,548 - 39,164
----------------------------- -------------------------- -------------------- ----------- -----------
Total liabilities 10,779 23,112,479 748 23,124,006
Net assets 68,414 91,707 3,148 163,269
Non-current asset additions 329 304 26 660
Segmental information: Split by geographical location
Revenue Six months Six months
to 31 March to 31 March
2022 2021
GBP'000 GBP'000
United Kingdom 61,609 53,887
Isle of Man 2,622 2,447
Australia 2,801 3,060
---------------- ------------- -------------
Total 67,032 59,393
---------------- ------------- -------------
Non-current assets 31 March 30 September
2022 2021
GBP'000 GBP'000
United Kingdom 1,138 26,873
Isle of Man 26,005 51
-------------------- --------- -------------
Total 27,143 26,924
-------------------- --------- -------------
4. Earnings per share
Six months Six months
to 31 March to 31 March
2022 2021
Profit
Profit for the year and earnings GBP25.5m GBP25.0m
used in basic and 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 (0.4m) (0.2m)
Weighted average number of Ordinary
Shares for the purposes of basic
EPS 330.9m 331.1m
Adjustment for dilutive share option
awards 0.4m 0.2m
Weighted average number of Ordinary
Shares for the purposes of diluted
EPS 331.3 331.3m
Earnings per share
Basic earnings per share 7.7p 7.5p
Diluted earnings per share 7.7p 7.5p
5. Tax on profit on ordinary activities
The UK estimated weighted average effective tax rate was 19% for
the six month period ended 31 March 2022 (31 March 2021: 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
under the liability method using a tax rate of 25% (2021: 19%). 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 becomes effective.
Deferred Tax Asset
Accelerated Share Policyholder Other deductible Total
capital based tax temporary
allowances payments differences
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 September
2020 402 - 87 489
Excess tax relief
charged to equity - 19 - - 19
Charge to income - 192 - 16 208
-------------------- ------------- ------------ ------------- ----------------- --------
At 30 September
2021 - 613 - 103 716
Charge to income - - - - -
-------------------- ------------- ------------ ------------- ----------------- --------
As at 31 March
2022 - 613 - 103 716
-------------------- ------------- ------------ ------------- ----------------- --------
Deferred Tax Liability
Accelerated Share Policyholder Other deductible Total
capital based tax temporary
allowances payments differences
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 September
2020 121 - 8,847 - 8,968
Deferred tax
acquired through
business combination - - - 821 821
Charge to income (49) - 19,599 179 19,729
----------------------- ------------ ----------- ------------- ----------------- ---------
At 30 September
2021 72 - 28,446 1,000 29,518
Charge to income - - (10,301) (56) (10,357)
----------------------- ------------ ----------- ------------- ----------------- ---------
As at 31 March
2022 72 - 18,145 944 19,161
----------------------- ------------ ----------- ------------- ----------------- ---------
7. Policyholder income and expenses
Six months
Six months to to 31 March
31 March 2022 2021
GBP'000 GBP'000
Net income / (expense) attributable
to policyholder returns (8,155) 17,802
Policyholder tax (charge)
/ credit 8,155 (17,802)
This relates to income and expenses, and the associated tax
charges, on policyholder assets and liabilities.
8. Intangible assets
Software
and IP Customer
rights Goodwill relationships Software Brand Total
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2021 12,505 18,286 2,086 1,975 260 35,112
Additions - - - - - -
------------------- --------- --------- --------------- --------- -------- --------
At 31 March 2022 12,505 18,286 2,086 1,975 260 35,112
------------------- --------- --------- --------------- --------- -------- --------
Amortisation
At 1 October
2021 12,505 - 100 203 18 12,826
Charge for the
year - - 69 141 13 223
------------------- --------- --------- --------------- --------- -------- --------
At 31 March 2022 12,505 - 169 344 31 13,049
------------------- --------- --------- --------------- --------- -------- --------
Net Book Value
At 30 September
2021 - 18,286 1,986 1,772 242 22,286
At 31 March 2022 - 18,286 1,917 1,631 229 22,063
Cost
At 1 October
2020 12,505 12,951 - - - 25,456
Acquisitions
through business
combinations - 5,335 2,086 1,975 260 9,656
------------------- --------- --------- --------------- --------- -------- --------
At 30 September
2021 12,505 18,286 2,086 1,975 260 35,112
------------------- --------- --------- --------------- --------- -------- --------
Amortisation
At 1 October
2020 12,505 - - - - 12,505
Charge for the
year - - 100 203 18 321
------------------- --------- --------- --------------- --------- -------- --------
At 30 September
2021 12,505 - 100 203 18 12,826
------------------- --------- --------- --------------- --------- -------- --------
Net Book Value
At 30 September
2020 - 12,951 - - - 12,951
At 30 September
2021 - 18,286 1,986 1,772 242 22,286
Amortisation of intangible assets is recognised within
administrative expenses in the statement of comprehensive
income.
9. Provisions
30 September
31 March 2022 2021
GBP'000 GBP'000
Balance brought forward 17,804 25,208
Increase in dilapidations
provision 26 52
Increase in ILInt non-linked
unit provision - 13
(Decrease)/increase in ILUK
tax provision 15,856 (7,469)
Balance carried forward 33,686 17,804
--------------------------------- -------------- --------------------------
Amounts falling due within
one year 11,624 11,624
Amounts falling due after
one year 22,062 6,180
Dilapidations provisions 542 516
ILInt non-linked unit provision 54 54
Current ILUK tax provision - 11,626
Non-current ILUK tax provision 33,090 5,608
33,686 17,804
--------------------------------- -------------- --------------------------
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.
10. Investments held for the benefit of policyholders
31 March 31 March 30 September 30 September
2022 2022 2021 2021
Cost Fair value Cost Fair value
ILInt GBP'000 GBP'000 GBP'000 GBP'000
Investments
held for the
benefit of
policyholders 1,882,215 2,166,442 1,737,512 2,102,209
---------------- ----------- ----------- ------------- -------------
1,882,215 2,166,442 1,737,512 2,102,209
---------------- -------------
ILUK
Investments
held for the
benefit of
policyholders 17,292,864 20,034,973 16,146,376 19,684,897
---------------- ----------- ----------- ------------- -------------
17,292,864 20,034,973 16,146,376 19,684,897
Total 19,175,079 22,201,415 17,883,888 21,787,106
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, with the remaining GBP1,415 million
included within the cash balance (note 12).
11. Liabilities for linked investment contracts
31 March 30 September
2022 2021
Fair value Fair value
ILInt GBP'000
Unit linked liabilities 2,294,882 2,199,700
2,294,882 2,199,700
ILUK
Unit linked liabilities 21,321,234 20,853,690
21,321,234 20,853,690
Total 23,616,116 23,053,390
Analysis of change in liabilities for linked investment
contracts
30 September
31 March 2022 2021
Fair value Fair value
GBP'000 GBP'000
Opening balance 23,053,390 18,112,935
Investment inflows 1,711,589 3,391,318
Investment outflows (575,777) (1,130,468)
Compensation 201 163
Changes in fair value of underlying
assets (442,239) 2,940,185
Policyholder credit on deemed
losses 1,563
Other fees and charges - Transact (30,750) (56,620)
Other fees and charges - third
parties (101,861) (204,123)
Closing balance 23,616,116 23,053,390
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.
12. Cash and cash equivalents
31 March 30 September
2022 2021
GBP'000 GBP'000
Bank balances - Instant access 170,282 169,578
Bank balances - Notice accounts 7,502 6,502
Cash and cash equivalents held
for the benefit of the policyholders
- instant access - ILUK 1,286,259 1,131,567
Cash and cash equivalents held
for the benefit of the policyholders
- term deposits - ILUK - 37,225
Cash and cash equivalents held
for the benefit of the policyholders
- instant access - ILINT 128,440 96,458
Cash and cash equivalents held
for the benefit of the policyholders
- term deposits - ILINT - 1,032
Total 1,592,483 1,442,362
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.
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.
Following a review of the term deposits held for the benefit of
policyholders, management has concluded that these should be
recognised as investments held for the benefit of policyholders,
rather than cash and cash equivalents . This is due to the fact
that the original maturity is more than 90 days and they cannot be
withdrawn early without penalties. The term deposits have therefore
been reclassified in the period ended 31 March 2022, to bring the
accounts in line with the accounting standards.
The impact is a reduction in cash and cash equivalents of
GBP35.8 million and a corresponding increase in investments held
for the benefit of policyholders . The treatment has had no impact
on the profit or loss or net assets of the Group.
Management has considered the qualitative and quantitative
impact of the above change, and has concluded that this does not
have a material effect on the prior year financial statements, and
a prior year adjustment is therefore not required. This is due to
the fact that:
-- The net impact on the statement of comprehensive income and on net assets is nil;
-- the total balances are not material in the context of total
policyholder assets and linked liabilities; and
-- the users would not reasonably have any expectations
regarding the measurement or disclosure of these items, as it
fundamentally does not relate to them.
13. Trade and other receivables
31 March 30 September
2022 2021
GBP'000 GBP'000
Other receivables 1,837 935
Less: credit loss allowance (122) (123)
Other receivables net 1,715 812
Amounts owed by Group undertakings - -
Amounts due from HMRC 7,060 1,800
Amount due from policyholders to
meet current tax liability 1,067 1,107
Total 9,842 3,719
Amount due from HMRC is in respect of tax claimed on behalf of
policyholders for tax deducted at source.
14. Trade and other payables
31 March 30 September
2022 2021
GBP'000 GBP'000
Trade payables 2,163 439
PAYE and other taxation 1,767 1,610
Deferred consideration - -
Other payables 6,148 5,460
Accruals and deferred income 7,550 8,216
Deferred consideration 634 1,741
Total 18,262 17,466
15. Related parties
There were no material changes to the related party transactions
during the period.
16. 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.
17. Dividends
During the six month period to 31 March 2022 the Company paid an
interim dividend of GBP23.2 million (7.0 pence per share) to
shareholders in respect of financial year 2021. This was in
addition to the first interim dividend of GBP9.9 million (3.0 pence
per share) in respect of financial year 2021, which was paid in
June 2021. The total of GBP33.1 million (10.0 pence per share)
compares with a full year interim dividend of GBP27.4 million (8.3
pence per share) in respect of the full financial year 2020.
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
LEI
213800CYIZKXK9PQYE87
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
IR XELLLLELFBBZ
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