TIDMIHP
RNS Number : 8862S
IntegraFin Holdings plc
19 July 2022
LEI Number: 213800CYIZKXK9PQYE87
IHP Group quarterly update - Q3 of financial year 2022
19 July 2022
Headlines
-- Our gross inflows for the quarter were GBP1.7bn and our net
inflows over the same period were GBP1.0bn. Furthermore, our gross
inflows and net inflows for the financial year to date remain ahead
of the prior year comparative. This is a solid performance,
considering the economic and market headwinds in 2022.
-- The average daily funds under direction ('FUD') for the
quarter was GBP51.9bn, this was lower than both Q1 and Q2 of
financial year 2022, due to the adverse impact of market
movements.
-- The rate at which new clients and advisers are joining the
platform remains consistently strong and provides a solid basis for
ongoing platform growth.
-- In this quarterly update we also provide cost guidance,
including further information on the phasing of the investment in
additional IT and software development staff that we announced at
our FY22 half year reporting.
Quarter ended Quarter ended Financial Financial
year year
to date to date
--------------------
30 June 2022 30 June 2021 30 June 2022 30 June 2021
GBPm GBPm GBPm GBPm
Opening FUD 53,500 46,929 52,112 41,093
Inflows 1,703 1,994 5,770 5,728
Outflows -703 -657 -2,089 -2,084
Net Flows 1,000 1,337 3,681 3,644
Market movements -4,152 2,112 -5,321 5,744
Other movements(1) -48 -68 -172 -171
Closing FUD 50,300 50,310 50,300 50,310
Average daily
FUD for the
period 51,889 48,677 52,655 45,698
Notes:
(1) Includes fees, taxes and investment income.
Alex Scott, Chief Executive Officer, commented:
I am pleased to report a robust quarter of inflows on to our
platform. Net inflows were GBP1.0bn in spite of a difficult
economic and market environment. Outflows remained broadly in line
with previous quarters.
The net inflows on to the platform, together with strong and
consistent rates of new clients joining the platform (17,949 added
to date in FY22, compared to 17,942 for the comparative period in
FY21), and newly registered advisers (546 added to date in FY22,
compared to 522 for the comparative period in FY21), is testament
to the strength of the investment platform offering.
Platform FUD at the end of the third quarter had reduced to
GBP50.3bn as a result of continuing macro-economic and
geo-political events impacting both stock and bond markets. This
has had a corresponding impact on our core platform revenue.
We announced in our HY22 reporting that we would be increasing
investment in IT and software development. We now provide guidance
on the previously announced 50 IT and software development staff to
be recruited in FY22 and FY23 mainly in relation to the Transact
platform.
-- This investment in IT and software development will deliver
enhancements to our proprietary investment platform and back office
software - with enhanced functionality for UK clients and their
advisers. Furthermore, this investment will enable us to implement
enhanced straight through processing of our operational activities,
meaning that we improve our operational efficiencies and the cost
effective scalability of our investment platform. This will reduce
the additional operational staff required to service additional
clients and advisers from FY25.
-- With recruitment made to date we expect a total Group staff
cost increase of 16% for the full financial year 2022 (excluding
T4A post combination remuneration), compared to the prior year
(FY21 total Group staff costs: GBP41.6m). We expect a similar level
of percentage increase of total Group staff costs for financial
year 2023. Total Group staff costs are then expected to increase by
9% in FY24. This guidance includes the expected impact of
continuing higher wage inflation.
-- We confirm that after these IT and software development staff
have been recruited, we then do not expect any material levels of
recruitment in these areas in the period to end of FY27.
We also provide guidance on the other key areas of Group
costs:
-- We received a significant one-off business rate rebate in
FY21. Allowing additionally for a significant increase in energy
costs we expect occupancy costs to increase by 72% for the full
financial year 2022 compared to the prior year (FY21: GBP1.4m). In
FY23 we expect occupancy costs to increase by 5%.
-- Regulatory and professional fees are expected to increase by
28% for the full financial year 2022, compared to the prior year
(FY21: GBP7.6m). This is driven by an increase in regulatory fees,
and an increase in professional fees to support our ongoing
regulatory requirements as a growing business. We then expect these
costs to increase by a single digit percentage in FY23.
-- Other costs are expected to increase by 24% for the full
financial year 2022 compared to the prior year (FY21: GBP3.9m).
This is driven by an increase of sales and marketing activity in
the period since lockdown restrictions were significantly reduced,
and due to an increase in IT equipment that has been expensed. We
then expect these costs to increase by 14% in FY23.
The Transact platform rate of net inflows, and the rate of
addition of new clients and advisers, gives me every confidence
that there is a strong pipeline for future platform growth.
Additionally, the software and system enhancements that we are
making to the Transact platform mean that we will continue to
provide the premier advised platform service in the UK.
T4A's development of the new CURO 365 software is progressing
well, and remains on target to be released for beta testing with a
major adviser firm client later this year.
The demand for financial advice is as strong as ever. There are
significant opportunities for the IHP Group in the growing advised
market in which we operate. Therefore, as we have done for over 20
years, we will continue to support UK clients and their financial
advisers. I believe it is our combination of in-house proprietary
technology, best in class service standards, and resilient and
efficient infrastructure, which makes our business model unique and
means we are well placed to lead in this sector. I look forward to
delivering value for our key stakeholders through the enhancements
that we will implement.
Historical flow and FUD data by quarter
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
FY20 FY21 FY21 FY21 FY21 FY22 FY22 FY22
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Opening FUD 39,711 41,093 44,824 46,929 50,310 52,112 54,539 53,500
Inflows 1,291 1,581 2,153 1,994 1,967 1,976 2,092 1,703
Outflows -560 -741 -686 -657 -660 -688 -697 -703
Net Flows 731 840 1,467 1,337 1,307 1,288 1,395 1,000
Market movements 690 2,938 694 2,112 553 1,207 -2,376 -4,152
Other movements
(1) -39 -47 -56 -68 -59 -68 -58 -48
Closing FUD 41,093 44,824 46,929 50,310 52,112 54,539 53,500 50,300
Average daily
FUD for the
period 40,607 42,905 45,873 48,677 51,647 53,514 52,551 51,889
Notes:
(1) Includes fees, taxes and investment income.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF
DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT
2018 ("EUWA")) (" UK MAR")
Enquiries
Investors
Luke Carrivick, Head of Investor
Relations +44 020 7608 5463
Media
Lansons: Tony Langham +44 (0)7979692287
Lansons: Maddy Morgan-Williams +44 (0)7947364578
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