TIDMIHP
RNS Number : 7257W
IntegraFin Holdings plc
14 December 2023
LEI Number: 213800CYIZKXK9PQYE87
14 December 2023
IntegraFin Holdings plc
Announcement of full year results for the year ended 30
September 2023
IntegraFin Holdings plc (IHP, or the Group), operator of the
UK's premium investment platform - Transact - for clients and UK
financial advisers, is pleased to report its full year results.
The Group displayed solid financial performance and operational
progress in a challenging macro-economic environment.
Highlights
-- Record year end Transact investment platform funds under direction ('FUD') of GBP55.0bn.
-- Solid growth of the Transact investment platform business
during FY23 with resilient net inflows of GBP2.7bn, representing
over 5% of opening FUD.
-- Group revenue increase of 1% to GBP134.9m (FY22: GBP133.6m).
-- Underlying Group profit before tax of GBP63.0m (FY22:
GBP65.8m), after adjusting for non-underlying expenses of GBP0.4m,
with IFRS profit before tax up 15% to GBP62.6m (FY22:
GBP54.3m).
-- Underlying Group earnings per share of 15.2p (FY22:16.3p).
IFRS Group earnings per share of 15.1p (FY22: 13.3p).
-- Financial guidance for the year ending 30 September 2024 remains unchanged.
-- Declared second interim dividend of 7.0 pence per ordinary
share, resulting in a total dividend for the year of 10.2 pence per
share in line with prior year (2022: 10.2 pps). The dividend is
payable on 26 January 2024 to ordinary shareholders on the register
on 22 December 2023. The ex-dividend date will be 21 December
2023.
Commenting on the Full Year results, Alexander Scott, IHP Group
Chief Executive said:
"I am pleased with the solid performance shown by the Group
during the past financial year. We have grown Group revenue, client
numbers, and adviser numbers, and delivered resilient net inflows
over the period. This is attributable to the dedication of our
staff in delivering a first-class service to our clients and their
advisers.
"While the external market has been volatile, the UK adviser
platform market remains healthy and is expected to grow well over
the coming years. We are well placed to take advantage of this
market growth, and we remain confident in our market position,
despite the uncertainty in the wider economy.
"Above all, we remain focused on our goal of being the number
one provider of software and services for clients and UK financial
advisers."
Operational Highlights
-- Performance of the Transact platform remains strong and growing:
- A 2% increase in the Transact platform's adviser base to
c.7.7k advisers (30 September 2022: 7.5k)
- A 2% increase in the number of clients using the Transact
platform to c.230k (30 September 2022: 225k)
-- Digitalisation programme to deliver operational efficiencies
for the Transact platform is progressing well:
- Recruitment of IT and software professionals advancing despite
competitive IT recruitment market
- Recruitment will continue into FY24 in line with planned total headcount additions
-- Strong growth at Time4Advice including:
- Revenue for FY23 of GBP4.8m, an increase of 22% over the past financial year
- Increase in chargeable users for FY23 of 22%
Financial information
IHP Group
Year to Year to
30 September 30 September
2023 2022
Total Group revenue GBP134.9m GBP133.6m
-------------- --------------
Underlying profit before GBP63.0m GBP65.8m
tax
-------------- --------------
IFRS profit before tax GBP62.6m GBP54.3m
-------------- --------------
Underlying earnings per
share 15.2p 16.3p
-------------- --------------
Total dividend per share 10.2p 10.2p
-------------- --------------
Transact platform:
Year ended Year ended
30 September 30 September
2023 2022
Net new business inflows GBP2.7bn GBP4.4bn
-------------- --------------
Closing funds under direction GBP55.0bn GBP50.1bn
('FUD')
-------------- --------------
GBP53.6bn GBP52.5bn
Average daily FUD
-------------- --------------
Transact platform clients
(as at 30 September) 230,294 224,705
-------------- --------------
Transact platform registered
advisers (as at 30 September) 7,683 7,537
-------------- --------------
Time4Advice:
Year ended Year ended
30 September 30 September
2023 2022
GBP4.8m GBP3.9m
Time4Advice revenue
-------------- --------------
Total number of CURO software
users (as at 30 September) 2.8k 2.3k
-------------- --------------
Enquiries
Investors
Luke Carrivick, IHP Head of Investor
Relations +44 020 7608 5463
Media
FGS Global: Mike Turner +44 7775992415
FGS Global: Chris Sibbald +44 7855955531
2023 Full year results presentation
IHP will be hosting a virtual analyst audio presentation at
09:30am on 14 December 2023. This will be available at
https://brrmedia.news/IHP_FY23.
A recording of the presentation will be available for playback
after the event at https://www.integrafin.co.uk/. Slides
accompanying the analyst presentation will also be available this
morning at https://www.integrafin.co.uk/annual-reports/.
CEO Statement
Overview
The Group has continued its record of resilient growth, with
Transact demonstrating robust performance in increasing funds under
direction (FUD), net inflows and client and adviser numbers. This
financial year has been marked by persistently high inflation and
interest rates, with only modest economic growth.
The first half of our financial year saw relatively solid equity
market performance. Global equity markets were volatile but there
was an upward trend during the period from October 2022 to March
2023. The latter two quarters of financial year 2023 saw less
volatility. Slowing inflation towards year end led to a pause in
the rate rises that characterised much of the year but the high
cost of living persisted.
Under these challenging conditions, we support our clients and
their financial advisers through our combination of proprietary
technologies - the Transact investment platform and CURO - and our
industry-leading customer service.
We remain focused on our goal of making financial planning
easier and more efficient and, to this end, we have continued our
programme to deliver organic growth through investment in our
people and our technologies, seeking long-term efficiencies through
scale and ensuring we continue to attract investors to our
platform.
Platform performance - Transact overview
Throughout the period, Transact has steadily grown both its
adviser base and client numbers. In the first half of the year, we
undertook a programme of portfolio rationalisation as part of
preparations for the Consumer Duty regulations, resulting in a
one-time reduction.
Platform inflows fell across the whole advised retail sector due
to the cost-of-living crisis, which diminished the available income
for investment. Consequently, our gross inflows fell during the
year. This nevertheless represents strong performance in a
difficult market, being the third highest level of gross inflows in
the industry which, coupled with high retention, delivered 22% of
net inflows within the advised platform market.
Transact grew its market share as a result of these resilient
net inflows. Nevertheless, owing to both macro-economic and
industry factors, outflows were substantially higher in the year.
In contrast to FY22 - where sharply negative market movements in
the second half reduced otherwise-robust net inflows - market
movements this year were broadly positive.
Financial performance
Driven by the rise in FUD, revenue grew during the year. Annual
commission on client funds remains the main contributor to revenue,
whilst administration fees were the second largest component. T4A's
contribution also increased during this year.
Underlying expenses rose in 2023, with most of the uplift
stemming from our increase in staff costs. This is in line with our
expectations, as the bulk of the IT software hires stipulated in
our growth strategy fell within this year. Other cost increases
were driven by both inflationary and scale-based factors, as the
Group continues to invest in its key competencies.
The Group's IFRS profit before tax has risen by GBP8.3m, a 15%
increase over the prior year. However, there is a decrease in
underlying profit before tax from last year. The underlying figure
excludes exceptional items, which were elevated in FY22 due to the
impact of T4A post-combination remuneration and the VAT decision.
The reduction in underlying profit before tax is driven by the
increased investment in the business in this year and next year; we
then anticipate the resultant improvements from scale and
efficiency to start to come through from 2025.
The Group maintains its focus on organic platform growth, which
has continued to yield steady increases in both FUD and revenue.
Our aim is to achieve sustainable growth through incremental
improvements to our proposition, thereby allowing us to continue
providing the high quality of service to which we are
committed.
Our people
We have continued with the IT and software professional hiring
plan announced in mid-2022 and since then we have added 27 such
employees. Based on this progress, we anticipate finalising the
plan during 2024. We are already benefitting from the new expertise
and scale, allowing us to accelerate our programme of platform
improvement.
Given the importance of our people to the Group's success, we
have made their wellbeing a priority during the year. Responding to
feedback from the previous employee engagement survey, we have
reworked our remuneration approach. This has led to a tiered pay
rise, changes to the bonus system and enhanced maternity and
paternity benefits.
We have selected a new CFO, Euan Marshall, who will be joining
in January 2024. Euan brings with him significant experience in
listed financial services companies and I look forward to working
with him to execute on our Group strategy.
The Group has made other key senior hires, specifically our
first UK-based Chief Technology Officer (CTO), Damien Francis, and
a new Group Chief Risk Officer (CRO), Emma Vernon, both of whom
joined in January 2023. These new perspectives and skills will
strengthen our strategy as well as helping the Group adapt to key
changes taking place in the industry.
Digitalisation programme
Led by our new CTO, our programme of platform digitalisation has
delivered significant improvements. We have aimed to reduce as many
paper routes as possible on the platform, especially those relating
to account transfers, and we have introduced efficient, intuitive
digital alternatives. The success of these initiatives means that
now all new accounts opened on our platform are paperless and the
majority of wrappers in portfolios are also opened on a paperless
online basis.
Our adviser support team is now well established and has been
making use of new support functionality to promptly address
questions from our clients and advisers; through our live chat
feature we have achieved a 96% query resolution rate. In addition
to the technical improvements to the platform, we have sought also
to expand our service offerings.
Our BlackRock Model Portfolio Service (MPS), launched in
November 2022, has outperformed our expectations in terms of
adviser and client interest. This service offers our clients access
to flexible, diversified model portfolios investing in a broad
range of markets.
Protecting our customers - Consumer Duty
Consumer Duty represented perhaps the largest regulatory change
of the year, with the legislation taking effect in July 2023.
Prioritising good outcomes for our clients and advisers has always
been at the centre of the Group's activities. We were well
positioned to adapt to the new rules and have ensured the necessary
changes have been implemented. This includes mandatory training for
all employees and new joiners.
Our commitment to Consumer Duty is embodied in our approach to
interest on client cash. With interest rates at their highest level
in recent years, greater industry focus has been placed on the
interest generated from client cash. In accordance with our
'customer first' principles, Transact does not take any client cash
interest earned and instead passes it all onto our clients. A t the
time of writing, we are paying the highest interest rate across the
UK platform sector to our clients.
Throughout 2023, we have moved forward with our sustainability
initiatives including significantly increased monitoring of energy
usage and waste, as well as applying tangible initiatives such as
solar panels on our Melbourne office.
Outlook
The market outlook for the coming year is more optimistic than
it was at the start of FY23 but headwinds are anticipated to
persist. Inflation is expected to come down but at a pace that is
as yet unknown, and the Bank of England base rate is predicted to
remain at a higher level than has been seen in the past 10 years.
By investing in the key drivers of our competitive advantage - our
proprietary technology and our industry-leading customer service -
the Group aims to continue to grow our adviser, client and FUD
base.
Throughout FY24, we will continue our work on the platform
digitalisation project. Our digitalisation approach will focus on
further limiting paper-based forms and expanding straight-through
processing. These technological developments will accelerate
processing, making transfers quicker and easier for clients and
advisers. We also seek to add additional data analysis
functionality by making available to advisers more data on the
transactions they perform.
Consumer Duty is expected to remain one of the most prominent
features of the regulatory environment. We put positive consumer
outcomes at the centre of our business model. To secure continued
adherence to the new requirements, we will focus our training and
development to ensure our people are well able to comply with the
objectives of Consumer Duty.
Following the successful beta client test during the year, T4A's
next generation Power Platform CURO software will commence roll out
to the pipeline of adviser firms. We will seek further innovation
including a data interface with the Transact platform.
In this period of ongoing economic and market volatility,
clients rely more than ever on their advisers for high quality,
personalised financial planning and support. As we have always
done, we'll continue to support UK financial advisers and their
clients by providing our combination of in-house technology and
well-trained people delivering high quality service. Our holistic
financial planning solution will serve clients and advisers alike
in managing their portfolios easily and efficiently.
I would like to thank all my colleagues across the Group for
their diligent work over the year. Their commitment and dedication
have been crucial in working towards our strategic objective: to be
the number one provider of software and services for our clients
and their financial advisers. I look forward to continuing to grow
our business and deliver on our strategy throughout FY24 and
beyond.
Alexander Scott
IHP Group CEO
13 December 2023
Financial Review
Headlines
Group revenue remained broadly steady in FY23, increasing by 1%
to GBP134.9 million. This was against another year of economic
volatility, due to elevated inflation and rapidly increasing
interest rates, both of which impacted the financial markets and
client wealth.
Despite ongoing global economic challenges, FY23 ended with a
record 230,294 Transact platform clients (FY22: 224,705) and 7,683
registered advisers (FY22: 7,537).
IHP Group has a strong liquidity profile, largely due to
regulatory capital requirements, and therefore benefited from UK
interest rates rising, with interest received on corporate cash
increasing from GBP0.6 million in FY22 to GBP5.3 million in
FY23.
Headline IFRS profit before tax rose 15% to GBP62.6 million
(FY22: GBP54.3 million), however underlying profit before tax fell
by 4% to GBP63.0 million (FY22: GBP65.8 million). The reduction is
due to an increase in administration expenses, largely driven by
the ongoing strategic programme of investment in software and IT
infrastructure and offset by the increase in corporate interest
income.
Profit after tax rose 13% to GBP49.9 million (FY22: GBP44.0
million).
EPS (earnings per share) is 15.1p (FY22: 13.3p). After removing
all non-underlying expenses in FY23, underlying EPS* is 15.2p,
compared with 16.3p in FY22.
Transact platform operational performance
FY23 FY22
GBPm GBPm
Opening FUD 50,070 52,112
Inflows 6,406 7,275
Outflows (3,753) (2,873)
-------------------- -------- --------
Net flows 2,653 4,402
Market movements 2,272 (6,248)
Other movements(1) (36) (196)
-------------------- -------- --------
Closing FUD 54,959 50,070
(1) Other movements includes fees, tax charges and rebates,
dividends and interest.
Funds Under Direction closed the year up 10% on FY22 at GBP55.0
billion.
FY23 gross inflows of GBP6.4 billion, in a competitive
marketplace and with ongoing economic pressure on our clients, are
due to the reliability and quality of our advised investment
platform.
Whilst outflows have increased to GBP3.8 billion, the annualised
rate is 7% of opening FUD (FY22: 6%) therefore they are still
within the historical banding, as a percentage of FUD, that we
expect. One factor driving outflows is clients withdrawing savings
as the cost of living has increased and also as the world has
returned to normal post lockdown.
Our net flows of GBP2.7 billion are strong for the sector and
represent more than 50% of the increase in FUD in FY23.
*Alternative performance measures (APMs) which are indicated
with an asterisk. APMs are financial measures which are not defined
by IFRS. They are used in order to provide better insight into the
performance of the Group. Further details are provided in the
glossary.
T4A operational performance
In the 12 months to September 2022, T4A has increased CURO
licence users by 22%, from 2,253 at 30 September 2022, to 2,752 at
September 2023.
Group financial performance
There are two streams of Group revenue: investment platform
revenue (96% of total revenue) and T4A revenue (4% of total
revenue).
Investment platform revenue
Investment platform revenue has increased by GBP0.4 million
year-on-year to GBP130.1 million and comprises three elements, 99%
(FY22: 98%) of which is from a recurring source.
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) are recurring.
Other income is composed of buy commission and dealing charges.
FY23 FY22
Investment platform GBPm GBPm
revenue
Annual commission income
(recurring) 116.1 115.9
Wrapper fee income (recurring) 12.3 11.6
Other income 1.7 2.2
-------------------------------- ------ ------
Total platform revenue 130.1 129.7
Average daily FUD for the year, arising from the performance of
the assets in client portfolios, increased by 2% in FY23 to GBP53.6
billion. Annual commission income increased to GBP116.1 million in
FY23. The increase in annual commission revenue was moderated by
the reduction in the annual commission rate from 0.27% to 0.26%,
with effect from 1 July 2022, therefore only three months of the
reduction impacted FY22, but a full 12 months impacted FY23.
Recurring wrapper administration fee income increased by GBP0.7
million (6%) year-on-year, reflecting the increase in the number of
open tax wrappers for both existing and new clients.
Buy commission, included in other income, has been deliberately
reduced as a component of revenue each year. Buy commission was
GBP0.7 million in FY23 (FY22: GBP1.5 million), falling due to the
threshold at which clients receive a rebate of buy commission being
reduced from GBP0.2 million which was the threshold from 1 March
2022, to GBP0.1 million with effect from 1 March 2023. The
reduction in the buy commission threshold is another positive step
in our responsible pricing strategy, as we seek to remove an
increasing proportion of clients from the buy commission charge and
simplify our fee structure.
T4A revenue
T4A's revenue was GBP4.8 million for FY23, compared with GBP3.9
million for FY22, an increase of 23%. This was driven by an
increase in recurring revenue from additional CURO user
licences.
Interest income on corporate cash
Interest income rose from GBP0.8 million in FY22 to GBP6.4
million in FY23. The average Group corporate cash balance was
GBP186.3 million over the year and the Bank of England base rate
rose 3% over the course of the financial year, ending the financial
year at 5.25%.
This resulted in interest income on corporate cash balances
rising GBP4.7 million, to GBP5.3 million. We also received another
GBP0.8 million, being a combination of interest due from the Vertus
loan facility and interest received from HMRC.
Operating expenses
FY23 FY22
GBPm GBPm
Employee costs 53.9 47.1
Occupancy 2.8 2.4
Regulatory and professional fees 9.8 9.8
Other income - tax relief due
to shareholders (1.6) (2.4)
Other costs 6.8 6.3
Non-underlying expenses - backdated
VAT and interest - 8.8
Non-underlying expenses - other 0.4 2.7
------------------------------------- ------ ------
Total expenses 72.1 74.7
Depreciation and amortisation 2.5 3.0
------------------------------------- ------ ------
Total operating expenses 74.6 77.7
Operating expenses on a statutory IFRS basis have reduced by
GBP2.6 million, or 3%.
Underlying expenses
Employee costs GBP53.9 million (+GBP6.8 million, +14%)
Costs have increased due to increased headcount and pay
rises.
Group employee numbers through the year increased by 6% (FY22:
8%) from an average of 594 in FY22 to an average of 631 in FY23,
this accounted for GBP2.7 million of the increase in costs. Notable
senior additions are a CTO and CRO. We have also recruited a
further 26 people in IT through the year, as we continue to
implement plans announced in FY22 to significantly increase system
development capacity across the Group and drive future
efficiencies.
We continued to enhance salaries to reflect the inflationary
environment, recognising the pressures being placed on our people
due to the rise in the cost of living. We also want to ensure we
retain talent and we monitor the market with regard to inflationary
pressures and market-competitive salary levels. Inflationary pay
rises, including resultant impact on share scheme costs and company
pension contributions, increased costs by GBP3.7 million in
FY23.
Current year VAT, included in Other costs (GBP3.6 million
(+GBP0.4 million (+13%))
Current year VAT has increased by GBP0.4 million, largely due to
increased investment platform development software fees, charged by
IHP's wholly owned software development company and now subject to
reverse charge VAT.
Occupancy costs GBP2.8 million (+GBP0.4 million, +17%),
depreciation and amortisation costs GBP2.5 million (-GBP0.5
million, -17%)
Occupancy costs increased by GBP0.4 million, and depreciation
and amortisation reduced by GBP0.5 million. The increase in
occupancy costs is due to the head office lease ending in June 2023
and the accounting impact of IFRS 16, the Leases accounting
standard, no longer applying. This means depreciation of the right
of use asset has been replaced by rent expense for the final three
months of the financial year. The lease is being renewed for a
limited period.
Regulatory and professional fees GBP9.8 million (no change)
Regulatory and professional fees did not increase in FY23, due
to an uplift in professional fees being partially offset by
regulatory fees that were lower than expected.
Other income - tax relief due to shareholders GBP1.6 million
(-GBP0.8 million, -33%)
Tax relief due to shareholders relates to life insurance company
tax requirements and thus is subject to valuations at year-end,
which are inherently dependent on market valuations at that
date.
Non-underlying expenses
Non-underlying expenses - other GBP0.4 million (-GBP2.3 million,
-85%)
In FY22, within non-underlying expenses, we recognised GBP3.0
million of ongoing expenses. This was attributable to the IFRS
requirement that we recognise the post combination deferred and
additional consideration payable to the original T4A shareholders
in respect of the acquisition of T4A, as remuneration over the four
years from January 2021 to December 2024.
However, T4A has not met the minimum threshold for highly
stretching targets to earn the additional consideration element of
post combination remuneration. Therefore, the post combination
expense in respect of the additional consideration element that was
recognised in FY21 and FY22 of GBP1.6 million has been released,
and we have not recognised any cost in FY23. This has led to the
reduction in non-underlying post combination remuneration expense
for FY23 from GBP3.0 million to GBP0.4 million.
Moreover, the post combination consideration cost in respect of
FY24 and FY25 is expected to reduce to GBP2.1 million and GBP0.5
million respectively, as only the deferred consideration element
will now be recognised.
Tax
The Group has operations in three tax jurisdictions: UK,
Australia and the Isle of Man. This results in profits being
subject to tax at three different rates. However, 96% of the
Group's income is earned in the UK.
Shareholder tax on ordinary activities for the year increased by
GBP2.5 million, or 24%, to GBP12.8 million (FY22: GBP10.3 million)
due to the increase in taxable profit and the increase in
corporation tax rate from 19% to 25%, with effect from 6 April
2023.
Our effective rate of tax over the period was 20% (FY22: 18%).
The effective rate of tax in FY22 was dampened by the effect of the
backdated, non-recurring VAT expense of GBP8.8 million, incurred in
September 2022, being tax deductible.
Our tax strategy can be found at: https://
www.integrafin.co.uk/legal-and-regulatory-information/
Consolidated statement of financial position
Net assets have grown 10% (FY22: 8%), or GBP16.7 million, in the
year to GBP189.9 million, and the material movements on the
consolidated statement of financial position are as follows:
Cash and significant cash flows
Shareholder cash has decreased by GBP5.1 million year on year to
GBP177.9 million (FY22: GBP183.0 million). This is due to the
strong cash flows generated from operating activities being used to
invest in gilts to maximise returns, whilst maintaining minimal
risk on assets supporting regulatory solvency requirements. The
gilt investments increased by GBP19.3 million from GBP3.1 million
to GBP22.3 million. We also paid dividends of GBP33.7 million in
the year (FY22: GBP33.7 million).
We continue to operate without any need for debt, so have not
incurred an increase in financing costs from the increase in base
rate through the year, rather, we benefited due to our strong
corporate cash reserves.
Deferred tax asset, non-current provisions and non-current
deferred tax liability
The reduction in the deferred tax asset of GBP5.2 million to
GBP0.8 million (FY22: GBP6.0 million) the non-current provisions of
GBP5.6 million to GBP40.5 million (FY22: GBP46.1 million), and the
current provision of GBP3.0 million to GBP7.7 million (FY22: 10.7
million), plus the increase in non-current deferred tax liabilities
of GBP6.4 million to GBP7.3 million (FY22: 0.9 million) are all a
function of the realised and unrealised gains that have arisen on
policyholder assets, as the value of linked funds has risen year on
year.
ILUK holds tax charges deducted from ILUK policyholders in
reserve to meet future tax liabilities and the tax reserve may be
paid back to policyholders if asset values do not recover such that
the tax liability unwinds.
Investments and cash held for the benefit of policyholders and
liabilities for linked investment contracts (notes 17, 18 and
20)
ILUK and ILInt write only 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 have zero
net effect.
Cash and investments held for the benefit of ILUK and ILInt
policyholders have risen to GBP24.4 billion (FY21: GBP22.2
billion). This increase of 10% is entirely consistent with the rise
in total FUD on the investment platform.
Capital resources and capital management
To enable the investment platform within the Group to offer a
wide range of tax wrappers, there are three regulated entities
within the Group: a UK investment firm, a UK life insurance company
and an Isle of Man life insurance company.
Each regulated entity maintains capital well above the minimum
level of regulatory capital required, ensuring sufficient capital
remains available to fund ongoing trading and future growth. Cash
and investments in short-dated gilts are held to cover regulatory
capital requirements and tax liabilities.
The regulatory capital requirements and resources in ILUK and
ILInt are calculated by reference to economic capital-based
regimes.
IFAL is subject to Investment Firms Prudential Regime (IFPR)
regulatory capital and liquidity rules introduced in January 2022,
following the implementation in the UK of the MiFIDPRU rule
book.
These prudential rules require the calculation of capital
requirements reflecting 'K' factor requirements that cover
potential harms arising from business activities. The K factors are
calculated using formulae for assets and cash under
administration.
Regulatory Capital as at 30 September 2023
Regulatory Regulatory Regulatory
Capital requirements Capital resources cover
GBPm GBPm %
IFAL 33.3 44.4 133
ILUK 201.4 261.6 130
ILInt 23.8 41.1 173
Regulatory Capital as at 30 September 2022
Regulatory Regulatory Regulatory
Capital requirements Capital resources cover
GBPm GBPm %
IFAL 32.6 39.7 122
ILUK 186.9 244.0 131
ILInt 23.7 42.0 177
The Company's regulated subsidiaries continue to hold regulatory
capital resources well in excess of their regulatory capital
requirements. We will maintain sufficient regulatory capital and an
appropriate level of working capital. We will use retained capital
to further invest in the delivery of our service to clients, pay
dividends to shareholders and provide fair rewards to
employees.
The following table shows the surplus capital held by the Group,
after consideration of the Group's risk appetite and future
dividend payments. This is shown on a different basis to the above
table, which is on a regulatory basis while the below shows equity
on an IFRS basis.
Capital as at 30 September 2023
FY23 FY22
GBPm GBPm
Total equity 189.9 173.2
Loans and receivables, intangible assets
and property, plant and equipment (30.6) (30.6)
------------------------------------------ ------- -------
Available capital pre dividend 159.3 142.6
Interim dividend declared (23.2) (23.2)
------------------------------------------ ------- -------
Available capital post dividend 136.1 119.4
Additional risk appetite capital (72.7) (76.2)
------------------------------------------ ------- -------
Surplus 63.4 43.2
Additional risk appetite capital is capital the board considers
to be appropriate for it to hold to ensure the smooth operation of
the business such that it can meet future risks to the business
plan and future changes to regulatory capital requirements without
recourse to additional capital.
The board considers the impact of regulatory capital
requirements and risk appetite levels on prospective dividends from
its regulated subsidiaries.
Our Group's Pillar 3 document contains further details and can
be found on our website at:
https://www.integrafin.co.uk/legal-and-regulatory-information/
Pillar 3 Disclosures.
As stated in the Chair's report, t he board has declared a
second interim dividend for the year of 7.0 pence per ordinary
share, taking the total dividend for the year to 10.2 pence per
share (2022: 10.2p)
Dividends
During the year to 30 September 2023, IHP (the Company) paid a
second interim dividend of GBP23.2 million to shareholders in
respect of financial year 2022 and a first interim dividend of
GBP10.6 million in respect of financial year 2023.
In respect of the second interim dividend for financial year
2023, the board has declared a dividend of 7.0 pence per ordinary
share (FY22: 7.0p).
The financial year 2023 total dividends paid and declared of
GBP33.7 million compares with full year interim dividends of
GBP33.7 million in respect of financial year 2022.
Principal risks and uncertainties
The directors, in conjunction with the board and ARC, have
undertaken a review of the potential risks to the Group that could
undermine the successful achievement of its strategic objectives,
threaten its business model or future performance and considered
non-financial risks that might present operational disruption.
The tables below set out the Group's principal risks and
uncertainties to the achievement of the identified strategic
objectives, risk trend for 2023 together with a summary of how we
manage the risks.
Business and strategic risks
Principal risk and Management of the principal risk and uncertainty
uncertainty
-------------------------------------- ------------------------------------------------------
Service standard failure We manage the risk by providing our client
- our high levels of service teams with extensive initial and ongoing
client and adviser retention training, supported by experienced subject
are dependent upon our matter experts and managers. The challenges
consistent and reliable facing the business and the wider industry,
levels of service. Failure have increased during the year, however monitoring
to maintain these service service metrics has allowed us to identify
levels would affect the areas where there is deviation from expected
our ability to attract service levels or where processing backlogs
and retain business. have arisen and to deliver targeted remediation
There is a potential plans to ensure client outcomes and service
risk of greater outflows standards are maintained. We have substantially
than expected and/or reduced backlogs relative to FY22 and are
a net outflow of FUD better able to address them when they occur.
impacting profitability
and/or the medium/long-term We also conduct satisfaction surveys to ensure
sustainability of the our service levels are still perceived as
platform. excellent by our clients and their advisers.
Service standards are also dependent on resilient
Change over the year operations, both current and forward looking,
Stable ensuring that risk management is in place.
T4A continues to develop the delivery of next
Aligned to strategic generation CURO.
financial objectives
Sustainable growth
Increase earnings
------------------------------------------------------
Diversion of platform The risk of reduced investment in the platform
development resources is managed through a disciplined approach
- maintaining our quality to expense management and forecasting. We
and relevance requires horizon scan for upcoming regulatory and taxation
ongoing investment. regime changes and maintain contingency to
Any reduction in investment allow for unexpected expenses e.g. UK Financial
due to diversion of Services Compensation Scheme (FSCS) levies,
resources to other non-discretionary which ensures we do not need to compromise
expenditure (for example, on investment in our platform to a degree
regulatory developments) that affects our offering.
may affect our competitive
position. The risk has increased over the year driven
in large part due to preparation for, and
the implementation of, the Consumer Duty regime
Change over the year for our regulated entities, both as manufacturers
Increase and/or distributors.
We remain proactive in embedding all mandatory
changes (e.g. Consumer Duty, Operational Resilience,
Aligned to strategic HMRC changes to lifetime allowances) through
financial objectives our business-as-usual model. Our platform
Sustainable growth developers remain responsive to the business
Invest needs and have increased developer resources
Increase earnings over the year.
------------------------------------------------------
Increased competition: The advised market remains our key target
cheaper and/or more and competitor risk is mitigated by focusing
sophisticated propositions on providing exceptionally high levels of
- we operate in an increasingly service and being responsive to client and
competitive market, financial adviser feedback and demands through
both for clients and an efficient process and operational base.
their advisers. Consolidation
in the adviser market We also keep close to the landscape of our
makes it more challenging platform competitors, as well as the trends
to attract and retain impacting the financial adviser market. Our
business. The consequences platform service and developments remain award
may be that greater winning. We release a monthly update to our
outflows are experienced proprietary platform technology, incorporating
than expected and/or improvements and new functionality. We continue
a net outflow of FUD to develop our digital strategy, expanding
impacting profitability our Transact Online interface allowing advisers
and/or the medium/long-term direct processing onto the platform. This
sustainability of the is essential to remain relevant and competitive,
platform. improving both functionality and service efficiency
and allows us to continue to increase the
Change over the year value-for-money of our service by reducing
Increase client charges, subject to profit and capital
parameters when deemed appropriate.
The Group continues to review its business
Aligned to strategic strategy and growth potential. In this regard,
financial objectives it primarily considers organic opportunities
Sustainable growth that will enhance or complement its current
Increase earnings service offerings to the adviser market.
T4A continues to broaden our service offering
to advisers. We also continue to support the
diversification of the adviser market through
the Vertus scheme which continues to be successful.
------------------------------------------------------
Financial risks
Principal risk and Management of the principal risk and uncertainty
uncertainty
Stock and bond market The risk of depressed stock and bond market
value volatility (Market values, and the impact on revenue, has been
Risk) - our core business and remains high. External economic, political
revenue is derived from and geopolitical factors continue to influence
our platform business markets in 2023. The risk is mitigated through
which has a fee structure a wide asset offering which ensures we are
based, in large part, not wholly correlated with one market, and
upon a percentage of which enables clients to switch assets in
the FUD. Depressed equity times of uncertainty. In particular, clients
and bond values have are able to switch into cash assets, which
an impact on the revenue remain on our platform supported by our top
streams of the platform quartile interest rates. In addition, our
business. wrapper fees are not impacted by market volatility
as they are based on a fixed quarterly charge.
Change over the year
Increase We can closely monitor and control expenses
by continually driving efficiency improvements
in our business processes including increasing
Aligned to strategic online and digital processing. Strong investment
financial objectives platform service and sales and marketing activity
Sustainable growth ensures we attract new advisers and clients.
Increase earnings Sustaining positive net inflows during turbulent
Generate cash times presents the potential for longer-term
Retain strong balance profitability.
sheet
Deliver on dividend This value volatility is not expected to ease
policy in the foreseeable future and while hedging
options have been explored, they have been
deemed expensive in terms of the revenue protection
they afford.
-------------------------------------------------------
Uncontrolled expense The risk has increased over the year as a
risk - higher expenses direct result of sustained inflationary pressures
than expected and budgeted on the UK and global economy.
for would adversely
impact cash profits. The most significant element of our expense
base is employee costs. These are controlled
Change over the year through modelling employee requirements against
Increase forecast business volumes. The Group has made
sustainable salary increases to employees
over the year and built out its capability
Aligned to strategic in several key areas across all three lines
financial objectives of risk governance to support the business.
Generate cash
Deliver on dividend Planned investment in IT and software development
policy deliver enhancements to our proprietary platform
enabling us to implement enhanced straight
through processing of operational activities.
A robust multi-year costing plan is produced
which reflects the strategic initiatives of
the business. This captures planned investment
expenditure required to build our operational
capability and cost-effective scalability
of the business. Cost base variance analysis
is completed monthly with any expenditure
that deviates unexpectedly from plan being
rigorously reviewed to assess the likely trend
with reforecasts completed accordingly.
Occupancy and utility costs have also increased.
Regulatory fees decreased slightly while professional
fees have increased in line with expectations,
as a result of the broad regulatory agenda.
Also notable, and a growing issue, is that
suppliers are wrestling with the requirements
of climate initiatives in terms of disclosures,
and with unit costs for sustainable or green
energy and supplies likely to attract a premium
as organisations stride toward a net zero
carbon footprint. Such costs are difficult
to control directly and may unexpectedly impact
the base case budget.
-------------------------------------------------------
Capital strain (including We continuously monitor the current and expected
liquidity) - unexpected, future regulatory environment and ensure that
additional capital or all regulatory obligations are or will be
liquidity requirements met. This provides a proactive control to
imposed by regulators mitigate this risk. Additionally, we carry
may negatively impact out an assessment of our capital requirements,
our solvency coverage which includes assessing the regulatory capital
ratio. required. We retain a capital buffer over
and above the regulatory minimum solvency
Change over the year capital requirements.
Stable
We await the detail of corporate tax changes
resulting from the OECD Base Erosion and Profit
Aligned to strategic Shifting project relating to our Isle of Man
financial objectives life company, ILInt. We anticipate that there
Retain strong balance will be a reduced level of retained income,
sheet which will impact the future coverage levels
Deliver on dividend of regulatory capital.
policy
-------------------------------------------------------
Credit risk - loss The Group seeks to invest its shareholder
due to defaults from assets in high quality, highly liquid, short-dated
holdings of cash and investments. For the banks holding corporate
cash equivalents, deposits, cash, maximum counterparty limits are set
formal loans and reinsurance in addition to minimum credit quality steps.
treaties with banks
and financial institutions. The Vertus loan scheme has an agreed commitment
level and the value of the drawn and undrawn
Change over the year balances are monitored regularly. Loans are
Stable made on approved business cases.
Aligned to strategic
financial objectives
Retain strong balance
sheet
-------------------------------------------------------
Non-financial risks
Principal risk and Management of the principal risk and uncertainty
uncertainty
Reputational risk - The Risk Management Framework provides the
the risk that current monitoring mechanisms to ensure that reputational
and potential clients' damage controls operate effectively and reputational
and their advisers desire risk is mitigated.
to do business with
the Group reduces due Mitigation includes a focus on internal operational
to a lower perception risk controls, error management and complaints
in the marketplace of handling processes as well as root cause analysis
the Group's offered investigations. Additionally, controls include
services covering the training for key company staff on how to manage
Transact platform and company reputation internally; regular management
T4A adviser support and monitoring of the company websites and
software. social media; and engaging the services of
an external PR firm to consult on reputational
matters.
Change over the year
Stable
Aligned to strategic
financial objectives
Sustainable growth
---------------------------------- ------------------------------------------------------
Political and Geopolitical Political and Geopolitical risk cannot be
risk - the risk of changes directly mitigated by the Group. However,
in the political landscape by closely monitoring developments through
within the UK and between its risk horizon scanning process, potential
countries or geographies, impacts are taken into consideration as part
disrupting the operations of the business planning process.
of the business or resulting
in significant development The external geopolitical environment in 2023
costs. has built on 2022 and become increasingly
uncertain through a series of significant
Change over the year global events, including the continuing Russian
Increase invasion of Ukraine, the escalating conflict
in the Middle East, trade tensions between
USA and China, the global energy crisis and
Aligned to strategic supply chain issues. Furthermore, domestic
financial objectives political instability exists within both the
Sustainable growth UK and the USA with elections due within the
Invest next 24 months. These dynamics and related
Increase earnings events can cause disruption to markets and
Generate cash macroeconomics with a direct impact on FUD
Retain strong balance for the Group.
sheet
Deliver on dividend
policy
---------------------------------- ------------------------------------------------------
Operational risk (including The Group aims to minimise operational risks
operational resilience at all times, through a strong and well-resourced
and the sustainability control and operational structure. Note that
agenda) - the risk of operations form an integral part of the ESG
loss arising from inadequate and sustainability agenda.
or failed internal processes,
people and systems, We note the principal types of operational
or from external events. risk below and provide the change over the
year for each.
Change over the year
Increase
Aligned to strategic
financial objectives
Sustainable growth
Invest
Increase earnings
Generate cash
---------------------------------- ------------------------------------------------------
People - the inability The business operates both performance management
to attract, retain and and talent recognition programmes to reward
motivate performing high performing employee members, identify
and values-aligned employees future leaders, and retain and attract talent
within the business. within the business.
Significant attrition We maintain a comprehensive career and training
rates of such employees development programme and provide a flexible
or an inability to attract working environment that meets our employees'
such new employees can and business needs. These are supported by
have a detrimental impact robust Group HR policies and practices. Our
on the service provided benefits package is competitive.
as well as poor adherence
to regulatory procedures No less than annually, the Group undertakes
and requirements resulting a staff engagement survey and addresses any
in reputational damage identified areas for improvement to drive
and potential compliance high engagement.
breaches. Since the "great resignation" of 21/22 difficulties
with the retention of employees and the ability
Change over the year to attract new recruits in our UK and Australian
Decrease operations have significantly improved.
---------------------------------- ------------------------------------------------------
IT Infrastructure and The continuous and evolving sophistication
software - a geing and of the cyber threat to our IT infrastructure
underinvested IT infrastructure environment means risk within this space remains
and software has the high.
potential to cause the
Group disruption through Wars and conflict contribute to a global technology
systems outages, a failure environment that is constantly under attack.
to plan and maintain Protecting our services against this continues
operational capacity to be a core focus. We continue to carry out
and create vulnerabilities cyber penetration testing and evolve our cyber
to operational resilience security capabilities. Awareness training
and loss of a competitive is provided to ensure employees understand
market share as newer and recognise threats to our business systems.
technology emerges.
Investment in IT and software development
Change over the year continues, with modernisation of our digital
Stable workplace capabilities presenting opportunity
for improved security controls.
There is a full programme of digitalisation
work to be delivered over the business planning
period for our proprietary investment platform,
focussing on the provision of online, straight
through processes for common financial planning
practices, which will benefit our UK advisers
and their clients. This will also significantly
increase the scalability of our investment
platform.
Integration between adviser software applications
is paramount, with data access and synchronisation
between systems being key requirements. Our
Application Programming Interfaces (APIs)
are already integrated with many third-party
software providers, and we will continue to
enhance our data services to meet the demands
of our clients in a secure manner.
---------------------------------- ------------------------------------------------------
IT Resilience and Information Data and continuity of services are critical
Security - the Group focus areas for us given the increase of risk
creates, obtains, stores, in channels like cybersecurity. Ensuring that
processes and retrieve our core services are resilient and that are
significant volumes controls around business and client data are
of commercial and corporate robust is a constantly evolving focus area.
matters, some of which Resilience testing of the Transact platform,
is highly sensitive. for example, takes place every two months.
Change over the year In particular, the Group has a dedicated financial
Increasing crime team and an on-going fraud and cyber
risk awareness programme. Additionally, the
Group carries out regular IT system vulnerability
testing. The crisis management team (CMT)
reviews the Group's business continuity plans
during the course of the year.
Key changes in the last year are the establishment
of dedicated first and second line Cyber Security
teams, the heads of which are due to start
in early 2024. This will provide an improved
governance and operational framework for Cyber
Security.
Beyond IT and cyber security, the Company
also has a function led by the Company's Data
Protection Officer (DPO) to manage information
security risk and compliance with UK GDPR.
The DPO carries out monitoring and works with
the business to ensure the risks from its
evolving physical and digital workplace and
business operations are managed.
---------------------------------- ------------------------------------------------------
Regulatory risk - the The Group has an established compliance function
financial services regulated that analyses regulation and advises on and
entities within the monitors how our financial services regulatory
Group have a full and standards are met.
stretching regulatory
agenda. Expanding law, The financial services regulated entities
regulation and guidance in the group ensure regulatory standards are
need analysing and transitioning met through a framework of policies, procedures,
effectively into business governance, training, horizon scanning, monitoring
as usual to avoid failing and engagement with our regulators.
to comply with regulatory
rules or standards. Cross-departmental projects are established
to deliver for significant regulatory changes,
Change over the year with Group internal audit undertaking reviews
Increasing during the project phases and/or post-implementation
thematic reviews. During the period such projects
included preparation and implementation of
the FCA's Consumer Duty, which requires ongoing
work to ensure it is embedded within operations,
and work to meet FCA PS21/3 Operational Resilience
requirements.
Meeting the regulatory agenda is an imperative
for the operation of our core platform business.
The regulatory agenda remains challenging,
particularly in light of the demands of the
new consumer duty.
---------------------------------- ------------------------------------------------------
Emerging risk focus
Through regular conversations and more formal quarterly risk
review meetings with risk owners and other business stakeholders,
attending industry events and reviewing external sources, emerging
risks are identified. These emerging risks by their nature have
uncertainty of likelihood and impact on the business. Emerging
risks are categorised as near- (next 12 months), medium- and
longer-term (more than 3 years) and are regularly reported and
assessed, both at the executive level and, no less than quarterly,
at ARCs and boards where appropriate.
Emerging risks discussed during 2023 have included:
-- Changing expectations of the UK and Isle of Man
regulators.
-- Increasing regulatory scrutiny or focus impacting our
platform business model.
-- Shift in tax regime which may alter the tax benefits of
pensions and ISAs including the abolition of inheritance tax.
-- The aging population of the UK, the platform client base and
the advisers using our platform and/or the CURO software and the
generational shift in wealth to different generations with
differing preferences and needs.
The directors have carried out a robust assessment of the
principal and emerging risks facing the Group, including those that
would threaten its business model, future performance, solvency or
liquidity, and have concluded that the Group is well positioned to
manage these risks.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual report
and financial statements in accordance with applicable United
Kingdom law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the Group and parent Company financial
statements in accordance with UK-adopted international accounting
standards (IFRSs). Under Company law the directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and the
Company and of the profit or loss of the Group and the Company for
that period.
In preparing these financial statements the directors are
required to:
-- select suitable accounting policies in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors and
then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group and Company financial position and
financial performance;
-- in respect of the Group financial statements, state whether
IFRSs have been followed, subject to any material departures
disclosed and explained in the financial statements;
-- in respect of the parent Company financial statements, state
whether IFRSs have been followed, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and/ or the
Group will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's and
Group's transactions and disclose with reasonable accuracy, at any
time, the financial position of the Company and the Group and
enable them to ensure that the Company and the Group financial
statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and parent
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a strategic report, directors' report,
directors' remuneration report and corporate governance statement
that comply with that law and those regulations. The directors are
responsible for the maintenance and integrity of the corporate and
financial information included on the Company's website.
Directors' responsibilities pursuant to DTR4
The directors confirm, to the best of their knowledge:
-- that the consolidated financial statements, prepared in
accordance with IFRSs give a true and fair view of the assets,
liabilities, financial position and profit of the parent Company
and undertakings included in the consolidation taken as a
whole;
-- that the annual report, including the strategic report,
includes a fair review of the development and performance of the
business and the position of the Company and undertakings included
in the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face; and
-- that they consider the annual report, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position,
performance, business model and strategy.
By order of the board,
Helen Wakeford
Company Secretary
13 December 2023
Consolidated Statement of Comprehensive Income
Note 2023 2022
GBPm GBPm
Revenue 5 134.9 133.6
Cost of sales (3.9) (2.1)
Gross profit 131.0 131.5
Expenses
Administrative expenses 8 (74.6) (77.7)
16,
Expected credit losses on financial assets 22 (0.1) (0.2)
Operating profit 56.3 53.6
------------------------------------------------ ----- ---------- ----------
Interest income 9 6.4 0.8
Interest expense 25 (0.1) (0.1)
Net policyholder returns
Net income/(loss) attributable to policyholder
returns 12.1 (38.5)
Change in investment contract liabilities (1,056.0) 2,770.3
Fee and commission expenses 18 (193.3) (192.6)
Policyholder investment returns 10 1,249.3 (2,577.7)
------------------------------------------------ ----- ---------- ----------
Net policyholder returns 12.1 (38.5)
Profit on ordinary activities before taxation
attributable to policyholders and shareholders 74.7 15.8
Policyholder tax (charge)/credit (12.1) 38.5
Profit on ordinary activities before taxation
attributable to shareholders 62.6 54.3
Total tax attributable to shareholder
and policyholder returns 11 (24.8) 28.2
Less: tax attributable to policyholder
returns 12.1 (38.5)
------------------------------------------------ ----- ---------- ----------
Shareholder tax on profit on ordinary
activities (12.7) (10.3)
Profit for the financial year 49.9 44.0
Other comprehensive (loss)/income
Exchange (losses)/gains arising on translation
of foreign operations (0.1) 0.1
Total other comprehensive (losses)/income
for the financial year (0.1) 0.1
Total comprehensive income for the financial
year 49.8 44.1
------------------------------------------------ ----- ---------- ----------
Earnings per share
------------------------------------------------ ----- ---------- ----------
Earnings per share - basic 7 15.1p 13.3p
Earnings per share - diluted 7 15.1p 13.3p
All activities of the Group are classed as continuing.
Notes 1 to 36 form part of these Financial Statements.
Consolidated Statement of Financial Position
Note 2023 2022
GBPm GBPm
Non-current assets
Loans receivable 16 6.3 5.5
Intangible assets 12 21.4 21.8
Property, plant and equipment 13 1.1 1.2
Right-of-use assets 14 1.0 2.1
Deferred tax asset 26 0.7 6.0
30.5 36.6
Current assets
Investments 21 22.4 3.1
Prepayments and accrued income 22 17.2 17.2
Trade and other receivables 23 3.6 2.0
Current tax asset 14.3 15.0
Cash and cash equivalents 19 177.9 183.0
235.4 220.3
Current liabilities
Trade and other payables 24 19.5 21.5
Provisions 27 7.7 10.7
Lease liabilities 25 0.3 1.9
27.5 34.1
Non-current liabilities
Provisions 27 40.5 46.1
Contingent consideration 28 - 1.7
Lease liabilities 25 0.8 0.9
Deferred tax liabilities 26 7.2 0.9
----------------------------------- ----- ------------- -------------
48.5 49.6
Policyholder assets and
liabilities
Cash held for the benefit
of policyholders 20 1,419.2 1,458.6
Investments held for the
benefit of policyholders 17 23,021.7 20,715.8
Liabilities for linked investment
contracts 18 (24,440.9) (22,174.4)
- -
Net assets 189.9 173.2
----------------------------------- ----- ------------- -------------
Equity
Called up equity share capital 3.3 3.3
Share-based payment reserve 29 3.4 2.6
Employee Benefit Trust reserve 30 (2.6) (2.4)
Foreign exchange reserve 31 (0.1) -
Non-distributable reserves 31 5.7 5.7
Retained earnings 180.2 164.0
----------------------------------- ----- ------------- -------------
Total equity 189.9 173.2
----------------------------------- ----- ------------- -------------
These Financial Statements were approved by the Board of
Directors on 13 December 2023 and are signed on their behalf
by:
Alexander Scott
Director
Company Registration Number: 08860879
Notes 1 to 36 form part of these Financial Statements.
Company Statement of Financial Position
Note 2023 2022
GBPm GBPm
Non-current assets
Investment in subsidiaries 15 35.3 33.3
Loans receivable 16 6.3 5.5
41.6 38.8
Current assets
Prepayments 22 - 0.1
Trade and other receivables 23 0.1 0.2
Cash and cash equivalents 26.0 33.1
----------------------------------- ----- ------- -------
26.1 33.4
Current liabilities
Trade and other payables 24 2.5 2.4
Loans payable 16 1.0 1.0
----------------------------------- ----- ------- -------
3.5 3.4
Non-current liabilities
Contingent consideration 28 - 1.7
Loans payable 16 6.0 7.0
----------------------------------- ----- ------- -------
6.0 8.7
Net assets 58.2 60.1
----------------------------------- ----- ------- -------
Equity
Called up equity share capital 3.3 3.3
Share-based payment reserve 29 2.7 2.2
Employee Benefit Trust reserve 30 (2.4) (2.1)
Profit or loss account
Brought forward retained earnings 56.7 50.7
Profit for the year 31.6 39.8
Dividends paid in the year (33.7) (33.8)
----------------------------------- ----- ------- -------
Profit or loss account 54.6 56.7
Total equity 58.2 60.1
----------------------------------- ----- ------- -------
The Company has taken advantage of the exemption in section 408
(3) of the Companies Act 2006 not to present its own income
statement in these financial statements.
These Financial Statements were approved by the Board of
Directors on 13 December 2023 and are signed on their behalf
by:
Alexander Scott
Director
Company Registration Number: 08860879
Notes 1 to 36 form part of these Financial Statements.
Consolidated Statement of Cash Flows
2023 Restated
2022
GBPm GBPm
Cash flows from operating activities
Profit on ordinary activities before
taxation attributable to policyholders
and shareholders 74.7 15.8
Adjustments for non-cash movements:
Amortisation and depreciation 2.5 3.0
Share-based payment charge 2.1 2.0
Interest charged on lease 0.1 0.1
(Decrease)/increase in contingent consideration (1.7) 0.9
(Decrease)/increase in provisions (8.6) 38.5
Adjustments for cash effecting investing
and financing activities:
Interest on cash and loans (6.4) (0.8)
Adjustments for statement of financial
position movements:
(Increase)/decrease in trade and other
receivables, and prepayments and accrued
income (1.6) 0.5
(Decrease)/increase in trade and other
payables (2.0) 4.0
Adjustments for policyholder balances:
(Increase)/decrease in investments
held for the benefit of policyholders (2,305.9) 1,071.3
Increase/(decrease) in liabilities
for linked investment contracts 2,266.5 (879.0)
Increase/(decrease) in policyholder
tax recoverable 10.0 (6.0)
Cash generated from operations 29.7 250.3
Income taxes paid (22.4) (13.5)
Interest paid on lease liabilities (0.1) (0.1)
--------------------------------------------------------------- ------------ --------------
Net cash flows (used in)/generated
from operating activities 7.2 236.7
Investing activities
Acquisition of property, plant and
equipment (0.7) (0.3)
Purchase of financial instruments (22.3) (3.0)
Redemption of financial instruments 3.0 5.0
Increase in loans (0.8) (2.1)
Interest on cash and loans 6.4 0.8
--------------------------------------------------------------- ------------ --------------
Net cash generated from/(used in)investing
activities (14.4) 0.4
Consolidated Statement of Cash Flows (continued)
2023 Restated
2022
GBPm GBPm
Financing activities
Purchase of own shares in Employee
Benefit Trust (0.4) (0.5)
Purchase of shares for share scheme
awards (1.1) (1.3)
Equity dividends paid (33.7) (33.7)
Payment of principal portion of lease
liabilities (1.9) (2.4)
-------- ---------
Net cash used in financing activities (37.1) (37.9)
Net (decrease)/increase in cash and
cash equivalents (44.3) 199.2
Cash and cash equivalents at beginning
of year 1,641.6 1,442.4
Exchange losses on cash and cash equivalents (0.1) -
Cash and cash equivalents at end of
year 1,597.1 1,641.6
------------------------------------------------ -------- ---------
Cash and cash equivalents consist
of:
---------------------------------------------- -------- ---------
Cash and cash equivalents 177.9 183.0
------------------------------------------------ -------- ---------
Cash held for the benefit of policyholders 1,419.2 1,458.6
------------------------------------------------ -------- ---------
Cash and cash equivalents 1,597.1 1,641.6
------------------------------------------------ -------- ---------
Notes 1 to 36 form part of these Financial Statements.
See note 36 for details on 2022 restated balances.
Company Statement of Cash Flows
2023 Restated
2022
GBPm GBPm
Cash flows from operating activities
Loss before interest and dividends (2.0) (4.9)
Adjustments for non-cash movements:
(Decrease)/increase in contingent
consideration (1.7) 0.9
Adjustment for statement of financial
position movements:
Decrease/(increase) in trade and other
receivables 0.2 (0.2)
Increase in trade and other payables 0.1 -
Net cash flows used in operating
activities (3.4) (4.2)
Investing activities
Dividends received 33.3 45.0
Interest received 0.9 0.2
Increase in loans receivable (0.8) (2.0)
----------------------------------------- ------- ---------------------
Net cash generated from investing
activities 33.4 43.2
Financing activities
Purchase of own shares in Employee
Benefit Trust (0.3) (0.5)
Purchase of shares for share scheme
awards (1.3) (1.3)
Repayment of loans (1.0) (1.0)
Interest expense on loans (0.6) (0.2)
Equity dividends paid (33.7) (33.8)
---------------------
Net cash used in financing activities (37.1) (36.8)
Net (decrease)/increase in cash and
cash equivalents (7.1) 2.2
Cash and cash equivalents at beginning
of year 33.1 30.9
Cash and cash equivalents at end
of year 26.0 33.1
----------------------------------------- ------- ---------------------
Notes 1 to 36 form part of these Financial Statements.
See note 36 for details on 2022 restated balances.
Consolidated Statement of Changes in Equity
Non-distributable
Called insurance
up equity and foreign Share-based Employee
share exchange payment Benefit Retained
capital reserves reserve Trust reserve earnings Total equity
GBPm GBPm GBPm GBPm GBPm GBPm
Balance at
1 October 2021 3.3 6.2 2.4 (2.1) 153.5 163.3
Comprehensive
income for
the year:
Profit for
the year - - - - 44.0 44.0
Movement in
currency translation - 0.1 - - - 0.1
----------------------- ------------ ------------------ ------------ --------------- ---------- -------------
Total comprehensive
income for
the year - 0.1 - - 44.0 44.1
Share-based
payment expense - - 2.0 - - 2.0
Settlement
of share based
payment - - (1.5) - - (1.5)
Purchase of
own shares
in EBT - - - (0.5) - (0.5)
Excess tax
relief charged
to equity - - (0.3) - - (0.3)
Exercised share
options - - - 0.2 (0.2) -
Release of
actuarial reserve - (0.5) - - 0.5 -
Other movement - (0.1) - - (0.1) (0.2)
Distributions
to owners -
Dividends paid - - - - (33.7) (33.7)
Balance at
30 September
2022 3.3 5.7 2.6 (2.4) 164.0 173.2
----------------------- ------------ ------------------ ------------ --------------- ---------- -------------
Balance at
1 October 2022
Comprehensive
income for
the year: 3.3 5.7 2.6 (2.4) 164.0 173.2
Profit for
the year - - - - 49.9 49.5
Movement in
currency translation - (0.1) - - - (0.1)
----------------------- ------------ ------------------ ------------ --------------- ---------- -------------
Total comprehensive
income for
the year - (0.1) - - 49.9 49.4
Share-based
payment expense - - 2.1 - - 2.1
Settlement
of share based
payment - - (1.5) - - (1.5)
Purchase of
own shares
in EBT - - - (0.4) - (0.4)
Excess tax
relief charged
to equity - - 0.2 - - 0.2
Exercised share
options - - - 0.2 - 0.2
Distributions
to owners -
Dividends paid - - - - (33.7) (33.7)
Balance at
30 September
2023 3.3 5.6 3.4 (2.6) 180.2 189.9
----------------------- ------------ ------------------ ------------ --------------- ---------- -------------
Notes 1 to 36 form part of these Financial Statements.
Company Statement of Changes in Equity
Called Employee
up equity Share-based Benefit
share payment Trust Retained Total
capital reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
Balance at 1 October
2021
Comprehensive income
for the year: 3.3 1.7 (1.8) 50.7 53.9
Profit for the year - - - 39.8 39.8
----------------------------- ----------- ------------ --------- ---------- --------
Total comprehensive income
for the year - - - 39.8 39.8
Share-based payment expense - 2.0 - - 2.0
Settlement of share-based
payments - (1.5) - - (1.5)
Purchase of own shares
in EBT - - (0.3) - (0.3)
Distributions to owners
- dividends - - - (33.8) (33.8)
Balance at 30 September
2022 3.3 2.2 (2.1) 56.7 60.1
Comprehensive income
for the year:
Profit for the year - - - 31.6 31.6
----------------------------- ----------- ------------ --------- ---------- --------
Total comprehensive income
for the year - - - 31.6 31.6
Share-based payment expense - 1.9 - - 1.9
Settlement of share-based
payments - (1.4) - - (1.4)
Purchase of own shares
in EBT - - (0.3) - (0.3)
Distributions to owners
- dividends - - - (33.7) (33.7)
Balance at 30 September
2023 3.3 2.7 (2.4) 54.6 58.2
----------------------------- ----------- ------------ --------- ---------- --------
Notes 1 to 36 form part of these Financial Statements.
Notes to the Financial Statements
1. Basis of preparation and significant accounting policies
General information
IntegraFin Holdings plc (the "Company"), a public limited
company incorporated and domiciled in the United Kingdom ("UK"),
along with its subsidiaries (collectively the "Group"), offers a
range of services which are designed to help financial advisers and
their clients to manage financial plans in a simple, effective and
tax efficient way.
The registered office address, and principal place of business,
is 29 Clement's Lane, London, EC4N 7AE.
a) Basis of preparation
The consolidated Financial Statements have been prepared and
approved by the directors in accordance with UK-adopted
international accounting standards (IFRSs).
The Financial Statements have been prepared on the historical
cost basis, except for the revaluation of certain financial
instruments, which are stated at their fair value, have been
prepared in pound sterling, which is the presentational and
functional currency of the Group and Company and are rounded to the
nearest hundred thousand.
Climate risks have been considered where appropriate in the
preparation of these Financial Statements, with particular
consideration given to the impact of climate risk on the fair value
calculations and impairment assessments. This has concluded that
the impact of climate risk on the financial statements is not
material.
Going concern
The 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
Annual Report is approved, and the board has concluded that the
Group has adequate resources, liquidity and capital to continue in
operational existence for the next 12 months. 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 30 September 2023, the Group had GBP177.9 million of
shareholder cash on the statement of financial position,
demonstrating that liquidity remains strong.
-- Detailed cash flow and working capital projections; and
-- stress-testing of liquidity, profitability and regulatory
capital, taking account of possible adverse changes in trading
performance.
1. Basis of preparation and significant accounting policies
(continued)
When making this assessment, the board has taken into
consideration both the Group's current performance and the future
outlook, including the impact of the cost-of-living crisis,
sustained levels of high inflation, increasing interest rates and
volatile equity markets. The environment has been challenging
during the year, but our financial and operational performance has
been robust, and the Group's fundamentals remain strong.
Stress and scenario testing has been carried out, in order to
understand the potential financial impacts of severe, yet
plausible, scenarios on the Group. This assessment incorporated a
number of stress tests covering a broad range of scenarios,
including a cyber attack, system and process failures, and
persistent high inflation with continued market uncertainty.
Having conducted detailed cash flow and working capital
projections, and stress-tested liquidity, profitability and
regulatory capital; taking account of the economic challenges
mentioned above; the board is satisfied that the Group is well
placed to manage its business risks. The board is also satisfied
that it will be able to operate within the regulatory capital
limits imposed by the Financial Conduct Authority (FCA), Prudential
Regulation Authority (PRA), and Isle Man Financial Services
Authority (IoM FSA).
The board has concluded that the Company has adequate resources
and there are no material uncertainties to the Company's ability to
continue to operate for the foreseeable future, being a period of
at least twelve months from the date the financial statements are
approved. For this reason, they have adopted the going concern
basis for the preparation of the financial statements.
Basis of consolidation
The consolidated Financial Statements incorporate the Financial
Statements of the Company and its subsidiaries. Where the Company
has control over an investee, it is classified as a subsidiary. The
Company controls an investee if all three of the following elements
are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power
to affect those variable returns. Control is presumed to exist
where the Group owns the majority of the voting rights of an
entity. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of
control.
Subsidiaries are fully consolidated from the date on which
control is obtained by the Company and are deconsolidated from the
date that control ceases. Acquisitions are accounted for under the
acquisition method. Intercompany transactions, balances, income and
expenses, and profits and losses are eliminated on
consolidation.
The Financial Statements of all of the wholly owned subsidiary
companies are incorporated into the consolidated Financial
Statements. Two of these subsidiaries, IntegraLife International
Limited (ILInt) and IntegraLife UK Limited (ILUK) issue contracts
with the legal form of insurance contracts, but which do not
transfer significant insurance risk from the policyholder to the
Company, and which are therefore accounted for as investment
contracts.
In accordance with IFRS 9, the contracts concerned are therefore
reflected in the consolidated statement of financial position as
investments held for the benefit of policyholders, and a
corresponding liability to policyholders.
1. Basis of preparation and significant accounting policies
(continued)
Changes in accounting policies
i) There have been no new standards, amendments to standards or
interpretations adopted during the financial year that had a
material effect.
ii) Future standards, amendments to standards, and
interpretations not yet effective are noted below.
The following amendments are effective for periods beginning on
or after 1 January 2023:
IFRS 17 Insurance Contracts
In June 2022, the IASB issued amendments to IFRS 17 which will
replace IFRS 4 Insurance Contracts. IFRS 17 establishes the
principles for the recognition, measurement, presentation and
disclosure of insurance contracts within the scope of the Standard.
The Group would be required to provide information that faithfully
represents those contracts, such that users of the financial
statements can assess the effect insurance contracts have on the
entity's financial position, financial performance and cash
flows.
The Group has performed an assessment regarding the impact of
IFRS 17 on the Financial Statements and, while the insurance
companies in the Group do administer insurance business and hold
capital relating to the risks associated with this, there is no
significant insurance risk in any of the contracts. Therefore all
contracts are investment contracts under IFRS 9, and IFRS 17 has no
impact.
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2)
In February 2021, the IASB issued amendments to IAS 1 to assist
in determining which accounting policies to disclose, with
reference to materiality and how to determine which policies fall
into this category. IFRS Practice Statement 2 includes guidance to
support this.
The Group has assessed the impact of this amendment and does not
note any significant impact.
Definition of Accounting Estimates (Amendments to IAS 8)
In February 2021, the IASB issued amendments to IAS 8 to clarify
how to distinguish changes in accounting policies from changes in
accounting estimates. That distinction being that changes in
accounting estimates are applied prospectively to future
transactions and events, but changes in accounting policies are
applied retrospectively to past transactions and events.
The Group has assessed the impact of this amendment and does not
note any significant impact.
Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
In May 2021, the IASB issued amendments to IAS 12 which will
require recognition of deferred taxes on particular transactions
which, on initial recognition, give rise to equal amounts of
taxable and deductible temporary differences.
The Group has assessed the impact of this amendment and does not
note any significant impact.
1. Basis of preparation and significant accounting policies
(continued)
Amendments to IAS 12: International Tax Reform Pillar Two Model
Rules
Amendments to IAS 12 Income Taxes have been introduced in
response to the OECD's BEPS Pillar Two Model Rules. The amendments
include a temporary mandatory exception from accounting for
deferred taxes arising from the Pillar Two model rules and a
requirement to disclose that the exception has been applied
immediately and retrospectively. IHP has taken up this exemption
for FY23.
The Group is continuing to assess whether it will be in scope of
the Pillar Two model Rules. If so, the rules would be expected to
apply to the Group from 1 October 2024 and give rise to a financial
impact. However, the Group does not anticipate that any tax
liabilities that may arise from its overseas operations will be
material to the Group, as most of its revenue and profits are
generated in the UK and taxed at a rate of 25%.
The following amendments are effective for periods beginning on
or after 1 January 2024:
Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1)
In October 2022, the IASB issued amendments to IAS 1 regarding
how conditions with which an entity must comply within twelve
months after the reporting period, affect the classification of a
liability.
The Group has assessed the impact of this amendment and does not
note any significant impact.
The following amendments are effective for the period beginning
1 January 2025:
The Effects of Changes in Foreign Exchange Rates (IAS 21)
In August 2023, the IASB issued amendments to IAS 21 to provide
guidance to specify when a currency is exchangeable and how to
determine the exchange rate when it is not.
The Group has assessed the impact of this amendment and does not
note any impact as the only non-Sterling currency in use is
Australian Dollars.
No other future standards, amendments to standards, or
interpretations are expected to have a material effect on the
financial statements.
b) Principal accounting policies
Revenue from contracts with customers
Revenue represents the fair value of services supplied by the
Company. All fee income is recognised as revenue on an accruals
basis and in line with the provision of the services.
Fee and commission income is recognised at an amount that
reflects the consideration to which the Group expects to be
entitled in exchange for providing the services.
The performance obligations, as well as the timing of their
satisfaction, are identified, and determined, at the inception of
the contract.
1. Basis of preparation and significant accounting policies
(continued)
When the Group provides a service to its customers,
consideration is generally due immediately upon satisfaction of a
service provided at a point in time or at the end of the contract
period for a service provided over time. The Group has generally
concluded that it is the principal in its revenue arrangements
because it typically controls the services before transferring them
to the customer.
The Group has discharged all of its obligations in relation to
contracts with customers, and the amounts received or receivable
from customers equal the amount of revenue recognised on the
contracts. All amounts due from customers are therefore recognised
as receivables within accrued income, and the Group has no contract
assets or liabilities.
Fee income comprises:
Annual commission income
Annual commission is charged for the administration of products
on the Transact platform, and is levied monthly in arrears on the
average value of assets and cash held on the platform. The value of
assets and cash held on the Platform is driven by market movements,
inflows, outflows and other factors.
Wrapper fee income
Wrapper fees are charged for each of the tax wrappers held by
clients and are levied quarterly in arrears based on fixed fees for
each wrapper type.
Annual commission and wrapper fees relate to services provided
on an on-going basis, and revenue is therefore recognised on an
on-going basis to reflect the nature of the performance obligations
being discharged. As the benefit to the customer of the services is
transferred evenly over the service period, these fees are
recognised as revenue evenly over the period, based on time
elapsed.
Accrued income on both annual commission and wrapper fees is
recognised as a trade receivable on the statement of financial
position, as the Group's right to consideration is conditional on
nothing other than the passage of time.
Licence income
Licence income is the rental charge for use of access to T4A's
CRM software. The rental charge is billed monthly in advance, based
on the number of users. Revenue is recognised in line with the
provision of the service.
Consultancy income
Consultancy income relates to consultancy services provided by
T4A on an as-needs basis. Revenue is recognised when the services
are provided.
Other income
This comprises buy commission and dealing charges. These are
charges levied on the acquisition of assets, due upon completion of
the transaction. Revenue is recorded on the date of completion of
the transaction, as this is the date the services are provided to
the customer. As the benefit to the customer of the services is
transferred at a point in time, these fees are recognised at the
point they are provided.
1. Basis of preparation and significant accounting policies
(continued)
Interest income
Interest on shareholder cash, policyholder cash, loans and
coupon on shareholder gilts are the sources of interest income
received. These are recognised in the Consolidated Statement of
Comprehensive Income, with interest on shareholder assets
recognised within interest income, and interest on policyholder
assets recognised within policyholder returns. Under IFRS 9,
interest income is recorded using the effective interest method for
all financial assets measured at amortised cost and is recognised
in the Consolidated Statement of Comprehensive Income.
Cost of sales
Cost of sales relate to costs directly attributable to the
supply of services provided to the Group and are recognised in the
Consolidated Statement of Comprehensive Income on an accruals
basis.
Administrative expenses
Administration expenses relate to overhead costs and are
recognised in the Consolidated Statement of Comprehensive Income on
an accruals basis.
Fee and commission expenses
Fee and commission expenses are paid by ILUK and ILInt
policyholders to their financial advisers. Expenses comprise annual
commission which is levied monthly in arrears on the average value
of assets and cash held on the platform in the month and upfront
fees charged on new premiums on the platform.
Investments
Fixed asset investments in subsidiaries are stated at cost less
any provision for impairment.
Other investments comprise UK Government gilts held as
shareholder investments. The Group held a gilt in the prior year
that matured in the current year, which was held at fair value
through profit or loss as it fell under the 'other' business model,
and was stated at quoted bid price which equates to fair value,
with any resultant gain or loss recognised in profit or loss.
New gilts were acquired in the current financial year, which
were assessed upon purchase and deemed to meet the criteria to
classify as amortised cost under IFRS 9 Financial Instruments,
namely:
-- they are held within a business model whose objective is to
hold assets in order to collect contractual cash flows; and,
-- the contractual terms of the financial assets give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Investment contracts - investments held for the benefit of
policyholders
Investment contracts held for the benefit of policy holders are
comprised of unit-linked contracts. Investments held for the
benefit of policyholders are stated at fair value and reported on a
separate line in the statement of financial position, see
accounting policy on financial instruments for fair value
determination. Investment contracts result in financial liabilities
whose fair value is dependent on the fair value of underlying
financial assets. They are designated at inception as financial
liabilities at 'fair value through profit or loss' in order to
reduce an accounting mismatch with the underlying financial assets.
Gains and losses arising from changes in fair value are presented
in the Consolidated Statement of Comprehensive Income within
"Policyholder investment returns".
1. Basis of preparation and significant accounting policies
(continued)
Investment inflows received from policyholders are invested in
funds selected by the policyholders. The resulting liabilities for
linked investment contracts are accounted for under the 'fair value
through profit or loss' option, in line with the corresponding
assets as permitted by IFRS 9.
As all investments held for the benefit of policyholders are
matched entirely by corresponding linked liabilities, any gain or
loss on assets recognised through the Consolidated Statement of
Comprehensive Income are offset entirely by the gains and losses on
linked liabilities, which are recognised within the "change in
investment contract liabilities" line. The overall net impact on
profit is therefore GBPnil.
Investment contracts are measured at fair value using quoted mid
prices that are available at the reporting date and are traded in
active markets. Where this is not available, valuation techniques
are used to establish the fair value at inception and each
reporting date. The Company's main valuation techniques incorporate
all factors that market participants would consider and are based
on observable market data. The financial liability is measured both
initially and subsequently at fair value. The fair value of a
unit-linked financial liability is determined using the fair value
of the financial assets contained within the funds linked to the
financial liability.
Dividends
Equity dividends paid are recognised in the accounting period in
which the dividends are declared and approved.
Intangible non-current assets
Intangible non-current assets, excluding goodwill, are stated at
cost less accumulated amortisation and comprise intellectual
property software rights. The software rights were amortised over
seven years on a straight line basis, as it was estimated that the
software would be rewritten every seven years, and therefore have a
finite useful life. The software rights are now fully amortised,
but due to ongoing system development and coding updates no
replacement is required.
Goodwill is held at cost and, in accordance with IFRS, is not
amortised but is subject to annual impairment reviews.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. Cost
includes expenditures that are directly attributable to the
acquisition of the asset. Subsequent costs are included in the
asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost can be
measured reliably. Repairs and maintenance costs are charged to the
Consolidated Statement of Comprehensive Income during the period in
which they are incurred.
The major categories of property, plant, equipment are
depreciated as follows:
Asset class All UK and Isle of Man Australian entity
entities
Leasehold improvements Straight line over the Straight line over
life of the lease 40 years
------------------------ ---------------------
Fixtures & Fittings Straight line over 10 Straight line over
years 10 years
------------------------ ---------------------
Equipment Straight line over 3 to Straight line over
10 years 3 years
------------------------ ---------------------
Motor vehicles N/A 25% reducing balance
------------------------ ---------------------
1. Basis of preparation and significant accounting policies
(continued)
Residual values, method of depreciation and useful lives of the
assets are reviewed annually and adjusted if appropriate.
Goodwill and goodwill impairment
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the identifiable net
assets of the acquired entity at the date of acquisition. Goodwill
is recognised as an asset at cost at the date when control is
achieved and is subsequently measured at cost less any accumulated
impairment losses.
Goodwill is allocated to one or more cash generating units
(CGUs) expected to benefit from the synergies of the combination,
where the CGU represents the smallest identifiable group of assets
that generates cash inflows that are largely independent of the
cash inflows from other assets or group of assets. Goodwill is
reviewed for impairment at least once annually, and also whenever
circumstances or events indicate there may be uncertainty over this
value. The impairment assessment compares the carrying value of
goodwill to the recoverable amount, which is the higher of value in
use and the fair value less costs of disposal. Any impairment loss
is recognised immediately in the Consolidated Statement of
Comprehensive Income and is not subsequently reversed.
Intangible assets acquired as part of a business combination
Intangible assets acquired as part of a business combination are
recognised where they are separately identifiable and can be
measured reliably.
Acquired intangible assets consist of contractual customer
relationships, software and brand. These items are capitalised at
their fair value, which are based on either the 'Relief from
Royalty' valuation methodology or the 'Multi-period Excess Earnings
Method', as appropriate for each asset. Subsequent to initial
recognition, acquired intangible assets are measured at cost less
accumulated amortisation and any recognised impairment losses.
Amortisation is recognised in the consolidated statement of
comprehensive income within administration expenses on a straight
line basis over the estimated useful lives of the assets, which are
as follows:
Asset class Useful life
Customer relationships 15 years
----------------
Software 7 years
----------------
Brand 10 years
----------------
The method of amortisation and useful lives of the assets are
reviewed annually and adjusted if appropriate.
Impairment of non-financial assets
Property, plant and equipment, right-of-use assets and
intangible assets are tested for impairment when events or changes
in circumstances indicate that the carrying amount may not be
recoverable. Recoverable amount is the higher of an asset's fair
value less costs to sell and value in use (being the present value
of the expected future cash flows of the relevant asset).
The Group evaluates impairment losses for potential reversals
when events or circumstances warrant such consideration.
1. Basis of preparation and significant accounting policies
(continued)
Goodwill is tested for impairment annually and once an
impairment is recognised this cannot be reversed. For more detailed
information in relation to this, please see note 12.
Pensions
The Group makes defined contributions to the personal pension
schemes of its employees. These are chargeable to Consolidated
Statement of Comprehensive Income in the year in which they become
payable.
Foreign currencies
Transactions in foreign currencies are translated into the
functional currency at the exchange rate in effect at the date of
the transaction. Foreign currency monetary assets and liabilities
are translated to sterling at the year end closing rate. Foreign
exchange rate differences that arise are reported net in the
Consolidated Statement of Comprehensive Income as foreign exchange
gains/losses.
The assets and liabilities of foreign operations are translated
to sterling using the year end closing exchange rate. The revenues
and expenses of foreign operations are retranslated to sterling at
rates approximating the foreign exchange rates ruling at the
relevant month of the transactions. Foreign exchange differences
arising on retranslation are recognised directly in the
reserves.
Taxation
Current income tax
The taxation charge is based on the taxable result for the year.
The taxable result for the year is determined in accordance with
enacted legislation and taxation authority practice for calculating
the amount of corporation tax payable.
Policyholder tax comprises corporation tax payable at the
policyholder rate on the policyholders' share of the taxable result
for the year, together with deferred tax at the policyholder rate
on temporary differences relating to policyholder items.
Current income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted at the
reporting date in countries where the Group operates and generates
taxable income. Management periodically evaluates positions taken
in the tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the statement of
financial position differs from its tax base.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
assets/liabilities are recovered/settled.
With regard to capital gains tax on policyholders' future tax
obligations, management has determined that reserves should be held
to cover this, based on a reserve charge rate of 20%. The deferred
capital gains upon which the reserve charges are calculated are
reflected in the closing deferred tax balance.
1. Basis of preparation and significant accounting policies
(continued)
We are aware of the proposed BEPS Pillar 2 changes which might
impact the tax rate in some jurisdictions in future years and
continue to monitor for updates.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient tax profit will be available to allow all
or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be
recovered.
In assessing the recoverability of deferred tax assets, the
Group relies on the same forecast assumptions used elsewhere in the
financial statements and in other management reports, which, among
other things, reflect the potential impact of climate-related
development on the business, such as increased cost of production
as a result of measures to reduce carbon emissions.
The Group offsets deferred tax assets and deferred tax
liabilities if and only if it has a legal enforceable right to set
off current tax assets and current tax liabilities and the deferred
tax assets and deferred tax liabilities relate to income taxes
levied by the same taxation authority on either the same taxable
entity or different taxable entities which intend to either settle
current tax liabilities and assets on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered.
Policyholder Tax
HMRC requires ILUK to charge basic rate income tax on its life
insurance policies (FA 2012, s102). ILUK collects this tax
quarterly, by charging 20% tax (2022: 20%) on gains from assets
held in the policies, based on the policyholder's acquisition costs
and market value at each quarter end. Additional charges are
applied on any increases in the previously charged gain. The charge
is adjusted by the fourth financial year quarter so that the total
charge for the year is based on the gain at the end of the
financial year. When assets are sold at a loss or reduce in market
value by the financial year end, a refund of the charges may be
applied. Policyholder tax is recorded as a tax expense/(tax credit)
in the statement of comprehensive income, with a corresponding
asset/(liability) recognised on the statement of financial position
(under IAS 12).
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is responsible for allocating
resources and assessing performance of the operating segments and
has been identified as the Chief Executive Officer of the
Company.
Client assets and client monies
Integrated Financial Arrangements Ltd (IFAL) client assets and
client monies are not recognised in the parent and consolidated
statements of financial position as they are owned by the clients
of IFAL.
1. Basis of preparation and significant accounting policies
(continued)
Lease assets and lease liabilities
Right-of-use assets
The Group recognises right-of-use assets on the date the leased
asset is made available for use by the Group. These assets relate
to rental leases for the office of the Group, which have varying
terms clauses and renewal rights. Right-of-use assets are measured
at cost, less any accumulated depreciation and impairment losses,
and adjusted for any re-measurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made
at or before the commencement date.
Depreciation is applied in accordance with IAS 16: Property,
Plant and Equipment. Right-of-use assets are depreciated over the
lease term. See note 13 and 14.
Lease liabilities
The Group measures lease liabilities in line with IFRS 16 on the
balance sheet as the present value of all future lease payments,
discounted using an incremental borrowing rate at the date of
commencement. After the commencement date, the amount of lease
liabilities is increased to reflect the addition of interest and
reduced for the lease payments made. The Group's incremental
borrowing rate is the rate at which a similar borrowing could be
obtained from an independent creditor under comparable terms and
conditions. See note 25.
Short-term leases
The Group defines short-term leases as those with a lease term
of 12 months or less and leases of low value assets. For these
leases, the Group recognises the lease payments as an operating
expense on a straight line basis over the term of lease.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances from instant
access and notice accounts, call deposits, and other short-term
deposits with an original maturity of three months or less. The
carrying amount of these assets approximates to their fair
value.
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.
Financial instruments
Financial assets and liabilities are recognised when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash
flows from the assets have expired or have been transferred and the
Group has transferred substantially all risks and rewards of
ownership. Financial liabilities are derecognised when the
obligation specified in the contract is discharged, cancelled or
expires.
At initial recognition, the Group classifies its financial
instruments in the following categories, based on the business
model in which the assets are managed and their cash flow
characteristics:
(i) Financial assets and liabilities at fair value through profit or loss
This category includes financial assets and liabilities acquired
principally for the purpose of selling or repurchasing in the
short-term, comprising of listed shares and securities.
1. Basis of preparation and significant accounting policies
(continued)
Financial instruments in this category are recognised on the
trade date, and subsequently measured at fair value. Purchases and
sales of securities are recognised on the trade date. Transaction
costs are expensed in the Consolidated Statement of Comprehensive
Income . Gains and losses arising from changes in fair value are
presented in the Consolidated Statement of Comprehensive Income
within "policyholder investment returns" for corporate assets and
"n et income attributable to policyholder returns" for policyholder
assets in the period in which they arise. Financial assets and
liabilities at fair value through profit or loss are classified as
current except for the portion expected to be realised or paid
beyond twelve months of the balance sheet date, which are
classified as long-term.
(ii) Financial assets at amortised cost
These assets comprised of accrued fees, trade and other
receivables, loans, investments in gilts and cash and cash
equivalents. These are included in current assets due to their
short-term nature, except for the loan which is included in
non-current assets.
Financial assets are measured at amortised cost when they are
held within the business model whose objective is to hold assets to
collect contractual cash flows and their contractual cash flows
represent solely payments of principal and interest.
The carrying value of assets held at amortised cost are adjusted
for impairment arising from expected credit losses.
(iii) Financial liabilities at amortised cost
Financial liabilities at amortised cost comprise trade and other
payables and loans payable. These are initially recognised at fair
value. Subsequent measurement is at amortised cost using the
effective interest method. Trade and other payables are classified
as current liabilities due to their short-term nature. The loan is
split between current and non-current liabilities, based on the
repayment terms.
Impairment of financial assets
Expected credit losses are required to be measured through a
loss allowance at an amount equal to:
-- the 12-month expected credit losses (expected credit losses
from possible default events within 12 months after the reporting
date); or
-- full lifetime expected credit losses (expected credit losses
from all possible default events over the life of the financial
instrument).
A loss allowance for full lifetime expected credit losses is
required for a financial instrument if the credit risk of that
financial instrument has increased significantly since initial
recognition, as well as to contract assets or trade receivables,
where the simplified approach is applied to assets that do not
contain a significant financing component.
For all other financial instruments, expected credit losses are
measured at an amount equal to the 12-month expected credit
losses.
Impairment losses on financial assets carried at amortised cost
are reversed in subsequent periods if the expected credit losses
decrease.
1. Basis of preparation and significant accounting policies
(continued)
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
The ILUK policyholder reserves, which are part of the provisions
balance, arises from tax reserve charges collected from life
insurance policyholders, which are held to cover possible future
tax liabilities. If no tax liability arises the charges are
refunded to policyholders, where possible. As these liabilities are
of uncertain timing or amounts, they are recognised as provisions
on the statement of financial position.
Balances due to HMRC are considered under IAS 12 Income Taxes,
whereas balances due to policyholders are considered under IAS 37
Provisions, Contingent Liabilities and Contingent Assets.
Share-based payments
Equity-settled share-based payment awards granted to employees
are measured at fair value at the date of grant. The awards are
recognised as an expense, with a corresponding increase in equity,
spread over the vesting period of the awards, which accords with
the period for which related services are provided.
The total amount expensed is determined by reference to the fair
value of the awards as follows:
(i) Share Incentive Plan (SIP) shares
The fair value is the market price on the grant date. There are
no vesting conditions, as the employees receive the shares
immediately upon grant.
(ii) Performance share plan (PSP) share options
The fair value of share options is determined by applying a
valuation technique, usually an option pricing model, such as Black
Scholes. This takes into account factors such as the exercise
price, the share price, volatility, interest rates, and
dividends.
At each reporting date, the estimate of the number of share
options expected to vest based on the non-market vesting conditions
is assessed. Any change to original estimates is recognised in the
statement of comprehensive income , with a corresponding adjustment
to equity reserves.
2. Critical accounting estimates and judgements
Critical accounting estimates are those where there is a
significant risk of material adjustment in the next 12 months, and
critical judgements are those that have the most significant effect
on amounts recognised in the accounts.
In preparing these Financial Statements, management has made
judgements, estimates and assumptions about the future that affect
the application of the Group's accounting policies and the reported
amounts of assets, liabilities, income and expenses.
2. Critical accounting estimates and judgements (continued)
Management uses its knowledge of current facts and applies
estimation and assumption techniques that are aligned with relevant
accounting policies to make predictions about the future. Actual
results may differ from these estimates.
Estimates and judgements are reviewed on an ongoing basis and
revisions are recognised in the period in which the estimate is
revised. There are no assumptions made about the future, or other
major sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of resulting in a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year.
Judgements which do not involve estimates
The assessment to recognise the ILUK policyholder provision
comes from an evaluation of the likelihood of a constructive or
legal obligation, and whether that obligation can be estimated
reliably. The provision required has been calculated based on an
assessment of tax payable to HM Revenue & Customs (HMRC) and
refunds payable back to policyholders.
1. Financial instruments
(i) Principal financial instruments
The principal financial instruments, from which financial
instrument risk arises, are as follows:
-- Trade and other receivables
-- Accrued fees
-- Investments - Gilts
-- Investments - Listed shares and securities
-- Trade and other payables
-- Loans receivable and loans payable
(ii) Financial instruments by category
As explained in note 1, 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 profit or loss Amortised cost
Restated
2023 2022 2023 2022
GBPm GBPm GBPm GBPm
Cash and cash equivalents - - 177.9 183.0
Cash held for the benefit of policyholders - - 1,419.2 1,458.6
Investments - Listed shares and securities 0.1 0.1 - -
Investments - Gilts - 3.0 22.3 -
Loans receivable - - 6.3 5.5
Accrued income - - 12.5 12.1
Trade and other receivables - - 3.2 2.0
Investments held for the policyholders 23,021.7 20,715.8 - -
Total financial assets 23,021.8 20,718.9 1,641.4 1,661.2
---------------------------------------------- ------------------- ----------------- -------- --------------
2023 Restated 2022
Assets which are not financial instruments GBPm GBPm
Prepayments 4.7 5.1
Current tax asset 14.3 15.0
Trade and other receivables - 0.4 -
repayment interest due from HMRC
---------------------------------------------- ------------------- ----------------- -------- --------------
19.4 20.1
---------------------------------------------- ------------------- ----------------- -------- --------------
See note 36 for details on 2022 restated balances.
3. F inancial instruments (continued)
Financial liabilities: Fair value through profit or loss Amortised cost
2023 Restated 2022 2023 Restated 2022
GBPm GBPm GBPm GBPm
Trade payables - - 0.7 1.6
Lease liabilities - - 1.1 2.8
Other payables 5.9 5.4
Liabilities for linked investments contracts 23,021.7 20,715.8 1,419.2 1,458.6
---------------------------------------------- -------------- -------------------- -------- --------------
Total financial liabilities 23,021.7 20,715.8 1,426.9 1,468.4
---------------------------------------------- -------------- -------------------- -------- --------------
2023 Restated 2022
Liabilities which are not financial instruments GBPm GBPm
Accruals and deferred income 7.8 8.3
PAYE and other taxation 2.6 2.2
Other payables - due to HMRC 0.9 2.3
Deferred consideration 1.6 1.7
Contingent consideration - 1.7
12.9 16.2
---------------------------------------------- -------------- -------------------- -------- --------------
See note 36 for details on 2022 restated balances.
The following tables show the carrying values of assets and
liabilities for each of these categories for the Company:
Financial assets:
Fair value through profit or loss Amortised cost
2023 2022 2023 2022
GBPm GBPm GBPm GBPm
Cash and cash equivalents - - 26.0 33.1
Trade and other receivables - - 0.1 0.2
Loans receivable - - 6.3 5.5
Total financial assets - - 32.4 38.8
----------------------------- ----------------- ----------------- -------- -------
Financial liabilities:
Fair value through profit or loss Amortised cost
Restated
2023 2022 2023 2022
GBPm GBPm GBPm GBPm
Other payables - - 0.4 0.3
Loans payable - - 7.0 8.0
Due to Group undertakings - - - 0.1
Total financial liabilities - - 7.4 8.4
------------------------------------------ -------------------- -------------- ----- --------------
2023 Restated 2022
Liabilities which are not financial instruments GBPm GBPm
Accruals and deferred income 0.3 0.3
PAYE and other taxation 0.1 0.1
Deferred consideration - - 1.6 1.7
Contingent consideration - 1.7
------------------------------------------ -------------------- -------------- ----- --------------
2.0 3.8
------------------------------------------ -------------------- -------------- ----- --------------
See note 36 for details on 2022 restated balances.
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash
and cash equivalents, accrued fees, investments held in gilts,
loans, trade and other receivables, and trade and other payables.
Due to their short-term nature and/or expected credit losses
recognised, the carrying value of these financial instruments
approximates their fair value.
3. F inancial instruments (continued)
(iv) Financial instruments measured at fair value - fair value hierarchy
The table below classifies financial instruments 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. The levels of hierarchy are disclosed on
the next page.
The following table shows the three levels of the fair value
hierarchy:
-- Level 1: quoted prices (unadjusted) in active markets for identical instruments;
-- Level 2: instruments which are not actively traded but
provide regular observable prices; and
-- Level 3: i nputs that are based on level 1 or level 2 data,
but for which the last known price is over a year old (unobservable
inputs).
The following table shows the Group's financial instruments
measured at fair value and split into the three levels:
2023 Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Assets
Term deposits 182.0 - - 182.0
Investments and securities 740.3 181.9 0.5 922.7
Bonds and other fixed-income
securities 16.5 1.0 - 17.5
Holdings in collective
investment schemes 21,754.5 143.3 1.7 21,899.5
------------------------------ -------------------- ----------------- ----------------- -------------
Investments held for
the benefit of policyholders 22,693.3 326.2 2.2 23,021.7
Investments - listed shares
and securities 0.1 - - -
Total 22,693.4 326.2 2.2 23,021.8
------------------------------ -------------------- ----------------- ----------------- -------------
Liabilities
Liabilities for linked
investments contracts 22,693.3 326.2 2.2 23,021.7
------------------------------ -------------------- ----------------- ----------------- -------------
Total 22,693.3 326.2 2.2 23,021.7
------------------------------ -------------------- ----------------- ----------------- -------------
Level
2022 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm
Assets
Term deposits 63.9 - - 63.9
Investments and securities 631.9 137.9 0.3 770.1
Bonds and other fixed-income
securities 10.9 1.2 - 12.1
Holdings in collective
investment schemes 19,730.4 137.7 1.6 19,869.7
-------------------------------------- ---------------- ----------------- -------------- ------------
Investments held for
the benefit of policyholders 20,437.1 276.8 1.9 20,715.8
Investments 3.1 - - 3.1
-------------------------------------- ---------------- ----------------- -------------- ------------
Total 20,440.2 276.8 1.9 20,718.9
-------------------------------------- ---------------- ----------------- -------------- ------------
Liabilities
Liabilities for linked
investments contracts 20,437.1 276.8 1.9 20,715.8
Contingent consideration - - 1.7 1.7
-------------------------------------- ---------------- ----------------- -------------- ------------
Total 20,437.1 276.8 3.6 20,717.5
-------------------------------------- ---------------- ----------------- -------------- ------------
3. F inancial instruments (continued)
Level 1 valuation methodology
Financial instruments included in Level 1 are measured at fair
value using quoted mid
prices that are available at the reporting date and are traded
in active markets. These
are mainly Open-Ended Investment Companies (OEICs), Unit Trusts,
Investment trusts
and Exchange Traded Funds.
The price is sourced from our 3rd party provider, who source
this directly from the
stock exchange or obtain the price directly from the fund
manager.
Level 2 valuation methodology
Financial instruments included in Level 2 are measured at fair
value using observable
mid prices traded in markets that have been assessed as not
active but which provide
regular observable prices. These are mainly Structured products
and OEICs.
The price is sourced from the structured product provider or
from our 3rd party
provider, who obtain the price directly from the fund
manager.
Level 3 valuation methodology
Financial instruments included in Level 3 are measured at fair
value using the last known price and for which the price is over a
year old. These are mainly OEICs and Unit Trusts. These instruments
have unobservable inputs as the current observable market
information is no longer available. Where these instruments arise
management will value them based on the last known observable
market price.
The prices are sourced as noted in level 1 and level 2
above.
For the purposes of identifying level 3 instruments,
unobservable inputs means that current observable market
information is no longer available. Where these instruments arise
management will value them based on the last known observable
market price. No other valuation techniques are applied.
Level 3 sensitivity to changes in unobservable measurements
For financial instruments assessed as Level 3, based on its
review of the prices used, the Group believes that any change to
the unobservable inputs used to measure fair value would not result
in a significantly higher or lower fair value measurement at year
end, and therefore would not have a material impact on its reported
results.
Review of prices
As part of its pricing process, the Group regularly reviews
whether each instrument can be valued using a quoted price and if
it trades on an active market, based on available market data and
the specific circumstances of each market and instrument.
The Group regularly assesses instruments to ensure they are
categorised correctly and Fair Value Hierarchy (FVH) levels
adjusted accordingly. The Group monitors situations that may impact
liquidity such as suspensions and liquidations while also actively
collecting observable market prices from relevant exchanges and
asset managers. Should an instrument price become observable
following the resumption of trading the FVH level will be updated
to reflect this.
3. Financial instruments (continued)
Changes to valuation methodology
There have been no changes in valuation methodology during the
year under review.
Transfers between Levels
The Group's policy is to assess each financial instrument it
holds at the current financial year end, based on the last known
price and market information, and assign it to a Level.
The Group recognises transfers between Levels of the fair value
hierarchy at the end of the reporting period in which the changes
have occurred. Changes occur due to the availability of (or lack
thereof) quoted prices and whether a market is now active or
not.
Transfers between Levels between 01 October 2022 and 30
September 2023 are presented in the table below at their valuation
at 30 September 2023:
Transfers from Transfers to GBPm
Level 1 Level 2 32.3
Level 2 Level 1 20.9
The reconciliation between opening and closing balances of Level
3 assets are presented in the table below:
2023 2022
GBPm GBPm
Opening balance 1.9 1.9
Unrealised gains or losses in the
year ended 30 September 2023 (0.1) (0.4)
Transfers in to Level 3 at 30 September
2023 valuation 0.4 0.4
Transfers out of Level 3 at 30 September
2023 valuation - -
Purchases, sales, issues and settlement - -
Closing balance 2.2 1.9
------------------------------------------ ------- --------
Any resultant gains or losses on financial assets held for the
benefit of policyholders are offset by a reciprocal movement in the
linked liability.
(v) Capital maintenance
The regulated companies in the Group are subject to capital
requirements imposed by the relevant regulators as detailed
below:
Legal entity Regulatory regime
------------- -----------------------
IFAL IFPR
ILUK Solvency II
ILInt Isle of Man risk based
capital regime
Group capital requirements for 2023 are driven by the regulated
entities, whose capital resources and requirements as detailed
below:
3. F inancial instruments (continued)
IFAL ILUK ILInt
30 September 30 September 30 September
2023 2022 2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ------- ------- ------- ------- ------- -------
Capital resource 44.4 39.7 269.2 244.0 46.6 42.0
Capital requirement 33.3 32.6 215.8 186.9 27.1 23.7
Coverage
ratio 133% 122% 125% 131% 172% 177%
The Group has complied with the requirements set by the
regulators during the year. The Group's policy for managing capital
is to ensure each regulated entity maintains capital well above the
minimum requirement.
4. Risk and risk management
Risk assessment
The board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's risk function.
Risk assessment is the determination of quantitative values
and/or qualitative judgements of risk related to a concrete
situation and a recognised threat. Quantitative risk assessment
requires calculations of two components of risk, the magnitude of
the potential impact, and the likelihood that the risk
materialises. Qualitative aspects of risk, despite being more
difficult to express quantitatively, are also taken into account in
order to fully evaluate the impact of the risk on the
organisation.
(1) Market risk
Market risk is the risk of loss arising either directly or
indirectly from fluctuations in the level and in the volatility of
market prices of assets, liabilities and other financial
instruments.
(a)
Price risk
Market price risk from reduced income
The Company's dividend income from its regulated subsidiaries,
IFAL, ILUK and ILInt, is exposed to market risk. The Group's main
source of income is derived from annual management fees and
transaction fees which are linked to the value of the clients'
portfolios, which are determined by the market prices of the
underlying assets. The Group's revenue is therefore affected by the
value of assets on the platform, and consequently it has exposure
to equity market levels and economic conditions.
4. Risk and risk management (continued)
The Group mitigates the second order market price risk by
applying fixed charges per tax wrapper in addition to income
derived from the charges based on clients' linked portfolio values.
These are recorded in note 5 as wrapper fee income and annual
commission income, respectively. This approach of fixed and
variable charging offers an element of diversification to its
income stream. The risk of stock market volatility, and the impact
on revenue, is also mitigated through a wide asset offering which
ensures the Group is not wholly correlated with one market, and
which enables clients to switch assets, including into cash on the
platform, in times of uncertainty.
Sensitivity testing has been performed to assess the impact of
market movements on the Group's profit after tax and equity for the
year. The sensitivity is applied as an instantaneous shock at the
start of the year, and shows the impact of a 10% change in values
across all assets held on the platform.
Impact on profit and equity
for the year
2023 2022
GBPm GBPm
10% increase in asset values 8.7 8.5
10% decrease in asset values (8.7) (8.5)
Market risk from direct asset holdings
The Group and the Company have limited exposure to primary
market risk as capital is invested in high quality, highly liquid,
short-dated investments.
Market risk from unit-linked assets
The Group and the Company have limited exposure to primary
market risk from the value of unit-linked assets as fluctuations
are borne by the policyholders.
(b) Interest rate risk
The Group receives interest on its cash and cash equivalents of
GBP177.9 million (2022: 183.0 million), on its loans GBP6.3 million
(2022: GBP5.5 million) and on financial investments of GBP22.4
million (2022: GBP3.1 million). The Group mitigates interest rate
risk by diversifying its investments, which include government
gilts which have a fixed rate of interest.
Sensitivity testing has been performed to assess the impact of a
1% change in interest rates. This would be expected to
increase/decrease interest received on cash and cash equivalents by
GBP1.7 million (2022: GBP1.8 million) and on loans by GBP0.1
million (2022: GBP0.1 million), which would increase/decrease
profit after tax and equity by GBP1.4 million (2022: GBP1.5
million).
(c) Currency risk
The Group is not directly exposed to significant currency risk
however it is exposed to currency risk which arises on the platform
software maintenance and support fees charged by IAD Pty, which are
charged in Australian Dollars. The total amount of software
maintenance and support fees in FY23 amounted to GBP7.2 million
(FY22: GBP6.2 million).
Sensitivity testing has been performed to assess the impact of a
10% change in the GBP-AUD exchange rate. This would be expected to
cause an increase/decrease of GBP0.7 million (2022: GBP0.6 million)
on the software maintenance and support fees.
4. Risk and risk management (continued)
The table below shows a breakdown of the material foreign
currency exposures for the unit-linked policies within the
Group:
2023 2023 2022 2022
---------------- --------- ------ --------- ---------
Currency GBPm % GBPm %
GBP 24,279.2 99.3 22,021.1 99.3
USD 133.4 0.5 127.0 0.6
EUR 15.9 0.1 16.4 0.1
Others 12.4 0.1 9.8 0.0
---------------- --------- ------ --------- ---------
Total 24,440.9 100.0 22,174.3 100.0
---------------- --------- ------ --------- ---------
99.3% of investments and cash held for the benefit of
policyholders are denominated in GBP, its base currency. Remaining
currency holdings greater than 0.1% of the total are shown
separately in the table. However, it is recognised that the
majority of investments held for the benefit of policyholders are
in collective investment schemes and some of their underlying
assets are denominated in currencies other than GBP, which
increases the funds under direction currency risk exposure. A
significant rise or fall in sterling exchange rates would not have
a significant first order impact on the Group's results since any
adverse or favourable movement in policyholder assets is entirely
offset by a corresponding movement in the linked liability.
(2) Credit (counterparty default) risk
Credit risk is the risk that the Group or Company is exposed to
a loss if another party fails to meet its financial obligations.
For the Company, the exposure to counterparty default risk arises
primarily from loans directly held by the Company, while for the
Group this risk also arises from fees owed by clients.
Assets held at amortised cost
(a) Accrued income
This comprises fees owed by clients. These are held at amortised
cost, less expected credit losses ("ECLs").
Under IFRS 9, a forward-looking approach is required to assess
ECLs, so that losses are recognised before the occurrence of any
credit event. The Group estimates that pending fees three months or
more past due are unlikely to be collected and are written off.
Based on management's experience, pending fees one or two months
past due are generally expected to be collected, but consideration
is also given to potential losses on these fees. Historical loss
rates have been used to estimate expected future losses, while
consideration is also given to underlying economic conditions, in
order to ensure that expected losses are recognised on a
forward-looking basis. This has led to the additional recognition
of an immaterial amount of ECLs.
Details of the ECLs recognised in relation to accrued income can
be seen in note 22.
(b) Loans
Loans subject to the 12 month ECL are GBP6.3m (2022: GBP5.5m).
While there remains a level of economic uncertainty in the current
climate, leading to potentially higher credit risk, there is not
considered to be a significant increase in credit risk, as all of
the loans are currently performing to schedule, and there are no
significant concerns regarding the borrowers. There is therefore no
need to move from the 12 month ECL model to the lifetime ECL model.
Expected losses are recognised on a forward-looking basis, which
has led to the additional recognition of an immaterial amount of
ECLs.
4. Risk and risk management (continued)
In addition to the above, the Company has committed a further
GBP5.0m in undrawn loans.
Details of the ECLs recognised in relation to loans can be seen
in note 16. No ECLs have been recognised on the undrawn loan
commitments, as any ECLs would not be considered to be
material.
(c) Cash and equivalents
The Group has a low risk appetite for credit risk, which is
mainly limited to exposures to credit institutions for its bank
deposits. A range of major regulated UK high street banks is used.
A rigorous annual due diligence exercise is undertaken to assess
the financial strength of these banks with those used having a
minimum credit rating of A (Fitch).
In order to actively manage the credit and concentration risks,
the board has agreed risk appetite limits for the regulated
entities of the amount of corporate and client funds that may be
deposited with any one bank; which is represented by a set
percentage of the respective bank's total customer deposits.
Monthly monitoring of these positions along with movements in Fitch
ratings is undertaken, with reports presented to the Directors for
review. Collectively these measures ensure that the Group
diligently manages the exposures and provide the mitigation scope
to be able to manage credit and concentration exposures on behalf
of itself and its customers
Counterparty default risk exposure to loans
The Company has loans of GBP6.3m (2022: GBP5.5m). There are no
other loans held by the Group.
Counterparty default risk exposure to Group companies
As well as inconvenience and operational issues arising from the
failure of the other Group companies, there is also a risk of a
loss of assets. The Company is due GBP81k (2022: GBP160k) from
other Group companies.
Counterparty default risk exposure to other receivables
The Company has no other receivables arising, due to the nature
of its business, and the structure of the Group.
Across the Group, there is exposure to counterparty default risk
arising primarily from:
-- corporate assets directly held by the Group;
-- exposure to clients; and
-- exposure to other receivables.
The other exposures to counterparty default risk include a
credit default event which affects funds held on behalf of clients
and occurs at one or more of the following entities:
-- a bank where cash is held on behalf of clients;
-- a custodian where the assets are held on behalf of clients; and
-- Transact Nominees Limited (TNL), which is the legal owner of
the assets held on behalf of clients.
4. Risk and risk management (continued)
There is no first order impact on the Group from one of the
events in the preceding paragraph. This is because any credit
default event in respect of these holdings will be borne by
clients, both in terms of loss of value and loss of liquidity.
Terms and conditions have been reviewed by external lawyers to
ensure that these have been drafted appropriately. However, there
is a second order impact where future profits for the Group are
reduced in the event of a credit default which affects funds held
on behalf of clients.
There are robust controls in place to mitigate credit risk, for
example, holding corporate and client cash across a range of banks
in order to minimise the risk of a single point of counterparty
default failure. Additionally, maximum counterparty limits and
minimum credit quality steps are set for banks.
Cash and cash equivalents and investments are classed as stage 1
on the expected credit loss model (meaning that they are not
credit-impaired on initial recognition and have not experienced a
significant increase in credit risk since initial recognition) with
no material expected credit loss provision held.
Corporate assets and funds held on behalf of clients
There is no significant risk exposure to any one UK clearing
bank.
Counterparty default risk exposure to clients
The Group is due GBP12.3m (2022: GBP11.8m) from fee income owed
by clients.
Impact of credit risk on fair value
Due to the limited direct exposure that the Group and the
Company have to credit risk, credit risk does not have a material
impact on the fair value movement of financial instruments for the
year under review. The fair value movements on these instruments
are predominantly due to changes in market conditions.
(3) Liquidity risk
Liquidity risk is the risk that funds are not accessible such
that the Company, although solvent, does not have sufficient liquid
financial resources to meet obligations as they fall due, or can
secure such resources only at excessive cost.
As a holding company, the Company's main liquidity risk is
related to paying out shareholder dividends and operating expenses
it may incur. Additionally, the Company has made short term
commitments, in the form of a capped facility arrangement, to
Vertus Capital SPV1 Limited ('Vertus') (as one of Vertus' sources
of funding) to assist Vertus in developing its business, which is
to provide tailored niche debt facilities to adviser firms to fund
acquisitions, management buy-outs and other similar
transactions.
Across the Group, the following key drivers of liquidity risk
have been identified:
-- liquidity risk arising due to failure of one or more of the Group's banks;
-- liquidity risk arising due to the bank's system failure which
prevents access to Group funds; and
-- liquidity risk arising from clients holding insufficient cash
to settle fees when they become due.
4. Risk and risk management (continued)
The Group's liquidity risk arises from a lack of readily
realisable cash to meet debts as they become due. This takes a
number of forms - clients' liabilities coming due, other
liabilities (e.g. expenses) coming due, insufficient liquid assets
to meet loan repayments to subsidiary companies and future payment
commitments over the next three years following the acquisition of
T4A.
The first of these, clients' liabilities is primarily covered
through the terms and conditions with clients' taking their own
liquidity risk, if their funds cannot be immediately surrendered
for cash.
Payment of other liabilities depends on the Group having
sufficient liquidity at all times to meet obligations as they fall
due. This requires access to liquid funds, i.e. working banks and
it also requires that the Group's main source of liquidity, charges
on its clients' assets, can also be converted into cash.
The payment of loan obligations is covered by the upward
dividends from subsidiary entities which were assessed against the
financial plans and capital projections of the regulated entities
to ensure the level of affordability of the future dividends.
The purchase price for T4A comprised three elements, a fixed sum
payable on deal completion which has been settled, a further fixed
sum to be paid in four equal annual instalments and a variable
amount by reference to T4A's performance over that four year
period. The payment of these future obligations is expected to be
met from the Company's own reserves and dividends it expects to
receive from its subsidiaries.
The Company has set out two key liquidity requirements: first,
to ensure that clients maintain a percentage of liquidity in their
funds at all times, and second, to maintain access to cash through
a spread of cash holdings in bank accounts.
There are robust controls in place to mitigate liquidity risk,
for example, through regular monitoring of expenditure, closely
managing expenses in line with the business plan, and, in the case
of the Vertus facility, capping the value of loans. Additionally,
the Group holds corporate and client cash across a range of banks
in order to mitigate the risk of a single point of counterparty
default failure.
Maturity schedule
The following table shows an analysis of the financial assets
and financial liabilities by remaining expected maturities as at 30
September 2023 and 30 September 2022. All financial liabilities are
undiscounted.
In addition to the financial assets and financial liabilities
shown in the tables below, the Company committed a further GBP5.6m
in undrawn loans. These are available to be drawn down
immediately.
4. Risk and risk management (continued)
Financial assets:
Up to 3 3-12 1-5 Over
2023 months months years 5 years Total
GBPm GBPm GBPm GBPm GBPm
Investments
held for the
policyholders 23,021.7 - - - 23,021.7
Investments - - 22.4 - 22.4
Accrued income 12.5 - - - 12.5
Trade and other
receivables 3.2 - - - 3.2
Loans - - 6.3 - 6.3
Cash and cash
equivalents 177.9 - - - 177.9
Cash held for the
benefit of policyholders 1,419.2 - - - 1,419.2
----------------------------- ---------- -------- ------- --------- ---------
Total 24,634.5 - 28.7 - 24,663.1
--------------------- ------------------ -------- ------- --------- ---------
Up to 3 3-12 1-5 Over
Restated 2022 months months years 5 years Total
GBPm GBPm GBPm GBPm GBPm
Investments
held for the
policyholders 20,715.8 - - - 20,715.8
Investments 0.1 - 3.0 - 3.1
Accrued income 12.1 - - - 12.1
Trade and other
receivables 2.0 - - - 2.0
Loans - - 5.5 - 5.5
Cash and cash equivalents 183.0 - - - 183.0
Cash held for the
benefit of policyholders 1,458.6 - - - 1,458.6
----------------------------- ---------- -------- -------- --------- ---------
Total 22,371.6 - 8.5 - 22,380.1
---------------------- ----------------- -------- -------- --------- ---------
See note 36 for details on 2022 restated balances.
Financial liabilities:
1-5
2023 Up to 3 months 3-12 months years Over 5 years Total
GBPm GBPm GBPm GBPm GBPm
Liabilities for linked investment contracts 24,440.9 - - - 24,440.9
Trade and other payables 6.6 - - - 6.6
Lease liabilities 0.1 0.3 0.9 - 1.3
Total 24,447.6 0.3 0.9 - 24,448.8
--------------------------------------------- --------------- ------------ ------- ------------- ---------
1-5
2022 Up to 3 months 3-12 months years Over 5 years Total
GBPm GBPm GBPm GBPm GBPm
Liabilities for linked investment contracts 22,174.4 - - - 22,174.4
Trade and other payables 7.0 - - - 7.0
Lease liabilities 0.6 1.3 0.9 - 2.8
Total 22,182.0 1.3 0.9 - 22,184.2
--------------------------------------------- --------------- ------------ ------- ------------- ---------
As per note 3, accruals, deferred consideration and contingent
consideration have been reclassified as non-financial instruments
and have therefore been removed from this table.
4. Risk and risk management (continued)
(4) Outflow risk
Outflows occur when funds are withdrawn from the platform for
any reason. Outflows typically occur where clients' circumstances
and requirements change. However, these outflows can also be
triggered by operational failure, competitor actions or external
events such as regulatory or economic changes.
Outflow risk is mitigated by focusing on providing exceptionally
high levels of service. Outflow rates are closely monitored and
unexpected experience is investigated. Despite the current
challenging and uncertain economic and geopolitical environment,
outflow rates remain stable and within historical norms.
(5) Expense risk
Expense risk arises where costs increase faster than expected or
from one-off expense "shocks".
The Group and the Company has exposure related to expense
inflation risk, where actual inflation deviates from expectations.
As a significant percentage of the Group's expenses are staff
related the key inflationary risk arises from salary inflation. The
Group and the Company have no exposures to defined benefit staff
pension schemes or client related index linked liabilities.
The Group's expenses are governed at a high level by the Group's
Expense Policy. The monthly management accounts are reviewed
against projected future expenses by the Board and by senior
management and action is taken where appropriate.
5. Disaggregation of revenue
The Group has the following categories of revenue:
-- Annual commission - based on a fixed percentage applied to
the value of the client's portfolio each month.
-- Wrapper fee income - based on a fixed quarterly charge per wrapper.
-- Other income - buy commission is based on a set percentage
charge applied to each transaction. Dealing charges are charged
based on a fixed fee for each type of transaction.
-- Adviser back-office technology - licence income based on a
fixed monthly charge per number of users. Consultancy income is
charged based on the services provided.
For the financial year ended
30 September
2023 2022
GBPm GBPm
Annual commission income 116.1 115.8
Wrapper fee income 12.3 11.6
Other income 1.7 2.2
Adviser back-office technology 4.8 4.0
Total revenue 134.9 133.6
-------------------------------- --------------- --------------
6. Segmental reporting
The revenue and profit before tax are attributable to activities
carried out in the UK and the Isle of Man.
The Group has three classes of business, which have been
organised primarily based on the products they offer, as detailed
below:
-- Investment administration services - this relates to services
performed by IFAL, which is the provider of the Transact wrap
service. It is the provider of the General Investment Account
(GIA), is a Self-Invested Personal Pension (SIPP) operator, an ISA
manager and is the custodian for all assets held on the platform
(except for those held by third party custodians).
-- Insurance and life assurance business - this relates to ILUK
and ILInt, insurance companies which provide the Transact Personal
Pension, Executive Pension, Section 32 Buy-Out Bond, Transact
Onshore and Offshore Bonds, and Qualifying Savings Plan on the
Transact platform.
-- Adviser back-office technology - this relates to T4A,
provider of financial planning technology to adviser and wealth
management firms via the CURO adviser support system.
Other Group entities relates to the rest of the Group, which
provide services to support the Group's core operating
segments.
Analysis by class of business is given below.
6. Segmental reporting (continued)
Statement of comprehensive income - segmental information for
the year ended 30 September 2023:
Investment Insurance and Adviser Other Group Consolidation Total
administration life assurance back-office entities adjustments
services business technology
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Annual
commission
income 63.1 53.0 - - - 116.1
Wrapper fee
income 3.0 9.3 - - - 12.3
Adviser
back-office
technology - - 4.8 - - 4.8
Other income 1.2 0.5 - 76.0 (76.0) 1.7
Total revenue 67.3 62.8 4.8 76.0 (76.0) 134.9
Cost of sales (2.1) (0.6) (0.7) (0.5) - (3.9)
----------------- ---------------- --------------- ---------------- ---------------- ---------------- ----------
Gross
profit/(loss) 65.2 62.2 4.1 75.5 (76.0) 131.0
Administrative
expenses (42.2) (30.2) (5.5) (72.3) 75.6 (74.6)
Impairment
losses - - - (0.1) - (0.1)
Operating
profit/(loss) 23.0 32.0 (1.4) 3.1 (0.4) 56.3
Interest expense - - - (0.7) 0.6 (0.1)
Interest income 1.2 4.4 - 1.4 (0.6) 6.4
Net policyholder
returns
Net
income/(loss)
attributable to
policyholder
returns - 12.1 - - - 12.1
Change in
investment
contract
liabilities - (1,056.0) - - - (1,056.0)
Fee and
commission
expenses - (193.3) - - - (193.3)
Policyholder
investment
returns - 1,249.3 - - - 1,249.3
Net policyholder
returns - 12.1 - - - 12.1
----------------- ---------------- --------------- ---------------- ---------------- ---------------- ----------
Profit/(loss) on
ordinary
activities
before taxation
attributable to
policyholders
and
shareholders 24.2 48.5 (1.4) 3.8 (0.4) 74.7
Policyholder tax
credit/(charge) - (12.1) - - - (12.1)
Profit on
ordinary
activities
before
taxation
attributable
to
shareholders 24.2 36.4 (1.4) 3.8 (0.4) 62.6
Total tax
attributable to
shareholder and
policyholder
returns (5.0) (18.7) 0.5 (1.7) (0.1) (24.9)
Less: tax
attributable to
policyholder
returns - 12.1 - - - 12.1
----------------- ---------------- --------------- ---------------- ---------------- ---------------- ----------
Shareholder tax
on profit on
ordinary
activities (5.0) (6.6) 0.5 (1.7) (0.1) (12.8)
Profit/(loss)
for the period 19.2 29.8 (0.9) 2.1 (0.3) 49.9
----------------- ---------------- --------------- ---------------- ---------------- ---------------- ----------
6. Segmental reporting (continued)
Statement of comprehensive income - segmental information for
the year ended 30 September 2022:
Investment Insurance and Adviser Other Group Consolidation Total
administration life assurance back-office entities adjustments
services business technology
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Annual
commission
income 63.4 52.6 - - - 116.0
Wrapper fee
income 2.8 8.7 - - - 11.5
Adviser
back-office
technology - - 3.9 - - 3.9
Other income 1.3 0.9 - 64.4 (64.4) 2.2
Revenue 67.5 62.2 3.9 64.4 (64.4) 133.6
Cost of sales (0.7) (0.4) (0.5) (0.5) - (2.1)
----------------- ---------------- --------------- ---------------- ---------------- ---------------- ----------
Gross
profit/(loss) 66.8 61.8 3.4 63.9 (64.4) 131.5
Admin expenses (43.0) (28.8) (5.3) (64.6) 64.0 (77.7)
Expected credit
losses on
financial
assets (0.1) - - (0.1) - (0.2)
----------------- ---------------- --------------- ---------------- ---------------- ---------------- ----------
Operating
profit/(loss) 23.7 33.0 (1.9) (0.8) (0.4) 53.6
Interest expense - - - (0.4) 0.3 (0.1)
Interest income 0.1 1.0 - - (0.3) 0.8
Net policyholder
returns
Net
income/(loss)
attributable to
policyholder
returns (38.5) - - - (38.5)
Change in
investment
contract
liabilities - 2,770.3 - - - 2,770.3
Fee and
commission
expenses - (192.6) - - - (192.6)
Policyholder
investment
returns - (2,577.7) - - - (2,577.7)
Net policyholder
returns - 38.5 - - - (38.5)
----------------- ---------------- --------------- ---------------- ---------------- ---------------- ----------
Profit on
ordinary
activities
before taxation
attributable to
policyholders
and
shareholders 23.8 (4.5) (1.9) (1.2) (0.4) 15.8
Policyholder tax
credit/(charge) - 38.5 - - - 38.5
Profit on
ordinary
activities
before taxation
attributable to
shareholders 23.8 34.0 (1.9) (1.2) (0.4) 54.3
Total tax
attributable to
shareholder and
policyholder
returns (4.4) 32.6 0.3 (0.4) 0.1 28.2
Less: tax
attributable to
policyholder
returns - (38.5) - - - (38.5)
Shareholder tax
on profit on
ordinary
activities (4.4) (5.9) 0.3 (0.4) 0.1 (10.3)
Profit/(loss) for
the period 19.4 28.1 (1.6) (1.6) (0.3) 44.0
6. Segmental reporting (continued)
Statement of financial position - segmental information for the
year ended 30 September 2023:
Investment Insurance and Adviser
administration life assurance back-office
services business technology Total
GBPm GBPm GBPm GBPm
Assets
Non-current assets 10.3 19.1 1.1 30.5
Current assets 78.0 154.6 2.8 235.4
Total assets 88.3 173.7 3.9 265.9
Liabilities
Current liabilities 8.4 18.1 1.0 27.5
Non-current liabilities 0.8 47.5 0.2 48.5
Total liabilities 9.2 65.6 1.2 76.0
Policyholder assets and
liabilities
Cash held for the benefit
of policyholder - 1,419.2 - -
Investments held for the
benefit of policyholders - 23.021.7 - -
Liabilities for linked
investment contracts - (24,440.9) - -
Total policyholder assets - - -
and liabilities -
Net assets 79.1 108.1 2.7 189.9
Non-current asset
additions 0.3 0.3 0.0 0.6
6. Segmental reporting (continued)
Restated Statement of financial position - segmental information
for the year ended 30 September 2022:
Investment administration Insurance Total
services and life assurance
business Adviser
back-office
technology
GBPm GBPm GBPm GBPm
Assets
Non-current
assets 10.4 25.4 0.8 36.6
Current assets 71.8 144.7 3.8 220.3
Total assets 82.2 170.1 4.6 256.9
Liabilities
Current liabilities 10.5 22.5 1.1 34.1
Non-current liabilities 1.9 47.6 0.1 49.6
Total liabilities 12.4 70.1 1.2 83.7
Policyholder assets
and liabilities
Cash held for the
benefit of policyholder - 1,458.6 - 1,458.6
Investments held
for the benefit
of policyholders - 20,715.8 - 20,715.8
Liabilities for
linked investment
contracts - (22,174.4) - (22,174.4)
Total policyholder - - - -
assets and liabilities
Net assets 69.8 100.0 3.4 173.2
Non-current asset additions 0.2 0.1 - 0.3
See note 36 for details on 2022 restated balances.
Segmental information: Split by geographical location
2023 2022
GBPm GBPm
Revenue
United Kingdom 129.4 128.3
Isle of Man 5.5 5.3
Total 134.9 133.6
2023 2022
GBPm GBPm
Non-current assets
United Kingdom 23.4 25.1
Isle of Man 0.1 -
Total 23.5 25.1
7. Earnings per share
2023 2022
Profit
Profit for the year and earnings
used in basic and diluted earnings
per share GBP49.9m GBP44.0m
Weighted average number of shares
Weighted average number of Ordinary
shares 331.3m 331.3m
Weighted average numbers of Ordinary
Shares held by Employee Benefit
Trust (0.5m) (0.4m)
Weighted average number of Ordinary
Shares for the purposes of basic
EPS 330.8m 330.9m
Adjustment for dilutive share option
awards 0.5m 0.4m
Weighted average number of Ordinary
Shares for the purposes of diluted
EPS 331.3m 331.3m
Earnings per share
Basic 15.1p 13.3p
Diluted 15.1p 13.3p
Earnings per share ("EPS") is calculated based on the share
capital of IntegraFin Holdings plc and the earnings of the
consolidated Group.
Basic EPS is calculated by dividing profit after tax
attributable to ordinary equity shareholders of the Company by the
weighted average number of Ordinary Shares outstanding during the
year. The weighted average number of shares excludes shares held
within the Employee Benefit Trust to satisfy the Group's
obligations under employee share awards.
Diluted EPS is calculated by adjusting the weighted average
number of Ordinary Shares outstanding to assume conversion of all
potentially dilutive Ordinary Shares.
8. Expenses by nature
The following expenses are included within administrative
expenses:
Group
2023 2022
GBPm GBPm
Depreciation 2.1 2.6
Amortisation 0.4 0.4
Wages and employee benefits expense 52.8 46.1
Other staff costs 1.1 1.0
Auditor's remuneration:
* auditing of the Financial Statements of the Company
pursuant to the legislation 0.2 0.1
* auditing of the Financial Statements of subsidiaries 0.6 0.4
* other assurance services 0.4 0.3
Other professional fees 4.8 4.7
Regulatory fees 3.9 4.2
* Non-underlying expenses - backdated VAT - 8.0
* Non-underlying expenses - interest on backdated VAT - 0.8
* Other non-underlying expenses - deferred
consideration 2.1 2.1
* Other non-underlying expenses -contingent
consideration (1.7) 0.9
* Other non-underlying expenses - (0.3)
Short-term lease payments:
* land and buildings 0.6 0.1
Other occupancy costs 2.2 2.3
Other costs 6.7 6.4
Other income - tax relief due to
shareholders (1.6) (2.4)
Total administrative expenses 74.6 77.7
Other income - tax relief due to shareholders, relates to the
release of policyholder reserves to the statement of comprehensive
income.
Company
2023 2022
GBPm GBPm
Wages and employee benefits expense 0.7 0.6
Non underlying expenses:
* Remuneration 0.3 3.0
Auditor's remuneration:
* auditing of the Financial Statements of the Company
pursuant to the legislation 0.2 0.2
Other professional fees 0.6 0.8
Other costs 0.2 0.2
Total administrative expenses 2.0 4.8
8. Expenses by nature (continued)
Wages and employee benefits expense
The average number of staff (including executive directors)
employed by the Group during the financial year amounted to:
2023 2022
No. No.
CEO 2 2
Client services staff 232 223
Finance staff 72 69
Legal and compliance staff 39 38
Sales, marketing and product development
staff 65 64
Software development staff 139 131
Technical and support staff 82 67
631 594
The Company has no employees (2022: nil).
Wages and employee (including executive directors) benefits
expenses during the year, included within administrative expenses,
were as follows:
2023 2022
GBPm GBPm
Wages and salaries 43.9 36.3
Social security costs 4.8 4.2
Other pension costs 2.0 3.6
Share-based payment costs 2.1 2.0
52.8 46.1
Compensation of key management personnel
Key management personnel are defined as those persons having
authority and responsibility for planning, directing, and
controlling the activities of the entity and as such, only
directors are considered to meet this definition.
2023 2022
GBPm GBPm
Short-term employee benefits 3.0 2.9
Post-employment benefits 0.2 0.2
Share based payment 0.5 0.4
Social security costs 0.5 0.4
4.1
Highest paid director:
Short-term employee benefits 0.6 0.6
Other benefits 0.2 0.2
No. No.
Number of directors for whom pension
contributions are paid 8 8
Short-term employee benefits comprise salary and cash bonus.
9. Interest income
Group Company Group Company
2023 2023 2022 2022
GBPm GBPm GBPm GBPm
Interest income on bank deposits 5.3 0.5 0.6 -
Interest income on tax repayments 0.4 - - -
Interest income on loans 0.4 0.4 0.2 0.2
Interest income on financial investments 0.3 - - -
6.4 0.9 0.8 0.2
All interest income is calculated using the effective interest
rate method, except for Interest income on tax repayments.
10. Policyholder investment returns
2023 2022
GBPm GBPm
Change in fair value of underlying
assets 1,024.2 (2,729.2)
Investment income 225.1 151.5
Total policyholder investment
returns 1,249.3 (2,577.7)
11. Tax on profit on ordinary activities
Group
a) Analysis of charge in year
The income tax expense comprises:
2023 2022
GBPm GBPm
Corporation tax
Current year - corporation tax 12.7 10.0
Adjustment in respect of prior
years (0.1) 0.7
12.6 10.7
Deferred tax
Current year 0.1 (0.4)
Change in deferred tax charge/(credit)
as a result of higher tax rate - -
Total shareholder tax charge for
the year 12.7 10.3
Policyholder taxation
UK policyholder tax at 20% (2022:
20%) - -
Deferred tax at 25% (2022: 25%) 11.8 (33.8)
Prior year adjustments - (4.9)
Tax deducted on overseas dividends 0.3 0.2
Total policyholder taxation 12.1 (38.5)
Total tax attributable to shareholder
and policyholder returns 24.8 (28.2)
11. T ax on profit on ordinary activities (continued)
b) Factors affecting tax charge for the year
The tax on the Group's profit before tax differs from the amount
that would arise using the weighted average tax rate applicable to
profits of the consolidated entities as follows:
2023 2022
GBPm GBPm
Profit on ordinary activities before
taxation attributable to shareholders 62.6 54.3
Profit on ordinary activities multiplied
by effective rate of Corporation
Tax 22% (2021: 19%) 13.8 10.3
Effects of:
Non-taxable dividends - -
Group relief - -
Income / expenses not taxable / deductible
for tax purposes multiplied by effective
rate of corporation tax (0.6) (0.2)
Adjustments in respect of prior years 0.1 0.7
Effect of change in tax rate - -
Effect of lower tax rate jurisdiction (0.6) (0.5)
Other adjustments - -
12.7 10.3
Add policyholder tax 12.1 (38.5)
24.8 (28.2)
Company
a) Analysis of charge in year
2023 2022
GBPm GBPm
Deferred tax charge/(credit) (see
note 26) - -
b) Factors affecting tax charge for the year
2023 2022
GBPm GBPm
Profit on ordinary activities before
tax 31.6 39.9
Profit on ordinary activities multiplied
by effective rate of Corporation
Tax 22% (2021: 19%) 7.0 7.6
Effects of:
Non-taxable dividends (7.3) (8.5)
Income / expenses not taxable / deductible
for tax purposes multiplied by effective
rate of Corporation Tax - 0.6
Group loss relief to ISL 0.3 0.3
- -
12. Intangible assets - Group
Software
and IP Customer
rights Goodwill relationships Software Brand Total
Cost GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October
2022 12.5 18.3 2.1 2.0 0.3 35.2
At 30 September
2023 12.5 18.3 2.1 2.0 0.3 35.2
Amortisation
At 1 October
2022 12.5 - 0.3 0.5 0.1 13.4
Charge for the
year - - 0.1 0.3 - 0.4
At 30 September
2023 12.5 - 0.4 0.8 0.1 13.8
Net Book Value
At 30 September
2022 - 18.3 1.8 1.5 0.2 21.8
At 30 September 2023 - 18.3 1.7 1.2 0.2 21.4
Cost
At 1 October
2021 12.5 18.3 2.1 2.0 0.3 35.2
At 30 September
2022 12.5 18.3 2.1 2.0 0.3 35.2
Amortisation
At 1 October
2021 12.5 - 0.1 0.2 0.1 12.9
Charge for the
year - - 0.2 0.3 - 0.5
At 30 September
2022 12.5 - 0.3 0.5 0.1 13.4
Net Book Value
At 30 September
2021 - 18.3 2.0 1.8 0.2 22.3
At 30 September
2022 - 18.3 1.7 1.5 0.2 21.8
All intangible assets are externally generated.
Goodwill impairment assessment
In accordance with IFRS, goodwill is not amortised, but is
assessed for impairment on an annual basis. The impairment
assessment compares the carrying value of goodwill to the
recoverable amount, which is the higher of value in use and the
fair value less costs of disposal. The recoverable amount is
determined based on value in use calculations. The use of this
method requires the estimation of future cash flows and the
determination of a discount rate in order to calculate the present
value of the cash flows.
The goodwill relates to the acquisition of IAD Pty in July 2016
and T4A in January 2021.
The carrying amount of the IAD Pty goodwill is allocated to the
two cash generating units ("CGUs") that relate to the Transact
platform, as these are benefitting from the IAD PTY acquisition.
The carrying amount of the goodwill for T4A is allocated to the CGU
that relates to the CURO software as this is the source of revenue
for T4A.
12. I ntangible assets - Group (continued)
IAD Pty
2023 2022
GBPm GBPm
Investment administration services 7.2 7.2
Insurance and life assurance business 5.7 5.7
Total 12.9 12.9
Other assumptions are as follows:
2023 2022
Discount rate 13.2% 13.3%
Period on which detailed forecasts
are based 5 years 5 years
Long-term growth rate 2.0% 1.0%
The carrying amount of the T4A goodwill is all allocated to the
below CGU:
T4A
2023 2022
GBPm GBPm
Adviser back-office technology 5.3 5.3
Other assumptions are as follows:
2023 2022
Discount rate 14.0% 11.6%
Period on which detailed forecasts
are based 5 years 5 years
Long-term growth rate 2.0% 2.0%
The recoverable amounts of the above CGUs have been determined
from value in use calculations based on cash flow projections from
formally approved budgets covering a five year period to 30
September 2028. Post the five year business plan, the growth rate
used to determine the terminal value of the cash generating units
was based on a long-term growth rate of 2.0%. The discount rate is
assessed on an annual basis and has been calculated using the
weighted average cost of capital.
Based on management's experience, the key assumptions on which
management has calculated its projections are net inflows, market
growth and expense inflation.
The annual impairment tests relating to both acquisitions
indicated that there is significant headroom in the recoverable
amount over the carrying value of the CGUs. There is therefore no
indication of impairment.
Projected cash flows are impacted by movements in underlying
assumptions, including equity market levels, number of CURO users,
employee numbers and cost inflation. The Group considers that
projected cash flows of the investment administration services and
insurance and life assurance business CGUs are most sensitive to
movements in equity markets, because they have a direct impact on
the level of the Group's fee income, while the adviser back-office
technology CGU is most sensitive to the number of CURO users, as
this forms the basis of its licence income.
A sensitivity analysis has been performed, with key assumptions
being revised adversely to reflect the potential for future
performance being below expected levels. This estimated that a fall
in equity markets of approximately 45%, or a reduction of CURO
users of approximately 30% compared to expectations, would be
required before the carrying value of any CGU would exceed the
recoverable amount.
13. Property, plant and equipment - Group
Leasehold Fixtures Motor
improvements Equipment and Fittings Vehicles Total
Cost GBPm GBPm GBPm GBPm GBPm
At 1 October 2022 1.7 3.7 0.2 - 5.6
Additions 0.1 0.4 0.1 0.1 0.7
Disposals - (0.4) - - (0.4)
Reclassification - (0.2) 0.2 - -
Foreign exchange - (0.1) - - (0.1)
At 30 September
2023 1.8 3.4 0.5 0.1 5.8
Depreciation
At 1 October 2022 1.4 2.9 0.1 - 4.4
Charge in the
year 0.1 0.7 0.1 - 0.9
Disposals - (0.5) - - (0.5)
Reclassification - (0.1) 0.1 -
Foreign exchange - (0.1) - - (0.1)
At 30 September
2023 1.5 2.9 0.3 - 4.7
Net Book Value
At 30 September
2022 0.3 0.8 0.1 - 1.2
At 30 September
2023 0.3 0.5 0.2 0.1 1.1
Cost GBPm GBPm GBPm GBPm GBPm
At 1 October 2021 1.7 3.6 0.2 - 5.5
Additions - 0.3 - - 0.3
Disposals - (0.2) - - (0.2)
At 30 September
2022 1.7 3.7 0.2 - 5.6
Depreciation
At 1 October 2021 1.3 2.3 0.1 - 3.7
Charge in the
year 0.1 0.8 - 0.9
Disposals - (0.2) - - (0.2)
At 30 September
2022 1.4 2.9 0.1 - 4.4
Net Book Value
At 30 September
2021 0.4 1.3 0.1 - 1.8
At 30 September
2022 0.3 0.8 0.1 - 1.2
The Company holds no property, plant and equipment.
14. Right-of-use assets - Property - Group
Cost GBPm
At 1 October 2022 6.6
Additions 0.4
Disposals (5.2)
Foreign exchange (0.1)
At 30 September 2023 1.7
Depreciation GBPm
At 1 October 2022 4.5
Charge in the year 1.4
Disposals (5.2)
At 30 September 2023 0.7
Net Book Value
At 30 September 2022 2.1
At 30 September 2023 1.0
Cost GBPm
At 1 October 2021 6.5
Foreign exchange 0.1
At 30 September 2022 6.6
Depreciation GBPm
At 1 October 2021 2.8
Charge in the year 1.7
At 30 September 2022 4.5
Net Book Value
At 30 September 2021 3.6
At 30 September 2022 2.1
Depreciation is calculated on a straight-line basis over the
term of the lease.
During the year, the right of use asset for the Group's
Clement's Lane office was fully depreciated as the lease came to an
end in June 2023. The Group has 'security of tenure' and therefore
the original lease continues until it is terminated by either
party. The Group intends to occupy the building whilst the terms of
a new lease for the same building are finalised. Costs of the lease
from July 2023 onwards were therefore recognised directly in the
statement of comprehensive income as occupancy costs.
15. Investment in subsidiaries
2023 2022
GBPm GBPm
Carrying value at 1 October 33.3 31.6
Share-based payments 2.0 1.7
Carrying value at 30 September 35.3 33.3
The Company has investments in the ordinary share capital of the
following subsidiaries at 30 September 2023:
Incorporation
and significant
Name of Company Holding % Held place of business Business
Direct holdings
Integrated Financial Ordinary Shares 100% United Kingdom Investment
Arrangements Ltd Administration
IntegraFin Services Ordinary Shares 100% United Kingdom Services
Limited Company
Transact IP Limited Ordinary Shares 100% United Kingdom Software
provision
& development
Integrated Application Ordinary Shares 100% Australia Software
Development Pty maintenance
Ltd
Transact Nominees Ordinary Shares 100% United Kingdom Non-trading
Limited
IntegraLife UK Limited Ordinary Shares 100% United Kingdom Life Insurance
IntegraLife International Ordinary Shares 100% Isle of Man Life Assurance
Limited
Transact Trustees Ordinary Shares 100% United Kingdom Non-trading
Limited
Objective Funds Ordinary Shares 100% United Kingdom Dormant
Limited
Objective Wealth Ordinary Shares 100% United Kingdom Dormant
Management Limited
Time For Advice Ordinary Shares 100% United Kingdom Financial
Limited planning
software
Indirect holdings
IntegraFin Limited Ordinary Shares 100% United Kingdom Non-trading
ObjectMastery (UK) Ordinary Shares 100% United Kingdom Dormant
Limited
IntegraFin (Australia) Ordinary Shares 100% Australia Non-trading
Pty Limited
The Group has 100% voting rights on shares held in each of the
subsidiary undertakings.
All the UK subsidiaries have their registered office address at
29 Clement's Lane, London, EC4N 7AE. ILInt's registered office
address is at 18-20 North Quay, Douglas, Isle of Man, IM1 4LE.
IntegraFin (Australia) Pty's registered office address is at Level
4, 854 Glenferrie Road, Hawthorn, Victoria, Australia 3122.
Integrated Application Development Pty Ltd.'s registered office
address is 19-25 Camberwell Road, Melbourne, Australia.
The above subsidiaries have all been included in the
consolidated Financial Statements.
15. Investments in subsidiaries (continued)
Integrated Financial Arrangements Ltd is authorised and
regulated by the Financial Conduct Authority. The principal
activity of the Company and its subsidiaries is the provision of
'Transact', a wrap service that arranges and executes transactions
between clients, their financial advisers and financial product
providers including investment managers and stockbrokers.
IntegraFin Services Limited (ISL), is the Group services
company. All intra-group service contracts are held by this
services company.
Integrated Application Development Pty Ltd (IAD Pty) provides
software maintenance services to the Group.
IntegraFin Limited is the trustee of the IntegraSIP Share
Incentive Plan, which was set up to allocate Class C Shares in the
capital of the Company to staff. IntegraFin Limited undertakes no
other activities.
Transact Nominees Limited holds customer assets as a nominee
company on behalf of Integrated Financial Arrangements Ltd.
IntegraFin (Australia) Pty Limited is currently non-trading.
Transact IP Limited licenses its proprietary software to other
members of the IntegraFin Group.
IntegraLife UK Limited is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority. Its principal
activity is the transaction of ordinary long-term insurance
business within the United Kingdom.
IntegraLife International Limited is authorised and regulated by
the Isle of Man Financial Services Authority and its principal
activity is the transaction of ordinary long-term insurance
business within the United Kingdom through the Transact Offshore
Bond.
Time For Advice Limited is a specialist software provider for
financial planning and wealth management.
16. Loans
This note analyses the loans payable by and receivable to the
Company. The carrying amounts of loans are as follows:
Loans receivable
2023 2022
GBPm GBPm
Loans receivable from third parties 6.5 5.7
Interest receivable on loans 0.1 -
Total gross loans 6.6 5.7
Expected credit losses allowance (0.3) (0.2)
Total net loans 6.3 5.5
16. Loans (continued)
Movement in the expected credit losses for the loan is as
follows:
2023 2022
GBPm GBPm
Opening expected credit losses (0.2) (0.2)
Increase during the year (0.1) -
------
Balance at 30 September (0.3) (0.2)
------
The loans receivable are measured at amortised cost with the
expected credit losses charged straight to the statement of
comprehensive income.
Loans payable
2023 2022
GBPm GBPm
Loan payable to subsidiary 7.0 8.0
To be settled within 12 months 1.0 1.0
To be settled after 12 months 6.0 7.0
Total loan payable 7.0 8.0
The loan payable was initially recognised at fair value.
Subsequent measurement is at amortised cost using the effective
interest rate method. The interest charge is recognised on the
statement of comprehensive income.
Interest on the loan is paid quarterly, whilst the remaining
capital repayments are annual over the next 7 years.
17. Investments held for the benefit of policyholders
2023 2023 2022 2022
Cost Fair value Cost Fair value
ILInt GBPm GBPm GBPm GBPm
Investments held
for the benefit
of policyholders 2,155.5 2,310.3 1,988.9 2,057.2
2,155.5 2,310.3 1,988.9 2,057.2
ILUK
Investments held
for the benefit
of policyholders 19,249.9 20,711.4 19,215.4 18,658.6
19,249.9 20,711.4 19,215.4 18,658.6
Total 21,405.4 23,021.7 21,214.3 20,715.8
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.
18. Liabilities for linked investment contracts
2023 2022
Fair value Fair value
ILInt GBPm GBPm
Unit linked liabilities 2,481.5 2,201.4
2,481.5 2,201.4
ILUK
Unit linked liabilities 21,959.4 19,973.0
21,959.4 19,973.0
Total 24,440.9 22,174.4
Analysis of change in liabilities for linked investment
contracts
2023 2022
GBPm GBPm
Opening balance 22,174.4 23,053.4
Investment inflows 2,670.3 3,113.9
Investment outflows (1,400.5) (1,163.1)
Changes in fair value
of underlying assets 1,024.1 (2,729.0)
Investment income 225.1 151.5
Other fees and charges
- Transact (59.2) (59.7)
Other fees and charges
- third parties (193.3) (192.6)
Closing balance 24,440.9 22,174.4
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.
19. Cash and cash equivalents
2023 2022
GBPm GBPm
Bank balances - instant access 165.9 173.5
Bank balances - notice accounts 12.0 9.5
Total 177.9 183.0
------ ------
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.
20. Cash held for the benefit of policyholders
2023 2022
GBPm GBPm
Cash and cash equivalents held for the benefit of the policyholders - instant access - ILUK 1,248.0 1,314.3
Cash and cash equivalents held for the benefit of the policyholders - instant access - ILINT 171.2 144.2
Total 1,419.2 1,458.5
--------- ----------
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.
21. Investments
Group Group
2023 2022
GBPm GBPm
Fair value through profit or loss
Listed shares and securities 0.1 0.1
Gilts - 3.0
Total 0.1 3.1
Amortised cost
Gilts 22.3 -
Total 22.3 -
22.4 3.1
In July 2023, the previously held gilt of GBP3.0 million
matured, and new gilts of GBP22.3 million were purchased in August
2023. These gilts are interest-bearing and the associated income is
referenced in Note 9 as "interest on financial investments".
22. Prepayments and accrued income
Group Company Group Company
2023 2023 2022 2022
GBPm GBPm GBPm GBPm
Accrued income 13.5 - 13.1 -
Less: expected
credit losses (1.0) - (1.0) -
Accrued income
- net 12.5 - 12.1 -
Prepayments 4.7 - 5.1 0.1
Total 17.2 - 17.2 0.1
Movement in the expected credit losses (for accrued income and
trade and other receivables) is as follows:
2023 2022
GBPm GBPm
Opening expected credit losses (1.0) (0.8)
Increase during the year - (0.2)
------
Balance at 30 September (1.0) (1.0)
------
23. Trade and other receivables
Group Company Group Company
2023 2023 2022 2022
GBPm GBPm GBPm GBPm
Other receivables 3.2 - 2.1 -
Less: expected
credit losses (0.1) - (0.1) -
Other receivables
net 3.1 - 2.0 -
Amounts owed by
Group undertakings - 0.1 - 0.2
Repayment interest
due from HMRC 0.4 - - -
Total 3.6 0.1 2.0 0.2
Amount due from HMRC is in respect of tax claimed on behalf of
policyholders for tax deducted at source.
24. Trade and other payables
Group Company Group Company
2023 2023 2022 2022
GBPm GBPm GBPm GBPm
Trade payables 0.7 - 1.6 -
PAYE and other taxation 2.6 0.1 2.2 0.1
Other payables 6.8 0.4 7.7 0.3
Accruals 7.8 0.4 8.3 0.3
Deferred consideration 1.6 1.6 1.7 1.7
Tota l 19.5 2.5 21.5 2.4
Other payables mainly comprises GBP5.3 million (2022: GBP4.8
million) in relation to bonds awaiting approval.
25. Lease liabilities
2023 2022
GBPm GBPm
Opening balance 2.8 5.1
Additions 0.2 -
Lease payments (2.0) (2.4)
Interest expense 0.1 0.1
Balance at 30 September 1.1 2.8
Amounts falling due within one year 0.3 1.9
Amounts falling due after one year 0.8 0.9
The Group has various leases in respect of property as a lessee.
Lease terms are negotiated on an individual basis and run for a
period of one to five years.
As per Note 14, the lease for the Group's Clement's Lane office
ended in June 2023.
26. Deferred tax
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 20% (2022: 20%) on
policyholder assets and liabilities and 25% (2022: 25%) on
non-policyholder items. The increase in the UK corporation tax rate
from the current rate of 19% 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 Policyholder
Asset Excess
Policyholder management Policyholder
Unrealised losses/ expenses and Unrealised Other
Accelerated (unrealised gains) deferred losses on deductible
Capital Share based acquisition investment temporary
Allowances payments costs trusts differences Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October
2021 - 0.6 - - - 0.1 0.7
Excess tax
relief
charged to
equity (0.3) (0.3)
Charge to
income 0.1 0.2 8.1 2.2 0.2 - 10.8
Offset
Deferred Tax
Liability (5.2) (5.2)
At 30
September
2022 0.1 0.5 2.9 2.2 0.2 0.1 6.0
Excess tax
relief
charged to
equity - 0.2 - - - - 0.2
Charge to
income - (0.2) (2.9) 0.3 0.4 0.1 (2.3)
Offset
Deferred Tax
Liability - - - (2.5) (0.6) (0.1) (3.2)
At 30
September
2023 0.1 0.5 - - - 0.1 0.7
Deferred Tax Liability Accelerated Policyholder
capital allowances tax on unrealised Other taxable
gains differences Total
GBPm GBPm GBPm GBPm
At 1 October 2021 0.1 28.4 1.0 29.5
Charge to income (0.1) (23.2) (0.1) (23.4)
Offset against
Deferred Tax asset - (5.2) (5.2)
At 30 September
2021 - - 0.9 0.9
Charge to income - 9.6 (0.1) 9.5
Offset against Deferred
Tax asset (3.1) (0.1) (3.2)
At 30 September 2023 - 6.5 0.7 7.2
The Company has no deferred tax assets or liabilities.
27. Provisions - Group
2023 2022
GBPm GBPm
Balance brought forward 56.8 17.8
(Decrease)/increase in dilapidations provision - (0.3)
Decrease in ILInt non-linked unit provision - (0.1)
(Decrease)/increase in ILUK policyholder
reserves (9.7) 45.0
Increase/(decrease) in other provisions 1.1 (5.6)
Balance carried forward 48.2 56.8
Amounts falling due within one year 7.7 10.7
Amounts falling due after one year 40.5 46.1
Dilapidations provisions 0.2 0.2
Other provisions 1.1 -
ILUK policyholder reserves 46.9 56.6
Total 48.2 56.8
ILUK policyholder reserve 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.
28. Contingent consideration - Group and Company
2023 2022
GBPm GBPm
Contingent consideration - 1.7
The T4A acquisition cost included additional consideration
between GBP0 and GBP8.6 million, which was payable in January 2025
and contingent on T4A meeting certain highly stretching performance
targets over the next four years. During the year, it was
determined that T4A is not expected to meet these targets, and
therefore, the contingent consideration recognised to date has been
released.
29. Share-based payments
Share-based payment reserve
Group Company Group Company
2023 2023 2022 2022
GBPm GBPm GBPm GBPm
Balance brought forward 2.6 2.2 2.4 1.7
Movement in the year 0.8 0.5 0.2 0.5
Balance carried forward 3.4 2.7 2.6 2.2
29. Share-based payments (continued)
Share schemes
(i) SIP 2005
IFAL implemented a SIP trust scheme for its staff in October
2005. The SIP is an approved scheme under Schedule 2 of the Income
Tax (Earnings & Pensions) Act 2003.
This scheme entitled all the staff who were employed in October
2005 to Class C shares in IFAL, subject to their remaining in
employment with the Company until certain future dates.
The Trustee for this scheme is IntegraFin Limited, a wholly
owned non-trading subsidiary of IFAL.
Shares issued under the SIP may not be sold until the earlier of
three years after issue or cessation of employment by the Group. If
the shares are held for five years they may be sold free of income
tax or capital gains tax. There are no other vesting
conditions.
The cost to the Group in the financial year to 30 September 2023
was GBPnil (2022: GBPnil). There have been no new share options
granted.
(ii) SIP 2018
The Company implemented an annual SIP awards scheme in January
2019. This is an approved scheme under Schedule 2 of the Income Tax
(Earnings & Pensions) Act 2003, and entitles all eligible
employees to ordinary shares in the Company. The shares are held in
a UK Trust.
The scheme includes the following awards:
Free Shares
The Company may give Free Shares up to a maximum value,
calculated at the date of the award of such Free Shares, of
GBP3,600 per employee in a tax year.
The share awards are made by the Company each year, dependent on
12 months continuous service at 30 September. The cost to the Group
in the financial year to 30 September 2023 was GBP0.8m (2022:
GBP0.6m).
Partnership and Matching Shares
The Company provides employees with the opportunity to enter
into an agreement with the Company to enable such employees to use
part of their pre-tax salary to acquire Partnership Shares. If
employees acquire Partnership Shares, the board grants relevant
Matching Shares at a ratio of 2:1.
The cost to the Group in the financial year to 30 September 2023
was GBP0.5m (2022: GBP0.5m).
29. Share-based payments (continued)
(iii) Performance Share Plan
The Company implemented an annual PSP scheme in December 2018.
Awards granted under the PSP take the form of options to acquire
Ordinary Shares for nil consideration. These are awarded to
Executive Directors, Senior Managers and other employees of any
Group Company, as determined by the Remuneration Committee.
The exercise of the PSP awards is conditional upon the
achievement of a performance condition set at the time of grant and
measured over a three year performance period.
The cost to the Group in the financial year to 30 September 2023
was GBP0.9m (2022: GBP0.8m). This is based on the fair value of the
share options at grant date, rather than on the purchase cost of
shares held in the Employee Benefit Trust reserve, in line with
IFRS 2 Share-based Payment.
Details of the share awards outstanding are as follows:
2023 2022
Shares Shares
(number) (number)
SIP 2018
Shares in the plan at start of the
year 854,247 692,683
Granted 504,113 292,318
Shares withdrawn from the plan (152,748) (130,754)
Shares in the plan at end of year 1,205,612 854,247
Available to withdraw from the plan
at end of year 557,544 314,161
Details of the movements in the share scheme during the year are
as follows:
2023 2023 2022 2022
Weighted Shares Weighted Shares
average average
exercise exercise
price price
(pence) (number) (pence) (number)
SIP 2005
Outstanding at start
of the year 0.0 805,509 0.0 872,709
Shares withdrawn from
the plan 0.0 (42,804) 0.0 (67,200)
Shares in the plan
at end of year 0.0 762,705 0.0 805,509
Available to withdraw
from the plan at end
of year 0.0 762,705 0.0 805,509
The weighted average share price at the date of withdrawal for
shares withdrawn from the plan during the year was 273.1 pence
(2022: 425.5 pence).
29. Share-based payments (continued)
At 30 September 2023 the exercise price was GBPnil as they were
all nil cost options.
2023 2023 2022 2022
Weighted Share options Weighted Share options
average average
exercise exercise
price price
(pence) (number) (pence) (number)
PSP
Outstanding at start
of the year 0.00 675,307 0.00 576,088
Granted 0.00 293,376 0.00 184,772
Forfeited 0.00 - 0.00 -
Exercised (69,019) (85,553)
Outstanding at
end of year 0.00 899,664 0.00 675,307
Exercisable at
end of year 0.00 249,985 0.00 183,958
The fair value of options granted during the year has been
estimated using the Black-Scholes model. The principal assumptions
used in the calculation were as follows:
2023 2022
PSP
Share price at date of grant 287.8 522.5
Exercise price Nil Nil
Expected life 3 years 3 years
Risk free rate 3.5% 0.7%
Dividend yield 3.5% 1.9%
Weighted average fair value per option 258.8p 493.3p
30. Employee Benefit Trust reserve
Group:
2023 2022
GBPm GBPm
Balance brought forward (2.4) (2.1)
Purchase of own shares (0.2) (0.3)
Balance carried forward (2.6) (2.4)
Company:
2023 2022
GBPm GBPm
Balance brought forward (2.1) (1.8)
Purchase of own shares (0.3) (0.3)
Balance carried forward (2.4) (2.1)
The Employee Benefit Trust ("EBT") was settled by the Company
pursuant to a trust deed entered into between the Company and
Intertrust Employee Benefit Trustee Limited ("Trustee"). The
Company has the power to remove the Trustee and appoint a
new trustee. The EBT is a discretionary settlement and is used
to satisfy awards made under the PSP.
30. Employee Benefit Trust reserve (continued)
The Trustee purchases existing Ordinary Shares in the market,
and the amount held in the EBT reserve represents the purchase cost
of IHP shares held to satisfy options awarded under the PSP scheme.
IHP is considered to be the sponsoring entity of the EBT, and the
assets and liabilities of the EBT are therefore recognised as those
of IHP. Shares held in the trust are treated as own shares and
shown as a deduction from equity.
31. Other reserves - Group
2023 2022
GBPm GBPm
Foreign exchange reserves (0.1) -
Non-distributable merger reserve 5.7 5.7
Foreign exchange reserves are gains/losses arising on
retranslating the net assets of
IAD Pty into sterling.
Non-distributable reserves relate to the non-distributable
merger reserve held by one of the Company's subsidiaries, IFAL,
which is classified within other reserves on a Group level .
32. Related parties
During the year the Company did not render nor receive any
services with related parties within the Group, and at the year end
the Company had the following intra-Group receivables:
Amounts owed by
related parties
Company 2023 2022
GBPm GBPm
Integrated Financial Arrangements
Ltd - 0.1
A loan of GBP10 million was issued to the Company by IntegraLife
UK Limited in FY21. This is an arm's length transaction as interest
is charged at a commercial rate. IHP is paying the loan off over
ten years and made the second payment of GBP1 million, plus accrued
interest, during the year. The current loan balance is GBP7
million.
The Group has not recognised any expected credit losses in
respect of related party receivables, nor has it been given or
received any guarantee during 2023 or 2022 regarding related party
transactions.
Payments to key management personnel, defined as members of the
board, are shown in the Remuneration Report. Directors of the
Company received a total of GBP3.6 million (2022: GBP3.6 million)
in dividends during the year and benefitted from staff discounts
for using the platform of GBP4k (2022: GBP2k). The number of IHP
shares held at the end of the year by key management personnel was
35,321,348, an increase of 132,224 from last year.
32. Related parties (continued)
Schrodinger Pty Ltd, the company which leases office space to
IAD Pty in Melbourne, Australia, is considered a related party of
the Company, as Michael Howard has control or joint control of
Schrodinger and is a member of the key management personnel (as a
director) of the Company. During the year IAD Pty paid Schrodinger
GBP0.3 million (FY22: GBP0.3 million) in relation to the lease. The
lease has been in place since April 2012 and was last renewed in
May 2021.
ObjectMastery Services Pty Ltd (OM) provides the service of
executive directors consultancy services to IAD Pty, and IAD Pty
provides consultancy and book-keeping services to OM. OM is
considered a related party of the Company, as Michael Howard has
control or joint control of it. IAD Pty paid OM GBP71k (FY22:
GBP72k) for services received during the year, GBP44k (FY22:
GBP44k) of which related to Michael Howard's services. IAD Pty
received GBP43k (FY22: GBP39k) from OM for services provided during
the year. IAD owed GBP2k to OM as at 30 September 2023 (30
September 2022: GBP1k).
The Schrodinger and OM related party transactions and balances
were not disclosed in the financial year 2022 related parties note,
so the above has been restated to include this.
All of the above transactions are commercial transactions
undertaken in the normal course of business.
33. Contingent liability
There are some assets in ILUK policyholder linked funds which
are under review. Our current best estimate of possible future
outflow, in the event of remediation, is GBP1.2 million. A future
outflow is possible but not probable and the timing of any outflow
is uncertain. Accordingly, no provision for any liability has been
made in these financial statements.
34. Events after the reporting date
A second interim dividend of 7.0 pence per share was declared on
13 December 2023. This dividend has not been accrued in the
consolidated statement of financial position.
35. Dividends
During the year to 30 September 2023 the Company paid interim
dividends of GBP33.7 million (2022: GBP33.8 million) to
shareholders. The Company received dividends from subsidiaries of
GBP33.4 million (2022: GBP45.0 million).
36. Restatement of prior period information
Certain changes have been made to the comparative financial
information included in these financial statements in order to
correct prior period errors and align it to the current year
presentation. These changes are noted in the tables below.
No prior year opening balance sheet has been included in these
financial statements, given there is no impact to total assets,
total liabilities, profit or equity, and the nature of the values
impacted are such that they do not change from year to year to an
extent that would influence the decision of a user.
Consolidated Statement of Cash Flows
The following changes have been made to the comparative
information in the Consolidated Statement of Cash Flows:
-- Profit on ordinary activities before taxation attributable to
policyholders and shareholders has been used as the starting point
of cash flows from operating activities, rather than profit on
ordinary activities before taxation. Increase/(decrease) in
policyholder tax recoverable has subsequently been adjusted to
reflect the movement in tax attributable to shareholder and
policyholder returns
-- All other movements relate to reclassifications between headings
Per 2022 Movement Restated
financial 2022
statements
GBPm GBPm GBPm
Cash flows from operating activities
Profit on ordinary activities
before taxation 54.3 (54.3) -
Profit on ordinary activities
before taxation attributable
to policyholders and shareholders - 15.8 15.8
Adjustments for non-cash movements
(previously income statement
non-cash movements):
Release of actuarial provision (0.5) 0.5 -
Interest charged on lease - 0.1 0.1
Increase in contingent consideration - 0.9 0.9
Increase in provisions - 38.5 38.5
Adjustments for cash effecting
investing and financing activities:
Interest charged on lease 0.1 (0.1) -
Decrease in current asset investments 2.0 (2.0) -
Adjustments for statement of
financial position movements:
Increase in contingent consideration 0.9 (0.9) -
Settlement of share-based payment
reserve (1.3) 1.3 -
Increase in provisions 39.0 (39.0) -
Adjustments for policyholder
balances:
Increase/(decrease) in policyholder
tax recoverable (44.5) 38.5 (6.0)
Cash generated from operations 251.0 (2.0) 249.0
Net cash flows (used in)/generated
from operating activities 237.5 (2.1) 235.4
Investing activities
Acquisition of property, plant
and equipment (previously tangible
assets) (0.4) 0.1 (0.3)
Purchase of financial instruments - (3.0) (3.0)
Redemption of financial instruments - 5.0 5.0
Net cash (used in)/generated
from investing activities (1.7) 2.1 0.4
Consolidated Statement of Cash Flows (continued)
Per 2022 Movement Restated
financial 2022
statements
GBPm GBPm GBPm
Financing activities
Purchase of shares for share
scheme awards - (1.3) (1.3)
Net cash used in financing
activities (36.6) (1.3) (37.9)
Company Statement of Cash Flows
The following change has been made to the comparative
information in the Company Statement of Cash Flows, which is a
reclassification between headings:
Per 2022 Movement Restated
financial 2022
statements
GBPm GBPm GBPm
Adjustments for non-cash movements:
Settlement of share-based payment
reserve 1.3 (1.3) -
Net cash flows used in operating
activities (5.5) (1.3) (4.2)
Financing activities
Purchase of shares for share
scheme awards - (1.3) (1.3)
Net cash used in financing
activities (35.5) (1.3) (36.8)
Note 3 - Financial instruments - (ii) Financial instruments by
category
The following changes have been made to the comparative
information within the financial instruments note 3, to the tables
in (ii) Financial instruments by category table:
-- Assets and liabilities which are not financial instruments
have been presented in the note to allow users to clearly reconcile
back to other supporting notes
-- Accruals, contingent consideration, deferred consideration
and balances due to HMRC have been reclassified from financial
liabilities, to liabilities which are not financial instruments.
Note that the bonus accrual was already excluded from the table as
it was not classified as a financial instrument
-- Liabilities held for the policyholders have been split to
show the liabilities linked to cash holdings at amortised cost,
with those linked to investments remaining at fair value through
profit or loss
-- Trade and other receivables has been restated to include the
full balance, to correct an error in the note
-- Trade and other payables has been split out to show trade
payables and other payables separately, and has been restated to
correct an error in the note
Note 3 - Financial instruments - (ii) Financial instruments by
category (continued)
Financial assets:
Fair value through the profit or loss Amortised cost
2022 As per 2022 financial Movement Restated 2022
statements
GBPm GBPm GBPm GBPm
Trade and other receivables - 0.6 1.4 2.0
Total financial assets 20,718.9 1,659.8 - 1,661.2
Assets which are not financial As per 2022 financial Movement
instruments statements Restated 2022
GBPm GBPm GBPm
Prepayments - 5.1 5.1
Current tax asset - 15.0 15.0
- - 20.1
Financial liabilities:
Fair value through the profit or loss Amortised cost
As per 2022 Movement Restated As per 2022 financial Movement Restated 2022
financial 2022 statements
statements
GBPm GBPm GBPm GBPm GBPm GBPm
Trade payables
(previously
trade and
other
payables) - - - 7.4 (5.8) 1.6
Other
payables - - - - 5.4 5.4
Accruals - - - 3.0 (3.0) -
Deferred
consideration - - - 1.7 (1.7) -
Contingent
consideration 1.7 (1.7) - - - -
Liabilities
held
for the
policyholders 20,714.4 (1,458.6) 20,715.8 - 1,458.6 1,458.6
Total
Financial
liabilities 22,176.1 20,715.8 14.9 1,468.4
As per 2022 financial Movement Restated 2022
statements
Liabilities which are not financial instruments GBPm GBPm GBPm
Accruals and deferred income - 8.2 8.2
PAYE and other taxation - 2.2 2.2
Other payables - due to HMRC - 2.3 2.3
Deferred consideration - 1.7 1.7
Contingent consideration - 1.7 1.7
- 16.1
Note 3 - Financial instruments - (ii) Financial instruments by
category (continued)
The following table show the carrying values of the liabilities for the Company:
Amortised cost
As per 2022 financial statements Movement Restated 2022
GBPm GBPm GBPm
Trade payables (previously trade and other payables) 0.4 (0.4) -
Loans payable (previously loans) 8.0 - 8.0
Deferred consideration 1.7 (1.7) -
Contingent consideration - - -
Accruals 0.2 (0.2) -
Other payables - 0.3 0.3
Due to Group undertakings - 0.1 0.1
Total financial liabilities 10.3 8.4
As per 2022 financial statements Movement Restated 2022
Liabilities which are not financial instruments GBPm GBPm GBPm
Accruals and deferred income - 0.3 0.3
PAYE and other taxation - 0.1 0.1
Deferred consideration - 1.7 1.7
Contingent consideration - 1.7 1.7
- 3.8
Note 4 - Risk and risk management - (3) Liquidity risk -
Maturity schedule
The following changes have been made in the 2022 risk and risk
management note 4, to the tables in (3) liquidity risk, maturity
schedule:
-- Corrected an error in the investment balance, as the amount
was shown in thousands rather than millions
-- Trade and other receivables has been restated to correct an error in the note
-- Removed accruals, VAT balances included within other
taxation, deferred consideration and contingent consideration as
these have been reclassified to liabilities which are not financial
instruments
-- Lease liabilities have been added to the maturity table
Financial assets:
As per 2022 financial statements
Up to 3 3-12 1-5 Over
2022 months months years 5 years Total
GBPm GBPm GBPm GBPm GBPm
Investments 124.2 - 3.1 - 127.3
Trade and other
receivables 2.0 0.2 - - 2.2
Total 22,495.7 0.2 8.6 - 22,504.5
Note 4 - Risk and risk management - (3) Liquidity risk -
Maturity schedule (continued)
Movement
Up to 3 3-12 1-5 Over
2022 months months years 5 years Total
GBPm GBPm GBPm GBPm GBPm
Investments (124.1) - (0.1) - (124.2)
Trade and other
receivables - (0.2) - - (0.2)
Total (124.1) (0.2) (0.1) - (124.4)
Restated
Up to 3 3-12 1-5 Over
2022 months months years 5 years Total
GBPm GBPm GBPm GBPm GBPm
Investments 0.1 - 3.0 - 3.1
Trade and other
receivables 2.0 - - - 2.0
Total 22,371.6 - 8.5 - 22,380.1
Financial liabilities:
As per 2022 financial statements
Up to 3 3-12 1-5 Over
2022 months months years 5 years Total
GBPm GBPm GBPm GBPm GBPm
Trade and other
payables 11.8 3.7 - - 15.5
Deferred consideration - 1.5 0.2 - 1.7
Contingent consideration - - 1.7 - 1.7
Total 22,186.8 6.5 2.8 - 22,196.1
Movement
Up to 3 3-12 1-5 Over
2022 months months years 5 years Total
GBPm GBPm GBPm GBPm GBPm
Trade and other
payables (4.8) (3.7) - - (8.5)
Lease liabilities 0.6 1.3 0.9 - 2.8
Deferred consideration - (1.5) (0.2) - (1.7)
Contingent consideration - - (1.7) - (1.7)
Total (4.8) (5.2) (1.9) - (11.9)
Restated
1-5
2022 Up to 3 months 3-12 months years Over 5 years Total
GBPm GBPm GBPm GBPm GBPm
Trade and other payables 7.0 - - - 7.0
Lease liabilities 0.6 1.3 0.9 - 2.8
Total 22,182.0 1.3 0.9 - 22,184.2
-------------------------- --------------- ------------ ------- ------------- ---------
Note 6 - Segmental reporting - Statement of financial
position
The following changes have been made in the 2022 segmental
reporting note 6, to the statement of financial position:
-- Non-current assets and non-current liabilities have been
adjusted by an equal amount to correct a prior year error in the
note
Statement of financial position - segmental information for the
year ended 30 September 2022:
Per 2022 financial Movement Restated
statements
Insurance and life Insurance Insurance
assurance business and life assurance and life assurance
business business
GBPm GBPm GBPm
Assets
Non-current assets 30.6 (5.2) 25.4
Total assets 175.3 170.1
Liabilities
Non-current liabilities 52.8 (5.2) 47.6
Total liabilities 75.3 70.1
Other information
Directors, Company Details, Advisers
Executive Directors
Alexander Scott
Michael Howard
Jonathan Gunby
Non-Executive Directors
Richard Cranfield
Christopher Munro
Rita Dhut
Caroline Banszky
Victoria Cochrane
Robert Lister
Company Secretary
Helen Wakeford
Independent Auditors
Ernst & Young LLP, 25 Churchill Place, Canary Wharf, London,
E14 5EY
Solicitors
Eversheds Sutherland (International) LLP, One Wood Street,
London, EC2V 7WS
Corporate Advisers
Peel Hunt LLP, 7(th) Floor 100 Liverpool Street, London,
England, EC2M 2AT
Barclays Bank PLC, 1 Churchill Place, Canary Wharf, London, E14
5HP
Principal Bankers
National Westminster Bank Plc, 250 Bishopsgate, London, EC2M
4AA
Registrars
Equiniti Group Ltd, 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
Glossary of Alternative Performance Measures (APMs)
Various alternative performance measures are referred to in the
Annual Report, which are not defined by IFRS. They are used in
order to provide better insight into the performance of the Group.
Further details are provided below.
APM Definition and purpose
Operational performance measures
Funds under direction Calculated as the total market value of all
("FUD") cash and assets on the platform, valued as
at the respective year end.
Year end 2023 2022
GBPbn GBPbn
Cash 3.92 3.51
Assets 51.04 46.56
FUD 54.96 50.07
% change
on the previous
year 10% (4%)
Average 2023 2022
daily FUD GBPbn GBPbn
Cash 3.54 3.23
Assets 50.10 49.27
FUD 53.64 52.50
% change
on the previous
year 3% 11%
The measurement of FUD is the primary driver
of the largest component of the Group's revenue.
FUD is used to derive the annual commissions
due to the Group.
These values are not reported within the
financial statements or the accompanying
notes.
Gross inflows and Calculated as gross inflows onto the platform
Net inflows less outflows leaving the platform by clients
during the respective financial year.
Inflows and outflows are measured as the
total market value of assets and cash joining
or leaving the platform.
2023 2022
GBPbn GBPbn
Gross inflows 6.41 7.28
Outflows 3.75 2.88
Net inflows 2.66 4.40
% change on
the previous
year (40%) (11%)
The measurement of net inflows onto the platform
shows the net movement of cash and assets
on the platform during the year. This directly
contributes to FUD and therefore revenue.
These values are not reported within the
financial statements or the accompanying
notes.
Adviser and client Calculated as the total number of advisers
numbers or clients as at the financial year end.
Advisers are calculated as the registered
number of advisers on the Platform.
Clients are calculated as the total number
of clients on the platform.
T4A licence users calculated as the total
number of core licence users active on the
CURO platform.
2023 2022
Advisers 7.7 7.5
% increase 2% 5%
Clients 230.3 224.7
% increase 2% 8%
T4A licence
users 2.8 2.3
% increase 22% 44%
This measurement is an indicator of our presence
in the market.
These values are not reported within the
financial statements or the accompanying
notes.
Client retention Calculated as the total number of clients
with a non-zero valuation present in the
final month of both financial periods, as
a percentage of total clients in the current
financial period.
2023 2022
Client retention 95% 97%
This is a measurement of client loyalty and
an indicator of customer satisfaction with
our services provided.
These values are not reported within the
financial statements or the accompanying
notes.
Income statement measures
Non-underlying Calculated as costs which have been incurred
expenses outside of the ordinary course of the business.
Non-underlying 2023 2022
expenses GBPm GBPm
Backdated
VAT - 8.0
Interest
on backdated
VAT - 0.8
Other 0.4 2.7
Non-underlying
expenses 0.4 11.5
Our non-underlying expenses represent costs
which do not relate to our recurring business
operations and hence should be separated
from operating expenses in the income statement.
Other costs consist of post-combination remuneration.
Post-combination remuneration relates to
the payment to the original shareholders
of T4A. This is comprised of the deferred
and additional consideration payable in relation
to the acquisition of T4A and is recognised
as remuneration over four years from January
Non-underlying 2021 to December 2024.
expenses (continued)
T4A is not expected to meet the minimum threshold
for highly stretching targets to earn the
additional consideration element of post
combination remuneration. Therefore, the
post combination expense in respect of the
additional consideration element that was
recognised in FY22 of GBP1.6 million has
been released, and we have not recognised
any cost in FY23.
Moreover, the post combination consideration
cost in respect of FY24 and FY25 is expected
to reduce to GBP2.1 million and GBP0.4 million
respectively, as only the deferred consideration
element will now be recognised.
Underlying earnings Calculated as profit after tax net of non-underlying
per share expenses, divided by called up equity share
capital.
2023 2022
GBPm GBPm
Profit after
tax 49.9 44.0
Non-underlying
expenses 0.4 11.5
Tax allowable
element of
costs - (1.4)
Underlying
profit after
tax 50.3 54.1
Divide by:
Called up
equity share
capital 3.3 3.3
Underlying
earnings per
share 15.2p 16.3p
Underlying profit Calculated as profit before tax net of non-underlying
before tax expenses.
2023 2022
GBPm GBPm
Profit before
tax 62.6 54.3
Add: Non-underlying
expenses 0.4 11.5
Underlying
profit before
tax 63.0 65.8
Cash flow measures
Shareholder returns Calculated as dividend per share paid to
shareholders, which relate to the respective
financial years.
2023 2022
1(st) interim 3.2 pence 3.2 pence
dividend
2(nd) interim 7.0 pence 7.0 pence
dividend
Shareholder 10.2 pence 10.2 pence
returns
% increase
on previous
financial year 0.0% 2.0%
There are generally two dividend payments
made relating to each financial year. Shareholder
returns is a measurement of the total cash
dividend received by each shareholder for
each individual share held by them.
Dividend policy Calculated as total cash dividends paid in
relation to the respective financial year,
divided by the post-tax profit relating to
that same financial year.
2023 2022
GBPm GBPm
Total cash
dividends
paid 33.7 33.7
Profit for
the financial
year 49.9 44.0
Dividends
as a % of
profit 68% 77%
Our policy is to pay approximately 60% to
65% of full year profit after tax as two
interim dividends.
Delivery on dividend policy is a measurement
of the ability of the business to generate
distributable profits.
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END
FR NKQBNKBDKOBD
(END) Dow Jones Newswires
December 14, 2023 02:00 ET (07:00 GMT)
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