Fintel (LSE:FNTL) — Interim Results

0:00 Good afternoon, and welcome to the FINTEL PLC Interim Results Investor Presentation. After this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab situated on the right hand corner of your screen. To click Q and A, scroll to the bottom, type your question and press send. The company may not be in a position to answer every question received during the meeting itself. Have the company review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Matt Timnas, CEO. Good afternoon.

0:30 Good afternoon, and thank you very much, and good afternoon to everyone watching. I'm Matt Timmins. I'm the joint CEO of FINTEL, and joining with me today is my CFO, David Thompson. We're gonna discuss the first half year results for h y twenty twenty three, and, I will cover the first ten or fifteen minutes of the presentation, give you an overview of FINTEL, and then I'll hand to David who will take you through, the results in a bit more detail. So first of all, for those of you who are less familiar with FINTEL, we operate right at the very center of The UK retail financial services market. So The UK retail financial services market, we believe, is a wonderful market for consumers. It works incredibly well in the fact that consumers get access to thousands of different financial products from hundreds of different product manufacturers who are well capitalized, and they offer out those products at a price and value, which is sort of commensurate with a competitive nature of the market.

1:32 So a wonderful market works really well for consumers. For everyone else operating in the market, it's pretty difficult. It's heavily regulated, and it's highly fragmented. So there are lots of independent intermediary businesses operating right at the center of this market. In fact, around 80% of all investment business and about 75% of all mortgage products end up in the hands of a consumer by an intermediary of some description. There are around about 12,000 IFA businesses, around 10,000 mortgage businesses, and around 4,000, wealth management business. So we operate right at the very center of this market and have done for over twenty years. And the aim of FINTEL quite simply is to help, those participants within the market to get a better deal, do a better job, build better products, and distribute them very effectively.

2:27 So we support product providers, we support financial intermediaries, and we provide services to consumers as well. So instead of taking you through each individual product line, I'll I'll, first of all, give you an idea of the sort of value that we're trying to create in the business. So for financial intermediaries, those businesses in the center of this diagram, we want to help them to run a compliant and successful business to enable them to serve more customers, more cost effectively. And we do that quite simply through a, membership service where intermediary firms pay us a monthly subscription for access to regulation support and compliance and technology. We support around 3,000 businesses who pay us a monthly subscription for services, and that equates to just under 8,000 financial intermediaries.

3:18 So that's monthly subscription income into the business in exchange for core compliance and regulation support as well as fintech. For product providers, these are the banks, the building societies, the, asset managers, the life and pension companies, the platforms. We provide these organizations with, two things, primarily a service to help them distribute their products to the big intermediary base that we support, and also, data to help them to make better decisions when creating and making tweaks to existing products. So that's the the sort of large manufacturers around 400 of those firms we provide services to, and we help them distribute products and design better products based on consumer buyer behavior data.

4:09 For consumers, we help consumers to make smarter financial decisions through our de facto star rating system. So this is a rating of the product rather than the provider or the service that's given. So it's the underlying componentry of the products that we're rating, and we review and rate around 43,000 different financial products. So the two businesses operating together, de facto and simply biz under the banner of FINTEL, operate with a, unrivaled market position. We're the only business of our kind to to operate across the market in this way. We've got the largest database of financial products, and both businesses have got very, very, strong brands and are well trusted by the market.

4:55 So if we look at those two businesses in a bit more detail, they provide very different services. So Simply Biz is primarily primarily provides regulation and compliance support, and the fact that it provides fintech and insurtech. Even though they provide different products, though, the customer bases are identical. So both businesses serve financial intermediaries and both businesses serve product providers. So there's a real synergy of operation between the two businesses. Simply Business has been around for twenty years. It's an award winning business and de facto for twenty nine years and has very strong brand awareness amongst consumers at 70% and financial intermediaries at 98%. Both businesses operate with really high quality metrics.

5:42 We've got good gross margins within the business, strong levels of recurring income,

5:48 and continued growth across both businesses. And as I said, where the magic sort of happens is where those two businesses operate well together. So the more intermediary firms who use the fintech provided by the facto, the richer the dataset that we have and the more we're able to help product manufacturers to understand what's happening in the market and to help them design and improve their products. The more product providers who engage with us, the richer the dataset that we have on their products, which enables us to help consumers. So there's a wonderful flywheel effect with the two businesses operating, under the same company. To give you an idea of the sort of size and the scale and the reach of the business, de facto provides two different types of technology.

6:37 One is Insurtech to help insurance companies to compare their products against those of their competitors, and the other is financial planning technology used by intermediaries. When we look at the Insurtech part of the de facto business, we provide the technology to a 119 product manufacturers. And in terms of financial intermediaries, we provide fintech to eight and a half thousand. We research and rate 43,000 financial products. And when we look at the market by, volume, by premium income, we support 84% of the general insurance market, and we have a 32% market share amongst financial intermediaries. In terms of regulation regulatory support, our Simply Biz business supports around 8,000 financial advisers, wealth managers, and mortgage brokers.

7:32 Collectively, those advisers have over 100,000,000,000 in assets under management, and we have around a 30% share of the directly authorized, IFA mortgage and wealth management sector. When it comes to distribution, the two businesses combined represent over 10,000 unique intermediaries. We lend over 25,000,000,000 in mortgages and 64,000,000 in protection APE, which gives us a market share of around 5% of all UK lending and 20% of all protection business written. Our de facto business supports over 40,000,000 financial decisions through its star rating service and over 12,300,000,000 of GI premium policy, policies are star rated by the facto that go through price comparison websites.

8:29 We have around 70% brand awareness amongst consumers, and as I said, that's even higher amongst financial intermediaries. In terms of a quick snapshot of the first half year results, we grew our core revenue on a like for like basis by 4%. We grew our adjusted EBITDA by 8% with a strong EBITDA margin of 32%, really good levels of cash flow conversion, and increased our dividend by, 10% as well. It's also worth noting that the business is regulatory light and capital light. So we whilst we provide services for financial intermediaries, we are not the appointed representative of those intermediaries. So we're not taking responsibility for the advice that's given by those intermediaries to their clients. So this is a support service and fintech business operating in a cap in a capital light structure and a regulatory light structure.

9:24 We converted around 80% of our revenue from product manufacturers to monthly recurring revenues on a three year contract. We developed new products for or sorry should I say new modules for our de facto product, and we also acquired two businesses and 25% of another business during the first half of this year. As we look forward, we're well positioned for growth. We have almost 70% of our revenues now, which come through on a recurring nature. These are SaaS and subscription revenues. So that's either membership services through Simply Biz or SaaS revenues through the Insurtech and the fintech that we offer through the factor.

10:10 We have over £13,000,000 of cash in the bank and an undrawn RCF facility of 80,000,000. As we look forward, we believe there are strong growth drivers. So in every time regulation increases, more and more firms decide to outsource their compliance and regulatory support to organizations like ourselves. We are also building out, more and more, technology modules through the factor, which means that intermediaries, instead of using nine or 10 different suppliers, can use one supplier for the majority of their technology needs. And we have a very active m and a pipeline. Normally, in any one year, we're probably having one or two conversations around m and a with the hope that we will take one through to a transaction.

10:58 And I think this year is the the the sort of busiest year we've ever had in the fact that we are involved in 11 or 12 sort of meaningful conversations at the moment with a view to taking two, three, four of those through to an ultimate transaction over the course of the next sort of six to twelve months. So a very busy time for us in terms of m and a. And that's really important because as we generate a lot of cash as a business, we wanna make sure we put that to good use. So a little bit about the acquisitions that we made. This year, we have the first half of this year. Sorry. We've acquired a business called MICAP. MICAP provides alternative investment research to thousands of intermediary firms.

11:44 It's a great business. It's a market leader. It's got really good dynamics, and that business will continue to operate independently as well as integrate well into our de facto software. So MyCat's been an excellent acquisition for us in the first half of this year. We also acquired a business called Competent Advisor, and Competent Advisor provides a learning and development platform for intermediaries. So you can log on there, and you can set tests for yourself or for other advisers within your practice and record the number of hours you you clock up of CPD. So a really important acquisition for us. Again, that platform has got thousands of different subscribers. So both these businesses add to our SaaS subscription mix. Both have a ready made customer base. They are both profitable businesses, and they also add a a sort of IP and competence that we didn't have before.

12:38 So two great acquisitions. On top of that, we negotiated a five year contract with Intelliflo, who are a lead provider of CRM technology to around half of our member firms. So, essentially, what we've done is we've contracted in and secured that revenue for the next five years. So we have around half of our membership using IntelliFlow.

13:02 On top of that, we've invested into a business called Planner, which is a new style CRM system that we believe will be appropriate, hopefully, for the other half of the membership. So we've taken a 25% stake in Planner with a view to extending, that ownership over a period of time. So, on top of the the sort of solid financial results that we've delivered in the first half of the year, we've also made some really important strategic moves in the form of two good acquisitions. One really, really important minority investment into a new technology business and securing a long term contract with one of our sort of, longest suppliers in terms of intelligent office. We've got a really active pipeline of m and a. As I said, we've got we're involved in kind of 11 or 12 conversations at the moment. Expect a few of those to come through over the course of the next six months or so.

13:59 And so to sum up for me, I think it's been a a good, good start to the year. We've got, high levels of confidence into the rest of the year and beyond, and we've performed incredibly well strategically. So with that, I'll hand over to David. David will take you through the financials in a bit more detail, and then we'll make sure we'll leave plenty of time for q and a after. Thanks very much. And, David, over to you. Okay. Thanks, Matt, and good afternoon, everyone. So I guess the first three slides that I've got, if someone could move on to the next slide for me. The first three slides just have the the high level financial metrics. So if we focus on slide 10 just now, you can see revenue at a statutory level went slightly backwards by £500,000, but you can see the key measure of value in the business is the core revenue, and that had that had a good embedded growth in it. And and more on that later because there's there's underlying growth despite a a continued headwind in the the mortgage market with with the interest rates, etcetera.

15:06 We've got, an increase in adjusted EBITDA to £9,000,000. That's our highest of our, h one, EBITDA in terms of profitability and our highest of our adjusted PBT. So on the next slide, we just see how that kinda falls into cash.

15:22 And so the next slides, you you can see adjusted EPS down slightly to 5p. So, however, again, we've got the the revenue headwind from the non core business in terms of the housing market. We've also got an increase in the corporation tax rate in The UK, which has gone up from 19% to 25% in on, the start of April. So that's, put an additional tax charge into the business. Cash flow conversion's still strong. We're over a 100%, a 104%.

15:52 It is fair to say we've had a really good innings in terms of, cash flow conversion, particularly driven by working capital inflows. Our target for this conversion metric is actually somewhere between 90 and a 100%, and I think this is the the final period which we'll see in excess of a 100, and and it'll it'll normalize, as our working capital normalizes going forward. We basically got a a very large inflow on the back of the acquisition of the facto, and that's now working its way out through the system. So all of our working capital is on a on a normalized basis. And then finally, that leads to the cash resources. So we've got 13,300,000 of closing cash and no debt. As Matt said, we've got an undrawn 80,000,000 facility, and we'll show later on how how what our attitude is to capital allocation and investment because it's the business is entering a new investment phase having having delevered successfully from the the factor acquisition.

16:52 And then on to the the final sort

16:54 of highlight slide, we've we've focused on the real driver of core value, which is the core business. So over in slide, 12, we can see that the the core business has grown from, 27.1 to 27,600,000. Core adjusted EBITDA, true measure of cash generation, is up from 8.2 to 8,800,000. And another key measure of of value of the business is the percentage of those revenues that are collected monthly by

17:24 direct debit. So the great visibility over our cash flow, and that's through our SaaS and subscription type revenues. That's mainly membership fees paid for by by IFA firms and, the monthly license fees we get for our for our software. And that's now 68% of the core business as a whole. So, you know, despite a headwind of the housing market, the the the nine different areas of of revenue that we generate supporting the the the the whole board of, retail financial services shows we've got resilience in our model. So and and and we can still have underlying growth, despite those couple of headwinds. So over the next slide, we'll look at the, core business in terms of the revenue stack.

18:10 So you can see that top gray section there, 4,100,000, that's the non core property surveying business. Again, that that has clearly been affected by the by the housing market. We call that non core because it's it's not as scalable as the core advice, support, compliance assistance in software business. Property survey and evaluations are very people intensive business, and you have a number of different employed surveyors attending physical, properties to give a value. So it's got a completely different, profitability profile, and and it's nowhere near as scalable.

18:49 So we deem that noncore, and it's the subject of divestment at a point in the future when the market comes back to us. Still a good business, still profitable, but as I say, you'll see later on in terms of the the relative profit margin why it why it just doesn't quite set with the rest of the business. The the middle dark section there, we can't quite call that SaaS and subs, which is the green section, but it's still highly repeating. So in there, we've got the de facto ratings product. So you'll, no doubt, seen whenever you bought some

19:20 insurance products that carries a de facto five star rating or or or or a four star rating or whatever. And that's, the general insurers pay us an annual vintage fee. So it's highly repeating, but we can't quite convert it into a longer term subscription because of its very nature. It's it's it's time bound to to one calendar year. And they have to refresh the marketing every year, which again provides a good good level of return business. And then the the the the best driver of value is 18,800,000 growth in SaaS and subs. And, again, that's largely driven by good progress in our software sales. Now our revenue bridge in the bottom right hand corner there just shows you what the how the different parts have feared across the business, and the the most growth is in the the the highest area of a driver of value in the business.

20:10 So over on the next slide, we extend that across the the core p and l, and you can see three periods on periods. We've got, you know, just consistent growth across all metrics of the the core business. If you focus on core EBITDA, you can see good growth there. And as all good issuers should do on the right hand side, we provide a reconciliation back to statutory numbers. It's always the way if you use an alternative performance measure or a part of your business to extol the virtues of of of a particular part of it. You've always got to reconcile it back to the numbers, and that's what we do on the right hand side. And over in the next slide, that this this is probably one of the key slides that shows you how it splits up into the operating segments. And I'll try and tie this back to what Matt was saying earlier in in the opening.

20:58 So if you if you if you stand back and think, right, so what does actually FINTEL do as a group? In the first left hand segment of intermediary services, if you think of that as 3,000 IFE forms paying us a a monthly membership fee for a core level of service, and they can also take additional services from us, additional fail reviews, compliance visits, and the like. So there's a menu of additional services that they that they pick in any one year, and then we we bundle that and and charge them bimonthly but direct debit. So that comes from the 3,000 forms that that pays bimonthly direct debit. And the middle distribution channels, that's got two legs to it. The first one is clearly those 3,000 forms are highly attractive to the product manufacturers.

21:48 So Aviva, shoulders, and the like. So instead of them them sort of having a desperate network of sales advisers visiting a number of IFE firms during any Monday a week, what we do is we get, say, a 100 of those IFEs into a hotel room. We give them CPD. They get a chance to network and grow their business, and that's all good. But the the the other piece here is that that showed us an AVEVA can come along and stand on stage and and have a half hour slot to to, you know, promote their their own products. So that route to market is is highly targetable. They know who's in the room. We give them the data on what AUM they typically control. Do they use tax wrappers, etcetera? So so the product manufacturers can can target the the sales effort to high degree of accuracy, and and it pays about £5,000,000 a year for that privilege.

22:42 The second part of distribution is a a mortgage buying club, essentially. So we've got over a thousand mortgage brokers that are are members of Simply Biz, and we club them together and went to the lenders. And we've got one of the biggest buying clubs, basically. So about 25,000,000,000 over the last twelve months of of lending, and it's it's just over 5% market share. And the revenue model, they're slightly different. We take a a clip of the ticket on the way through. So it's a lot more of a a derivative of a market. Therefore, it's more it follows the cycle much more, whereas the the monthly direct debit part of the business is is is anti cyclical. So we've got a wee bit of exposure to the cycle there, and and that's fine, albeit, it's it's, down 20% at the moment. But that's not a bad performance because, actually, we're not quite as down as as we thought. We thought we'd be down about another five percentage points.

23:43 And then over in the right, we've got fintech and research, and and, again, half of that business sells about fintech to either IFAs as a workflow planning tool and think so if you're an IFE and someone comes in to invest some money, you've got to capture all the details, their attitude to risk, when they're gonna retire, you know, a a whole a whole, you know, series of different bits of information, and then walk them through a series of filters to capture the right funds to invest in, etcetera, etcetera, and pick the right tax wrapper if that's appropriate. So we provide that workflow tool for our IFAs, and that that so that's very popular. The second part of the fintech solution there is the general insurers get access to a product called Matrix.

24:29 So what they do in anyone is they if they want to launch a new car insurance product, they'll they'll use our Matrix software that has every policy in The UK, and they can see how they would rank on a on a series of different filters and sorts. So they use they use that to to drive better products into the market and and and create more value for end consumers. The other the other part of, de facto business is that we then rate those products that they create, and we would typically give them a a a five star rating if they meet all the the criteria or a full star or or whatever. So you can see the business through either core recurring membership by monthly direct debit or by monthly software as a service subscription.

25:14 We support an IFE market, and that attracts all the product manufacturers who want to distribute their wheels and we get some marketing revenue from them. And finally, we've got a mortgage club. So we've got a number of different ways in which we serve the IFE and product provider community across retail financial services. So, yep, there are nine different parts to the business. There are nine different revenue streams, but they're all heavily interlinked and interdependent, and and it works well together as a whole. So that that that's quite a key slide to to to sum up the business in in a in one. So on the next slide, what we do is we can contrast that with the noncore business. So on the left is just the aggregation of the previous three boxes. You can see a 54% gross margin.

26:01 Noncore in the middle, you can see that's a single digit margin percentage. It's a much more cost heavy business because you've got all all the different costs associated with individuals attending premises or up and down the country. So you can quite clearly see why, despite it still being a profitable business, we we deem it noncore. And then, again, as all good issuers should do, you you, tie it back to the the statutory total so you can see how it how it fits together. The final point on this slide is the middle bullet point there where we we've we've actually got a very sort of flexible cost model in terms of the non staff costs. So staff costs are about two thirds of the business, and we've got just under 5% wage inflation.

26:48 Now we targeted that slightly more efficiently across the business, mainly if you if you accept the premise that inflation is a is a regational tax. We we we weighted the the overall pounds pay rise to the lowest paid in the business. So if you were earning 20 to 30,000 a year, you would get a 9% pay rise. 30 to 40,000, you would get an 8% pay rise, and so it dropped a percentage point for every level of of of increasing that those wage bandings. That went down very well across the business, and and and everyone got a got a kind of fair pay rise for for for what what what they were facing with inflation. On to the next slide.

27:36 So we start to if if you if you just bear that in mind that it's it's got nine different revenue streams. It's highly resilient that you can see going all the way back through COVID, We've just had continued steady underlying growth across pandemics, housing market crashes, interest rate rises, inflationary, rises, etcetera. The the business is highly cash generative on a on a recurring basis. Now we bought the the business listed in 2018, and we bought the facto in March 2019. So we listed a 130,000,000 market cap, and we paid 75 for the facto. So it was quite a material acquisition at the time for particularly for a newly listed business. So we we set about integrating the facto well. It was a big a big bet, although one we passionately believed in, and we set about paying the debt off and getting it getting it integrated.

28:31 So three years later, the debt was completely paid off. We were in a gross cash position with with with the RCF fully repaid, and the facto has now doubled its EBITDA from when we we purchased it. So 5.25 up to just under 11,000,000 of of of EBITDA. So a great result all around and a great track record for us. But we've we've delevered the business and we've derisked it, and it's now time to go again and start to invest further. So you can see we've we're now into the investment phase, and those are on on on the next slide, you can see quite how we've broken those two investment phase, sections down. So we started the the period at 12,800,000 of cash, and we ended at 13.3. Now we generated 7.9 in cash, from ops in the period, a 1,800,000 cash tax bill. So we're we'd have a size and a profitability that we are part of the scheme, so we have to look at a full year tax rate and pay it quarterly in advance. So we that's that's two quarters worth of our annual tax bill paid in cash before the year end period end.

29:39 We had a small amount of interest income, 100,000. We paid a million for 25% in planner, so the first of the investments. We've put some investment into the office space and infrastructure. The start of that is 300,000 in in the period, and we've invested 1,600,000 in development expenditure. And we have a team of about 30 software developers in the facto that we've that we've built up, and they are busy with our whole technology road map of developing internally as well as through acquisition. Effectively, we're creating a one stop shop for directly authorized IFAs because we want to make being DA the most attractive proposition in the market. Not only does that get us more share of the current DA space, it also can convince people that are in the AR side of it under an umbrella to strike it on their own and and and create their own company and and come with us to to to be DA.

30:39 We then, we've got, from from a financing activity standpoint, we've got 2,600,000 dividends and a 200 k, commitment fee for the 80,000,000 revolving credit facility, and we end up at 14,300,000. So, again, I I if to to slightly recap on that, we've got nine different revenue streams, 3,000 IFAs paying us regularly each month. That attracts 400 product manufacturers to to to pay the distribution fee. One of the biggest mortgage lending buying clubs that is in The UK and a great bit of, fintech and and the de facto engaged product. And and that generates a lot of cash, and we're reinvesting it back into more of those products to create that one stop shop.

31:26 And then on the the second from last slide for me in '19, you can see the cash conversion. And, again, you know, you you don't want to just pick a 104% and have that in the biggest front we can. Actually, there's the calculation. And if you use a different cash flow conversion mechanism to help you compare different investments, then then all the numbers are there, and you can you can calculate to the to your heart's desire to to get the right number for you. But, essentially, you can see that that operating cash conversion, net changes in working capital, point nine last year is now point four, and that's as the aforementioned returning to a normalized state. But you see net capitalization, which is which is investment, is up point seven to 1.9.

32:12 You can see in the bottom right hand corner there the the progression over the last three six month periods as to how we're investing. As we delever the business, the facto debt was fully paid off. It's time to open the taps again and and invest more for growth. You can see there that we're gonna spend 3,500,000 per annum in the medium term, and that's about 8 to 9,000,000 over the next three years in in the de facto business alone. And then on the final side for me, it's just a summary, really. So we've got, again, another robust financial performance. Thanks again to the the diversity across all parts of retail financial services, hedging against, a a downturn in the mortgage market, increasing revenue quality in the core business now 68% of of the business's SaaS and subscription type.

33:01 Strong cash generation as we've seen, We're now deploying financial resources rather than the rather than building financial resources, and we've got a progressive dividend up 10% to 1.1, from from a penny last year. And I think that's I will hand back to Matt if I if I get one more slide. Thanks, David. Yeah. Just just the outlook slide, really, to say that we're trading in line with board expectations. As I said, we've got the strong cash flow conversion. We've got good levels of visibility over future revenues by running the subs and subscription model. So we're confident of the, financial performance for the rest of this year and beyond.

33:48 Continued organic growth into all three divisions within the business and a m and a pipeline that's, currently bursting at the seams with, hopefully more to come. And we feel that we're well positioned for, sustainable growth with a very, diversified, business, very defensive stock. So with that, I think we complete the presentation and I'll come on to Q and A now. Fantastic. Matt, David, thanks very much indeed for the presentation. Just to give you a breather, Matt, just before we go into that Q and A. Thank you for those questions submitted so far. Ladies and gentlemen, do just click on that Q and A tab, scroll to the bottom, type your question and press send if any further questions have come through. But just while the team take a few moments to review those questions submitted, I'd like to remind you that recording of the presentation, along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

34:40 Matt, David, as you can see, we have had a number of questions that have come through today's presentation. Thank you to all the investors who submitted those. If I could just ask you to start at the top, Matt, just read out the question and give your response where appropriate to do so, and I'll pick up from you at the end. Yeah. Absolutely. Thank you. So the first question I've got on my screen is from Simon. And Simon asks what's missing in the product set that you can upsell to your network. Are there any de facto style opportunities out there, and would debt be attractive to do deals even at higher rates? So I think that sounds like like, three questions in one, Simon. Thanks for that. So missing products that that we can sell, that that does change and it evolves depending upon the regulation. One of the big missing product sets was the the CRM software, which we invested into Planner.

35:30 There is another part of the product set which is missing when it comes to InsurTech. So at the moment, we sell, a piece of technology that compares products by features. And what we don't have as part of that product set is pricing data, is economic data, is claims history, weather data, that kind of stuff that can really help general insurance businesses to make sound decisions. And that information is provided by other companies, and we are currently going through a project to look at providing that all in all in one from the factor, which we think will will add, more revenue to our existing, from our existing customer base by taking more products.

36:16 When it comes to our intermediaries, I think the the honest answer to that is that we have access to the breadth of products they need. What we need to concentrate on now is the penetration of that. We've kind of we've and and we haven't been too good in the past at identifying who needs what. We've taken a more blanket approach to cross sell and upsell. And, again, we've made a big investment into the business with a new CRM system and ERP system that's coming live in April next year. We the reason one of the primary reasons we've done that is to give us better MI on what our customers are buying elsewhere and what we can provide them with out of our own our own kit back. So I think that's the first part of the question answered.

37:02 Are there any de facto style opportunities out there? We continue to be, very alive to, you know, large m and a, opportunities. At this moment in time, the pipeline is is, is smaller with more bolt on style type acquisitions that we're we're we're looking at. However, if we could find another de facto business, we absolutely would. I mean, we paid 74,300,000 for that business. In less than four years, we've doubled the profitability of it and paid down all the debt. So, you know, it looks to us like a a very good acquisition. And if we could do another one, we would. So we we stay alive to that. And then the last part of your question asks about debt being attractive to do deals even at higher rates. I think that's, you know, that's a question to look at on a deal by deal basis. So at the moment, we've got enough cash to cover the acquisitions that we've made and enough cash to do some bolt ons.

38:00 But if we get to a a position where we need, let's say, $50.60, 70,000,000 of cash, then we'd have to look at the combination of the debtor and equity structure. David, do you wanna add add anything on to that point? No. I think that's absolutely right. I mean, the the the margin in the facility is a 150 basis points at at one ton of leverage and below. So and and if we look at an 80,000,000 facility, we certainly keep our options open for for a big acquisition, which we referred to in the first part of the question the second part of the question. But, if you look at programmatic m and a we've got on the go just now, we'll comfortably be able to acquire three or four businesses and stay under one ton of leverage, and and that obviously controls exposure to to higher interest rates over time.

38:51 But we but we do look at it constantly, and it's on a on a case by case basis. Thanks, David. And then there's a question from Matthew. And, again, it's a two part question. So the first part, I will answer because it's really easy, and then I'll pass to David for more complex part of the question. So are you surprised the share price has not been better post degearing? Yes. Absolutely. I'm surprised that the share price isn't better, full stop. I mean, you know, the de facto business that we we've acquired, as I say, we pay 74,300,000 for that business. We've doubled the profitability. You know, the, the fact that we're still trading at around £2 a share or slightly below and slightly above is an absolute mystery to me.

39:38 But, yeah, a real disappointment with that. The second part of the question is, will you look to carry out buybacks or look to dividends at a meaningful yield? I'll hand to to David to give you a a better answer to that question. Sure thing. So so so the current answer is is is it's on on the back on on terms of buybacks or dividend growth. And, certainly, if you if you look back in time, the share price was down at approaching $1.60 per share. It's currently around about 1.90, having come off 10% on the back of the results, which, again, is another area of that we're not too happy about. But set set like a pound 60, a bit a buyback starts to become a wee bit more live. But there's a nuance in the buyback, so it wasn't a buyback to cancel. It was a buyback to hold in treasury to fund m and a, and that was the nuance that we looked at in terms of buybacks, in terms of just getting a bit more longer term value than the than the maths of of of creating a higher EPS because you've you've dropped the number of shares in that ship.

40:47 Dividends, again, it's it's it's about a 1.7, 1.8 dividend yield, but we we we're a growth story. The dividend cost is about 3,500,000 a year, and I think that that's a small but progressive growth is is where we are for now. We we've also considered specials, one offs, etcetera. I think the the business has got a capacity in terms of its coverage for north of 10p per share per per annum, but but that that's a kinda more of an ex growth story, and we still strongly believe that there's there's a lot of growth to come here. So we're keeping our powder dry, particularly with cost of debt increasing to where it was nine months ago that will hold our nerve and and go for continued growth just now.

41:33 Thanks, David. Another question from Matthew. He says, I think you said there was 12,000 IFAs, and you have 3,000 on the platform. What do the others use, and how hard is it switch out? Yeah. So there are sort of around 12,000 financial advice businesses. About half of those operate under someone else's umbrella, so they are what's called appointed representatives. And therefore, they they trade almost like self employed advisers on behalf of, an appoint you know, a a principal business. So they would be advisers of businesses like Open Work or Quilter and those kind of people. So about half half of that 12,000 6,000 businesses are ARs.

42:19 The other half are in our sweet spot. They're directly authorized firms. Of that, we support around 2,000 IFAE businesses. And so the other sort of circa 4,000 will buy in services from one of our competitors. They will buy in services from the likes of Paradigm, which is a business owned by Tatin, Bangkol, a business owned by Aviva, three sixty owned by Aberdeen, Lucidity, or True Potential. So they will be the kind of businesses that we compete with, and that's where the rest of the the market is. Is it hard to switch out? No. It's relatively straightforward. What is difficult is when your your host support service company provides you with a number of software systems, they are harder to switch out than the the kind of regulatory support, if you like.

43:14 So that's why we are investing heavily into making sure not only do we support intermediaries with, compliance and regulatory support, but we're also interwoven into their business fabric through the provision of, technology services. So hopefully, that that answers that one, Matthew. And we, we've got about fifteen minutes left, so happy to take any further questions. We'll just give it a few moments to see any further questions come in there, Matt. And then if not, we'll just ask you just for a few closing comments. And as I say, any further questions that do come through, we can pick up post event if that is the case. Okay. Just give a couple of moments to see anything further come through there, Matt.

44:12 Sure. Okay. I've got no further questions from attendees, and thank you for those who already submitted your question. Matt, I'll just ask you just for a few closing comments, if I may. Yes, absolutely. So thank you, first of all, to everyone for watching. I know this isn't necessarily the simplest business to understand. We do have lots of different revenue lines, as David said, kind of nine real key revenue lines in the business. And we do quite a lot of things, which makes it a relatively complex stock to understand. So but on the on the flip side to that, it's a very defensive business. We've got strong levels of recurring revenue coming through, almost 70% now on SaaS subscription revenues.

45:03 And the balance of the revenues, whilst they can't be mechanically called SaaS subscriptions, is repeating income from the same customers buying the same stuff from us year in, year out. And they have been doing that for ten, fifteen years or more. So when we look forward, the business has got great visibility. I think that the market is in really good health. We still have a massive advice gap in The UK. We need more intermediaries in the market, and regulation is not gonna slow down. So when you look at the key growth drivers, you say, well, we need more IFAs, mortgage brokers, wealth managers. Regulation's gonna carry on biting, and those firms need access to good quality support, good quality technology to enable them to do the right job for their clients. We've got really strong brands with high levels of of brand recognition across the market.

45:51 A core piece of technology used by over 8,000 intermediaries and insurance companies who rely on the data that we provide to help them compare products and build new ones. So I think the business is in a really solid position. Obviously, we're disappointed with the share price. I wish we could do something about that. But in terms of the business itself, we're in a great position. We look forward with real confidence. And I think that's that's kinda summarizes it for me. David, anything you wanna add to that? No. I'd absolutely echo that. Mean, again, defensive nature of it in 20,000,000 plus of EBITDA now, you know, less than 10 times EBITDA multiple just is is a bit disappointing.

46:38 And, you know, you know, I think for for all the reasons you said, it's a very defensive business and has coped well over the last few years with all the number of different things that have been thrown at businesses and you know? But we strongly believe in the growth story and long may it continue. Thank you. Thanks That's for going fantastic. Matt, David, thanks indeed for updating investors today. Please ask investors not to close the session. You'll be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete, and they'd be greatly valued by the company. On behalf of the management team of FINTEL PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thanks,