Fintel (FNTL ), a provider of fintech and support services to the UK retail financial services sector, issued a trading update ahead of its AGM meeting today, 18 May 2023.
The company reported continued trading in line with management expectations, coupled with operational progress in line with its strategy. The fintech provider's net cash position increased 6% to £13.6m as of 30 April 2023, compared to £12.8m on 31 December 2022.
Additionally, Fintel reported a board change whereby Ken Davy will be stepping down from the role of Chair and will be succeeded by Phil Smith who was Independent Non-Executive Director. Mr. Davy will remain on the board as a Non-Executive Director.
"The Board remains confident that Fintel's strategy, underpinned by positive market dynamics, positions it well to deliver strong and sustainable growth," Fintel said in its statement.
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A positive update from Fintel this morning, ahead of the company's AGM meeting at 10 AM. Fintel continues to execute its growth strategy, helped by an increased net cash position to £13.6m, providing more flexibility for organic and M&A-driven growth.
In its most recent full-year accounts to 31 December 2022 , Fintel reported a strong balance sheet and good momentum coming into the current fiscal year. The company delivered strong core revenue growth of 8% to £56.4m in FY22, ahead of its medium-term target. Earnings quality improved across all 3 operating divisions, with 7% revenue growth in the SaaS & Subscription category to £36.8m. Overall FY22 performance was in line with management expectations.
Alongside the improved revenue was solid adjusted EBITDA growth of 6% to £19.4m, in line with management expectations, while adjusted core EBITDA grew 9% to £18.6m. As a result, adjusted EPS increased 16% to 12.2p, and Fintel increased its dividend per share by 8% to 3.25p.
Fintel's net cash position increased 5-fold year-on-year to £12.8m, and further to £13.6m post-period as reported today. The company secured a new and increased 4-year £80m revolving credit facility, completed in December 2022, on more favourable terms, to fund new growth opportunities.
We expect Fintel's core revenue growth to continue in FY23 and beyond, in line with its 5-7% medium-term goal, driven by ongoing distribution as a service (DaaS) adoption across its membership base, increased financial technology penetration, and growing regulatory demands, including FCA Consumer Duty. Fintel's business model is based on strong recurring and repeatable income, giving it good revenue visibility.
Furthermore, Fintel's M&A pipeline should enhance growth in the medium-term, facilitated by its strong net cash position and new credit facility. Fintel has already demonstrated an effective M&A strategy - it acquired Defaqto in 2019 for £74.3m (of which ~50% was borrowed), and has since doubled Defaqto's profits and repaid all borrowed cash.
Additionally, Fintel has solid ESG credentials, as discussed in our ESG roundup from last year. Fintel's ESG strategy was shortlisted for "ESG Initiative of the Year" by the 2023 ICA Compliance Awards, with further commitments outlined via launch of the company's "2023 Better Outcomes Plan".
Fintel will deliver its half-year trading update in July 2023 and interim results in September 2023.
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