Fintel : Interim results for 6 months ending 30 June 2021

21 September 2021

Fintel plc

("Fintel", "the Company" or the "Business")

Half Year Results for the Six Months ended 30 June 2021

Robust Trading, Digital Acceleration, Strategic Delivery

Fintel (AIM: FNTL), the leading provider of fintech and support services to the UK Retail Financial Services sector, today announces its unaudited consolidated results for the six months ended 30 June 2021.

Financial highlights:

• Solid Revenue growth - up 10% to £31.7m (H1'20: £28.9m)
• Strong Adjusted EBITDA*1 - up 12% to £8.3m (H1'20: £7.4m)
• Solid adjusted EBITDA*1 margin - up 60 bps to 26.1% (H1'20: 25.5%)
• Adjusted PBT*2 - up 12% to £6.0m (H1'20: £5.4m)
• Adjusted EPS*3 - down 2% to 4.1p (H1'20: 4.2p), after one off tax charges
• Robust cash flow conversion*4 of 81% (H1'20: 65%)
• Strategic deleveraging - proforma net debt*5 to EBITDA ratio of c.0.2x (H1'20: 1.5x)
  Strategic Highlights
• Strategic disposal of non-core Zest Technology
• Strategic Technology and Distribution partnership with Tatton Asset Management
• Strategic disposal of Verbatim Funds
• Strategic launch of Distribution as a Service ("DaaS")

Dividend

The Board intends to pay an interim dividend of 1.0p per share, on or around 4 November 2021.

Matt Timmins, Joint CEO of Fintel plc, commented:

"I am delighted to report that Fintel delivered a robust financial performance in the first half of the year, and we remain confident of meeting our full year expectations.

We have also made significant strategic progress in the period, signing our largest ever fintech contract in a partnership that includes the disposal of the Verbatim funds, and realised excellent value from the sale of Zest. The launch of "distribution as a service" is off to an excellent start.

We have significant financial resources to match our ambitions for the business, both in terms of accelerating organic growth and creating value through acquisitions"

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*1 Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, share option charges and exceptional operating costs.

*2 Adjusted PBT is calculated as adjusted profit before tax, which excludes exceptional operating costs and amortisation of intangible assets arising on acquisition.

*3 Adjusted Earnings Per Share is calculated as adjusted profit after tax, which excludes exceptional operating costs and amortisation of intangible assets arising on acquisition, divided by the average number of ordinary shares in issue for the period.

*4 Free cash flow conversion is calculated as adjusted EBITDA, less working capital movements, lease payments, CAPEX, development expenditure, corporation tax and interest paid, as a percentage of Adjusted EBITDA.

*5Net debt position is shown on a proforma basis at 30 June 2021 including the effect of the sale of Zest Technology and Verbatim funds.

For further information please contact:

Matt Timmins (Joint Chief Executive Officer)

Neil Stevens (Joint Chief Executive Officer)

David Thompson (Chief Financial Officer)

Martin Green

Dan Bate

Pippa Hamnett

Bruce Garrow

David Anderson

Harry Hargreaves

George Peele

Mark Walter

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Notes to Editors

Fintel is the UK's leading fintech and support services business, combining the largest provider of intermediary business support, SimplyBiz, and the leading research, ratings, and Fintech business, Defaqto.

Fintel is the leading provider of digital, data led and expert services to product providers, intermediaries, and consumers to help them navigate the increasingly complex world of retail financial services. Fintel provides technology, compliance and regulatory support to thousands of intermediary businesses, data and targeted distribution services to hundreds of product providers and empowers millions of consumers to make better informed financial decisions. We serve our customers through three core divisions;

The Intermediary Services division provides technology, compliance, and regulatory support to thousands of intermediary businesses through a comprehensive membership model. Members include directly authorised IFAs, directly authorised mortgage advisers and wealth managers.

The Distribution Channels division delivers market Insight and analysis, product design and compliance and targeted distribution channels to financial institutions and product providers.

The Fintech and Research division comprises Defaqto which provides market leading software, financial information and product research to product providers and intermediaries. Defaqto also provides product ratings to help consumers compare products and buy with confidence.

For more information about Fintel, please visit the website: www.wearefintel.com

Analyst Presentation

An analyst briefing is being held at 09:30 GMT on 21 September 2021 via an online video conference facility. To register your attendance please contact Fintel@instinctif.com

For more information, please visit: www.wearefintel.com

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JOINT CHIEF EXECUTIVES' STATEMENT

Overview

Fintel has delivered a strong financial performance while navigating continued disruption from COVID 19, with

10% growth in revenue and a 12% increase in adjusted EBITDA.

As we accelerate our digital growth and increase focus on our core business, we remain confident of meeting our full year expectations and our longer-term strategic ambitions. Solid profitability and strong cashflow conversion are underpinned by increasing margins and higher quality earnings, demonstrating the strength of our market position and customer proposition.

An adjusted EBITDA margin of 26.1% (H1'20: 25.5%) demonstrates the progress we have made in improving margins and enhancing earnings quality across the business.

The robust performance in the core Intermediary division is in line with our strategy of increasing average revenue per customer and recruiting higher value new members as we continue to digitise our core offering and increase market penetration through improved adoption of our proprietary software. This has been augmented by growth from housing related transactions, driven by positive market conditions and the roll out of remote valuations.

In our Distribution division, new product development, service enhancement and packaged solutions are improving the quality of our underlying earnings as we continue to transition our industry partners to subscription and ad valorem agreements, increasing our longer-term recurring revenue towards our mid-term target of 70-80% recurring core revenues.

A proforma net debt to EBITDA ratio of c.0.2x*5 and cash flow conversion of 81% (H1'20: 65%) reflects our continued focus on balance sheet efficiency. The disposal of Zest and the Verbatim Funds has enabled us to deleverage the business, creating significant resources for future investment, and with cash flow conversion of 81% (H1'20: 65%) we are now well ahead of our mid-termtarget of 70%.

Divisional Performance

Intermediary Services revenue increased 3% to £12.6m (H1'20: £12.3m)

The Intermediary division provides technology, compliance, and regulatory support to over 3,000 intermediary businesses through a comprehensive membership model. Members include directly authorised IFAs, mortgage advisers and wealth managers.

The Intermediary division delivered a robust performance with a 3% increase in membership revenues. As the regulatory landscape for our members becomes more complex, we continue to benefit from increasing demand for help with new and existing regulation. We continue to improve our average revenue per customer through digitisation of our core services and higher software adoption, with a 9% growth in Software license income during the period.

The financial highlights of the Intermediary division were as follows:

• Membership fee income increased by 4% to £5.6m (H1'20: £5.3m).
• Average Revenue per Customer ("ARPC") of £6,870 (FY'20: £6,729) - an increase of 2% on an annualized basis
• Software license income grew 9% to £2.9m (H1'20: £2.7m)

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Distribution Channels revenue increased 22% to £11.3m (H1'20: £9.2m)

The Distribution division delivers market Insight and analysis, product design and targeted distribution channels to financial institutions and product providers.

The Distribution Channels division recovered from a weak H1'20, benefitting from the improvement in the overall housing market, the introduction of remote valuations and an increase in housing related transactions.

Marketing services revenue continued to be impacted by the lockdown restrictions in the first half of the year, but management remains highly confident of a recovery in H2'21 and into 2022. As we transition to a combination of online and physical events and our new Distribution as a Service ("DaaS") model, we will convert existing annual contracts to multi-year recurring partnership income for the provision of data and distribution channels.

The financial highlights in the Distribution division were as follows:

• Marketing services revenues of £1.7m (H1'20 £2.6m)
• Mortgage services revenues of £3.2m (H1'20: £2.3m)
• Valuation services revenues of £4.0m (H1'20: £2.1m)
• Fund revenues of £1.2m (H1'20: £1.1m)
• Insurance services revenues of £1.2m (H1'20: £1.1m) Fintech and Research revenue increased 5% to £7.8m (H1'20: £7.4m)

Fintech and Research comprises Defaqto. Defaqto provides market-leading software, financial information and product research to product providers and financial intermediaries. Defaqto also provides product ratings to allow consumers compare products and buy with confidence.

Revenue growth was driven by customer growth in risk mappings and reviews due to increasing the scope of the service, an extended range of star ratings products and fund review product launches.

The financial highlights from the Fintech and Research division were:

• 52% growth in Recommendations on our fintech platform of £37.0bn (H1'20: £24.3bn)
• Software revenues of £3.7m (H1'20: £3.6m)
• Product Ratings revenue of £3.8m (H1'20: £3.5m)
• Gross profit margin of 60% (H1'20: 57%)

Strategic Delivery and Priorities

Our accelerated digital strategy continues to deliver margin growth, robust cash flow and good capital efficiency.

Significant strategic progress has been made with the sale of non-core asset Zest Technology for £10m (22x trailing EBITDA. These proceeds may increase by up to a further £1.5m based on performance.

A fintech, distribution and fund management strategic partnership with Tatton Asset Management was entered into, securing long term recurring revenue via 5-year SaaS enterprise partnership (generating a minimum of £7m), with further significant potential through a near 30% increase in our fintech client base and reach. The deal also generates up to £5.8m cash through the sale of the Verbatim Funds, again facilitating our future financial flexibility. The combined effects of these two transactions reduces proforma net debt to c.0.2x*5 EBITDA, creating funding headroom for further strategic growth.

The Company's value creation strategy combines organic growth and selective acquisitions. Organic growth is expected to be driven by growth in our core digital, software and technology offering as well as by increasing average revenue per customer - an ongoing business focus.

Capital discipline and a strong focus on cash return on capital employed, along with a prudent balance sheet and leverage management, remains a key strategic priority for us, ensuring we can take advantage of selective and appropriate opportunities when they arise to further enhance shareholder value.

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