IntegraFin flags higher costs and lower fees, shares tumble
IntegraFin Holding
359.50p
11:59 18/12/24
Shares in IntegraFin were sliding on Wednesday morning, after the operator of the 'Transact' investment platform reported a robust full-year financial performance, but flagged rising costs and lower fees for some of its services going forward.
Financial Services
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11:44 18/12/24
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12:00 18/12/24
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The FTSE 250 company said that for the 12 months ended 30 September, funds under direction increased 17% to £64.1bn, supported by £2.5bn in net inflows.
Revenue rose 7% to £144.9m, which it put down to a higher average daily funds under direction figure, while underlying profit before tax grew 12% to £70.6m.
Earnings per share improved by 7%, despite the impact of the UK's increased corporation tax rate.
The company highlighted its investments in proprietary technology, which it said had enhanced the efficiency of its platform as well as client experience.
A total dividend of 10.4p per share was declared for the year, a modest increase from the 10.2p paid in 2023.
The second interim dividend of 7.2p was scheduled for payment on 31 January.
Looking ahead, IntegraFin said it was optimistic about the growth potential of the adviser platform market, supported by improving macroeconomic conditions.
However, it announced targeted fee reductions, including lower pension wrapper fees and reduced charges for non-advised clients, which were expected to have an annualised cost of £3m.
Administrative expenses were forecast to rise by 9% in 2025, partly due to a £2m one-off cost associated with relocating its London office.
From 2026, cost increases were expected to moderate to low- to mid-single-digit percentages.
Despite the positive results and an upbeat outlook for client inflows, IntegraFin's shares dropped as much as 11% following the announcement.
Analysts expressed concerns over potential revenue margin attrition stemming from the fee cuts.
RBC Capital Markets noted that the changes could lead to slight downgrades to 2025 and 2026 consensus earnings estimates, although it acknowledged the company's strong flow outlook.
Shore Capital observed that revised guidance, including adjustments for increased national insurance contributions, could result in a 2% reduction in estimated earnings per share for the 2026 financial year.
Meanwhile, Panmure Liberum suggested the impact of fee reductions may already be priced into market expectations, given IntegraFin’s history of customer-focused charge reductions.
At 1021 GMT, shares in IntegraFin Holdings were down 8.08% at 358.5p.
Reporting by Josh White for Sharecast.com.