IntegraFin Holdings Annual Report 2021

FY2021 Annual Report · IntegraFin Holdings

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ANNUAL REPORT
AND FINANCIAL
STATEMENTS

FOR THE YEAR ENDED
30 SEPTEMBER 2021

Evolving.

OUR PURPOSE

The Group’s business model centres on making financial planning and
investment easier.

We enable clients and their families, through their financial adviser, to hold
their investments, across all tax wrappers, on our insourced investment
platform – Transact. We also provide advisers with a tool that supports
end-to-end financial advice.

We facilitate all saving, inter-generational planning and investment activity
through the Transact investment platform. We provide custody, tax wrapping,
trading and reporting. We do not provide financial advice, we leave that to
advisers that use our investment platform.

We make financial planning more efficient and straightforward through our
people delivering great service through great systems.

FINANCIAL YEAR 2021 HIGHLIGHTS

OPERATIONAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS

Funds Under Direction*:

Revenue:

£52.11bn 27%

£123.7m 15%

(2020: £41.09bn)

(2020: £107.3m)

Net inflows*:

£4.95bn

(2020: £3.59bn)

Client numbers:

208.6k

(2020: 191.9k)

Operating profit attributable
to shareholders:

38%

£63.2m

(2020: £55.3m)

14%

Profit after tax:

£51.1m

(2020: £45.5m)

12%

Client retention:

Earnings per share:

(2020: 96%)

96%

15.4p

(2020: 13.7p)

12%

Adviser numbers:

Shareholder returns in 2021*:

6.5k

(2020: 6.2k)

10.0p

(2020: 8.3p)

20%

* Alternative performance measures (APMs)
APMs are financial measures which are not defined by IFRS, these have been indicated with an asterisk. They are used
in order to provide better insight into the performance of the Group. Further details are provided in the glossary, on
page 202.

CONTENTS

Performance Highlights

Financial Statements

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

Strategic Report

Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . 140

Chair’s Statement . . . . . . . . . . . . . . . . . . . 2

Company Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

Chief Executive Officer’s

Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Company Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

Transact - Our Business Model . . . . . . 7

Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

Our Strategic Objectives . . . . . . . . . . . 12

Company Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

Key Performance Indicators . . . . . . . . 18

Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Market Overview . . . . . . . . . . . . . . . . . . . 21

Company Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Financial Review . . . . . . . . . . . . . . . . . . . . 26

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

Risk and Risk Management . . . . . . . . 40

Going Concern and Viability

Other Information

Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Directors, Company Details, Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

Corporate Social Responsibility . . . . 55

Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

Companies Act Section 172 . . . . . . . . 63

Glossary of Alternative Performance Measures (“APMs”) . . . . . . . . . . . . . . . . . . . . 202

Approval of the Strategic

Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Governance

Board of Directors . . . . . . . . . . . . . . . . . . 66

Corporate Governance Report . . . . . 69

Audit and Risk Committee

Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Nomination Committee Report . . . . . 82

Directors’ Remuneration Report . . . 87

Directors’ Report . . . . . . . . . . . . . . . . . . 122

Statement of Directors’

Responsibilities . . . . . . . . . . . . . . . . . . . . 128

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 1

STRATEGIC REPORT

Richard Cranfield
Chair

CHAIR’S STATEMENT

Overview

Our last financial year saw the
continuing effects of COVID-19, with
significant Government-driven fiscal
interventions, and a clearer picture
emerging of the economic
consequences arising from the
pandemic. The arrival of President
Biden into office and continuing
global tensions have been the
geopolitical backdrop. In addition, in
the UK, we are working through the
consequences of Brexit, whilst in
Australia the response to COVID-19
has involved more lockdowns and
some resourcing issues, as the
country remains closed to most
foreign travel.

Despite the prevailing economic
instability, our performance has been
very strong, and our people have
coped extremely well with the
challenges they have faced this year.
Alexander Scott comments on the
results in more detail in his Chief
Executive Officer’s Review.

COVID-19

The UK has now had three separate
lockdowns, whilst the team in
Melbourne has had lockdowns and
restrictions far more draconian than
the UK. This has made it impossible
for Mike Howard to attend meetings
in person here in the UK; and has
made recruitment and resourcing
particularly challenging.

The Group remains proud that it did
not furlough any staff, or take
advantage of any other Government
assistance.

Time for Advice

On 11 January, we were pleased to
acquire Time for Advice (T4A), and
this is commented on in more detail
by Alex in his report.

The IHP Board

The major change to executive
management in financial year 2020
was Alex becoming Group Chief
Executive and Jonathan Gunby
becoming Chief Executive of
Integrated Financial Arrangements
Ltd (IFAL). These changes have
bedded in well and we have recruited
Tom Dunbar as Chief Development
Officer at IFAL in the current year.

At the Group level, Neil Holden
stepped down from the IntegraFin
Holdings plc (IHP) board on 1
September 2021, having been a
director of the Group’s parent
Company for over 10 years. We are
immensely grateful for Neil’s many
contributions over the years;
particularly through the IPO process
in 2018, and chairing both the IFAL
Audit Committee and IntegraLife UK
(ILUK), roles that Neil will continue to
hold.

2 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Closing

This has been my second year as
Chair and I have been enormously
impressed with how the business has
adapted to the very real challenges
and flourished. As I mentioned last
year, the business is highly
professional and puts its customers
front and centre.

The members of the board would like
to thank again all our hard working
colleagues for their extended efforts
dealing with the continuing challenge
posed by the pandemic, and the
social and financial consequences
that are continuing to flow from it.
These results, the published clients’
satisfaction surveys, and our ranking
within the platform sector are the
product of their efforts.

Richard Cranfield
Chair

15 December 2021

On pages 63 to 64, we present our
Section 172 (s172) statement, which
sets out how we consider our key
stakeholders in our decision making
and the key decisions we have made
throughout the financial year.

Victoria, in addition to her role as
SID, has become the non-executive
director for environmental and social
sustainability and Rita has become
the non-executive director for
employee engagement, we thank
both Victoria and Rita for stepping up
in this way.

The Board effectiveness review and
review of the Chair is discussed on
page 72.

Remuneration

The Directors’ Remuneration Report
is set out on page 87.

Dividend

In line with our dividend policy* and
in recognition of our financial
performance, we have declared a
second interim dividend of 7.0 pence
per ordinary share. Together with our
first interim dividend paid in June of
3.0 pence per ordinary share, this
takes the total dividend to 10.0
pence per ordinary share.

On 22 September 2021, Rita Dhut
joined us as a director of IHP. Rita’s
award winning investment experience
and continuing advisory and
technology roles are of great value to
the board and we are looking forward
to working with Rita.

Governance and culture

This is the second year that the 2018
UK Corporate Governance Code (the
Code) has applied to the Group.
Confirmation of how we have
complied with the Code for the year
under review is set out on page 69.

We take great care of our corporate
culture and values - which are
reflected both in our staff relations
and in our interactions with customers
and other key stakeholders. It is
particularly pleasing that we continue
to rank so highly in client service polls
undertaken by Investment Trends and
CoreData, and that our senior staff
have such longevity with the Group.

Following the 2021 AGM, Victoria
Cochrane, as Senior Independent
Director (SID), and Christopher
Munro, as Chair of the Remuneration
Committee, offered to meet with our
major shareholders and had in depth
meetings with several of them.
Constructive, transparent and open
engagement with our stakeholders
outside of the boardroom forms a
critical aspect of board-level activity.

We have taken on board feedback
from shareholders and sought to
address their concerns, as set out in
the meetings referred to above. We
have rigorous Audit and Risk, and
Remuneration Committees, which
meet regularly and review in depth
the work of the executives. We are
committing significant resources to
enhancing our corporate governance
processes and its constituent parts.
The Nomination Committee led the
process of selecting Rita, having run a
thorough external search, and we are
delighted she has agreed to join us.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 3

STRATEGIC REPORT
continued

Alexander Scott
Chief Executive Officer

CHIEF EXECUTIVE
OFFICER’S STATEMENT

Overview

It has been another year of
significant macro volatility. Our first
quarter was one of increased
optimism, as lockdowns started to
ease and efficacious COVID-19
vaccines began to emerge. Then, less
than a fortnight after the first UK
vaccination was administered on 8
December 2020, the UK was forced
back into full lockdown, the Brexit
transition period ended, with many
loose ends, and the US Capitol
building was stormed.

It has been a little calmer since, but
many things remain far from normal.
The time taken to administer
vaccines across all age groups has
meant our staff have continued to
predominantly work from home,
delivering our services remotely as
effectively and efficiently as they can,
and I thank them sincerely for their
resilience, hard work and good
humour throughout these trying
times.

Understandably, the confidence of
our people about returning to office
working remains low, with concerns
about travelling on crowded public
transport being the major anxiety. As
long as the threat of another UK
lockdown remains a serious
possibility, we will retain our
voluntary office attendance policy.

We have engaged with our staff when
considering options for returning to
the office and we will continue to

4 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

take account of their concerns and
remain agile, as we look to determine
the appropriate shape of new office
environments and establish working
patterns that not only support the
success of the business, but also
deliver positive outcomes for our
people.

Headlines

The investment platform market has
proven resilient throughout recent
uncertainty and Transact has grown
strongly over the course of the last
financial year.

We have continued to bring new
clients on board, increasing clients on
the investment platform by 9% over
the year. This has been achieved
through maintaining the number of
advisers that use Transact and adding
a further 5% through the period. At
the end of the year our clients
exceeded 208k, with more than 6.5k
advisers actively using Transact.

Gross inflows* were 34% up on last
year at £7.70 billion, reflecting strong
growth not just from the prior year,
but also from pre COVID-19 levels.
In the early stages of the first release
from lockdown, outflows spiked
slightly, but this did not last and they
quickly reverted to expected levels,
resulting in very strong net inflows of
£4.95 billion, up 38% year-on-year.

The combination of very strong net
inflows and positive market
movements helped increase FUD at

the year-end to £52.11 billion, an
increase of 27% over the year.

Revenue in the year has increased to
£123.7 million, (+15%). This is
predominantly generated by
Transact, although the purchase of
Time for Advice (T4A) has made a
contribution since January. Core
expenses across the Group have
been sensibly managed throughout
the year. T4A is loss making at this
time, due to the costs of system
development and an expansion in the
number of sales and support staff.
Additionally, non-underlying
expenses* resulting from acquisition
processes have also been absorbed.
After these costs, the Group’s profit
before tax has increased by 14% to
£63.1 million.

Market background

Equity market performance was
strong through the first half of our
financial year, with markets
responding well to the US election
result and the approval for multiple
versions of COVID-19 vaccinations.
This positivity was reflected in the
advised platform market, with strong
growth of gross inflows, which first
returned to pre-COVID-19 levels and
then, from early 2021, exceeded
them. The timing of this recovery led
to strong tax year end performance.

The second half of the year continued
in a similar vein, as a relatively
successful vaccine rollout programme
in the UK brought hope of a return to
normality. The Christmas lockdown
gradually began to ease and
businesses started to return to more
usual working practices.

There has also been considerable
activity in the investment platform
market throughout the year, resulting
in several changes of platform
ownership. It is too early yet to be
clear how much of this activity will
result in true consolidation and a
reduction in the number of platforms,
and how much will be rebranding and

ownership consolidation. Even with
this activity, over the full year, the
retail advised platform market FUD
grew by 20% from £460.52 billion
(September 2020) to £553.28 billion
(September 2021).

Our activity

In January, we took the opportunity
to broaden the services we offer to
advisers by completing the
acquisition of T4A, a specialist
software provider for financial
planning and wealth management
firms based in Norwich. This expands
the Group’s offering of adviser
services through T4A’s CURO
software, an adviser back office
system. The acquisition gives access
to T4A’s existing base of adviser
users, their system development
expertise and service support. Like
Transact, T4A is focused on the
delivery of function rich systems,
with high quality support and we
believe CURO will be complementary
to Transact.

We also considered an opportunity
for the non-organic growth of the
investment platform business,
engaging in the acquisition process
for the Nucleus platform. Ultimately,
due to the high hurdles we set in
order to proceed with any acquisition
not being satisfactorily cleared, we
decided to withdraw from this
process.

Focusing on organic growth, we have
continued delivering incremental
additions to the functionality of our
investment platform. Continuing
states of lockdown have added to the
impetus to deliver increased online
optionality. We have been able to
achieve this through changes to our
development schedule, refocussing
our software developers on providing
tools to remove the need for paper
documents and wet signatures.
Successful delivery of these
developments has resulted in
NextWealth revising our rating

upwards to Digital Process Champion
in April 2021.

Whilst we will continue to extend the
capability of our online systems, we
will also continue to provide support
to those users who are not yet ready
to embrace these developments.
With significantly increased flows
over the year, this has increased
pressure on our service teams to
maintain the service standards we
set ourselves. Recruitment of
experienced staff has proven more
difficult in recent months, as
COVID-19 has led many people to
consider their priorities for the future
and, globally, many are opting to
make permanent changes to their
lifestyles. We have, and will continue
to, engage with our colleagues,
asking for their views on the shape of
future office working.

We have again reduced the cost of
Transact to clients, following our
process of responsible pricing.
Reductions were made to both ad
valorem and buy transaction charges.

Transact has seen further small
growth in market share of FUD. As
well as consistently ranking in the top
three firms for gross inflows each
quarter, and also retaining top spot in
annual independent research studies,
Investment Trends and CoreData.

We are a generally low-carbon
business, but we are mindful of our
environmental responsibilities and we
are developing our climate strategy.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 5

To this end, we engaged Willis Towers
Watson to assess and help us
enhance our alignment to the Task
Force on Climate-related Financial
Disclosure (TCFD) recommendations,
in preparation for disclosure and
to help boost our Environmental
Social and Governance (ESG)
considerations. We were also keen
to gain insights into our current
sustainability positioning. The
outputs from this work are being
used to develop our ESG strategy,
and are expected to be finalised by
June 2022. Implementation of the
strategy will commence after the
strategy is finalised.

The outlook

The positivity from the last three
months of the 2021 financial year
have continued in to the start of the
new financial year. However, much
uncertainty persists, with COVID-19
and impacts of the end of the Brexit
transition still emerging.

From 1 January 2022, the new
Investment Firms Prudential Regime,
setting out post-Brexit regulations for
investment firms, will come in to
force. Among other impacts, these
rules will result in higher capital
requirements for our investment
firm. This has been planned for, with
sufficient capital having been built up
and retained.

The advised platform market is
expected to continue to grow 18% in
2022. We aim to continue to grow
our share, as we refine our systems
and processes, further developing
and expanding the financial
infrastructure and associated services
we offer.

We will help drive the development of
CURO and grow the adviser service
team at T4A, ensuring that increasing
sales volumes are properly
supported. However, we expect T4A
to continue to be loss-making next
year, as it builds its capability to
support a larger adviser base.
Additionally, the acquisition of T4A
will result in an increase in non-
underlying expenses for the next
three years, but we believe this
acquisition and the development of
the CURO system will then deliver an
independent profit stream, as well as
future strategic benefits derived from
closer integration between the
Transact system, Transact Online and
CURO.

We will continue investing in our
staff. We will support them and seek
to ensure we arrive at an optimum
work-life balance that still achieves
our strategic objectives. We realise
our people are front and centre of
our success. We will improve our
working environment, as our main
office lease draws to an end and we
consider new premises. We aim to
use this opportunity to improve the
well-being of staff and to assist with
managing our environmental impact,
a full plan for which is being
developed and acted on. We will do
this whilst managing our cost base
prudently, and continue to deliver fair
returns for all of our stakeholders.

Alexander Scott
Chief Executive Officer

15 December 2021

6 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

STRATEGIC REPORT continued

TRANSACT –
OUR BUSINESS MODEL

Making financial planning easier

We operate a market-leading
investment platform that delivers an
infrastructure which enables advisers
to implement financial plans for our
mutual clients, as simply and
efficiently as possible. Our leading
platform functionality is supported by
a high-touch client service team,
which provides real time, consistent
day-to-day and technical support, no
matter how basic, or complex, the
query may be. We strive to always do
the right thing for our clients and
their advisers.

A key feature of our business model
is the control we have over every
aspect of what we do. Our goal is to
insource the main components of our
service and technology, enabling us
to maintain control over the quality
and cost of our whole operation.

The main components of our business
model are:

Operational
excellence

People
excellence

▪ We have an award-winning client servicing model

▪ 194 dedicated client service staff who are client-centric

▪ Our client service teams are high-touch and regionally

allocated

▪ Highly efficient client and adviser experience

▪ We value strong adviser relationships

▪ We recognise that our people are our primary asset

▪ We value our staff and seek to retain them through a

strong, values-driven culture

▪ We recognise excellent performance and give all staff

the opportunity to develop and progress, be it through
technical specialism, people management skills,
promotion within a department, or changing roles

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 7

STRATEGIC REPORT continued

In-house
wrappers

We provide a wide range of in-house tax-efficient
wrappers, including:

▪ Pensions

▪ ISAs (LISA and JISA)

▪ Onshore life insurance bonds

▪ Offshore life insurance bonds

▪ General Investment Accounts

In-house
technology

▪ Our software systems technology is proprietary and we

own our software development company

▪ We have full control of development direction and

priorities and costs

▪ We have full control of the client experience

▪ All of the above contributes to our agility and

responsiveness to client and adviser requirements

Open
architecture

We are whole of market and provide access to a wide
range of investment types, including:

▪ Mutual funds

▪ Investment trusts and shares

▪ Exchange traded funds

▪ Gilts and bonds

▪ Venture capital trusts

▪ Cash and term deposits

8 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Proven
reputation

▪ We are a long-established, financially secure,

investment platform

▪ We have championed a consistently high level of service

for 21 years

▪ We have won numerous awards and we were rated as
best adviser platform in annual adviser surveys run by
CoreData and Investment Trends

▪ The fair treatment of our stakeholders, comprising

clients, employees, suppliers and shareholders is one of
our core values

Trusted by
independent
advisers

▪ We enjoy long-standing relationships with many

financial planning firms across the UK

▪ Over 6,500 advisers have independently chosen

Transact as an investment platform for their clients

Strong balance
sheet

▪ We have a highly cash generative business model,

which has led to shareholder cash increasing*

▪ No debt on our balance sheet

▪ Expenses are closely monitored and managed in

line with our business plan

▪ We have a strong regulatory capital position that

remains stable through the economic cycle

*Note that the financial statements show policyholder cash and shareholder
cash as one balance. Policyholder cash has decreased as policyholders have
invested through financial year 2021, hence the overall cash balance has
decreased.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 9

STRATEGIC REPORT continued

Using our resources to create
value

1. Investing in our people

Our client service and support teams
receive extensive training through
our internal training programmes and
they have been instrumental in our
success and the many accolades and
awards Transact has received. The
client service teams are supported by
a dedicated technical specialist
department that has the expertise
and agility to deal with more complex
queries as they arise.

2. Building our infrastructure

Our systems and processes are
designed to meet the needs of our
clients and their advisers. We listen
to user feedback when considering
and planning the improvements we
will make to our bespoke systems.
The development and implementation
of these enhancements has been
carried out in a considered, controlled
manner for over twenty years and
this proven approach is expected to
continue for the foreseeable future.

3. Growing FUD by attracting and
retaining clients

The Transact business model
incorporates ‘responsible pricing’,
which means we share our profits
with our clients through price
reductions, when circumstances
permit. We do this when we are

comfortable that doing so will not
have a negative impact on service
levels and our ability to invest in our
people and the platform, and it
means that the best service in the
platform market continues to be even
better value for money which should
drive increased profitability and
shareholder returns.

We insource the main components of
our service and technology, which
gives us absolute control over the
quality and cost of our whole
operation. By closely managing
expenses, in line with a realistic
business plan, and regularly
implementing process efficiencies,
our per unit cost base is controlled
and has grown at a slower rate than
business volumes.

Our investment platform has been
consistently differentiated from our
competitors’ over the years, through
sustained customer service
excellence. We operate a trusted
investment platform and this is
evidenced by over 6,500 advisers
who have independently selected
Transact for their clients.

4. Growing earnings from increasing
levels of FUD

Our revenue is generated from the
fees clients pay for using our
platform. We are confident that the
business model we operate is truly
sustainable, as over 98% of the
platform revenue, as detailed on
page 30 in the Financial Review, is
recurring and has been for many
years.

10 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

5. Managing costs

Insourcing the key components of
our service and technology means we
have total control over the quality,
development and cost of our
proposition. In particular, control of
our software systems development is
crucial to our business model, as it
enables our client service teams to
operate particularly effectively.

6. Delivering fair returns for all
stakeholders

Fair treatment of clients, employees,
suppliers and shareholders is central
to our business model. We often
reduce charges to share our success
with clients. We have introduced a
Share Incentive Plan (SIP) that is
open to all staff and a Performance
Share Plan (PSP) for management.
The schemes aim to reward
performance, recognising the
contribution all staff have made to
the success of the firm, and to
encourage loyalty. We also endeavour
to maintain fair returns to
shareholders by delivering on our
dividend policy, in line with Strategic
Objective 6 on page 15, whilst
maintaining a strong and stable
regulatory capital base.

Time for Advice (T4A) business
model

T4A provide the CURO product and
support service to financial advisers.
CURO is technology which supports the
financial advice process from end-to-
end, and is therefore complementary
to our investment platform.

T4A’s business model aligns with the
Group’s in many respects. T4A aims
to increase its adviser user base and,
therefore, its licence fee revenue, by
investing in the development of its
core product, CURO, as well as
developing an enhanced version,
CURO365.

T4A is investing in its people to
ensure there is the necessary level of
development and support resource,
as it grow its user base. However,
despite the projected increase in
costs as T4A invests, its expenses are
carefully managed and any
additional, unforeseen, but necessary
costs are discussed at Group level,
prior to being incurred.

T4A aims to increase its revenue in
order to become profitable, in line
with its development plan, and
contribute to IHP Group profitability.

Shareholder returns

In respect of financial year 2021, the
first interim dividend of 3.0 pence per
ordinary share (£9.9 million in total)
was paid in June, and the second
interim dividend, as detailed in the
Chair’s statement, of 7.0 pence per
ordinary share (£23.2 million in
total), has been declared.

The dividends in respect of financial
year 2021 equate to a return to
shareholders of 65% of post-tax
profit, which is in line with our
dividend policy.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 11

STRATEGIC REPORT continued

OUR STRATEGIC OBJECTIVES

IntegraFin Holdings plc (IHP Group) is focused on
the delivery of financial services infrastructure and
associated services to UK advisers and our mutual
clients.

We want to create, maintain and improve value for our
four principal groups of stakeholders – our clients, our
employees, our suppliers and our shareholders. To do
this, we must maintain our reputation for delivering a
high quality, value for money service. This is achieved
by keeping our offering relevant to current and future
new clients through ongoing development which
ensures we meet the needs of clients and their
advisers. The key risks mentioned below are described,
along with risk management activities and controls, on
pages 16 and 17.

12 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

1. Drive growth

We aim to grow FUD by attracting and retaining clients
through their advisers, due to delivering a superior
service and value for money. We aim to grow the
numbers of advisers using Transact and CURO, due to the
benefits the services offer to our mutual advisers.

The business considers developments to the core
proposition and business plan, where such changes are
likely to improve the operation of financial plans for
clients and their advisers. The business targets the
implementation of new wrappers and services where it
can see opportunities that will benefit all customers.

We will also review and consider potential acquisition
opportunities where there is an expectation of accelerated
growth, or augmentation of the current proposition that
would enhance shareholder value. We have a high hurdle
for taking any such opportunities forward, applying a
rigorous and disciplined approach.

Financial year 2021 progress:

FUD ended the year at £52.11 billion (2020: £41.09
billion), growing 27% over the year.

Post acquiring T4A, the number of advisers using CURO
has increased to 1,716, an increase of 18%.

Financial year 2022 outlook:

We will continue to target advisers not yet using our
services that are in our identified core markets. We also
aim to encourage adviser users to move their clients onto
Transact and CURO, as they experience the benefits that
our service brings, and those clients already using us will
put more money into their portfolios.

Ongoing development of CURO, with CURO365 planned,
and integration of T4A into the Group, both operationally
and from a corporate perspective.

Key risks:

▪ Service standards failure

▪ Stock market volatility

2. Invest in the business

Financial year 2021 progress:

£10.0 million (2020: £9.8 million)
invested in platform development in
the year. This is comprised of
platform developer and management
cost, acquisition of new equipment
and training costs.

The investment costs incurred in
financial year 2021 of acquiring T4A
comprised: an up-front cash payment
of £8.6 million in January 2021; £2.2
million of deferred and additional
consideration has been expensed as
post-combination remuneration from
January 2021 to September 2021
(further details in the Financial
Review section on page 26); plus a
£4 million cash injection from IHP to
aid T4A in growing the business.
Therefore, a total of £10.8 million
was invested in the in the acquisition
of T4A in the year by the Group, with
a further £4.0 million injected
internally by IHP.

Financial year 2022 outlook:

We look forward to making further
enhancements that benefit and support
the client and adviser online experience
in financial year 2022, as well as
implementing other systems
improvements which are already
designed and timetabled.

Key risk:

▪ Diversion of investment platform
and CURO development resources

▪ Staff retention

A history of investment in our people
and our technological infrastructure
has ensured our service quality has
been award winning and operationally
resilient. This will not change. We
recognize that high calibre, well-
trained, engaged staff and intuitive,
progressive systems are critical to our
ongoing success.

Aside from the work required to keep
up to date with statutory and
regulatory change every year, we are
guided by feedback from clients and
their advisers when prioritising
changes to Transact. The emergence
of new investor practices and
product, wrapper and functionality
additions may all require the
deployment of new technologies. We
continue to adapt to these changes
and invest in our software in a steady
and targeted manner, building on
over twenty years of development
experience. We will apply the same
principles to the development of
CURO365.

Where new opportunities have been
identified, the business looks to
introduce insourced solutions. New
developments must:

▪ Not risk Group capital beyond

reasonable levels;

▪ Not bring us into commercial

conflict with our clients’ advisers;
and

▪ Not make it difficult for us to meet

our regulatory responsibilities.

Through these measures, we aim to
continue to grow profits and generate
the best returns we can for our
shareholders.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 13

STRATEGIC REPORT continued

3. Grow earnings

4. Maintain cash generation

We are a highly cash-generative business because all
our fees are received in cash, which we collect directly
from client portfolios as they become due, or directly
from advisers using T4A. Shareholder cash, which is
combined with policyholder cash in the financial
statements, has increased as a result of our cash
generative business model. Combined with sensible
expense management, we expect to continue generating
cash profits.

Financial year 2021 progress:

Operating profit attributable to shareholders, generating
profits from the cash received, in financial year 2021 was
£63.2 million, which is an increase of 14% from £55.3
million in financial year 2020. This has been achieved
despite recognition of T4A’s operating loss of £1.3 million.

Financial year 2022 outlook:

We will continue to manage expenses and it is expected
the Group’s strong liquidity profile will be maintained. It is
expected that T4A’s costs will again exceed revenue in
financial year 2022; this will again impact the Group’s
operating profit attributable to shareholders.

Key risks:

▪ Stock market volatility

▪ Uncontrolled expenses

We expect to continue growing FUD and revenue by
attracting more investments onto our platform. We aim to
achieve this through:

▪ Our on-platform advisers and clients. The investments

managed by Transact’s current adviser base are
expected to increase through stock market growth and
new contributions.

▪ Increasing penetration of Transact’s current adviser
base. That is, increasing the share of wallet from
advisers on our platform through advisers putting more
of their clients on our investment platform.

▪ Attracting new advisers by maintaining leading ratings
amongst advisers and keeping our platform relevant to
new advisers and clients by constantly reviewing and
developing the service to meet their needs.

▪ We are fully cognisant that T4A will continue to be loss-

making for the next financial year and that this will reduce
Group profitability in the short-term, but in the longer term
we expect the growth in adviser users of CURO, coupled
with investment in the business, to generate profits.

The expectation that the UK wealth management market
will continue to grow, leading to a consequential growth in
investable assets managed by advisers, provides a positive
outlook for the demand for investment platform services.

Financial year 2021 progress:

FUD increased by 27% to £52.11 billion (2020: £41.09
billion) and revenue increased by 15% to £123.7 million
(2020: £107.3 million), including £2.4 million of licence
fee revenue from T4A.

Financial year 2022 outlook:

Investment platform client numbers grew by 9% and
adviser numbers by 5% in financial year 2021. The number
of advisers using CURO increased by 18% from January
2021 to September 2021. We aim to sustain this level of
growth and potentially increase all metrics in the coming
year, but recognise that whilst financial year 2021 has been
very strong, the economic landscape remains challenging.

Key risks:

▪ Service standards failure
▪ Stock market volatility
▪ Increased competition

14 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

5. Maintain strong balance sheet

6. Deliver on dividend policy

We continue to maintain robust capital resources, which
are supported by emerging profit. We have no debt and
our regulatory capital position remains resilient through
the economic cycle.

Our policy is to pay 60% to 65% of full year profit after
tax as two interim dividends.

Financial year 2021 progress:

The Group capital position, as defined by Group net
assets, grew 16% and ended the year at £163.3 million,
up from £140.9 million at 2020 year end.

Financial year 2022 outlook:

We will continue to manage our capital prudently, to
enable us to meet our regulatory capital requirements as
the business grows.

Key risks:

▪ Stock market volatility

▪ Capital strain

A first interim dividend was paid of 3.0p per ordinary
share and a second interim dividend declared of 7.0
pence per ordinary share, in line with our dividend policy.

Financial year 2022 outlook:

Our dividend policy remains unchanged, but our income
may be impacted by continuing market uncertainty due to
the pandemic, inflationary pressure on all costs, including
recruitment, and the emergence of issues due to Brexit.

Key risks:

▪ Stock market volatility

▪ Uncontrolled expenses

▪ Capital strain

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 15

STRATEGIC REPORT continued

KEY RISKS

There are factors within and outside
our control that may affect the
achievement of our strategic
objectives. We aim to mitigate
exposures that are outside our risk
appetite where possible. The key
risks associated with our strategic
objectives are:

16 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

1. Stock market volatility:
Financial year 2020 was
characterised by financial markets
plunging, followed by daily market
swings, as the severity of the
pandemic emerged. Financial year
2021, however, has largely been one
of recovery, as COVID-19 vaccines
have been developed and rolled out
worldwide and investor confidence
has returned. The real impact of
Brexit and the UK’s deal with the EU
is yet to fully emerge and it has been
masked by the economic shock of the
pandemic. However, it is expected
that Brexit will impact stock markets
for the foreseeable future. Stock
market volatility impacts the value of
our investment platform FUD and,
therefore, revenue.

Risk management and control:
The risk of stock market volatility,
and the impact on revenue, is
mitigated through a wide asset
offering which ensures we are not
wholly correlated with one market,
and which enables clients to switch
assets in times of uncertainty. In
particular, clients are able to switch
into cash assets, which remain on our
investment platform. Our wrapper
fees are not impacted by stock
market volatility, as they are a fixed
quarterly charge. Due to the
acquisition of T4A, we also now have
another revenue stream which is not
affected by stock market movements.
We closely monitor and control
expenses across the Group, which
assists in maintaining profit in
turbulent times.

2. Service standards failure:
Our high levels of client and adviser
retention are dependent upon our
consistent and reliable levels of
service. Failure to maintain these
service levels would affect our ability
to attract and retain business.

Risk management and control:
We manage the risk of service
standards failure by ensuring our
service standards do not deteriorate.

a proactive control to mitigate the
potential for capital strain.
Additionally, we carry out an
assessment of our capital
requirements, which includes
assessing the regulatory capital
required. We retain a capital buffer
over and above the regulatory
minimum solvency capital
requirements.

7. Staff retention:
Inability to retain staff and attract
new staff, due to changing cultural
expectations, unrealistic salary
expectations and competitor
pressure.

Risk management and control:
We ask all leavers to complete a
questionnaire which details their
reasons for leaving the Group. We
can then monitor and proactively
seek to act should clear trends
emerge. We perform salary
benchmarking exercises to ensure we
do not fall behind the prevailing
market rate and we ensure our total
compensation package is attractive.
This is coupled with comprehensive
training for new starters and
opportunities for career development
within the Group. We are also
implementing a hybrid working model
to accommodate shifting cultural
expectations around office working.

This is achieved by providing our
client service teams with extensive
initial and ongoing training,
supported by experienced subject
matter experts and managers. We
strive to ensure staffing levels remain
appropriate, through forecasting and
tracking levels of business and
analysing management information
on team performance. We recruit
high calibre staff as necessary.
Service levels are monitored and
quality checked and any deviation
from expected service levels is
addressed. We also conduct
satisfaction surveys to ensure our
service levels are still perceived as
excellent by our clients and their
advisers. Service standards are also
dependent on resilient operations,
both current and forward looking,
ensuring that risk management is in
place. Please see the Risk and Risk
Management section on page 40.

3. Increased competition:
We operate in competitive markets.
Increased levels of competition for
adviser and their clients;
improvements in offerings from other
investment platforms; and
consolidation in the adviser market
may all make it more challenging to
attract and retain business.

Risk management and control:
Competitor risk is mitigated by
focusing on providing exceptionally
high levels of service, developing
new products and platform
functionality and being responsive to
client and financial adviser demands
whilst maintaining an efficient
expense base. This allows us to
continue to increase the value for
money of our service by reducing
client charges, subject to profit and
capital parameters, when deemed
appropriate.

4. Diversion of resources:
Maintaining our quality and relevance
requires ongoing investment. Any
reduction in investment due to
diversion of resources to other

non-discretionary expenditure (for
example, a change in the taxation
regime, or other regulatory
developments) may affect our
competitive position.

Risk management and control:
The risk of reduced investment is
managed through a disciplined
approach to expense management
and forecasting. We horizon scan for
upcoming regulatory and taxation
regime changes and maintain
contingency to allow for unexpected
expenses e.g. UK Financial Services
Compensation Scheme (FSCS) levies,
which ensures we do not need to
compromise on investment in our
platform to a degree that affects
our offering.

5. Uncontrolled expenses:
Higher expenses than expected and
budgeted for would adversely impact
cash profits. The key constituent of
expenses is salary costs, but other
expenses are more likely to change
unexpectedly, for example legal,
compliance or regulatory costs and
levies.

Risk management and control:
The most significant element of our
expense base is staff costs. These
are controlled through modelling staff
requirements against forecast
business volumes, factoring in
efficiencies that it is expected will
emerge through platform
development. Any expenditure
request that deviates from plan is
rigorously challenged and must be
approved before it is incurred.

6. Capital strain:
Unexpected, additional capital
requirements imposed by regulators
may negatively impact our solvency
coverage ratios.

Risk management and control:
We actively monitor the current and
expected future regulatory
environment and ensure that all
regulatory obligations are or will be
met. By doing so, we ensure we have

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 17

STRATEGIC REPORT continued

KEY PERFORMANCE
INDICATORS

We have a number of quantifiable
measures that we use to gauge the
performance of our business, these
are our key performance indicators.

We consider the measures to be key
to our business due to: our current
and future revenue streams and
market position are linked to FUD;
increasing market share through new
advisers and clients, and ensuring
existing clients do not want to leave
(client retention*); investment in the
platform to ensure we continue to
deliver and improve our outstanding
customer service; and, sufficient
capital to ensure we meet our
regulatory requirements and can
continue to support and invest in the
business.

All metrics have exceeded our
expectations, especially when taking
into consideration the challenging
economic environment resulting from
COVID-19 during financial year 2021.

FUD* increased by £11.02 billion (27%)

The value of FUD is a primary driver of revenue, as it forms the basis of
annual commission payable which, as detailed on page 30 in the Financial
Review, is the largest component of Group revenue.

£52.1bn

£37.8bn

£41.1bn

TOTAL FUD

55bn

50bn

45bn

40bn

35bn

30bn

25bn

20bn

15bn

10bn

5bn

0bn

)
£
(
D
U
F

FY19

FY20

FY21

Financial Year (end)

Net inflows* were up 38%

Transact was in the top three highest net inflows of all advised platforms in
the year to date of 2021, according to Fundscape statistics.

NET INFLOWS

)
£
(

s
w
o
l
f
n
I

t
e
N

5bn

4bn

3bn

2bn

1bn

0bn

£3.5bn

£3.6bn

£5.0bn

FY19

FY20

FY21

Financial Year (end)

18 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Client numbers* were up 9% to over 208,600

The increase in the number of clients is testament to the continued quality of
our service.

CLIENT NUMBERS

179k

192k

209k

s
r
e
b
m
u
N
t
n
e

i
l

220K

200K

180K

160K

140K

120K

100K

FY19

FY20

FY21

Financial Year (end)

Client retention* remained at 96% per annum

Client retention is an important measure of satisfaction. It is also a driver of
ongoing revenue and we attribute our high level of client retention to
satisfaction with our service and offering.

Financial year

Levels of client retention

2019

96%

2020

96%

2021

96%

Adviser numbers* were up 5% to over 6,500

We have experienced steady growth in the number of advisers using the
platform. We help advisers to “onboard” their clients through a mixture of
face-to-face local support and phone and online assistance via our extensive
servicing and technical teams. Once again we retained the highest Net
Promoter Score (NPS) of the adviser platforms in the annual Investment
Trends survey. The rate of growth of adviser numbers continues to increase
steadily year-on-year.

ADVISER NUMBERS

s
r
e
b
m
u
N
r
e
s
i
v
d
A

7,000

6,500

6,000

5,500

5,000

4,500

6,524

6,205

5,871

FY19

FY20

FY21

Financial Year (end)

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 19

STRATEGIC REPORT continued

Investment in the
business continued*

In financial year 2021, we invested
£10.0 million (2020: £9.8 million) in
platform development, including
software development, platform
infrastructure and staff training.
Ongoing investment ensures the
proposition remains award-winning
and operationally resilient.

The acquisition of T4A also aligned
with one of our core strategic
objectives of investing in the business.
T4A’s product, CURO, is technology
which supports the financial advice
process from end-to-end, and is
therefore complementary to our
investment platform.

The acquisition cost comprised an
up-front cash payment of £8.6
million, plus £8.6 million of deferred
consideration, payable in tranches
over the next four years. Additional
consideration of up to £8.6 million
may also be payable in January
2025, although this is contingent on
T4A meeting certain performance
targets over each of the next four
years. We also injected £4 million of
cash into T4A, in order to support the
development and expansion of CURO
over the coming years.

Operating profit attributable to
shareholder returns increased to
£63.2 million (14%)

We maintained income growth in a
challenging market, whilst expenses
remained stable, excluding the impact
of non-underlying expenses incurred in
the acquisition of T4A and consideration
of the acquisition of Nucleus.

Capital stability was maintained

The Group maintained a strong
balance sheet with capital increasing
to £163.3 million. We retained a
sensible capital base, with capital
resources predominantly in cash and
UK gilts generated from the core
business. In order to determine the
capital base, we consider the capital
position after dividends, investment
and meeting increases in regulatory
capital requirements.

Gross profit increased to £122.2
million (15%)

We generated a gross profit for the
year of £122.2 million which
increased on the prior year. Our gross
profit has increased due to our
continued ability to generate fee
income from our services, despite
increased cost of sales from the T4A
acquisition in the year.

Shareholder returns* increased
by 20% to 10.0 pence per
ordinary share (2020: 8.3 pence
per ordinary share)

We continue to deliver on our
dividend policy and ensure that
60-65% of our profits are paid back
to shareholders. We have increased
shareholder returns this year through
the payment of the first interim
dividend of 3.0 pence per ordinary
share in June 2021 and the
declaration of the second interim
dividend of 7.0 pence per ordinary
share, to be paid in early 2022
(2020: 2.7 pence per ordinary share
and 5.6 pence per ordinary share).
This is testament to the Group’s
ability to grow and generate
distributable profits, which have
delivered increasing returns to
shareholders.

20 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

*Our KPIs include 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, on page 202.

MARKET OVERVIEW

The adviser platform market

At the end of September 2021, the
advised platform market had grown
to £553 billion, up 20% on the
prior year figure of £461 billion.
Industry gross flows during this
period grew 34%.

As a leading player in this sector,
Transact’s funds under direction
grew 27% to £52.11 billion. Gross
flows were up 34% at £7.70 billion
and, more importantly, net flows
were up 38%.

MARKET GROSS FLOWS

18.0bn

16.0bn

14.0bn

12.0bn

10.0bn

8.0bn

6.0bn

4.0bn

2.0bn

0.0bn

)
£
(

s
w
o
F

s
s
o
r
G

Q1 FY21

Q2 FY21

Q3 FY21

Q4 FY21

TRANSACT GROSS FLOWS

Financial Year 2021

)
£
(

s
w
o
F

s
s
o
r
G

2,400m

2,100m

1,800m

1,500m

1,200m

900m

600m

300m

Q1 FY21

Q2 FY21

Q3 FY21

Q4 FY21

Financial Year 2021

MARKET NET FLOWS

)
£
(

s
w
o
F

t
e
N

9.0bn

7.5bn

6.0bn

4.5bn

3.0bn

1.5bn

0.0bn

Q1 FY21

Q2 FY21

Q3 FY21

Q4 FY21

Financial Year 2021

TRANSACT NET FLOWS

)
£
(

s
w
o
F

t
e
N

1,500m

1,200m

900m

600m

300m

Q1 FY21

Q2 FY21

Q3 FY21

Q4 FY21

Financial Year 2021

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 21

STRATEGIC REPORT continued

Whilst the COVID-19 pandemic and other external factors have made this a
challenging year at times, the above result is testament to the Transact
operating model. Insourcing of nearly all the components required to deliver
the service means strong quality control. This supports Transact’s market
positioning which features a wide range of wrappers and asset types and a
high level of client service.

Transact gross flows were much less volatile than during the prior year and
eight months in the financial year feature in Transact’s all-time top 10.

MONTHLY GROSS FLOWS

1.2bn

1.0bn

0.8bn

0.6bn

0.4bn

0.2bn

0.0bn

Oct Nov Dec

Jan Feb Mar Apr May

Jun

Jul Aug Sep

FY21

FY20

Transact is consistently ranked in the
top three platforms for gross inflows.

Transact inflows result from one of
the following sources (in order of
significance):

▪ Advisers who are Transact users

and are introducing new clients to
Transact.

▪ Clients who are adding more

contributions to a Transact portfolio.

▪ Advisers who are new to Transact
and are introducing their clients to
Transact.

Outflows remaining broadly stable as
a percentage of opening FUD at
around 7%.

Another positive indicator was the
ratio of client asset transfers onto the
platform versus off the platform. For
the financial year, the monetary value
was 2:1 in favour of Transact.
Transact offers a wide range of
wrappers which isn’t always apparent
at first glance. The suite of ISA
products includes Junior, Flexible and
Lifetime ISAs. The pensions suite
includes trust and insured based

SPREAD ACROSS
WRAPPER TYPES FY21

23%

24%

46%

Pension

ISA

GIA

Bonds

22 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

wrappers (including a section 32
buyout). Both onshore and offshore
insurance bonds are offered, these
are provided by our subsidiary
insurance companies. The £52.11
billion we administer is spread across
these wrapper types:

Flows in financial year 2021 showed a similar composition.

GROSS FLOWS BY
WRAPPER TYPE FY21

22%

42%

28%

Pension

GIA

ISA

Bonds

This healthy mix is a result of financial advisers using the full range of
tax planning wrappers available to them and their clients. Much of the
functionality on Transact works at portfolio and wrapper level, thus making
the financial planning process easier to implement and monitor.

Structural drivers of growth

Each year individuals place more money in wrappers, especially their pensions
and ISAs, and so there are substantial new flows. Indeed, during the financial
year, 36% of Transact’s new inflows arose from customers topping up their
Transact portfolio.

In addition to this, there is a large addressable market with £3,200 billion
of assets owned by individuals. This is made up as follows:

SPREAD OF ASSESTS

19%

Occupational Defined Benefit

Occupational Defined Contribution

12%

53%

16%

Legacy Retail Savings and Investments
(excludes transactional banking monies)
Retail Platform

These categories are usually growing too through a combination of further
contributions and asset growth.

The complex taxation system in the UK means that individuals need to access
tax efficient wrappers and investment range. Moreover, they need financial
advice over the long-term and thus the advice market provides a highly
valued service to clients.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 23

STRATEGIC REPORT continued

Competitive environment

There are 16 adviser platforms administering over £5 billion and these form
our main competitors.

Transact retained the top spot in annual independent research studies
Investment Trends and CoreData for the twelfth year running (2010-2021
inclusive), as well as consistently performing strongly in quarterly and annual
Platforum surveys.

Category:
Large Platforms
(> £12bn FUD)

Category:
Large Platforms
(> £10bn FUD)

1st

2021

2020

2019

2018

2017

2016

2015

A core element of our proposition is the ownership of our software. We
regularly deploy releases of new software (eleven in financial year 2021),
which contain enhancements to existing code, as well as new functionality
which benefits clients and advisers.

Internal developments throughout the year included:

▪ A price reduction in April 2021 which resulted in both existing and new

clients benefiting.

▪ Enhancements to our online functionality resulted in NextWealth revising our

rating upwards to Digital Process Champion in April 2021.

24 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Adviser and client numbers

Of over 36,000 financial advisers in the UK, around 15,000 are operating in
our target market and are contestable. There is significant growth potential
within the existing contestable market – both converting registered users to
supporters and signing up new advisers. At the end of 2021, there were 6,524
advisers using Transact (compared to 6,205 a year earlier). We have one of
the strongest adviser ratings for Net Promoter Score of mainstream adviser
platforms and continue to sign up new advisers every month (these are a mix
of firms who are new to Transact and new advisers at existing firms). This
strong adviser support led to our customer numbers growing from 191,872 to
208,611.

ADVISER NUMBERS

s
r
e
b
m
u
N
r
e
s
i
v
d
A

7,000

6,000

5,000

4,000

3,000

2,000

2
1
Y
F

3
1
Y
F

4
1
Y
F

5
1
Y
F

6
1
Y
F

7
1
Y
F

8
1
Y
F

9
1
Y
F

0
2
Y
F

1
2
Y
F

Market Outlook

Financial Year (end)

In our own client satisfaction survey, in which 1,066 clients participated, 92%
of respondents rated Transact’s quality of service as either “very good”, or
“good”, and 83% of respondents stated they were “very likely” or “likely” to
recommend Transact to friends, family or colleagues.

CLIENT NUMBERS

s
r
e
b
m
u
N
t
n
e

i
l

225,000

200,000

175,000

150,000

125,000

100,000

75,000

50,000

2
1
Y
F

3
1
Y
F

4
1
Y
F

5
1
Y
F

6
1
Y
F

7
1
Y
F

8
1
Y
F

9
1
Y
F

0
2
Y
F

1
2
Y
F

Financial Year (end)

The fundamental growth drivers for
the sector remain strong. Transact is
very well placed and is in control of
all the key components of the
service. The business continues to
enjoy the growing economies of scale
and is able to invest in the business
whilst reducing charges to customers.

The sector is competitive, but
Transact competes strongly and
enjoys strong net flows. Whilst there
could be new market entrants there
are significant entry barriers in terms
of regulation, technology and market
reputation.

Advisers and their clients appreciate
the financial stability, quality of
service and the culture of continuous
improvement that Transact offers.

Jonathan Gunby
Executive Director

15 December 2021

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 25

STRATEGIC REPORT continued

The first quarter of the year was
impacted heavily by continuing
lockdowns and COVID-19 cases
spiking, as the Delta variant took
hold, resulting in net flows for the
quarter remaining subdued at £840
million. However, from the second
quarter of our financial year onwards,
and as the positive impact of the
vaccine programme emerged, net
flows increased dramatically, with
each quarter exceeding £1.3 billion
in net flows. The market recovery
and strong net flows has resulted in
increased revenue and increased
profits.

FINANCIAL REVIEW

Strength in numbers

Operational performance

Our financial year 2020 was marked
by global market turbulence and
worried investors, due to the speed at
which the pandemic ground the world
to a locked down halt. Despite this,
we produced a resilient set of results.

Financial year 2021 started off in a
similar vein, but then news broke
that an effective vaccine had been
developed, followed by the successful
roll out of the British vaccination
programmes. As positive news
emerged, pre-pandemic life began to
slowly resume and financial markets
recovered, with the FTSE 100
growing 21% year-on-year, to end
September 2021 at 7,086 points
(September 2020: 5,866 points).
However, future impacts of Brexit on
the British economy remain on the
horizon and the potential disruption,
as the pandemic ebbs and flows, is
also an economic risk, possibly for
years to come.

FUD started the financial year at
£41.09 billion and grew an
impressive 27%, to end the year at
£52.11 billion. The increase in FUD is
not solely attributable to the financial
markets and is also due to record net
flows onto the platform for the
financial year.

26 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

FUD, inflows and outflows

For the financial year ended
30 September

Opening FUD

Inflows

Outflows

Net flows

Market movements

Other movements1

Closing FUD

2021
£m

41,093

7,695

(2,744)

4,951

6,297

(229)

2020
£m

37,799

5,750

(2,160)

3,590

(224)

(72)

52,112

41,093

1Other movements includes dividends, interest, fees and tax charges and rebates.

The year’s gross inflows were £7.70
billion (2020: £5.75 billion) and
outflows remained within tolerance
at £2.74 billion (2020: £2.16 billion),
resulting in increased net inflows of
£4.95 billion (2020 £3.59 billion), up
38% year-on-year. The increase in
net flows is one that we have focused
on, as it demonstrates the resilience
of the platform and our impressive
retention rates, as our people have
strived to maintain service levels
throughout a year of, for the most
part, working remotely.

This performance was achieved
through continuing focus on doing
what we do well, and continuing to
make it better and more efficient for
the future. We continued to develop
the delivery of our high quality service
by investing in our people and our
proprietary technology. These
developments allowed us to benefit
from ongoing process efficiencies,
which are reflected in our increased
operating margin.

The cash payments, plus £0.4 million
of the deferred and additional
consideration, were considered part
of the purchase cost, whilst the
remaining fair value of £12.5 million
deferred and additional consideration
is required, under IFRS 3 – Business
Combinations, to be treated as
post-combination remuneration over
the four years from January 2021 to
December 2024. The expense
recognised by IHP in respect of the
deferred and additional consideration
and included in staff costs, from
January to September 2021, was
£2.2 million, this will rise to £3
million in financial year 2022.

On acquisition, the Group recognised
intangible assets of £4.3m, relating to
T4A’s CURO software, the CURO brand
and T4A’s customer relationships.
These assets are being amortised
over their respective useful lives,
resulting in £0.3m amortisation
expenses in this financial year. Further
details can be found in note 13.

Strategic developments

On 11 January 2021, IntegraFin
Holdings plc (IHP) completed the
acquisition of T4A, a specialist
software provider for financial
planning and wealth management.
The acquisition supports IHP’s
strategy to provide platform and
associated services to clients and
their advisers.

The acquisition provides IHP with
ownership of T4A’s CURO software,
which supports advisers through their
advice process, plus access to T4A’s
existing base of adviser users, their
system development expertise and
service support. Ongoing support and
development of CURO will aid T4A in
achieving profitability. Over time,
IHP’s Transact platform will integrate
with CURO in selected areas, and this
will further enhance service to
advisers and clients.

The acquisition cost comprised
an up-front cash payment of
£8.6 million, plus £8.6 million of
deferred consideration, payable
in tranches over the next four years.
Additional consideration of up to
£8.6 million may also be payable
in January 2025, although this is
contingent on T4A meeting certain
performance targets over each of
the next four years.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 27

STRATEGIC REPORT continued

Financial performance

Financial year 2021 saw the Group
benefitting from the financial markets
recovering and the return of investor
confidence, with new highs generated
in revenue and operating profit.

Strong positive net inflows of £4.95
billion, achieved through our ability
to attract new inflows and also retain
business already on the platform,
coupled with market recovery adding
£6.30 billion to the platform, resulted
in a year-on-year increase in FUD of
£11.02 billion. This drove revenue
growth and, together with to a
measured approach to our expense
base, resulted in increased profits.

The fair value of identifiable assets
and liabilities acquired, including the
intangibles recognised on acquisition
and the deferred tax liability arising
upon recognition of the intangible
assets, was £3.6 million, leading
to the recognition of £5.3 million
goodwill. The main reason the
goodwill has arisen is due to the
further potential value of the T4A
software, CURO, after further
development, which is a
complementary offering to Transact
and is expected to enhance the
overall service that can be offered to
advisers and clients.

With effect from the date of
acquisition on 11 January, T4A’s
accounts have been consolidated into
IHP’s results, resulting in the
inclusion of £2.4m of revenue
achieved from 11 January to 30
September 2021, and losses after tax
of £1.0 million in the same period.

T4A will require enhanced investment
for the next two years, due to the
business investing in its software
development through recruitment of
developers, and also through growing
the sales and support teams to
ensure the growing customer base is
fully supported. T4A’s loss in financial
year 2021 was expected. T4A is also
expected to be loss-making
throughout financial year 2022, and
is expected to start making a
monthly profit towards the end of
financial year 2023.

28 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

For the financial year ended
30 September

Revenue

Cost of sales

Gross profit

Expenses

Non-underlying expenses

Total administrative expenses

Credit loss allowance on financial assets

Operating profit attributable to
shareholder returns

2021
£m

123.7

(1.5)

122.2

(55.5)

(3.3)

(58.8)

(0.2)

63.2

Change in investment contract liabilities

(2,736.1)

Fee and commission expenses

Investment returns

Interest expense

Interest income

Profit before tax attributable to
shareholder returns

Net policyholder income/(loss)
attributable to policyholder returns

Policyholder tax

Tax on ordinary activities

Profit after tax

(204.1)

2,940.2

(0.2)

0.1

63.1

31.5

(31.0)

(12.5)

51.1

2020
£m

107.3

(0.8)

106.5

(51.0)

(0.2)

55.3

82.9

(137.6)

54.7

(0.2)

0.2

55.3

(3.1)

3.1

(9.8)

45.5

Revenue increased by 15% to £123.7 million (2020: £107.3 million), this
includes £2.4 million of T4A revenue for the period January to September 2021.

Total gross profit in the financial year to 30 September 2021 increased by
£15.8 million, or 15%, to £122.2 million from £106.4 million. This increase
was achieved after a reduction in the annual commission income charge and a
reduction in the threshold at which we rebate buy commission, and reflects the
increases in the value of FUD, number of clients and number of tax wrappers
(on which we levy a quarterly charge) held on the platform.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 29

STRATEGIC REPORT continued

Components of revenue (revenue note 5)

For the financial year ended
30 September

Investment platform -
annual commission income

Investment platform - wrapper fee income

Investment platform - other income

Total investment platform revenue

T4A revenue

Total Group revenue

2021
£m

107.7

10.6

3.0

121.3

2.4

123.7

2020
£m

94.5

9.7

3.1

107.3

The revenue from operating our
award winning investment platform
comprises three elements. Two of
these elements, annual commission
income (an annual, tiered fee on
FUD) and wrapper fee income
(quarterly wrapper fees for each of
the tax wrapper types clients hold)
constitute our recurring revenue. The
third element is other income and
includes buy commission charged on
asset purchases.

Annual commission income increased
by £13.2 million, or 14%, to £107.7
million (2020: £94.5 million). This
growth was achieved through growth
in net inflows of 38% and growth in
average FUD of 27%, reflecting the
uplift in financial markets from the
start of calendar year 2021.

Wrapper administration fee income
increased by £0.9 million, or 9%, to
£10.6 million (2020: £9.7 million).
This reflects the steady net increase
in the number of open tax wrappers
on the platform.

Recurring revenue streams
constituted 98% (2020: 97%) of
total investment platform revenue.

Other income, mainly buy
commission and dealing charges,
reduced by 3%, £0.1 million, to £3.0
million (2020: £3.1 million). The
primary reason for the decrease was
a further annual reduction in the buy
commission rebate threshold. The
portfolio value required for clients to
receive the rebate was reduced from
£0.4 million to £0.3 million, with
effect from March 2021.

30 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

PLATFORM REVENUE

£3.0m

£10.6m

£3.1m

£9.7m

£3.5m

£9.0m

£86.7m

£94.5m

£107.7m

)
£
(

e
m
o
c
n
I

e
e
F

130m

125m

120m

115m

110m

105m

100m

95m

90m

85m

80m

75m

70m

65m

60m

FY19

FY20

FY21

Financial Year (end)

Annual Commission

Wrapper Fee

Buy & Dealing

The other component of Group revenue, and now included, is the licence fee
revenue that T4A earns from advisers using its CURO technology. This was
£2.4 million from January 2021 to September 2021. It is the first year that
this revenue has been recAognised in IHP Group’s accounts and around £1.9
million of it is expected to be recurring. The remaining £0.5 million in the
year is revenue from a client whose contract has expired and the client could
leave with no notice. We were aware that the client was in run off at the point
of acquisition.

Administrative expenses

Total administrative expenses increased by £7.7 million, or 15%, to £58.9
million (2020: £51.0 million). The increase was mainly due to an increase in
staff costs, as well as some non-underlying expenses.

Staff costs

Occupancy

Regulatory and professional fees

Other income – tax relief due to
shareholders

Non-underlying expenses

Other costs

Total expenses

Depreciation and amortisation

Total operating expenses

41.6

1.4

7.6

(2.2)

3.3

3.9

55.6

3.1

58.7

36.9

2.0

7.0

(1.1)

3.6

48.4

2.6

51.0

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 31

STRATEGIC REPORT continued

Staff costs
Staff costs increased by £4.7 million,
or 13%, to £41.6 million (2020:
£36.9 million).

The costs of T4A’s staff of £2.4
million are recognised for the first
time, and relate to the period from
acquisition on 11 January 2021 to
30 September 2021. If we exclude
the impact of T4A’s staff costs, in
order to generate a more meaningful
comparison with the prior year, staff
costs have risen by £2.3 million,
or 6%.

Average staff numbers increased
from 494 to 543, an increase of 10%.
However, this includes the average
number of staff employed by T4A in
the period from January to
September 2021, which was 42. If
we exclude the impact of T4A, the
average number of staff increased
from 492 to 501, an increase of 2%.
This relatively modest rise in staff
numbers, in light of such strong
inflows, was aided by efficiency
gains through software development.

The rise in staff costs in the period,
excluding T4A, was attributable to
the net effects of general inflationary
increases. We maintained our annual
staff payrise in June and our FY21
discretionary bonus has been accrued
for in the year.

Staff share scheme costs, both the
Share Incentive Plan (SIP) for all
staff and the Performance Share Plan
(PSP) for management, did not
increase materially.

We operate a defined contribution
pension scheme for our staff. The
Company-paid contribution has been
9% of annual salary since FY19.

Occupancy
Occupancy costs decreased by £0.6
million, due to the receipt of a
backdated rates rebate in FY21 for
the head office at Clement’s Lane.
The rebate will be ongoing to the
expiry of the lease in 2023.

Regulatory and professional fees
Regulatory and professional fees
increased by £0.6 million, or 9%, to
£7.6 million. The most significant
increase was in professional fees and
was mostly due to the inclusion of
T4A’s professional fees for the
relevant period of £0.4 million.

Other income - tax relief due
to shareholders
Following the review of the tax
provision methodology in FY20,
excess tax provisions that arise, due
to the deduction of corporate
expenses in the policyholder tax
calculation, are returned to
shareholders annually. This amounted
to £2.2 million in FY21 (2020: £1.1
million) of which £1.1 million is not
expected to be recurring.

Non-underlying expenses*
Non-underlying expenses are those
outside the normal course of
business, they therefore do not
reflect the underlying performance of
IHP or the Group. The following
non-underlying expenses were
incurred throughout the year:

▪ £1.1 million relating to the

acquisition of T4A and consideration
of the acquisition of Nucleus; and

▪ £2.2 million post-combination

remuneration paid 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 2021
to December 2024. This non-
underlying expense is expected to
be £3 million in financial years 2022
to 2024, before reducing to £0.8
million in financial year 2025.

32 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Depreciation and amortisation
Depreciation and amortisation
charges increased by £0.5 million
year-on-year and £0.3 million of this
is attributable to the amortisation of
the intangible assets that have arisen
due to the acquisition of T4A.

The other £0.2 million is due to
additional depreciation on property,
plant, and equipment acquired
throughout the year.

Total capitalised expenditure for the
financial year was £0.7 million
compared with £0.9 million in the
prior year. The main reason for the
fall in FY21 was the purchase of
equipment in FY20 to facilitate the
move to home working, as lockdowns
were introduced due to the
pandemic.

Net income attributable to
policyholder returns, and
policyholder tax

Net income attributable to
policyholder returns increased by
£34.6 million, from an expense of
£3.1 million in FY20 to income of
£31.5 million in FY21.
Correspondingly, policyholder tax
increased by £34.6 million, from a
tax credit of £3.1m in FY20 to a tax
charge of £31.5 million in FY21. Both
of these increases were due to large
gains on investments held for the
benefit of policyholders, as a result of
the recovery in financial markets
during FY21.

Profit before tax attributable to shareholder returns

IHP - PROFIT BEFORE TAX

65m

60m

55m

50m

45m

40m

35m

X
A
T

E
R
O
F
E
B

T
I
F
O
R
P

£49.9m

£55.3m

£63.1m

FY19

FY20

FY21

Financial Year (end)

In the financial year to 30 September
2021, our operating margin
decreased from 52% to 51%. The
reduction was due to the non-
underlying expenses incurred in
FY21. If these expenses are
excluded, the operating margin has
increased year-on-year to 54%.

After including interest income on
corporate cash, the interest expense
arising from the implementation of
IFRS 16, and returns on corporate
gilt holdings, profit before tax in the
financial year to 30 September 2021
was £63.1 million, an increase of
14% on the prior year.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 33

STRATEGIC REPORT continued

Tax

The Group has operations in three
tax jurisdictions, being UK, Australia
and Isle of Man, resulting in profits
being subject to tax at three different
rates. However, the vast majority of
the Group’s income, 96%, is earned
in the UK.

Tax on ordinary activities described
below solely comprises the Group’s
’shareholder corporation tax’, which is
distinguished from the ‘policyholder
tax’ that the Group collects and
remits to HMRC in respect of ILUK,
which is taxed under the ‘I minus E’
tax regime.

Earnings per share

Profit after tax for the period

Average number of shares - basic EPS

Average number of shares - diluted EPS

Earnings per share – basic and diluted

Tax on ordinary activities for the year
increased by £2.8 million, or 29%, to
£12.5 million (2020: £9.8 million)
due to increased profits. Our effective
rate of tax over the period increased
to 20% (2020: 18%). The increase in
effective rates compared to FY20 was
due to the non-underlying expenses
incurred in FY21, which were
disallowable for tax purposes.

Our tax strategy can be found at:
www.integrafin.co.uk/legal-and-
regulatory-information/

2021
£m

51.1

331.0m

331.3m

15.4p

2020
£m

45.5

331.2m

331.3m

13.7p

Earnings per share, both basic and diluted, increased by 12.4% on prior year.

IHP - EARNINGS PER SHARE

)
e
c
n
e
P
(

S
P
E

18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0

12.4

13.7

15.4

FY19

FY20

FY21

Financial Year (end)

34 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Consolidated statement of
financial position

In the consolidated statement of
financial position, the material items
that merit comment include the
following:

Intangible assets (note 13)
The Group’s intangible assets as at
30 September 2021 have increased
by £9.3 million, or 72%, to end the
financial year at £22.3 million (2020:
£13.0 million). The intangible assets
comprise goodwill of £13.0 million
arising from the purchase of
Integrated Application Development
Pty Ltd (IAD) in July 2016, plus
goodwill of £5.3 million and
intangible assets of £4.0 million, both
arising from the acquisition of T4A in
January 2021. Goodwill is tested for
impairment annually.

Right-of-use asset and corresponding
lease liability (notes 15 and 26)
The right-of-use assets have been
depreciated through the year and
end the year at £3.6 million (2020:
£4.0 million). The lease liabilities
have also reduced from the net effect
of rent payments under the terms of
the respective lease agreements and
interest charges, and end the year at
£5.0 million (2020: £6.1 million). An
additional right-of-use asset and
lease liability was recognised in FY21,
as the lease on the office building in
Australia was renewed.

Deferred acquisition costs and
deferred income liability (note 17)
Following a review of the terms of the
agreements relating to establishment
charges paid to ILUK and ILInt
policyholders’ financial advisers,
management has concluded that the
Group is acting in an agency capacity
between the policyholders and their

financial advisers, rather than as a
principal. It therefore should not
recognise the deferred acquisition
costs as contract costs, nor does it
have future service obligations in
respect of the deferred fees to justify
the recognition of the corresponding
deferred income liability. The
deferred acquisition costs and
deferred income liabilities have
therefore been derecognised in the
financial year ended 30 September
2021, to bring accounts in line with
the accounting standards.

The impact is a reduction in both assets
and liabilities of £53.5m. The treatment
has had no impact on the profit or loss
or net assets of the Group.

Investments and cash held for the
benefit of policyholders and liabilities
for linked investment contracts
(notes 19, 20 and 21)
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.

Investments held for the benefit of
ILUK policyholders have increased to
£19.68 billion (2020: £15.19 billion)
and to £2.10 billion (2020: £1.53
billion) for the benefit of ILInt
policyholders. Cash held for the
benefit of ILUK policyholders has
decreased to £1.17 billion (2020:
£1.28 billion) and cash held for the

benefit of ILInt policyholders has
decreased to £97.5 million (2020:
£102.7 million). Liabilities for linked
investment contracts increased to
£23.05 billion (2020: £18.11 billion).
This 27% year-on-year increase
reflects the growth in the value of
FUD held in life insurance wrappers,
which was attributable to the net
effect of growth in premiums, offset
by claims, and the market recovery
in 2021.

Deferred tax liabilities (note 27)
Deferred tax liabilities increased by
£20.5 million to £29.5 million (2020:
£9.0 million). This increase was
primarily due to market gains on the
assets held in ILUK’s life tax
wrappers during the year. The
unrealised gains are spread over the
next seven years, leading to a
deferred tax liability. Sufficient cash
is held by ILUK to meet this liability.
A deferred tax liability of £0.8m has
also been recognised in relation to
the fair value adjustments upon the
acquisition of T4A. See note 13 for
further details.

Provisions (note 29)
Provisions have decreased in FY21 by
£7.4 million. This is largely due to tax
charges deducted from ILUK
policyholders being paid to HMRC in
the period, due to the recovery in the
financial markets through the year.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 35

STRATEGIC REPORT continued

Cash flows

Liquidity and capital management

Shareholder cash and cash
equivalents (note 21)
Shareholder cash increased from
£154.1 million at 30 September 2020
to £176.1 million at 30 September
2021. The increase of 14% reflects
the cash-generative nature of the
business and the continuing strength
of liquidity within the Group. The
main driver of the increase was
operating profit, and the most
significant cash outflows came in the
form of our equity dividends paid in
the year of £27.7m (2020: £26.2m)
and our acquisition of T4A, which
required a cash outflow of £7.9m
(2020: £nil).

Policyholder cash and cash
equivalents (note 21)
Cash held for the benefit of
policyholders has decreased from
£1.39 billion to £1.27 billion. This is a
result of the improved market
outlook in FY21, which has
encouraged policyholders to move
their cash holdings into other
investments.

At 30 September 2021 the Group
held shareholder cash and cash
equivalents of £176.1 million (2020:
£154.1 million). Cash generated
through trading also covered dividend
payments totaling £28.5 million. This
comprised £18.6 million second
interim dividend in respect of the
financial year 2020 (2019: £17.2
million), paid in January 2021 and
£9.9 million first interim dividend in
respect of the first half of financial
year 2021 (2020: £8.9 million), paid
in June 2021.

To enable 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, and therefore
do not directly equate to IFAL’s
expense-based regulatory capital
requirements. These bases are
determined by the appropriate
regulations that apply for each of the
companies.

36 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Regulatory Capital

For the financial
year ended
30 September 2021

Regulatory
Capital
requirements

Regulatory
Capital
resources

Regulatory
Cover

IFAL

ILUK

ILInt

£m

25.4

214.1

23.9

£m

37.2

268.7

43.4

146.7

125.5

181.1

For the financial
year ended
30 September 2020

Regulatory
Capital
requirements

Regulatory
Capital
resources

Regulatory
Cover

IFAL

ILUK

ILInt

£m

24.0

170.4

18.5

£m

34.1

239.3

33.4

141.8

140.4

180.7

The new investment firm capital
regime will apply to IFAL from 1
January 2022. We have performed
projections which indicate that from
this point we will continue to
maintain capital in excess of the new
regulatory requirements.

All of 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 staff.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 37

STRATEGIC REPORT continued

£m

163.3

(31.2)

132.1

(23.19)

108.91

(58.4)

50.51

Capital

For the financial year ended
30 September 2021

Total equity

Loans and receivables, intangible assets and property,
plant and equipment

Available capital pre dividend

Interim dividend declared

Available capital post dividend

Additional risk appetite capital

Surplus

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 is able to meet future
risks to the business plan and future
changes to regulatory capital
requirements without recourse to
additional capital – see the Going
Concern and Viability Statement on
page 52.

The board considers the impact of
regulatory capital requirements and
risk appetite levels on prospective
dividends from all of its regulated
subsidiaries.

38 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Our Group’s Pillar 3 document
contains further details and can be
found on our website at:
www.integrafin.co.uk/legal-and-
regulatory-information/

As stated in the Chair’s report, the
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 10.0 pence
per ordinary share (2020: 8.3 pence
per ordinary share).

Given the net cash, liquidity and
capital coverage positions as set out
above, the Group is well-positioned
to fund the £23.193 million dividend.

Dividend Type

Share Class

Ordinary

Per share

Ordinary – first interim

Ordinary – second interim

15 December 2021

All

2021
£m

33.1

2020
£m

27.5

3.0 pence

2.7 pence

7.0 pence

5.6 pence

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 39

STRATEGIC REPORT continued

Governance

The board has established a non-
executive committee, the Audit and
Risk Committee, to provide guidance
and oversight on risk matters. This
committee of the Company is
responsible for reviewing the manner
in which the Group implements and
monitors the adequacy of the Risk
Management Framework. For risk
oversight of the regulated
subsidiaries it is supported by the
IFAL Group Risk Committee, itself
made up of independent non-
executive directors of IFAL. Together
they assist the board and senior
management in fostering a culture
that encourages good stewardship of
risk and emphasizes and
demonstrates the benefits of a
risk-based approach to management
of the Group.

The framework is supported by the
Risk Management Policy which
provides general guidelines for the
design and implementation of risk
management, with the senior
management responsible for its
implementation. The Risk
Management Policy is overseen by
the IHP Chief Executive Officer (CEO)
and is reviewed at least on an annual
basis. Any material changes are
approved by the board following
guidance from the Audit and Risk
Committee and approval by the
boards of the regulated subsidiaries,
which receive guidance from the IFAL
Group Risk Committee.

RISK AND RISK
MANAGEMENT

“The process which aims to
help us understand, assess,
assign ownership, manage
and take action on all our
risks. This allows us to
perform risk monitoring and
reporting, with a view to
increasing the probability of
success and reducing the
likelihood of failure of the
Group or its regulated
subsidiaries.”

Overview

The risk management framework
defines the risk principles of the
Group and is designed to support the
delivery of the Group’s strategic
objectives. It assists the board in
understanding its current and future
risks and provides appropriate
information that is incorporated into
our strategic decision making and
business planning processes. It
encompasses all strategic, financial
and operational risks that may
prevent us from fulfilling our business
objectives. These are set out in the
Principal Risks and Uncertainties
section below.

How risks are managed

Promoting a culture of risk awareness
and risk ownership is essential for
ensuring that risk implications are
considered and managed. The risk
management framework comprises
our systems of governance, risk
appetite and risk management
processes which are developed,
managed and embedded throughout
the Group. The risk management
framework drives a consistent
approach for the identification and
assessment of risks as part of the
evaluation of business opportunities,
uncertainties and threats in managing
the business on a continuous basis
within approved risk appetites.

40 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Risk appetite

Our risk appetite is the
degree of risk that we are
prepared to accept in pursuit
of our strategic and
operational objectives.

The board is responsible for
establishing the risk strategy and
approving the risk appetite
statements. We define our risk
appetite statements on a quantitative
and qualitative basis using the
principle risk taxonomy set out in our
Risk Management Framework.

This provides a consistent approach
from which each of our operating
companies set their own risk appetite
statements to meet the common
aims of the Group. We have generally
adopted an overall conservative
approach which is reflected in our
risk appetite preferences and in the
overall approach to risk
management. Our risk appetite
preferences, aligned to our risk
exposures and business strategy,
can be articulated as follows:

Risk category

Coverage

Risk appetite preferences

Strategic and
Business risk

Risks associated with the
implementation of the
business plan, brand and
reputation. The need for
the business to respond to
the Environment, Social
and Governance (ESG)
agenda.

We ensure risks that are
taken are aligned with our
strategic aims and provide
an acceptable level of
return. Our business model
and investment supports
our ambitions for delivering
against the Climate and ESG
obligations.

Operational
risk

Operational risk is the risk
of loss resulting from
inadequate or failed
internal processes, people
and systems, or from
external events.

▪ Financial reporting
▪ Legal and regulatory
▪ Client money
▪ Financial crime and fraud
▪ HR failure
▪ Information security
and infrastructure

▪ Other operational risks
▪ Outsourced service

provider failure

▪ Product
▪ Project
▪ TPA failure
▪ Model risk
▪ Conduct

We do not actively seek to
take operational risk to
generate returns. We accept
a level of operational risk
that means the controls in
place should prevent
material losses, but should
not excessively restrict
business activities.

We aim to have a zero risk
appetite for unfair client
outcomes arising from
systematic failures in our
cultural outlook or in any
element of the client life
cycle; and we have a zero
risk appetite for material
regulatory breaches.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 41

STRATEGIC REPORT continued

Market risk

The risk of loss arising from
fluctuations in the level
and/or volatility of market
prices of assets, liabilities
and financial instruments.

Capital and
Liquidity risk

The lack of capital to meet
operational and regulatory
requirements or the risk
that cash is not accessible
due to insufficient
resources or at excessive
cost.

Insurance
risk

The risks of writing and
administering insurance
business within the Group.

We have a preference for
secondary market risk
through charges determined
based on clients’ portfolio
values. This is central to our
proposition and we accept
the potential impact on
financial performance.

We have a prudent capital
management approach and
we currently invest
shareholder assets in high
quality, highly liquid,
short-dated investments.

We have a preference for
savings and pension
products with low capital
requirements and without
financial guarantees.

We have a preference for
savings and pensions
products with low levels of
sums assured.

Group risk

The risk that one entity in
the Group is negatively
affected by the actions of
another entity in the
IntegraFin Group.

We accept certain risks and
ensure that these are
appropriately identified,
managed, mitigated and
monitored through the
Group risk register.

Concentration
risk

The risk can arise from the
uneven distribution of
exposures from other risks
typically operational risks
or liquidity risks.

We accept certain risks and
ensure that these are
appropriately identified,
managed, mitigated and
monitored through the
Group risk register.

Actual risk exposures are regularly assessed by the Group’s risk management
function against risk appetite using a comprehensive set of key risk indicators
which are reported to the Audit and Risk Committee, the IFAL Group Risk
Committee and senior management.

42 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

The risk management process

The CEO, with support from the senior management
team, is accountable to the board and the Group’s
regulators for the effective management of risk across
the business. We have established our Risk Management
Framework with consideration of the Committee of
Sponsoring Organisation of the Treadway Commission
(COSO) Integrated Framework Principles, providing a
consistent, proactive approach to identification,
assessment, mitigation and reporting of risks throughout
the Group.

The CEO is responsible for ensuring an embedded and
consistent approach is adopted for the overall
management of risk controls, including the monitoring of
risk exposures, reporting in relation to risk management
arrangements and for assessing the adequacy and

effectiveness of policies and procedures designed to
detect any risk of failure to comply with regulatory
obligations. In this regard, we have implemented a
comprehensive “top down” and “bottom up” approach to
managing risks through regular assessments, monitoring
(including horizon scanning) and reporting in conjunction
with senior management and risk owners.

For risk management to be effective, it is important that
the roles and responsibilities of all those involved are
clearly defined. Accordingly, the Group’s Risk
Management Framework is designed along the “three
lines of defence” model which provides at least three
stages of oversight to ensure that all companies operate
within their risk appetites.

Our Risk Management Framework is shown below:

OVERSIGHT

ENTERPRISE RISK MANAGEMENT

OWNERSHIP

RISKS

Risk and governance framework

Board

Strategy/Business

e
c
n
e
f
e
D

f
o

e
n
L

d
r
3

–

t
i
d
u
a

a
n
r
e
t
n
I

e
c
n
e
f
e
D

f
o

e
n
L

d
n
2

–

e
c
n
a

i
l

p
m
o
C

d
n
a

t
n
e
m
e
g
a
n
a
m
k
s
i
R

Operational

Market

Model
governance and
data quality

Risk
management
policies

Board with
Risk Committee
guidance

Capital/Liquidity

Credit/Counterparty

Systems and controls policies
(Group policy, processes and procedures
principles and guidance documents)

e
c
n
e
f
e
D

f
o

e
n
L

t
s
1

Procedures, manuals,
operational limits, methodology,
specifications, control activities,
training, reporting

Actuarial, Business
Intelligence, Client Operations,
Corporate and Client
Accounting, Facilities,
Human Resources,
Information Technology, IAD,
Legal, Management, Marketing,
Operational Resilence, Sales,
System and Service
Development, T4A, Technical,
Trading Operations, Training,
Transact Support

Insurance

Group

Concentration

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 43

STRATEGIC REPORT continued

The “three lines of defence”
risk governance model

First line of defence

Our first line of defence is the
business departments which have
responsibility for managing and
controlling their risks, in accordance
with agreed risk appetites through
the implementation of a sound set of
processes and controls.

Responsibility for risk management
resides at all levels within our
business, from the senior
management team to departmental
and team managers. All staff
members are accountable for
managing risks within the business
areas for which they are responsible,
ensuring compliance with prescribed
Company plans, policies and
prevailing regulatory and legislative
requirements.

The business lines are also
responsible for complying with the
policies and standards which
comprise the Group’s Risk
Management Framework. Current key
risks and issues facing us are
considered by the business, recorded
into the Group risk register with each
key risk owned by the member of the
management team responsible for
the strategic management of that
risk across the Group.

The directors consider the totality of
the risk register and carry out a
robust assessment of the emerging
and principal risks facing the Group,
including those that would threaten
its business model, future
performance, solvency and liquidity.

Second line of defence

Our second line of defence comprises
two functions: the risk management
function and the compliance function.

The risk management function is
responsible for coordinating all the
risk management activities within the
business. This includes the
development, maintenance and
enhancement of the Risk
Management Policy and Framework.
Additional risk responsibilities include
ensuring that the business risk
owners maintain up to date and
accurate risk and control data within
the Group risk register. The output
from the risk register forms part of
the risk management reporting
process to the Audit and Risk
Committee and IFAL Group Risk
Committee.

The compliance function is primarily
responsible for supporting the Group
to ensure that its activities are
conducted in accordance with all
applicable regulatory requirements.

The Risk Management and
Compliance functions provide reports
to the Audit and Risk Committee and
the IFAL Group Risk Committee, on
at least a quarterly basis, with
information and analysis on the key
risks the Group faces (including
forward-looking risks), capital
requirements and comparison against
risk appetite. The chairs of the
Committees then provide a summary
to the members of the boards.

44 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Third line of defence

Risk capital frameworks

Our third line of defence is internal
audit, which provides independent
assurance on the adequacy and
effectiveness of the Group’s risk
management and major business
process control arrangements. It
performs regular audits across the
business, reporting to the Audit
Committees on the implementation
and effectiveness of the Risk
Management Policy, framework and
internal controls. The Head of
Internal Audit reports directly to the
Audit Committee chairs.

The board is satisfied that internal
audit provides sufficient assurance on
the Risk Management Policy and
Framework and internal controls.

The Company’s regulated subsidiaries
fall under various risk capital regimes.
All of the regimes are guided by
similar underlying risk principles,
albeit the results and reporting
requirements are regime specific.

The Company’s regulated subsidiaries
maintain a sound and appropriate
system of capital management in
order to meet their strategic capital
objectives. They have a preference
for a simple system of capital
management which reflects the
nature of their businesses. At a legal
entity level, the regulated
subsidiaries are capitalised at the
required regulatory minimum plus an
adequate buffer defined as part of
their capital management, risk
appetite and dividend policies.

Our stakeholders expect us to be
resilient in our operations. We
actively manage both our risk
exposure against appetite across our
defined principle risk categories as
well as the emerging risks derived
from insight via management and
other reliable external sources, to
undertake stress and scenario
testing. These are used to identify
additional impacts on the ability of
the Group and its regulated
subsidiaries to meet capital and
liquidity needs as a result of changes
in the external environment that are
over and above the amount of capital
held. More details of these are set
out in the Principal Risks and
Uncertainties statement.

These are overseen by management
and governance committees to
ensure exposures are adequately
identified and acted upon in a timely
manner. In this regard we ensure
through our Risk Capital frameworks
that our regulated entities hold
adequate capital to meet obligations.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 45

STRATEGIC REPORT continued

Common Reporting Framework

Solvency II

ILUK, a UK-based life company in the
Group, has adopted the standard
formula approach in calculating the
Solvency Capital Requirement (SCR),
and has not adopted any of the
transitional measures in the UK and
EU Solvency II balance sheet (as
applicable during the financial year).
As at 30 September 2021, ILUK has
own funds of £269 million (2020:
£239 million) and an SCR of £214
million (2020: £170 million) which
gives a solvency coverage ratio of
126% (2020: 141%).

During the reporting period, ILUK
was fully compliant with the SCR.
Additionally, the UK and EU Solvency
II balance sheet and SCR were
regularly monitored and in line with
standard regulatory requirements
reported to the Prudential Regulation
Authority (PRA) as required.

Isle of Man Risk Based Capital
regime

As at 30 September 2021, ILInt, an
Isle of Man-based life company in the
Group, has Own Funds of £43.4
million (2020: £33.4 million) and
SCR of £23.9 million (2020: £18.5
million) which gives a SCR coverage
ratio of 182% (2020: 180%).

During the reporting period, ILInt
was fully compliant with the SCR.
Additionally, the Risk Based Capital
balance sheet and SCR are regularly
monitored and in line with standard
regulatory requirements reported to
the Isle of Man Financial Services
Authority (IoM FSA) as required.

Since 11pm on 31 December 2020,
IFAL has been subject to the UK
Capital Requirements Regulations and
FCA prudential rules, including IFPRU
– Prudential sourcebook for
investment firms (prior to this date
IFAL was subject to the EU Capital
Requirements Directive and
Regulations). Throughout the financial
year, IFAL has been classified as an
IFPRU limited licence 125K firm and
treated as a significant IFPRU firm,
and has managed its capital, risk and
reporting obligations in line with the
prudential regulations relevant to such
class and type of firm.

As at 30 September 2021, IFAL has
regulatory capital resources of £37.2
million (2020: £34.1 million) and a
regulatory capital requirement of
£25.4 million (2020: £24.0 million)
which gives a capital requirement
coverage ratio of 146% (2020:
142%).

During the reporting period, IFAL was
fully compliant with its regulatory
capital requirement. Additionally,
regulatory capital resources and
capital requirements were regularly
monitored and in line with standard
regulatory requirements reported to
the FCA on an annual basis.

The FCA’s Investment Firm Prudential
Regime (IFPR) comes into force on 1
January 2022 and IFAL will manage
its capital and risk requirements
under these rules for reporting
requirements after the 1 January
2022. IFAL will be subject to new
requirements regarding its regulatory
capital and liquidity requirements,
from a quantitative and a qualitative
perspective under the new regime,
however expects that it will remain
adequately capitalised under the new
IFPR requirements.

46 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

PRINCIPAL RISKS
AND UNCERTAINTIES

The directors, in conjunction with
the board, 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 following tables, which have
been expanded this year to include a
linkage to the strategic objectives,
describe the principal risks and
uncertainties with a summary of how
we manage and mitigate the risks
along with an assessment of the
change over the year:

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 47

STRATEGIC REPORT continued

BUSINESS and STRATEGIC RISKS

ALIGNED TO
STRATEGIC
OBJECTIVE

1. Drive growth

3. Grow earnings

1. Drive growth

2. Invest in the
business

3. Grow

earnings

PRINCIPAL RISK AND
UNCERTAINTY

Service standard failure -
(including unexpected outflow
risk) – Our high levels of
client and adviser retention
are dependent upon our
consistent and reliable levels
of service. Failure to maintain
these service levels would
affect our ability to attract
and retain business. There is
a potential risk for a net
outflow (i.e. greater level of
withdrawals or transfers) than
expected impacting
profitability.

Diversion of platform
development resources -
Maintaining our quality and
relevance requires ongoing
investment. Any reduction in
investment due to diversion of
resources to other non-
discretionary expenditure (for
example, a change in the
taxation regime or other
regulatory developments) may
affect our competitive
position.

MANAGEMENT AND CONTROLS

CHANGE OVER
THE YEAR

We manage the risk of service
standards failure by ensuring our
service standards do not deteriorate.
This is achieved by providing our
client service teams with extensive
initial and ongoing training, supported
by experienced subject matter
experts and managers. Service levels
are monitored and quality checked
and any deviation from expected
service levels is addressed. We also
conduct satisfaction surveys to
ensure our service levels are still
perceived as excellent by our clients
and their advisers. Service standards
are also dependent on resilient
operations, both current and
forward-looking, ensuring that risk
management is in place.

The risk of reduced investment in the
platform is managed through a
disciplined approach to expense
management and forecasting. We
horizon scan for upcoming regulatory
and taxation regime changes and
maintain contingency to allow for
unexpected expenses e.g. UK
Financial Services Compensation
Scheme (FSCS) levies, which
ensures we do not need to
compromise on investment in our
platform to a degree that affects our
offering.

The steady increase in-inflow
volumes from advisers onto
our core systems coupled
with the remote working
model has resulted in an
increase in the risk. We
however remain a recognised
top platform service provider
by the industry.

The risk has remained
broadly unchanged over the
year. We have been proactive
throughout the year. There
has been an ongoing focus
on ensuring that we have
assessed and incorporated
regulatory changes (e.g.
IFPR, Operational Resilience)
which have been managed
through our business as
usual model without undue
diversion of resources.

We completed the acquisition
of Time4Advice (T4A) in
January 2021 and our
management teams have
been engaging actively to
identify and deliver operating
efficiencies and best practices
where appropriate.

Increased Competition –
We operate in a competitive
market. Increased levels of
competition for clients and
advisers; improvements in
offerings from other
investment platforms; and
consolidation in the adviser
market may all make it more
challenging to attract and
retain business.

1. Drive growth

3. Grow

earnings

Competitor risk is mitigated by focusing
on providing exceptionally high levels
of service and being responsive to
client and financial adviser demands
through an efficient expense base. This
allows us to continue to increase the
value for money of our service by
reducing client charges, subject to
profit and capital parameters when
deemed appropriate.

The risk has remained
broadly unchanged over the
year. The acquisition of T4A
has broadened 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.

The Group continues to review its
business strategy and growth potential.
In this regard, it considers both organic
and acquisitive opportunities that will
enhance or complement its current
service offerings to the adviser market.

48 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

ALIGNED TO
STRATEGIC
OBJECTIVE

1. Drive growth

3. Grow

earnings

4. Maintain cash
generation

5. Maintain
strong
balance
sheet

6. Deliver on
dividend
policy

4. Maintain cash
generation

6. Deliver on
dividend
policy

FINANCIAL RISKS

PRINCIPAL RISK AND
UNCERTAINTY

Stock market volatility
(market risk) – External
factors continue to influence
equity markets which have
recovered strongly throughout
2021 following the COVID-19
shock. The measures taken by
the UK government to support
the economy and business
along with the Bank of
England implementing and
sustaining record low levels of
base rate interest have
contributed to this position.
Stock market volatility
impacts the value of our FUD.

Uncontrolled expense risk –
Higher expenses than
expected and budgeted for
would adversely impact cash
profits. Sustained increases in
business volumes would
require extended operational
working hours or additional
administrative resources
resulting in an increase in the
staff cost base. In addition
other costs such as levies and
legal fees can also
unexpectedly impact the base
case budget.

Capital strain (including
Liquidity) -
Unexpected, additional capital
or liquidity requirements
imposed by regulators may
negatively impact our
solvency coverage ratio.

5. Maintain
strong
balance
sheet

6. Deliver on
dividend
policy

Credit risk –
loss due to defaults from
holdings of cash and cash
equivalents, deposits, formal
loans and reinsurance treaties
with banks and financial
institutions.

5. Maintain
strong
balance
sheet

MANAGEMENT AND CONTROLS

CHANGE OVER
THE YEAR

No change; the risk to FUD
from stock market volatility
remains.

The risk has increased over
the year. The platform
business has experienced a
38% increase year-on-year
in net inflows to FUD. As a
consequence, staff costs and
system development costs
have also increased during
the year. In addition, the
Group has incurred one- off
costs associated with
exploring and delivering on
acquisition opportunities,
which includes the
administrative costs of
acquiring T4A.

Increasing risk associated
with higher level of
regulatory expectation.

No change.

The risk of stock market volatility,
and the impact on revenue, is
mitigated through a wide asset
offering which ensures we are not
wholly correlated with one market,
and which enables clients to switch
assets in times of uncertainty. In
particular, clients are able to switch
into cash assets, which remain on
our platform. Our wrapper fees are
not impacted by stock market
volatility as they are a fixed quarterly
charge. We also closely monitor and
control expenses, which assists in
maintaining profit in turbulent times.

The most significant element of our
expense base is staff costs. These
are controlled through modelling
staff requirements against forecast
business volumes, factoring in
efficiencies that are expected to
emerge through platform
development. Any expenditure
request that deviates from plan is
rigorously challenged and must be
approved before it is incurred.

We continuously monitor the current
and expected future regulatory
environment and ensure that all
regulatory obligations are or will be
met. This provides a proactive control
to mitigate this risk. Additionally, we
carry out an assessment of our capital
requirements, which includes assessing
the regulatory capital required. We
retain a capital buffer over and above
the regulatory minimum solvency
capital requirements.

The Group seeks to invest its
shareholder assets in high quality,
highly liquid, short-dated
investments. Maximum counterparty
limits are set for banks and minimum
credit quality steps are also set. The
Vertus loan scheme has an agreed
commitment level and the value of
the drawn and undrawn balances are
monitored regularly. Loans are made
on approved business cases.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 49

STRATEGIC REPORT continued

NON - FINANCIAL RISKS

PRINCIPAL RISK AND
UNCERTAINTY

Reputational risk –
the risk that current and
potential clients’ desire to do
business with the Group
reduces due to a lower
perception in the market
place of the Group’s offered
services covering the Transact
platform and T4A adviser
support software.

Operational risk (including
operational resilience and
the environment, social
and governance (ESG)
agenda) – the risk of loss
arising from inadequate or
failed internal processes,
people and systems, or from
external events.

ALIGNED TO
STRATEGIC
OBJECTIVE

1. Drive growth

2. Invest in the
business

3. Grow

earnings

4. Maintain cash
generation

MANAGEMENT AND CONTROLS

CHANGE OVER THE
YEAR

Unchanged for the year,
although the Group
recognises the wider
potential for reputational risk
issues following the
acquisition of T4A.

Increase during the year.
The extended remote
working has influenced the
current and expected
office-based model. A
greater level of flexibility is
expected by our staff, over
working locations, accessing
our IT systems and
maintaining well controlled
agile business processes.

The Risk Management Framework
provides the monitoring mechanisms
to ensure that reputational damage
controls operate effectively and
reputational risk is mitigated, to
some extent, by internal operational
risk controls, error management and
complaints handling processes as
well as root cause analysis
investigations.

The continuous and evolving
sophistication of the cyber threat
means information security, IT
infrastructure and maintaining
business resilience remain high on
the operational risk agenda. In
addition, we are very aware of our
need to retain and attract
experienced and competent people
within the business. In this regard we
perform salary benchmark reviews,
maintain a comprehensive career and
training development programme and
provide a flexible working
environment that meets our staff and
business needs. These aspects form
an integral part of the ESG agenda
and we are embracing the
developments by continuing to work
towards understanding the impact of
climate change on the business
operations and ensuring diversity and
inclusion is actively embedded across
all areas of the business.

The Group aims to minimise its
operational risks at all times through
a strong and well-resourced control
and operational structure. In
particular, the Group has in place a
dedicated financial crime team and
an on-going fraud and cyber risk
awareness programme. Additionally,
the Group carries out regular IT
system maintenance, and system
vulnerability testing. The Crisis
Management Team (CMT) reviews
the Group’s business continuity plans
during the course of the year.

Robust process documentation and
assurance reviews capture
improvement opportunities in a
timely manner.

A consistent application of the risk
management framework, has supported
the Group allowing management to
make effective and informed risk-based
operational decisions.

50 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

MANAGEMENT AND CONTROLS

CHANGE OVER THE
YEAR

No change.

Geopolitical risk cannot be directly
mitigated by the Group. However,
through close monitoring of
developments through its risk
horizon scanning process, potential
impacts are taken into consideration
as part of the business planning
process.

PRINCIPAL RISK AND
UNCERTAINTY

Geopolitical risk –
the risk of changes in
the political landscape
disrupting the operations of
the business or resulting in
significant development
costs..

ALIGNED TO
STRATEGIC
OBJECTIVE

1. Drive growth

2. Invest in the
business

3. Grow

earnings

4. Maintain cash
generation

5. Maintain
strong
balance
sheet

6. Deliver on

dividend policy

Emerging risk focus

The management approach to risk ensures that we identify and monitor a series of emerging risks. These have a degree
of uncertainty around the likelihood and impact on the business. The more significant emerging risks in the near, medium
and longer term are set out below and are regularly reported and assessed through the governance committees.

Near-term
risks

Ability to attract
and retain
experienced
people

Shift in staff expectations of flexible working arrangements, resulting in a
sustained loss of experienced staff coupled with a difficulty in attracting
new joiners. This might impact our ability to maintain and develop the high
level of operational service standards.

Financial Crime
Fraud

The emergence of more sophisticated instances of financial crime impacting
our security and reputation across the client base.

Medium-term
risks

Prolonged
economic
downturn

Severe and prolonged worldwide economic downturn resulting in volatile
equity markets. Investors losing confidence in equity markets and seeking
alternative investment assets impacting our FUD.

Political and
Regulatory
changes and a
shifting focus

Changing expectations of the UK and Isle of Man regulators. Increasing
regulatory scrutiny or focus impacting our platform business model.

Shift in tax regime reducing tax benefits of pensions and increasing the tax
benefits of ISAs. The EET to TEE shift.

Longer-term
risks

Disruptive
market
influences

The independent adviser model is dramatically impacted as a result of
prolonged economic factors, new technological entrants and a more
aggressive acquisition by vertically integrated firms reducing our adviser/
client base.

Generational shift
in customers and
expectations

The ageing population is shifting the longer term savings habits and
expectations. Surveys suggest that Gen-X and millennials are more
conservative investors with many indicating a preference to hold cash. The
further advancement of technology may well impact the employment
markets and our target markets in the longer term.

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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 51

STRATEGIC REPORT continued

GOING CONCERN AND
VIABILITY STATEMENT

In accordance with the Code, the
directors have assessed whether the
Group is considered a going concern
over the following twelve month
period, as well as the prospects and
viability of the Group over a period of
three years.

Going concern

The Strategic Report sets out the
Group’s business model, its strategic
objectives and the associated risks,
and the annual financial review on
pages 7 to 39.

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 to continue
in operational existence for the next
12 months. As detailed in the going
concern disclosure in the financial
statements, on page 148, this is
supported by:

▪ the current financial position of the

Group;

▪ 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,
including the impact of COVID-19.

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 COVID-19 pandemic.
Market volatility and uncertainty is
expected to continue for some time,
due to the pandemic and the effect of
measures taken to combat it, but the
Group’s fundamentals remain strong.

Having conducted detailed cash flow
and working capital projections, and
appropriate stress-testing on
liquidity, profitability and regulatory
capital, taking account of the

COVID-19 pandemic and further
possible adverse changes in trading
performance, 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 regulators, being
the FCA, PRA, and IoM FSA.

The board has concluded that the
Group has adequate resources and
there are no material uncertainties to
the Group’s ability to continue to
operate for the foreseeable future,
being a period of at least twelve
months from the date this Annual
Report is approved. For this reason,
they have adopted the going concern
basis for the preparation of the
financial statements.

Viability

The key factors affecting the Group’s
viability and prospects are its market
position and recurring revenue.

Market position
Market position can be assessed as
follows: independent research
consistently rates Transact as the top
platform in the market (page 24);
the number of advisers using the
platform increased by 5% during the
year; the number of clients on the
platform increased by 9%; and, our
Net Promoter Score remained the
highest score for an advised
platform.

The above measures all demonstrate
adviser and client satisfaction with
the service provided.

Recurring revenue
The absolute level of revenue is
dependent on market values, but key
to the recurrence is the retention of
FUD. The T4A business also has a
level of recurring business through
repeat and long-term contracts to
provide the CURO service.
Maintaining the recurring revenue
base across these activities is
achieved through retaining client and

52 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Cyber-attack – considers the impact
of a hacker gaining network access
and extracting data and information
which is used for fraudulent purposes
attracting significant media attention.

Combined scenario – considers
the impact of the combination of
cyber-attack and extended COVID-19
pandemic resulting in continued
market uncertainty.

To illustrate the severity of the
scenarios modelled, the following
table sets out some of the key
changes in parameters made in
the scenarios. The most severe
scenarios modelled assumed a
number of these changes occurred
within the same scenario during the
business planning period.

Long-term fee anomaly – a
deep-rooted systemic issue is
identified in relation to the
overcharging of fees to clients
requiring system development, client
remediation and significant
compensation.

Significant disruption of
electronic messaging system
(supplier failure) – the release of
an internal change programme
disrupts our messaging system to
key market suppliers resulting in
down time and leading to manual
work arounds causing significant
backlog in business processes.

Extended COVID-19 pandemic
resulting in further market
disruption – considers: prolonged
economic downturn, with reduced
investor confidence coupled with an
HMRC erosion of CGT and inheritance
tax thresholds along with the Bank of
England raising interest rates. These
factors significantly impact the value
and inflows to FUD and our revenues.

advisers through our service delivery.
98% of revenue is of recurring nature
(page 30).

We are targeting organic revenue
growth across our existing and newly
acquired T4A business, with
moderate margin improvements that
are driven by efficiency delivered
from process and systems
enhancement.

Assessment period and measures

It is the board’s view that a three
year time horizon is an appropriate
period over which to assess its
viability and prospects, and to
execute its business plan. This
assessment period is consistent with
the Group’s current business plan
projections and the Internal Capital
Adequacy Assessment Process
(ICAAP) and Own Risk and Solvency
Assessments (ORSA) of the Group’s
regulated entities. Consideration is
also given to projections beyond this
period, though this does not form
part of the formal assessment.

The strategy and business plan is
approved annually by the board and
updated as appropriate. It considers
the Group’s profitability, cash flows,
capital requirements, dividend
payments, and other key variables
such as liquidity and the solvency
requirements of the regulated
entities. These are considered under
stress and scenario tests, to ensure
the business has sufficient flexibility
to withstand such impacts by
adjusting its plans within the normal
course of business.

The stress and scenario tests applied
are severe, yet plausible, at both an
individual and combined level. The
key scenarios are as follows:

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 53

STRATEGIC REPORT continued

TABLE: ASSUMPTIONS UNDERLYING THE STRESS SCENARIOS

RISK FACTOR

STRESS APPLIED TO
BASE CASE ASSUMPTION

Market downturn

Mass lapse

A market fall of 20% over a one month
period followed by a flat market for 12
months.

30% drop in the number of clients over
three months, with a further 5% drop the
following year.

Increase in outflows

65% increase in outflow rates for up to
twelve months.

Decrease in inflows

25% decrease in inflow rates for twelve
months.

One-off spikes in
operating costs

Up to £20.0m one-off spike in operating
costs depending on the underlying stress
scenario.

Reduction in fee income

Reduction in fee income by up to 40%.

the regulators over the period of this
assessment and beyond.

By order of the board,

Helen Wakeford
Company Secretary

15 December 2021

The results of the above stress and
scenario tests led to the following
conclusions:

▪ under a range of stressed scenarios
no expected profit or liquidity issues
are expected to arise in the Group
over the three year business
planning period and beyond;

▪ each of the regulated entities has
sufficient available capital to cover
its regulatory solvency
requirements, and this is expected
to continue over the three year
business planning period and
beyond; and

▪ under a range of stressed scenarios

the entities are still able to meet their
capital and liquidity requirements
over the three year business planning
period and beyond.

The directors’ assessment has been
made with consideration and
reference to: the Group’s current
position and three year business
plan; the Group’s risk appetite; the
Group’s financial projections; and,
the Group’s principal risks and
uncertainties, including uncertainty
caused by the COVID-19 pandemic
and geopolitical uncertainty, as
detailed in the strategic report.

In accordance with the Code, the
directors have assessed the Group’s
prospects by reference to the
three-year planning period to
September 2024 The directors
have a reasonable expectation that
the Group will continue to meet its
liabilities as they fall due, and that it
will be able to operate within the
regulatory capital limits imposed by

54 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

CORPORATE SOCIAL
RESPONSIBILITY

We are wholly committed to doing
the right thing for our four
stakeholder groups: clients, our
people, suppliers and shareholders.
This encompasses acting ethically
and with understanding, integrity and
transparency in all business dealings
and in the way we treat our
colleagues through our employment
practices. These are core principles
and they are applied by all Group
entities.

We embrace our social responsibilities
widely in relation to the effects our
operations have on environmental
and social wellbeing. We embed our
social responsibilities primarily
through ensuring Group companies
operate honestly, we treat our people
and other stakeholders equitably and
we deliver commercial benefits to all
of our stakeholders.

We have a Whistleblowing Policy and
a NED with responsibility for
whistleblowing. This ensures staff are
supported and have an appropriate,
confidential reporting channel, should
they have concerns about the ethics
of behaviour exhibited by colleagues
within the Group, that they believe
should be escalated and investigated.
We have also appointed a NED who is
responsible for our staff wellbeing,
with a focus on championing and
promoting staff welfare and ensuring
it has proportionate representation at
board level. We respect human
rights, supported by our Human
Rights Policy.

Our people and our culture

Our main asset, and a key driver of
our success, is our people and we
aim to ensure they are respected,
motivated and safeguarded whilst at
work. We want our people to feel
their contribution is integral to the
success of the Group. We achieve this
through a corporate culture of which
we are proud, one of:

▪ empowering colleagues to challenge

thinking at all levels of the
organisation, in the belief that their
personal experience, ideas and
voice matters;

▪ encouraging people to develop and

progress. Whether it be through the
suite of internal “Learning Central”
courses we have developed, on the
job training, supporting professional
qualifications, promotion, or
through opportunities for staff to
move to other Group functions;

▪ encouraging everyone to listen to

concerns and opinions raised by any
of their colleagues, advisers or
clients. We encourage feedback
from all both informally and through
anonymous surveys;

▪ ensuring we are aware of, and fully

support, any additional
requirements colleagues may have,
or enhanced support that they may
need; and

▪ ensuring that we have a

comprehensive staff handbook,
supported by an appropriate range
of employment policies, that clearly
set out our approach to areas that
affect, and are of importance, to all
staff.

We believe the culture that is
promoted from the board down is
one that instills staff engagement.
This is due to our open culture and
an accessible Leadership and Senior
Management Team, which ensures all

employees are able to share ideas
and suggestions for improving the
offering and the way in which we
work.

Supporting our people
We encourage all colleagues, at all
levels, to talk and listen to each
other, not just concerning day-to-day
work issues, but other issues that
may impact their day at work. We
know that the wellbeing of our staff
is of paramount importance, as they
are the backbone of our proposition.
We have zero tolerance for any form
of bullying or harassment and our
Anti-harassment and Bullying Policy
is a mandatory read for all staff.

Our Human Resource business
partners are always ready to provide
support for our people when they
need extra assistance, and are
trained mental health first aiders.

There is also a confidential,
independent Employee Assistance
Programme (EAP) available to all
staff. EAP offers help, advice and
support on a wide range of life
events, from emotional and
relationship issues to financial
concerns.

We aim for a collegiate, industrious
and sociable work environment and,
whilst this has been impacted by our
people working from home for the
majority of the year, we have run
some popular initiatives, including: a
Christmas cake decorating
competition; “Get moving this

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 55

STRATEGIC REPORT continued

Our continuing approach to the
COVID-19 pandemic

Practical arrangements
Whilst some people have returned to
the office due to their role, or on an
ad hoc, voluntary basis, the majority
of our people have continued to work
from home during both the stringent
lockdowns early in 2021, and also
throughout the relaxation of
restrictions. We do however recognize
that some staff would prefer to come
into the office to work for personal
reasons and, whilst respecting
government guidelines, we have
allowed this where it will benefit
individuals and is safe to do so.

We have been mindful and measured
in our approach to requiring people to
return to the office. We will not rush
any decisions, especially as our people
have worked hard to ensure the
ongoing success of the firm remotely,
so any return to the office is still
largely voluntary and staff are settled
into a working routine that is effective
operationally and affords management
oversight and contact. We have
actively engaged with our staff on this
and will continue to do so.

Continuing impact of COVID-19 on
our colleagues
We are conscious of the impact on
colleagues, as they continue to deal
with concern for their family’s, and
their own, health and wellbeing. We
realise the continuous flow of news
and social media reports on the
pandemic, plus speculation regarding
the long-term impact of the
pandemic on the global economy, can
drive anxiety.

With the above in mind, we continue
to ensure all staff in all jurisdictions
within the Group are fully supported
and have resources they can call upon,
should they need additional help.

As mentioned already, we have
accessible, fully trained mental health
first aiders in our Human Resources
Department. We have promoted the

Employee Assistance Programme to
remind all Group staff it is there and,
throughout the Group, directors have
continued to give our people frequent
updates and assurance on our future
plans for working safely, and in line
with government guidelines, in each
geographical area that we have
people working.

We have conducted staff surveys in
order to better understand how
people are coping with being at home
and what sentiment prevails
regarding a future return to an office
environment, albeit under a new
hybrid working model, as adopted by
individual Group entities. We have
listened to the feedback at company
level and it has informed decisions on
how we will operate in future, as and
when each Group entity transitions
more formally back to the office.

We have continued investment in
staff engagement and contact
through enhancing technology, which
has facilitated the ability to stay in
touch with fellow team members,
face-to-face, through frequent virtual
meetings, as well as the usual
telephone calls. For example, we
have continued our more informal,
magazine style bulletin for staff,
called the “Transact Together Hub”,
which has reported some of the
challenges departments have faced,
as well as celebrating operational
successes and some of the more
lighthearted aspects of Transact
culture emerging from the ‘working
from home’ environment, be it in the
UK, Isle of Man, or Australia.

We are proud that the Group’s culture
continues to develop and flourish,
despite ongoing, challenging
circumstances for all.

Diversity, equality and inclusion

Our employment strategy is to recruit
and promote the best people for roles
across all levels within the Group. We
seek to ensure we do not exhibit

March”, whereby staff cycled/ran/
walked from our London office to our
Melbourne office; and, Christmas and
Easter hampers for all staff. Our
people also reprised the much-
enjoyed Transact pub quiz. Many of
these initiatives also raised money
for a range of charities.

Involving our people
The Executive regularly engages
with all staff on future plans that
impact the Group and are of
relevance to colleagues through
e-mail updates. We aim to ensure
communication is proportionate,
inclusive and addresses issues that
may be of concern to our people, but
we also like to share and celebrate
our successes.

Alex and Jonathan also give all-staff
updates to inform colleagues of our
financial results and to share general
information, as far as we are able, on
future strategic initiatives. The
all-staff updates also give our people
an opportunity to ask questions
about future corporate direction and
to engage with the Executive.

There are regular ‘Meet the
Managers’ sessions, whereby the
Non-Executive Directors meet
members of the senior management
team to discuss departmental,
operational issues, and learn more
about working on the ‘frontline’
within the Group. These meetings are
valuable as they give the NEDs more
insight and the ability to challenge
the Executive.

56 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

conscious, or unconscious, bias in our
selection and promotion process, in
line with our core belief in doing the
right thing. We recognize, however,
that a diverse workforce and board
strengthens our corporate culture
and that diversity is not restricted to
gender, but is multi-faceted and
encompasses ethnicity, educational
background, age, sexual orientation,
disability and religion.

During financial year 2021, we met
the Hampton-Alexander Review’s
target of 33% representation of
women on our board (2020: 20%)
and 67% female representation in
roles which we define internally as
our senior management equivalent.

We are committed to further
increasing diversity and equality, in
all its forms, across our current and
future workforce and we believe we
can achieve this through initiatives
that make working for the Group
more agile, such as the proposed
hybrid working arrangements that
have been agreed in each office
location. The office/home proportions
have been agreed following
consultation with staff, through
surveys and conversations. We
believe the approach taken in each
geographical location is
proportionate, recognizes the way
individual Group entities work and
maintains a judicious work/life
balance for many staff. It also
recognises the relatively seamless
transition from office working to
home working from March 2020
onwards, which resulted in little
operational disruption, thanks to the
commitment and resourcefulness of
our people.

As we seek to improve our
employment agility, we are also
considering other initiatives, such as
home working contracts for certain
roles, which we believe will increase
our ability to recruit from a much
wider pool of talent, both
geographically and through the

Group becoming more accessible to
accomplished people who have more
challenging personal circumstances.

Our policy continues regarding the
employment, training, career
development and promotion of
disabled employees, and employees
who became disabled whilst in
employment, and we will always
make reasonable adjustments as
necessary in order that they can
embrace opportunities within the
Group.

Gender pay gap

Across the Group we employed 574
staff and six NEDs are officers of the
Company. The breakdown of our
people by gender, as at September
2021, was as follows:

Board Directors1

Senior Managers

Direct Reports

All Staff

Total

Male
%

Female
%

361

67 175

388 67 194 33

1 Michael Howard, an Executive Director of IHP and John Rundle, an Executive Director of IAD Pty, are included in the gender pay reporting figures, they
are however not paid employees and the total paid employee count is 574.

2. In 2020 the Company changed the basis of reporting. The Code provides for the gender and diversity of senior management to be reported either by
reference to the Company’s executive committee, or by reference to the layer below the board, including the Company Secretary. In prior years the
Company has reported Senior Management in accordance with the definition used in the prospectus, however we changed this basis in 2020 to better
reflect the management structure of the Group and have moved to reporting the layer below the board, including the Company Secretary, in accordance
with the definition in the Code.

Our reported mean gender pay
gap rose slightly to 13.9%, which
still compares favourably with results
reported by others in the sector in
which we operate and the national
average.

IntegraFin Services Ltd, the
Company’s services provision
subsidiary, published its gender pay
gap report in April 2021. The report
can be found on our website, at
www.integrafin.co.uk/legal-and-
regulatory-information/

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 57

STRATEGIC REPORT continued

Payment practices

Modern slavery

We endeavour to pay all suppliers
within agreed payment terms. We do
not seek to disadvantage, or
compromise, suppliers with whom we
conduct business, in line with one of
our core principles of ethical
behaviour. In financial year 2021, the
Group paid suppliers, on average,
within 14 days (2020: 14 days) and
the Group paid 92% (2020: 90%) of
suppliers within 30 days.

Anti-bribery and anti-corruption

The Group strives to maintain high
standards of governance. This
encompasses personal and corporate
ethics, compliance with laws and
regulations and we value integrity,
fairness and honesty when dealing
with all stakeholders. We have zero
tolerance for bribery and corruption
and take all reasonable steps to
ensure staff and Third Parties
understand what is and what is not
permitted and act with integrity at all
times. The Group has implemented
an Anti-Bribery and Corruption policy
and has put appropriate contractual
and other controls in place to
manage all forms of bribery and
corruption risk.

We do not tolerate modern slavery,
servitude, human trafficking or forced
labour. The Group’s modern slavery
statement is found at: www.
integrafin.co.uk/modern-slavery/

Community

Each year events are organized which
raise money and awareness of a
number of charities, chosen from
staff suggestions, to which the Group
donates as well as staff donating
voluntarily. For example, during the
year a staff member walked 28km in
aid of a children’s cancer charity and
raised in excess of £1,000, supported
by both staff and the Group.

Further initiatives to increase our
contribution to the community are
being formulated and is one of the
cornerstones of the ESG strategy we
are developing.

Environmental impact

Future plans and governance
We have a corporate and moral
obligation to manage and minimize
the Group’s environmental impact as
much as is reasonably possible and
within our control. Despite the
relatively low direct negative
environmental impact of the Group,
we are committed to making
progress in formulating a plan to
reduce our carbon footprint where we
realistically can.

58 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

During the year, Willis Towers Watson
(WTW) performed a review in order
to gather insight, and provide us with
recommendations and benchmarking
feedback regarding our climate and
Environmental, Social and
Governance (ESG) reporting, as well
as Taskforce on Climate Related
Financial Disclosures (TCFD) gap
analysis and readiness assessment.

WTW’s findings are being considered
and will be used to inform our
forward-planning actions, to ensure
we can comply with the TCFD
reporting framework
recommendations by the next
financial year end.

Regarding funds that we make
available on our platform, we are
execution only and as we do not
influence investment choice, we
cannot recommend that clients invest
in ESG funds. We will always ensure
that ESG funds are available as an
investment choice, providing they
meet our product onboarding criteria
and are compliant with HMRC rules
for tax wrappers.

Our Senior Independent Non-
Executive Director, Victoria Cochrane,
was appointed as non-executive
director for environmental and social
sustainability on 1 September 2021.

Financial year 2021 metrics
Financial year 2021 saw the majority
of the Group’s staff working from
home for the duration of the year and
refinements to key processes and
work streams which were
implemented in March 2020, to
enable remote working, continued.

We became Energy Savings
Opportunities Scheme Phase 2
certified in 2019 and we will aim to
become Phase 3 certified in
December 2022.

We have transitioned to operating
largely in a paperless environment,
where paper is only used for business
critical work streams. We rely

predominantly on electronic
signatures and we actively seek to
reduce the few processes that do
require some form of paperwork.
We encourage both clients and their
advisers, as well as shareholders to
opt for paperless options, with
considerable success.

We have switched our energy to
renewable energy tariffs from the
start of financial year 2022 and we
have upgraded our office cleaning
systems to chemical free systems.

Over the course of the year we saved
80 trees (FY20: 157) through
recycling confidential waste,
obviously with remote working there
has been a significant reduction in
paper consumption; we recycled 41%
of total waste (FY20: 41%); and,
maintained environmental initiatives
previously introduced, such as a
green energy supplier and chemical
free cleaning systems.

SECR data in relation to the
acquisition of T4A have been included
from the acquisition date, being 11
January 2021.

Our emissions data for the financial
year is presented below.

Greenhouse gas emissions data

For the financial year ended
30 September 2021

Scope 1

Printer emissions

Scope 1

Purchase of gas

Scope 2

Purchase of electricity

Total Scope 1 and 2

Scope 3

Business flights

Scope 3

Vehicle usage

Scope 3

Disposal of waste

158

131

291

Total Scope 1, 2 and 3

297

Staff numbers

467

101

CO2 Tonnes

Aus

IoM

Total

175

185

363

368

574

Streamlined Energy and Carbon
Reporting (SECR)

Emissions Intensity Ratio (CO2
tonnes per member of staff)

0.6

0.7

0.6

Square metres of office space

4,637

1,107

160

5,904

Emissions Intensity Ratio (CO2
tonnes per m2 of office space)

0.06

0.03

0.06

Energy consumption in the UK (Kwh 000’s)

1,323.3

Waste

Not recycled

Recycled

Total

CO2 Tonnes

2021

2020

0.1

0.2

0.3

The Group has adopted the reporting
requirements of the Streamlined
Energy and Carbon Reporting (SECR)
policy, as implemented by the UK
Government in 2019.

The general waste statistics are
included below and the movement
this year, is attributable to the full
reporting year being worked from
home and also from our initiatives
implemented during the year.

We are pleased to report that
we continue to see a fall in
emissions due to the reduction in
business travel, as a result of staff
working from home during the
COVID-19 pandemic.

We have maintained the same ratio
of waste recycled vs not recycled in
the year, however, the volume of
waste produced this year has
significantly decreased.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 59

STRATEGIC REPORT continued

Greenhouse gas emissions data

For the financial year ended
30 September 2020

Scope 1

Printer emissions

Scope 1

Purchase of gas

Scope 2

Purchase of electricity

Total Scope 1 and 2

Scope 3

Business flights

Scope 3

Vehicle usage

Scope 3

Disposal of waste

212

189

407

CO2 Tonnes

Aus

IoM

Total

238

264

508

576

487

Total Scope 1, 2 and 3

463

107

Staff numbers

398

Emissions Intensity Ratio (CO2
tonnes per member of staff)

1.1

1.3

0.8

1.2

Square metres of office space

4,637

1,107

161

5,905

Emissions Intensity Ratio (CO2
tonnes per m2 of office space)

0.09

0.07

0.05

0.08

Energy consumption in the UK (Kwh 000’s)

1,469.1

Waste

Not recycled

Recycled

Total

CO2 Tonnes

2020

2019

We have calculated the emissions in
line with the Greenhouse Gas
Protocol Corporate Standard. Each of
our emissions have been categorised
by ‘Scope’, in line with the standard,
as explained below:

To calculate emissions from gas, we
have taken gas used in KWH and
applied a conversion factor to arrive
at kilogrammes of CO2 emissions
produced and reported in CO2
Tonnes.

Scope 1 (direct emissions)

These are emissions arising from the
combustion of natural gas. We
produce these emissions from
purchasing gas, printer emissions and
from disposing of general waste, as a
result of running each of our premises
in London, Norwich, Melbourne and
Douglas in the Isle of Man.

To calculate emissions from printing,
we have taken waste in CO2 Tonnes
directly from supplier reports.

Scope 2 (indirect emissions)

Indirect emissions are those arising from
electricity purchased and used to run
our operations. We produce these
emissions from running each of our
premises in London, Norwich, Melbourne
and Douglas in the Isle of Man.

60 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

We pay all tax as it falls due and
make full disclosure to all relevant
tax authorities. The UK corporation
tax and employer’s national insurance
payable in respect of the year ended
30 September 2021 was £15.5
million (2020: £12.5 million). In
addition, other taxes such as VAT and
business rates were paid.

Intensity metrics

We believe number of staff is an
appropriate business specific metric
for calculating the Emissions Intensity
Ratio, as it is the main driver of our
energy consumption and, therefore,
emissions. We have added a second
metric this year, being CO2 per m2 of
office space, to enhance our reporting
and understanding of our energy
usage.

We are aware of and accepting of our
duty to reduce our impact on the
environment and have commenced
the process of developing a feasible
environmental strategy, with the
clear goal of reducing our relatively
low carbon footprint where we can.

Political donations

The Group does not make political
donations.

Tax strategy

We manage our tax affairs to the
same high ethical, legal and
professional standards as the delivery
of our services to clients. In
summary, our tax strategy is to
comply fully with all statutory
obligations, make full disclosure to
tax authorities in all appropriate
jurisdictions, and to pay all tax when
it is due. The full tax strategy
document is available at: www.
integrafin.co.uk/group-tax-
strategy/

To calculate emissions from
electricity, we have taken electricity
used in KWH and applied a
conversion factor to arrive at
kilogrammes of CO2 emissions
produced and reported in CO2
tonnes.

Scope 3 (other indirect
emissions)

Other indirect emissions are those
arising from business travel in rental
cars or employee owned vehicles,
where we are responsible for
purchasing the fuel. We produce
these emissions from staff business
flights and staff driving for work in
London, Norwich, Melbourne and
Douglas in the Isle of Man.

To calculate emissions from car fuel,
we have taken total distance travelled
in miles during the course of the
business trip and applied a conversion
factor to arrive at kilogrammes of CO2
emissions produced and reported in
CO2 tonnes.

To calculate emissions from flights we
have taken distance travelled in km
and applied a conversion factor to
arrive at kgs of CO2 emissions
produced and reported in CO2 tonnes.

To calculate emissions from waste,
we have taken waste in CO2 tonnes
directly from supplier reports.

Conversion factors

All conversion factors have been
obtained from the UK Government’s
Greenhouse gas reporting:
conversion factors 2021 data set.

Restatement 2020

We have restated the financial year
2020 emission scoping category for
the purchase of electricity, from scope
1 to scope 2, as this was incorrectly
allocated in the prior year Annual
Report. We have added new data to
2021 and the 2020 comparative this
year, being the waste not recycled
included in scope 3.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 61

STRATEGIC REPORT continued

Non-financial information
statement

The Strategic Report includes
non-financial information required
in accordance with section 414CB
of the Companies Act 2006. The
most directly relevant non-financial
information is signposted below,
however the Strategic Report does
touch on these topics briefly in
other sections:

S414CB
REQUIREMENT

Environmental
matters

RELEVANT
STRATEGIC REPORT
SECTION

Corporate and social
responsibility –
Environmental impact,
page 58

RELEVANT POLICY

We are currently developing
our environmental strategy
and policy, following
consultation with Willis
Towers Watson.

Employees

Corporate and social
responsibility – Our
people and our culture,
page 55

Staff Handbook

Health and Safety Policy

Equal Opportunities Policy

Social and
community

Human rights

Anti-bribery
and corruption

Corporate and social
responsibility – Our
people and our culture,
page 55 and
Community page 58

Corporate and social
responsibility –
page 58

Anti-Harassment and
Bullying Policy

Flexible Working Policy

This will be more clearly
defined when we progress
our ESG strategy and policy.

Human Rights Policy

Modern Slavery Policy

Anti-Bribery and Corruption
policy

S414CB
REQUIREMENT

RELEVANT
STRATEGIC REPORT
SECTION

RELEVANT POLICY

Business model

Transact - Our business model – page 7

Principal risks
and how they
are managed

Non-financial
key performance
indicators

Principal risks and uncertainties – page 47

Key performance indicators – page 18

62 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

COMPANIES ACT SECTION 172

The directors have a duty, under
Section 172 of the Companies Act, to
act in a way and in good faith, to
promote the success of the Company
for the benefit of its members as a
whole.

The table below sets out the different
matters that the directors should have
regard to and how they have fulfilled
their duties during the financial year.

The board considers the key
stakeholders to be our clients, our
shareholders, our staff and our
suppliers. These groups are
considered key as they are
fundamental to the continuing success
of the Group.

Consideration

What the directors have done

Long term
consequences of
decisions

IHP Group’s primary strategic objective is stated in the Strategic Objectives section on page 12. How
this strategy has been delivered during the financial year and the forward looking risks to being able
to deliver it in future are set out. The directors make strategic decisions on future direction,
investment and stakeholder value, based on the clear, sustainable, long-term Group objective of
delivering financial services infrastructure and associated services to UK advisers and clients.

By successfully achieving strategic objectives, which results in the ongoing and increased success
of the offering, the directors are able to take decisions which share the Group’s success with the
key stakeholders.

Key decisions taken by the board in financial year 2021 include, but are not limited to:

▪ further cuts to our pricing, in line with our responsible pricing strategy, which benefits our clients;

▪ the decision to acquire T4A. This was made after extensive due diligence had been performed
and the board was fully informed of the strategic benefit and the financial impact of acquiring
T4A. The board voted to proceed with the acquisition, based on the future long-term benefits
to investors and staff as the acquisition creates value within the Group;

▪ the decision not to pursue the acquisition of Nucleus. Again, due diligence and due consideration

were given to the acquisition and the board was fully involved. The decision not to acquire
Nucleus was fully supported by the board, as it was agreed, after significant investigation,
that proceeding with the transaction could expose the Group to an unacceptable level of
transition risk to current clients and advisers and therefore would not benefit stakeholders in the
long-term;

▪ the decision to continue without using any of the Government financial support schemes during
the COVID-19 pandemic, as the Group does not require financial assistance and all staff have
been fully employed throughout the pandemic;

▪ appointing Rita was a decision that will benefit the Group in the long-term, due to Rita’s

extensive investment and technology experience;

▪ the decision to approve the interim dividend, paid in June 2021 and relating to the first half of

financial year 2021, as the Group’s financial performance was strong.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 63

STRATEGIC REPORT continued

Consideration

What the directors have done

The interests of
the Group’s
employees

The directors value our people and the Directors’ Remuneration Report on page 87, sets out the
Group’s approach to remuneration, which is intended to ensure equitable remuneration across the
Group and which improves value for employees. The Corporate Social Responsibility disclosure on
page 55 also outlines the value directors place on staff welfare and the culture of the Group.

Key decisions taken by the board in financial year 2021 include:

▪ the decision to appoint a new NED with responsibility for staff wellbeing, following Neil stepping
down, is one that the board agreed was necessary and for the benefit of all Group employees;

▪ the decision to award all those employees the annual discretionary bonus, because they have

continued to deliver outstanding customer service from home, due to the pandemic;

▪ the decision to award staff a payrise, again in recognition of their critical contribution to the

success of the Group in the year; and

▪ the decision to award staff shares under the Share Incentive Plan.

Fostering
business
relationships

The Group does not tolerate unethical behaviour, as stated on page 55 of the Corporate Social
Responsibility section. It ensures suppliers are paid within payment terms and does not seek to
disadvantage or compromise suppliers with whom we do business.

An integral part of the service offering is the provision of regular relationship management to
advisers as they are the platform’s target market.

Key decisions taken by the board in financial year 2021 include:

▪ the implementation of a supplier framework during the financial year and the appointment of a
Supplier Manager who will assist with the onboarding of new suppliers and ongoing effective
relationships.

The impact of
operations on
the community
and environment

The Corporate Social Responsibility report on pages 55 to 62 sets out the impact of operations on
the environment.

The directors recognise that we have both a corporate and moral responsibility to minimise the
impact of the Group’s business conduct on the environment and community.

Key decisions taken by the board in financial year 2021:

▪ the decision to engage Willis Towers Watson to perform an evaluation and benchmarking

exercise and to give us guidance on further developing and planning our ESG strategy, as well as
consideration of the requirements of TCFD; and

▪ Appointing a NED with oversight of our ESG strategy, to ensure management focus and progress

is maintained.

Maintaining a
reputation for
high standards
of business
conduct

The business model and strategic objectives of the Group are set out on pages 7 to 15 and make
clear the focus of the business on delivering impeccable service to clients and their advisers
through investment in infrastructure and staff. The directors recognise that the service is only as
good as the technology and people behind it and that the Group’s reputation is built on high
standards of business conduct which must be maintained in order for the business to thrive and
grow. The directors also recognise that as the business is regulated by three separate regulators,
as detailed on page 46, then maintaining strong, open and productive relationships with the
respective regulators is also business critical.

Acting fairly
between members
of the Group

All shareholders are treated equally, with all information being made available to all shareholders
in a consistent manner.

64 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

APPROVAL OF THE STRATEGIC REPORT

The directors believe that the
Strategic Report on pages 2 to 65
meets all relevant statutory objectives
and requirements.

By order of the board,

Helen Wakeford
Company Secretary

15 December 2021

A statutory requirement of the Annual
Report is that the directors produce a
Strategic Report.

Section 172 of the Companies Act
states that the purpose of the report
is to inform members of the Company
and help them assess how the
directors have performed their duty.
To fulfil this, directors must act in a
way they consider, in good faith,
would be most likely to “promote the
success of the Company for the
benefit of its members as a whole”.

The Strategic Report should provide
shareholders with a comprehensive
and balanced overview of the Group’s
business model, strategy,
development, performance, position
and future prospects. The Strategic
Report should be clear, concise and
unambiguous, and should
demonstrate how the Company has
considered the interest of employees,
and the impact of the Company’s
operations on the community and
environment.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 65

GOVERNANCE

BOARD OF DIRECTORS

Richard Cranfield

Alexander Scott

Jonathan Gunby

Non-Executive Chair

Chief Executive Officer (CEO)

Executive Director

Appointed to the board:
26 June 2019

Experience includes:

▪ Henderson High Income Trust Plc

– Director since March 2020

▪ Allen & Overy LLP – Partner 1985 to 31

October 2021; currently senior adviser

Committees:

Nomination Committee (Chair),
Remuneration Committee.

Appointed to the board:
11 February 2014

Appointed to the board:
2 March 2020

Joined the Group in 2011 as Chief
Development Officer and became
an Executive Director in March 2020.

Experience includes:

▪ NMG Holdings – Executive Director

1999 – 2011

Joined the Group as Actuary and
Head of Group Technical Operations
in October 2009. From November
2010 he was Chief Financial Officer
and Head of Risk, becoming a
director in July 2011. Alexander
became Chief Executive Officer in
March 2020.

Experience includes:

▪ Sterling Insurance Group – Life Director

and Chief Actuary 2004-2009

▪ Criterion Assurance Group –

Non-Executive Director 2003-2010,

Group Director 2002-2003,

Director 1999-2002,

Actuary 1997-1999

Committees:

Nomination Committee.

66 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Michael Howard

Caroline Banszky

Victoria Cochrane

Executive Director

Appointed to the board:
11 February 2014

Co-founded the Group in 1999,
Executive Chair of the Group from
2001 until stepping down in
October 2017 and becoming an
Executive Director. Founded
ObjectMastery in Australia in April
1992 which developed the software
underpinning Transact.

Experience includes:

▪ Norwich Union Life Insurance –

responsible for marketing and

administration of investment funds

including the launch of the platform

Navigator in 1990

▪ Touche Ross – Audit division in

Melbourne office 1984-1986, in London

office 1980-1984

Independent
Non-Executive Director

Appointed to the board:
22 August 2018

Experience includes:

▪ 3i Group plc - Chair of Audit &

Compliance Committee 2014 to present

▪ Gore Street Energy Storage Fund plc

– Chair of Audit Committee 2017 to

Senior Independent Non-
Executive Director

Appointed to the board:
28 September 2018

Appointed Designated non-
executive director for
environmental and social
sustainability as of 15 September
2021.

present

Experience includes:

▪ Allchurches Trust Limited – Director

and Trustee (2018 to present)

▪ The Open University – Member of the

Investment Committee 2016 to present

▪ The Law Debenture Corporation plc

- Chief Executive 2002-2016

▪ SVB Holdings PLC (now Novae Group

plc) – COO 1997-2002

▪ N M Rothschild & Sons Limited

– Finance Director 1995-1997

▪ Ninety one plc – Chair of the Audit and

Risk Committee 2019 to present

▪ Euroclear Bank SA/NV – Non-executive

director 2016 to present

▪ Perpetual Income and Growth

Investment Trust plc – Non-executive

director 2015-2020

▪ HM Courts and Tribunal Service

- Non-executive director 2014 to

present

Committees:

▪ Bowater Industries Ltd - Senior Adviser

Audit and Risk Committee (Chair).

2014-2015

▪ Gloucester Insurance Ltd - Non-

executive director 2008-2013

▪ Ernst & Young (Global) - Global

Executive Board Member 2008-2013

▪ Ernst & Young (NEMIA and UK)

- Executive Board Member 2006-2008

Committees:

Audit and Risk Committee,
Nomination Committee.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 67

GOVERNANCE continued

Rita Dhut

Robert Lister

Christopher Munro

Independent
Non-Executive Director

Appointed to the board: 22
September 2021

Appointed Designated non-
executive director for employee
engagement as of 15 December
2021.

Independent
Non-Executive Director

Appointed to the Board:
26 June 2019

Independent
Non-Executive Director

Appointed to the board:
1 February 2017.

Experience includes:

▪ finnCap Group plc – Non-executive

▪ London and Continental Partners LLP

chair January 2021 to present

– Founding Partner 2016

▪ Credit Suisse Asset Management

▪ Pembroke Square Freeholders

Experience includes:

(UK) Limited – Non-Executive

Association Limited – Director 2013

▪ Financial Times Foundation for

Financial Literacy – Founder Trustee

and Non – Executive Director 2021 to

present

▪ JP Morgan European Investment

Trust Plc – Non-executive director

2019 to present

▪ Ashoka India Equity Investment trust

Plc – Non-executive director 2018 to

present

▪ Newable Ventures – Venture Investor

for a range of deep technology funds

2018 to present

▪ The Girls Day School Trust – Non-

Director 2012 to present

to present

▪ Investec Wealth and Investment

▪ Pacific Capital Partners – Director

Limited – Non-Executive Director

2004 to 2021

2010 to December 2021

▪ Chris Munro Trading Limited

▪ Aberdeen Smaller Companies Income

(formerly Beckwith Asset

Trust PLC – Director 2012 to present

Management) - Director 1994

▪ The Salvation Army International

to present

Trustee Company – Director 2016

▪ Jupiter Enhanced Income Trust

to present

– Director 1996-2009

▪ Rensburg Sheppards PLC – Director

▪ River & Mercantile Investment

– 2008-2010

Management – CEO 1994-1996

▪ Dresdner Kleinwort Wasserstein

▪ Robert Fleming Holdings Limited

–1998-2008

- Director 1988-1994

▪ Barclays de Zoete Wedd – 1983-1998

▪ Jardine Fleming Holdings – Director

executive director and Trustee 2016

Committees:

Audit and Risk Committee,
Remuneration Committee:
appointed 1 September 2021

to present

▪ Aviva Investors – various positions

including Head of European Equities

and Head of Pan European Equity

Value Investing 2001 -2012

▪ M&G – various positions including

Director of European Equities 1994 to

2000

Rita Dhut was appointed as a
non-executive director on 22
September 2021.

68 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

1983-1986.

Committees:

Remuneration Committee (Chair),
Nomination Committee.

All other directors were in office
throughout the financial year up
to the date of the report.

announcement was made
in November 2021 with an update
on shareholders’ feedback. A final
update, as required under the Code,
can be found on page 74.

▪ Provision 5: The Company, at the

date of the financial year ended 30
September 2021, did not yet have
a defined employee engagement
representative on the board.

However, since the financial year end,
the Company has now appointed Rita
as non-executive director responsible
for employee engagement and
ensuring the employee voice is heard
in the boardroom.

CORPORATE GOVERNANCE
REPORT

Introduction

Statement of compliance

The Code sets out the principles and
provisions relating to good
governance of UK listed companies
and can be found on the Financial
Reporting Council’s (FRC) website at
www.frc.org.uk.

The following report sets out how the
Company has complied with the
provisions of the Code, and an
explanation of any areas of
noncompliance.

With the exception of the areas of
noncompliance set out below, the
Company has complied with the
principles and the provisions of the
Code:

▪ Provision 4: At the Company’s last
AGM in 2021, several resolutions
received 20% or more votes cast
against the board’s recommendation.
The Company is required under the
Code to provide an update to the
market on the views received by
shareholders and actions taken in
response to voting feedback within
six months of its AGM. The
Company was unable to announce
this update within six months due
to the length of time it took to
engage with shareholders and
understand the reasons why some
shareholders voted against certain
resolutions. However, a market

On behalf of the board, I am pleased
to present the report setting out the
Group’s corporate governance
arrangements which reflect the
standards of practice required by the
2018 UK Corporate Governance Code
(the Code) in relation to the
management of the Group.

The Group’s purpose is the successful
delivery of financial services
infrastructure and associated services
to UK advisers and our mutual
clients. To achieve this we have a
number of strategic objectives set
out on pages 12 to 15 and these are
supported by the corporate culture
set out in the Corporate Social
Responsibility report on page 55.

We continue to abide by the
overriding principles of the 2018
Code which are designed to:

▪ promote long-term sustainable

success of the Company, business
effectiveness, efficiency,
responsibility and accountability.
Further details relating to this are
set out in the long-term
consequences of decisions section
in the Companies Act Section 172
statement, on page 63;

▪ provide suitable opportunity for
employee engagement in the
business. Further details relating to
this are set out in the interests of
the Group’s employees section in
the Companies Act Section 172
statement, on page 64;

▪ assist the effective review and

monitoring of the Group’s activities;

▪ help identify and mitigate significant
risks to the Group, as set out in our
Risk Report on page 40; and

▪ provide the necessary disclosures to
stakeholders to make a meaningful
analysis of the Group’s business
activities and its financial position.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 69

GOVERNANCE continued

▪ Provision 36: The Company’s
remuneration structure has
adopted a vesting period for
deferred bonus shares of three
years, rather than the Code’s
recommended five years. The
Directors’ Remuneration Policy was
reviewed earlier this year and is
being put forward to shareholders
for approval at the 2022 AGM.
After consideration, the Company
decided to implement minimum
shareholding requirements for
executive directors during their
tenure and to implement post-
employment shareholdings for the
executive directors as
recommended by the Code, but
has decided not to extend the
vesting period of the deferred
bonus shares from three years to
the recommended five years. The
Company believes that the
executive directors are sufficiently
invested in the Company’s
long-term success and that further
restrictions are not currently

required. We will however keep
this under review.

▪ Provision 38: The Company’s
remuneration policy allows all
employees, including executive
directors, the option annually to
have a portion of their cash bonus
contributed into their pension. This
does not comply with the Code’s
requirement for directors that only
basic salary should be
pensionable. However, none of the
executive directors currently take
advantage of this provision in the
remuneration policy. The Company
does not intend to change its
policy on pension sacrifice for the
directors at this time as the
arrangement is consistent with the
Group’s pension policy applicable
to all employees.

Board composition

The Company has three executive
directors and six independent
non-executive directors (including the
Chair).

Board and committee meetings and attendance

Board Meetings

Audit and Risk
Committee

Nomination
Committee

Remuneration
Committee

Eligible

Attended

Eligible

Attended

Eligible

Attended

Eligible

Attended

Caroline Banszky

Victoria Cochrane

Richard Cranfield

Neil Holden(1)

Michael Howard

Robert Lister

Christopher Munro

Alexander Scott

Jonathan Gunby

Rita Dhut(2)

Ian Taylor(3)

1 Neil Holden resigned as a director on 1 September 2021.

2 Rita Dhut was appointed as a director on 22 September 2021.

3 Ian Taylor resigned as a director on 26 February 2021.

70 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

the Group’s business. The roles of
Chair, Chief Executive Officer and
Senior Independent Director are
clearly defined and have been
approved by the board. The
allocation and division of
responsibilities is available on our
website here: www.integrafin.co.
uk/corporate-governance/

Independence

The Code recommends that at least
half the board of directors of a
UK-listed company, excluding the
chair, should comprise non-executive
directors determined by the board to
be independent in character and
judgement and free from
relationships or circumstances which
may affect, or could appear to affect,
this judgement.

Taking into account the provisions of
the Code, the board has considered
the independence of each of the
non-executive directors and has
determined that all are “independent
non-executive directors” within the
meaning of the Code.

The Code recommends that a Chair
should meet the independence
criteria set out in the Code on
appointment. The board has
concluded that the Chair, Richard
Cranfield, is independent for Code
purposes. Richard’s other
commitments are listed in his
biography and the Company has
concluded these do not affect his
ability to undertake the role. Any
significant commitments must be
disclosed to the board as and when
they arise for consideration.

The role of the board

Board leadership

The board is responsible for leading
and controlling the Company and has
overall authority for the management
and conduct of the Group’s business,
strategy and development. The board
is also responsible for ensuring the
maintenance of a sound system of
internal controls and risk
management (including financial,
operational and compliance controls)
and for reviewing the overall
effectiveness of systems in place
as well as for the approval of any
changes to the capital, corporate
and/or management structure of
the Group.

The board promotes the long-term
success of the Company and the
Group and ensures effective
operational management and
strategic development of the
proposition, having due regard to all
stakeholders, including safeguarding
of its clients’ interests.

To achieve these objectives the board
reviews, oversees and scrutinises the
activities of the executive and senior
management in accordance with the
board terms of reference and matters
reserved which can be found on the
Company’s website here: www.
integrafin.co.uk/corporate-
governance/. Details of how the
board has delivered its
responsibilities during the financial
year can be found in the s172 report
on pages 63 to 64.

Division of responsibilities

The board recognises the importance
of a clear division of responsibilities
between Executive and Non-
Executive roles and, in particular, a
clear delineation of the Chair’s
responsibility to run the Board and
the Chief Executive Officer’s
responsibility for running

Conflicts of interest

The Company’s Articles of Association
permit the board to consider and
authorise situations where a director
has an actual or potential conflict of
interest in relation to the Group. The
Company maintains a conflicts of
interest register which is reviewed
annually by the board.

In addition, prior to each board
meeting, the directors are asked
to declare any conflicts they may
have with regard to the business
meeting. Directors who declare a
conflict of interest may be authorised
by the rest of the board to participate
in decision making in accordance
with section 175 of the Companies
Act 2006.

The board considers and, if
appropriate, authorises any conflicts
or potential conflicts of interests of
directors and imposes any
limitations, qualifications or
restrictions as required. Additionally,
when making new appointments, the
board takes into account other
demands on directors’ time.
Significant commitments are
disclosed with an indication of time
involved and any additional external
appointments must be approved in
advance by the Company.

The board has reviewed the other
commitments of the non-executive
directors and concluded it is satisfied
that the non-executive directors
remain able to commit sufficient time
to the Company’s business.

Committees

There are three Committees of the
board: Audit and Risk, Nomination,
and Remuneration. The Audit and
Risk Committee and the
Remuneration Committee are wholly
non-executive committees and the
members are all independent
non-executive directors. The Chair of
the board is a member of, and chairs,
the Nomination Committee. The

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 71

GOVERNANCE continued

other members of the Nomination
Committee comprise the SID, the
CEO and one other independent
non-executive director.

The membership and terms of
reference of these board Committees
are reviewed annually and are
available on the Company’s website
(www.integrafin.co.uk) or on
request from the Company Secretary.

Matters reserved for the board

The board is the main decision
making and review body for the
Company. It determines the overall
strategic direction of the Company
and is responsible for the overall
management of the Company and
the business operations for its
subsidiaries.

The board’s remit is documented in
its terms of reference which include
details of matters reserved for the
board and matters delegated by the
board. The terms of reference are
reviewed and updated annually.
Matters which are reserved for the
board include strategy and
management, structure and capital,
financial reporting and controls,
internal controls, contracts,
communication, board membership
and appointments, remuneration and
corporate governance matters. The
board makes decisions as to
delegating to committees of the
board and the management team.
Matters which are delegated to the
management team include changes
to the Company’s management
structure and the approval of
resolutions and corresponding
documentation to be put to
shareholders at general meetings.

Setting the business model
and strategy

The board retains responsibility for
the overall management of the
Company and approval of any
long-term objectives of the Company.

A review of performance against the
Company’s strategy, objectives,
business plans and budgets is
considered at each board meeting.
Maintaining oversight of the
Company’s operations, ensuring
competent and prudent management,
sound planning, an adequate system
of control, adequate accounting in
addition to reviewing any significant
risks faced by the Company and
establishing and maintaining risk
management systems in co-
ordination with the Audit and Risk
Committee ensures the Company
fulfils its business objectives.

The board also retains responsibility
for considering the balance of
interests between shareholders,
employees, customers and the
community.

Board effectiveness review –
2021

The board conducts an annual
evaluation of its own effectiveness
and that of individual board
members. FTSE350 companies are
required by the Code to have an
externally facilitated board
effectiveness evaluation at least
every three years. An external
evaluation was done in 2020, with
the assistance of Independent Audit.
In 2021, the Chair, with the
assistance of the Company Secretary,
undertook an internal evaluation of
the performance of the board, its
committees, and individual directors
by way of written questionnaires. The
following were considered as part of
the internal evaluation: effectiveness
of the board and its committees; the
experience, independence and
knowledge of the directors; the
diversity of the board; how the board
works together; and, other factors
relevant to its effectiveness. The
findings and relevant action points
were discussed in the September
2021 board meeting and actions
agreed. The SID led the performance
evaluation of the Chair by meeting

72 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

place on site.

Relations with shareholders

separately with each of the executive
and non-executive directors. The SID
then met with the Chair to discuss
the directors’ feedback.

Triennial review of non-executive
director remuneration

The board determined that a triennial
review of non-executive director
remuneration be undertaken. The
board reviewed the outcome of an
external benchmarking exercise using
Tyzack Partners and the new
arrangements were reviewed by the
Committee to ensure that they
aligned with the regulatory
requirements applicable to non-
executives of regulated entities within
the Group. Having considered the
results of the benchmarking and the
review by the Committee, the board
agreed with and implemented the
proposals with effect from 1 October
2021. Details of the new fees are
outlined in the Remuneration Policy
on page 90.

Directors’ development and
training

Each board member is responsible for
identifying training appropriate to
their needs, and the non-executive
directors maintain individual annual
training logs.

The Chair and Company Secretary
ensure continuing training and
development for all directors based
on individual requirements.

The board carries out periodic ‘deep
dives’ into specific areas of the
business in order to broaden the
board’s understanding of the Group’s
business and the opportunities and
challenges it faces. During the year,
training and deep dive sessions were
facilitated for the directors which
comprised the following topics:

▪ Platform consolidation

▪ IT infrastructure

Directors’ induction

▪ FCA, PRA and Isle of Man FSA

supervisory review

▪ Review of the Investment Firms

Prudential Regime and ICAAP/ICARA

In addition, open Q&A sessions
between the directors and
management are held after the
sessions.

Election and re-election of
directors

The Company’s Articles of Association
require all existing directors to retire
from office at each AGM and be
eligible for re-election. Any new
directors appointed during the year
will be eligible for election at the first
AGM post-appointment. Rita will be
standing for election at the 2022
AGM.

A tailored induction programme is
prepared for each new director, based
on their individual needs. The
programme comprises the following
areas:

▪ Information and materials: a

comprehensive library of materials
is provided electronically including
prior board and committee papers
and minutes, strategy materials,
regulatory information, and
statutory and governance
documentation and policies.

▪ Scheduled meetings: individual
meetings are arranged with key
stakeholders and employees to
explore in more detail significant
aspects of the business and to
assist with relationship building
between the director and
management. Save during the
periods of the COVID-19 pandemic
when work from home was
necessary, these meetings take

The board maintains close
relationships with the Company’s
institutional shareholders through
periodic meetings with the executive
directors. Board members receive
copies of analysts’ and brokers’
reports on the Company along with a
quarterly Investor Analytics report
which details the top shareholders,
shareholder history, top buyers and
sellers, market analysis and share
price performance to aid familiarity
with details of shareholdings.

The CEO hosts shareholder
roadshows at which the Company’s
half year and annual results are
presented to institutional investors
invited by the Company’s brokers.
These have been held virtually over
the last year due to COVID-19
restrictions. The CEO and senior
management are also available after
each quarterly FUD update to meet
with investors.

The company secretarial and investor
relations functions engage with private
shareholders, providing support and
information as required, whilst the
Company’s registrar provides a range
of shareholder services.

The SID, Chair of the Remuneration
Committee and Company Secretary
met with selected institutional
investors to discuss any matters of
concern, including in relation to
voting feedback from the Annual
General Meeting (AGM). In addition,
the Chair of the board met with
institutional investors upon request.
The Company has considered the
feedback and taken it into
consideration when drafting the
disclosures in this Annual Report.

The Chair, SID and other non-
executive directors are available for
consultation with shareholders upon
request and will attend, the Annual
General Meeting, making themselves
available for question both during
and after the meeting.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 73

GOVERNANCE continued

Annual General Meeting (AGM)

In 2020, the Company’s shareholders approved an amendment to the
Company’s articles to allow for hybrid shareholder meetings.

The Company intends to exercise this meeting option going forward. Allowing
for hybrid meetings helps further support engagement by allowing
shareholders to attend the AGM electronically, when they would otherwise be
unable to attend the meeting in person.

The AGM provides shareholders with an opportunity to communicate with
the board, both formally during the AGM and informally afterwards when
held in person. Notice of the AGM will be sent in accordance with the
Companies Act 2006 and made available on our dedicated shareholder
website – www.integrafin.co.uk/shareholder-information/ - along with
any other relevant documentation.

Voting results final update - 2021 AGM

At the Company’s AGM, held on 8 March 2021, 20% or more of votes were
cast against the resolutions listed below:

Resolution

To re-elect Richard Cranfield

To re-elect Neil Holden

To re-elect Michael Howard

For

61.85%

66.79%

50.20%

Against

38.15%

33.21%

49.80%

On 9 November 2021, the Company provided an update
on its engagement with shareholders to better
understand the reasons why the above resolutions were
voted against.

Analysis of the voting activity, along with the matters
discussed in investor meetings, indicate that voting
against the resolutions reflected:

▪ board composition concerns, including reaching gender
and diversity targets, as set by the Hampton-Alexander
and Parker Reviews;

▪ board tenure;

▪ inadequate disclosures on ESG matters and not having
appointed a non-executive director to have board level
oversight of ESG for the Group; and

▪ past board meeting attendance deemed insufficient for

Michael.

Actions taken by the Company to date include those
outlined in its announcement of 1 September 2021, which
include Neil resigning as non-executive director of the
Company on 1 September 2021 and Rita being appointed
as a non-executive director on 22 September 2021. In
addition, Victoria has been appointed the Non-executive
director for environmental and social sustainability and
Rita has been appointed the Non-executive director
responsible for employee engagement.

With respect to Michael’s attendance at board meetings,
as he is located in Australia, local travel restrictions
imposed due to COVID-19 have made it unfeasible for
him to attend board meetings in person. The board
meeting times have since been adjusted to allow for
Michael to attend remotely from Australia and his
attendance for the year had been 100%.

By order of the board,

Richard Cranfield
Chair

15 December 2021

74 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

AUDIT AND RISK
COMMITTEE REPORT

Statement from the Chair

As Audit and Risk Committee
Chair, I am pleased to present the
Committee’s report for 2021. The
report sets out Committee governance
and the work the Committee has
undertaken this year.

BDO completed ten years as Group
Auditor in 2019 and the external
audit would ordinarily have been put
out for tender in financial year 2020,
however due to the pandemic the
Company applied for, and was
granted, a one year extension by the
FRC, which meant the audit tender
process was undertaken in the
current year.

A rigorous, considered, competitive
tender process was overseen by the
Committee in the first half of 2021

and it was announced on 28 June
2021 that Ernst & Young LLP had
been appointed, with effect from
financial year 2022, subject to
approval at the Company’s 2022
Annual General Meeting. Ernst &
Young will audit the entire Group,
which includes the two life companies
currently audited by KPMG.

We look forward to working with
Ernst & Young over the coming years
and, on behalf of the Committee, I
would like to thank BDO for their
contribution and hard work over
the last eleven years.

Caroline Banszky
Chair, Audit and Risk Committee

15 December 2021

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 75

GOVERNANCE continued

Neil resigned from the Committee on
1 September 2021 as he had served
10 years on the ultimate parent
company board and was no longer
considered independent. The
Committee recorded their thanks for
Neil’s hard work and contribution
over the years.

COMMITTEE GOVERNANCE

We meet at least four times each
year, in line with the Company’s
governance schedule. We met seven
times during this financial year, with
all committee members in
attendance. Apart from meetings to
discuss the external auditor tender,
we maintained focus on the Group’s
risk management, internal controls
and accounting processes and
procedures, to ensure there are
continuing, appropriate levels of
external and internal audit and risk
assessment to cover all material risks
and controls, including financial,
operational and compliance processes
and procedures.

The IHP CEO, the IFAL CEO, Group
Chief Financial Controller, Group
Counsel and the Group Head of
Internal Audit were routinely invited
to and attended the majority of
Committee meetings, although the
Committee reserves the right to
request any of these individuals to
leave the meeting. The Group’s
external auditor, BDO, also attended
specific Committee meetings for
external audit planning and reporting
purposes. I met privately with the
Group Chief Financial Controller,
Head of Internal Audit, Head of
Actuarial and Risk, external Audit
Partner and Head of Assurance at
BDO to discuss issued reports and
relevant financial reporting and
regulatory developments.

The members of the Committee as at 30 September 2021 were:

Date of appointment

Caroline Banszky (Chair)

22 August 2018

Victoria Cochrane

Robert Lister

28 September 2018

4 September 2019

76 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

During the year, we engaged an
external party to perform an external
quality assessment of the Internal
Audit function. The assessment
considered the effectiveness and
independence of the Internal Audit
function, and its adherence to the
International Internal Audit
Standards and the UK Code for
Internal Audit in Financial Services.
Overall, the Committee was satisfied
that the results of the external
quality assessment concluded that
the Internal Audit function was
independent and effective.

Internal audits

There were a number of internal
audit engagements completed during
the year. The results of these internal
audit engagements were discussed,
and follow up actions were reviewed
or requested where necessary. The
internal audit engagements included:
audits of the Group’s monitoring of
key system-automated processing;
corporate actions processes; key
management information reported to
the Group’s boards; the Financial
Projections Model, including viability
testing; the system change testing
process; UK and Isle of Man tax
reporting; and client assets and client
money compliance.

Furthermore, co-source internal audit
engagements, using external IT
security testing experts, were
completed on IT security across the
Group’s sites and IT environments. In
addition, the Group’s IT security was
also assessed and benchmarked
against good practice IT Security
standards. The results of these audit
engagements and assessments were
presented to the Committee, and the
Committee asked additional
questions, and received appropriate
answers, on the robustness of the
Group’s IT Security arrangements.

The Internal Audit function also
completed a review of the Group’s
major business operational processes
and assessed the risk management
and internal controls for these
business processes.

Composition of the
Audit and Risk Committee

All Committee members are
independent non-executive directors.
In adherence with the Code, both the
Audit and Risk Committee Chair and
Neil have recent and relevant
financial experience, and are also
qualified accountants.

On an ongoing basis, membership of
the Committee is reviewed by the
Chair of the Committee, in
collaboration with the Nomination
Committee, and any
recommendations for new
appointments are made to the board.

The Group also provides initial and
ongoing training for Committee
members to support them in carrying
out their duties effectively.

Role of the Audit and Risk
Committee

Our purpose is to provide oversight
and advice to the IHP board and we
have overall responsibility for the risk
management (including fraud risk)
and internal control processes of the
Group. This aids the board of IHP in
fulfilling its responsibilities of:
presenting a fair, balanced and
understandable assessment of the
Group’s position and prospects; and,
establishing financial and operational
controls and risk management across
the IHP Group.

We report our findings to the board,
identifying any matters in respect of
which we consider action or
improvement is needed, and we
make recommendations on the steps
to be taken.

The Audit and Risk Committee terms
of reference can be found at:
https://www.integrafin.co.uk/
corporate-governance/.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 77

GOVERNANCE continued

THE COMMITTEE’S WORK THROUGH THE YEAR

Area of focus

Work conducted

Going concern
and viability

▪ The directors are required to make a statement in the Annual Report on IHP’s long-term viability.

The Committee provided the Board with advice on the form and content of that statement. In
advance of the year end, the Committee reviewed the Group’s proposed stress test scenarios and
the assumptions underlying them, used to support the Viability statement.

▪ At the year-end, management provided a report to the Committee setting out its view of IHP’s

long-term viability and the proposed Viability statement based on the Group’s three year business
plan. This report included, at both an individual Company and consolidated Group level, forecast
outcomes of the business plan under the stress scenarios agreed with the Committee, detailing
capital and liquidity performance against an assessment of risk appetite. The report was produced
on financial data to 30 September 2021 and included consideration of an extended COVID-19
scenario and other scenarios as set out on pages 53 to 54, both individually and combined.

▪ The Committee discussed whether the choice of a three-year period remained appropriate. It

concluded that this remained appropriate due to the nature of the business. Taking account of
the assessment of the Group’s stress testing results, the Committee agreed to recommend the
Viability statement and three-year viability period to the Board for approval.

▪ The Committee concluded that the Group has sufficient financial resources and liquidity and is
well placed to manage business risks in the current economic environment, having considered
the potential impacts of COVID-19 together with other risks, and can continue operations for
the foreseeable future. The Committee has therefore concluded that the going concern basis
is appropriate.

Risk
management

▪ Oversaw the risk management framework and reviewed its effectiveness in relation to IHP, and

how Group companies have implemented the framework.

▪ Reviewed the regular quarterly risk reports presented by Risk Management to ensure the business

continues to operate effectively with the appropriate risk profile under the home working
environment.

▪ Reviewed and challenged the Risk Reports presented by the Head of Actuarial and Risk for IHP,

and considered the progress of management action taken in order to address management points
raised on IHP specific risks.

▪ Assurance was sought from the Chair of the IFAL Risk Committee that management points raised

have been addressed through appropriate management actions.

▪ Assisted the board in maintaining an appropriate culture within the Group, which emphasises and

demonstrates the benefits of the risk-based management of the Group.

▪ Considered the points escalated from the Group Company boards or committees which affect IHP,

or the Group as a whole.

78 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Area of focus

Work conducted

Financial
reporting

▪ Reviewed and challenged the financial reporting undertaken by the Group, with input and

support from the Group’s external auditor.

▪ Reviewed the Annual Report and financial statements, half-year reports, interim management

statements and other formal announcements relating to financial performance.

▪ Reviewed and recommended the Annual Report and financial statements and the half-year

report to the board with an emphasis on ensuring that the report is fair, balanced and
understandable.

▪ Considered the consistency of accounting policies and the financial reporting process.

▪ Reviewed the accounting for, and reporting of, the acquisition of T4A in the year.

▪ Reviewed the key accounting and financial risks and the steps taken by management to address
them. Further information on the key financial and non-financial risks can be found on pages 49
to 51.

▪ Reviewed the External Auditor report. The report confirmed that the External Auditor found no

issues with non-compliance with Group accounting policies, and that there has been no material
change to accounting policies during the financial year.

▪ Considered the disclosures, in particular the new disclosures under IFRS 3.

Accounting
judgements and
estimates

The Committee assessed and challenged the appropriateness of the judgements and estimates
applied by management in the preparation of the Annual Report. This included consideration of
the following:

▪ Deferred acquisition costs and deferred income liability

▪ Considered the revised treatment of the above balances, and management’s conclusion that

no prior year restatement was required.

▪ T4A acquisition

▪ Reviewed the key assumptions used in the identification and measurement of the intangibles

and goodwill upon the acquisition of T4A, as well as the fair value measurement of the
different types of consideration.

▪ Investments held for policyholder and linked liabilities

▪ Reviewed the key assumptions used in the valuation of the above balances, including the

methodology for valuing assets based on unobservable market inputs.

▪ ILUK tax provisions

▪ Considered the response to the prior year overstatement in respect of the calculation and

treatment of the policyholder tax provision. The Committee was satisfied that the assumptions
and judgements used in the current year are appropriate.

Following consideration of the above, the Committee concluded that there are no items that
should be classified as critical accounting estimates or judgements in the Annual Report and
financial statements.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 79

GOVERNANCE continued

Internal audit
effectiveness
and reporting

▪ Received and challenged Internal Audit reports at Committee meetings. The reports detailed

audits of IHP (and related Group entities) recently completed, including the co-sourced IT Audits
and any control recommendations made to management, and management response.

▪ Reviewed all internal audit reporting escalated by the IFAL Group Audit Committee, or activities
within other companies in the Group, which represent a significant risk to the Group as a whole.

▪ Approved the Group Internal Audit Plan, including specific areas of review on matters relating to

IHP.

▪ Received updates from the Chair of the IFAL Audit Committee on the management actions in

response to the findings and recommendations of internal audit reports.

▪ Noted the conclusion of the Internal Audit report that there were no significant deficiencies that

would need to be disclosed in the Annual Report.

▪ Assurance sought on the adequacy and security of the Group’s arrangements for employees and
contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or
other matters.

▪ Assurance sought that these arrangements allow proportionate and independent investigation of

such matters and appropriate follow up action.

▪ Received reports on matters relevant to the financial reporting processes including assurances

on internal controls, processes and fraud risk.

▪ Based on the scale and focus of the work conducted by Internal Audit during the year, and the
results of an external quality assessment of the Internal Audit function completed during the
year, the Committee concluded that the Internal Audit function is working effectively and
independently and that the team is appropriately qualified and staffed.

Effectiveness
and
independence of
the external
auditor

▪ Evaluated the external auditor’s independence, objectivity and compliance with ethical and

regulatory requirements.

▪ BDO has been the Group External Auditor for eleven years and Justin Chait has been the lead
audit partner for two years. The Company put the external audit contract out for competitive
tender during 2021. Following the tender process, we made a recommendation for the
appointment of Ernst & Young to the board, to be put to shareholders for approval at the AGM.

▪ Reviewed the current external auditor’s remuneration and whether fees for audit and/or non-

audit services are appropriate.

▪ There are no contractual or similar obligations restricting the Group’s choice of external auditor.

IHP’s external auditor, BDO, has confirmed that it remains independent.

▪ The Committee remains satisfied with the performance and effectiveness of BDO and has
concluded that BDO continues to display the necessary attributes of independence and
objectivity. The Company is in compliance with the requirements of The Statutory Audit Services
for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014, in the year ended 30 September 2021.

▪ The external auditors did not provide non-audit services, they provided Other Assurance
Services which were required by regulation, in line with the FRC’s revised 2019 ethical
standards. The cost of Other Assurance Services are disclosed in note 8. In addition, KPMG
provides audit services to the Company’s life insurance company subsidiaries, ILUK and ILInt.

80 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Whistleblowing

▪ The Group encourages employees to raise their concerns within the existing line management

structure but, recognising that not all concerns can be effectively managed through those
channels, the Company also provides the means for confidential reporting of concerns by
contacting any of three nominated internal individuals who will investigate the issues raised. The
Company provides for employees to make anonymous reports of suspected wrongdoing via a
portal.

▪ Neil, as a member of the IFAL Audit Committee, is a key contact in the Whistleblowing Policy and
fulfils the role of “whistleblower’s champion” under the Senior Managers’ Regime whilst Caroline
as Chair of the Audit and Risk Committee has oversight of Whistleblowing for the Group.

▪ We reviewed the Whistleblowing Policy and the framework for reporting, and confirmed that they

are appropriate to the Group structure and organisation.

Committee self-evaluation

We conducted a self-assessment of our own effectiveness in September. The Committee has considered the outputs and will
seek to implement improvements as deemed necessary.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 81

GOVERNANCE continued

NOMINATION COMMITTEE
REPORT

Statement from the Chair of
the Nomination Committee

non-executive director on the board
of the Group’s main operating
regulated subsidiary, IFAL, and Chair
of the UK life company subsidiary,
ILUK.

I am pleased to present the
Nomination Committee’s report for
2021.

The primary purpose of the
Committee is to develop and
maintain a formal, rigorous and
transparent procedure and to lead
the process for board and Committee
appointments and reappointments,
including making recommendations
to the board. To achieve a balanced
board, the Committee considers the
board’s size and composition, the
extent to which skills, experience and
attributes are represented and the
need to maintain high standards of
corporate governance.

We meet at least once a year in
accordance with the Company’s
governance schedule and the
Committee’s terms of reference. We
met five times during the financial
year due to increased board and
senior management succession
planning.

Succession planning

There were a few board changes
during the year. On 26 February 2021
Ian Taylor retired from the board
after twenty years with the Group.
We thank Ian for his tireless work
and dedication to the Company’s
success, and wish him well in his
retirement. On 1 September 2021,
Neil resigned as independent
non-executive director and on 22
September Rita was appointed as
independent non-executive director.
Neil still remains an independent

Senior management succession
planning continues to be a key focus
of the Committee. Tom Dunbar was
appointed Chief Development Officer
of IFAL in April 2021, a role
previously held by Jonathan, prior to
his appointment to the board. This
appointment forms part of the
Company’s ongoing leadership
succession plan and will help support
the execution of the Group’s long-
term strategic goals. The
Committee’s focus has now turned to
strengthening the succession plan to
other executive and senior
management roles as the recent
changes have become established.

Diversity and inclusion

Inclusivity throughout the business is
important to us and we continue to
focus on this by developing our
diverse talent pipeline. I am pleased
to report that we have met the
Hampton-Alexander Review’s target
of 33% representation of women on
our board (2020: 20%) and 67%
female representation in roles which
we define internally as our senior
management equivalent. Since Rita’s
appointment, we have also met the
Parker Review’s recommended
target. We are aware that there is
still some work to be done on
developing diverse talent at the
executive, senior management and
direct report levels and this is being
considered in the Group’s ongoing
leadership succession plans.

82 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

The Group is proud to have a culture
of promoting from within the
organisation. This not only includes
traditional vertical promotions, but in
many cases opportunities to move to
different departments within the
Group and learn new skills or
undertake professional development.
This approach ensures that we
develop a pool of talented individuals
who may have the potential for
succession into senior roles. We
support staff by providing relevant
training, assistance and resources to
help them succeed in their new roles.
In the last year, 55 employees
accepted internal job opportunities.

Effectiveness

An internal board evaluation
effectiveness review was conducted
during the year. It concluded that the
board and its Committees continued
to operate effectively. The Senior
Independent Director also met with
the directors to appraise my own
performance, and Victoria and I have
discussed the feedback received.

Richard Cranfield
Chair, Nomination Committee

15 December 2021

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 83

GOVERNANCE continued

Committee Governance

Committee membership during the year

The members of the Nomination Committee at 30 September 2021 were:

Name

Date of appointment

Richard Cranfield (Chair)

1 August 2019

Victoria Cochrane

28 September 2018

Christopher Munro

2 February 2018

Alexander Scott

2 March 2020

the Company, through the SID,
engaged with shareholders to
understand their views on the
composition of the Committee. The
feedback did not indicate any concern
with the current composition. We will
continue to listen to our shareholders
and keep the position under review
but no change to the Committee’s
composition is proposed at this time.

The Group provides initial and
ongoing training for Committee
members, to support them in
carrying out their duties effectively.
This is delivered by in-house
technical staff, through the
attendance at formal conferences
as required, and an in-house training
programme.

Role of the
Nomination Committee

The role and responsibilities of the
Nomination Committee are set out in
its terms of reference which can be
found at www.integrafin.co.uk/
corporate-governance/.

Composition of the
Nomination Committee

In adherence with the Code,
the majority of members of the
Nomination Committee are
independent non-executive
directors. The Chair of the board
chairs the Committee. However, he
does not chair when the Committee
is dealing with nominating a
successor to the Chair.

The CEO is a member of the
committee as permitted by the Code.
We note that some proxy advisory
companies advise a vote against.
However, we believe that the CEO
contributes valuable insight into the
composition of the management
team, interaction of the board with
management and cultural fit of
candidates to the board and senior
management team and that his
membership of the Committee does
not affect the independent decision
making by the Committee. The CEO
will always recuse himself from any
discussion or recommendation as to
his own successor. During the year

84 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

The Committee’s work through the year

Area of focus

Work conducted

Board
appointments

▪ Considered the independence of the non-executive
directors and made recommendations to the board.

Internal
evaluation of
the board

Succession
planning

▪ The Company Secretary assisted the Chair in preparing

internal evaluations for completion by all board
members. The evaluations were for the Board, all
Committees, individual board members, and for the
Chair. A written report was then provided to the Chair,
which was shared with the Board and actions were
agreed, with the exception of the evaluation of the
Chair which was provided to the SID and discussed
directly with the Chair.

▪ Reviewed the skills, experience, expertise and

composition of the board with a view to recommending
to the board, succession plans for the board and senior
management team.

▪ The Committee met with candidates for the role of
independent non-executive director and provided a
recommendation to the board.

Diversity was a key consideration in the Committee’s
recommendation for appointment of a new board member,
whilst still taking into account finding
a candidate with the most appropriate skills and experience.

Composition of the board

Age profile of the board
(number of directors)

Tenure of board
(number of directors)

The board membership comprises
a mix of long-standing and more
recent appointments who collectively
deliver a balance of historical
knowledge and industry experience.

45-50

50-55

60-65

65-70

70+

0-3 years

3-6 years

6-9 years

Board gender split
(%)

Ethnic diversity of the board
(%)

Women

Men

Caucasian

Ethnitically
Diverse

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 85

GOVERNANCE continued

BOARD SKILLS MATRIX DISCLOSURE
(number of directors)

Financial Services

Actuarial

Asset/Fund Management

Audit

Legal/Risk/Compliance/Governance

Technology

Insurance

Executive management

ESG

People

Diversity

The board has a Diversity Policy
which is reviewed and assessed
annually. It is the Board's policy that
new appointments to any group or
subsidiary board are made on merit,
taking into account the different
skills, industry experience,
independence, knowledge and
background required to achieve a
balanced and effective board.

In identifying suitable candidates for
appointment to the board, the
Committee will consider candidates
on merit against objective criteria
and with due regard for the benefits
of diversity on the board.

During the search process for the
appointment of a new independent
non-executive director in 2021, the
board took into consideration the
above factors when assessing
suitable candidates. An external
search firm, Tyzack Partners, was
retained to assist with the director
search.

Tyzack Partners provided an initial
longlist of seventeen candidates.
From this list we interviewed five
candidates and selected Rita Dhut.
We felt that Rita brought a greater
understanding of IT skills to the
board, as well as having experience
of managing assets.

The owner of Tyzack Partners is
known to Richard Cranfield but the
Committee is satisfied that there was
no conflict of interest in the
appointment of Tyzack Partners to
undertake the search.

Committee self-evaluation

The Nomination Committee
conducted a self-assessment of its
own effectiveness in 2021 with the
assistance of the Company Secretary.
In addition to considering the
composition of the Committee as
described above, the internal
evaluation considered the
performance of the Committee and
concluded that the Committee
continues to be effective.

86 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Following Neil’s resignation, Robert
was appointed to the Committee.
Robert has extensive relevant
experience of remuneration having
been a member of the Investec
Wealth and Investment Remuneration
Committee for the duration of his
appointment, and chaired the
Committee for five years. Robert is
also currently a member of the
finnCap plc Remuneration
Committee. I know that Robert will
bring new perspective to the
Committee discussions.

Reviewing the Directors’
Remuneration Policy

During 2021, the Committee
undertook a review of the executive
remuneration framework. This review
included meeting with significant
shareholders and other stakeholders
to discuss the Policy and the
proposed changes. We concluded
that the current framework has
served the business and shareholders
well, and as a result, we are not
proposing any fundamental changes
to the framework nor seeking
increases to quantum.

In the new Policy, target
shareholdings and post-employment
shareholdings will be required by
executive directors going forward.
Further details of this are included in
the new Policy and can be found on
pages 96, 111 and 116.

The Committee also recommended to
the board that a triennial review of
non-executive director remuneration
be undertaken. The board reviewed
the outcome of an external
benchmarking exercise and the new
arrangements were agreed and
implemented. Further details are set
out on page 73.

DIRECTORS’
REMUNERATION REPORT

Statement by the Chair of the
Remuneration Committee

Remuneration overview

On behalf of the board, I am pleased
to present the Directors’
Remuneration Report for the year
ended 30 September 2021.

Our current Directors Remuneration
Policy (‘Policy’) was approved by over
98% of shareholders at the 2019
AGM. In line with the three-year
renewal cycle, we will be seeking
shareholder approval for a new Policy
at the AGM in early 2022. The
proposed new Policy is set out on
pages 94 to 101 and we believe that
the Policy reflects the Company’s
approach to responsible executive
remuneration which is aligned with
the workforce.

Since the 2020 report, Transact has
continued to grow despite the effects
of the COVID-19 pandemic and, as at
30 September 2021 has 208,600
client investment portfolios, £52.11
billion of funds under direction and
574 staff across the Group
companies.

We continued to retain a loyal
workforce, with more than 27% of
our staff having been with the Group
for longer than 10 years.

Committee member changes

On 1 September 2021, Neil stepped
down as a Committee member and
from the board. Neil joined the Group
in 2011 and joined the Committee at
the time of the IPO and held the
position of Chair from 2018 until
2020. I would like to thank Neil for
his support and contribution to the
Committee both as Chair and as a
member. We are pleased that Neil
remains with the Group as a non-
executive director of our main
operating subsidiary, IFAL.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 87

GOVERNANCE continued

It remains one of our key principles
to create, maintain and improve
value provided to our customers,
shareholders and employees.
Whenever possible we are committed
to sharing profits between all three of
these stakeholders, and we believe
all three should benefit from any of
the Group’s activities.

Our reward philosophy remains
unchanged. We take a very
distinctive approach to remuneration.
We have set out further rationale to
our approach to executive director
remuneration on pages 91 and 92.
The key features of our reward
framework are as follows:

▪ Base salary – Our remuneration is
structured in such a way that the
level of base salary represents a
sufficiently high proportion of the
total remuneration. As a result
employees are not required to
maximise their income through
significant variable remuneration
awards. The Group pays basic
salaries which are benchmarked
regularly and are set at a level to
attract and retain staff but the
Group does not remunerate above
market rate. Senior roles’ fixed
remuneration does currently sit in
the lower quartile of the FTSE250
which ultimately reduces the
directors’ total remuneration
compared to other listed firms.

▪ Relatively modest additional

incentives – Above basic salary,
our maximum total additional
incentive opportunity is 100% of
salary per annum. Ordinarily, we do
not expect total annual variable
remuneration awards to exceed
65% of salary.

▪ Distinctive approach to

performance measurement – We
do not have mechanical
performance targets which apply to
variable pay awards, because we
believe that applying formulaic
measures can lead to undesirable

behaviours and/or outcomes.
Instead, the Committee exercises
independent judgement and
discretion when authorising
remuneration outcomes, taking into
account both Company and
individual performance. Our
performance measurement
framework considers at least four
“quantitative anchors” – financial
performance; stakeholder
outcomes; risk, regulation and ESG;
and strategy delivery.

▪ Alignment with wider workforce –
Our approach to remuneration for
executive directors is consistent
with that for all employees.
Executive directors received basic
pay increases in line with those
awarded to the wider workforce.
Our incentive structure is aligned
across the workforce and all
employees are made awards under
the same performance framework.
The pension policy for executive
directors is equivalent to that of the
workforce and at 1% for Alex and
1% for Jonathan, the actual
employer pension contributions
made in respect of executive
directors are well below the 12.3%
of salary contribution available to all
employees. Employees (including
the executive directors) may elect
to sacrifice their remuneration and
receive additional employer
contributions. Our current pension
arrangements therefore align with
the new Corporate Governance
Code.

▪ Share ownership – Our executive

directors are significant
shareholders in the Company and
with the exception of employees of
T4A, all UK and Isle of Man based
staff with the required accrued
service are invited to become
shareholders by way of the all staff
Share Incentive Plan (SIP) which we
are delighted to report, during
financial year 2021, has once again
had a 100% uptake for Free Shares

88 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

and has had an 85.75% uptake for
Partnership and Matching shares.

Remuneration outcomes for year
ended 30 September 2021

In summary, we believe in simple
and transparent reward linked to
Group success and personal
performance and delivered in a way
that does not drive undesirable
behaviours or encourage excessive
risk taking:

▪ We have designed our remuneration

structure to be inclusive and to
align executive remuneration with
that of the work force.

▪ We encourage share ownership by
our executive directors and senior
management to align the success of
the business with their own and
support this by way of Company-
operated share ownership plans.

▪ We operate an HM Revenue &

Customs tax-advantaged Share
Incentive Plan (SIP) for UK and Isle
of Man employees, as well as a
parallel scheme for our Australian
employees.

▪ The Group’s deferred bonus share
option plan has a maximum award
opportunity of 33% of salary.

▪ We do not operate a long-term
incentive plan as we believe
long-term targets have the potential
to drive inadvertent behaviours.

▪ For executive directors, we

reference performance against four
key areas – financial performance;
stakeholder outcomes; risk,
regulation and ESG; and strategy
delivery, taking a holistic approach
to reviewing performance.

We believe our distinctive approach
to remuneration supports both the
objectives of the Group, our
shareholders and our other
stakeholders and is aligned to the
key principles shared between us.

The Company achieved strong
financial results with an increase in
profit before tax of £7.8 million
(14%). Directors’ salary and bonus
awards were made in accordance
with the Policy. Salary increases were
in line with the pay rise awarded to
all staff at 2.5% for Alex and
Jonathan, compared to the award of
3.2% to all those UK and IoM based
staff who were eligible for an award.
Directors’ bonuses were awarded
within the parameters of the Policy.
Alex was awarded a cash bonus of
30% and a bonus award deferred
into shares of 31%. Jonathan was
awarded a cash bonus of 30% and a
bonus award deferred into shares of
31%. Michael did not receive a
bonus.

In making these awards the
Remuneration Committee considered
the quantitative anchors and in
particular, the financial performance
of the Company over the financial
year, the delivery of the business
strategy, the impact of the reduction
in charges to clients and other ESG
factors such as maintenance of staff
engagement as evidenced by the
stable turnover levels.

We are pleased with the support we
have received in the past from
shareholders with over 98% approval
for our previous Remuneration Policy
in 2019 and over 81% for the Annual
Remuneration Report at the 2021
AGM. We have engaged with
shareholders who voted against the
2020 report and have enhanced our
disclosures in response to feedback
received. I hope that you find this
year’s report informative and look
forward to receiving your continued
support at the forthcoming AGM.

Signed on behalf of the IHP
Remuneration Committee

Christopher Munro
Chair, IHP Remuneration
Committee

Alignment with shareholders

15 December 2021

We are mindful of our shareholders’
interests and are keen to ensure a
demonstrable link between reward
and value creation. We remain
committed to an open and ongoing
dialogue with our shareholders
regarding executive remuneration
and we welcome feedback on the
updated Policy.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 89

GOVERNANCE continued

REMUNERATION ‘AT A GLANCE’

Element

Operation

Out-turns 2021 and implementation in 2022

Base salary

▪ Increases will take into account a number
of factors including the scale of the role
and the individual’s experience and wider
workforce increases.

▪ The salary increase awarded was 2.5% for Alex and
2.5% for Jonathan which was in line with the UK and
IoM workforce increase of 3.2%.

Salary with effect from 1 June 2021:

▪ Alex Scott, CEO: £433,000

▪ Jonathan Gunby, Executive Director: £433,000.

Benefits1

▪ Includes, for example, death in service and

▪ Benefits for Alex and Jonathan comprise private

private medical insurance.

healthcare.

Pension

▪ The pension policy is equivalent to that of the

▪ Alex received a £4,000 pension contribution (0.9%).

wider workforce.

▪ The executive directors’ current pension

arrangements are lower than those of the
workforce.

▪ Jonathan received a £4,000 pension contribution (0.9%).

Annual bonus and
deferred bonus
award of shares

All employee share
plan

Shareholding
guidelines

Non-executive
director fees

▪ Total maximum opportunity is 100% of salary.

▪ Ordinarily, we do not expect awards to be in excess

▪ The committee retains flexibility to adjust the
balance between cash and deferred bonus
awards within the parameters set out in this
policy and the scheme rules.

▪ The deferred bonus awards will usually vest on

the third anniversary of the grant date.

▪ Deferred bonus awards granted under the
Company’s PSP are subject to malus and
clawback provisions as described below.

of 65% of salary.

▪ The Committee uses judgement and discretion when
determining outcomes under the annual bonus and
deferred bonus awards.

▪ Outcomes are made by reference to the four
quantitative anchors – financial performance;
stakeholder outcomes; risk, regulation and ESG, and
strategy delivery.

▪ For 2021 Alex was awarded a cash bonus of 30% and
a bonus award deferred into shares of 31%. Jonathan
was awarded a cash bonus of 30% and a bonus award
deferred into shares of 31%.

▪ The plan is operated in line with HMRC guidance.

▪ Executive directors are eligible to participate in the

all-employee SIP on the same terms as all employees.

▪ Executives are expected to build up and hold 100% of salary in shares over four years, for in-employment

shareholding guidelines.

▪ Post-employment, these guidelines will apply in full (i.e. 100% of salary) for the first year post departure

and taper down to half (i.e. 50% of salary) for the second year post departure. This policy does not apply to
shares purchased with an Executive’s own funds and will apply only to awards that vest after this
Remuneration Policy is approved.

▪ Fees are paid quarterly

Fees with effect from 1 October 2021:

▪ Board Chair: £140,000

▪ Base fee for non-executive director: £70,000

▪ Additional fee for chairing a Committee: £10,000

▪ Additional fee for role of Senior Independent

Director: £7,500

1 Directors are entitled to receive an employee discount on platform charges, in line with all employees.

90 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

STATEMENT OF VOTING
AT THE AGM

The Company remains committed to
ongoing shareholder dialogue and
takes a close interest in voting
outcomes. The following table sets
out voting outcomes in respect of the
resolutions relating to approving
directors’ remuneration matters at
the Company’s AGM for the last two
annual meetings:

YEAR

RESOLUTION

VOTES FOR /
DISCRETIONARY

% OF VOTE

VOTES
AGAINST

% OF VOTE

VOTES
WITHHELD

2021

2020

Approve the
Remuneration
Report

181,687,872

81.57

41,040,519

18.43

4,742,263

190,331,885

96.47

6,967,430

3.53

4,682,400

Policy review - The IntegraFin
approach to executive
remuneration

Our approach to executive director
remuneration is distinctive and, we
believe, aligned to our culture, our
strategy and our success to date.
We considered it afresh as part of our
triennial Policy review and still
believe that it supports our success.

Modest incentive quantum

Our incentives are exceptionally
modest when compared to other
FTSE 250 companies. We operate
only an annual bonus with a portion
deferred into shares, and the level
normally does not exceed 65% of
salary. This approach aligns to our
values and culture. A comparison
with a more typical FTSE 250
package is illustrated below.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 91

GOVERNANCE continued

ILLUSTRATIVE FTSE 250 PACKAGE

INTEGRAFIN APPROACH TO EXECUTIVE PAY

Salary

▪ Market rate

Salary

▪ No more than

market rate

Bonus max
150% of salary

▪ Deferral of half

for 3 years

▪ Targets set up front

Bonus max
100% of salary

▪ Maximum of 100%

of salary, but ordinarily

not expected to exceed

65% of salary

Performance
shares max
175% of salary

▪ Performance period

of 3 years + 2-year

holding period

▪ Targets set up front

No long
term
incentive

▪ Typical deferral of

half for 3 years

(33% of salary max)

▪ Performance assessed

on “look-back” basis

We believe that our performance
measurement framework is the best
way to achieve this and support our
culture.

Performance is assessed within a
framework which includes
consideration of four quantitative
anchors. Individual performance is
also considered. There are no
prescribed pre-set targets. Instead,
the Committee considers qualitative
and quantitative actual performance
within a pre-agreed framework.

As illustrated above, our overall
incentive levels are exceptionally
modest, and we believe that our
distinctive approach to incentives and
assessing performance should be
viewed in this context.

Why we do not operate a
traditional long term incentive
plan (LTIP)

We firmly believe that a traditional
LTIP with three year time horizons
would, for our business model, drive
the wrong behaviours and potentially
have unintended consequences. We
do not believe that high performance
pay upside, measured over just three
years, is a pay model which aligns to
proper long-term thinking and
stewardship of our business.

The low level of variable
remuneration enables us to be
flexible in the balance of immediate
and deferred reward without driving
behaviours which are predicated on
enhancing short-term outcomes. Our
experience is that this policy does not
impair executive performance or the

recruitment or retention of talent
in key roles in the organisation.

Approach to performance
measurement

We use a “look-back” approach when
it comes to assessing performance
and determining bonus outcomes.
This is designed to promote long-
term thinking, and to promote
actions which deliver long-term
success.

A critical contributor to the success
of the Group is the high standard of
client service delivered, collectively,
by our staff. Our unique business
model and focus on customer service
makes it difficult for us to set “hard”
targets. For example, even with
strong inflows, short-term
movements in the FTSE can have an
impact on our short-term profit. We
want to focus on growing inflows in a
controlled and responsible trajectory
in order to maintain the level of
customer satisfaction. Our approach
is to drive sustainable long-term
value for all of our stakeholders.

92 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

PERFORMANCE ASSESSMENT - OUR FOUR QUANTITATIVE ANCHORS

Financial performance

Salary

Stakeholder outcomes

Salary

Risk and regulation
(including ESG)

Salary

Strategy delivery

Approach to performance assessment is underpinned by the Remuneration Committee considering

qualitative and quantitative performance within this framework

(individual performance is also considered)

The Committee considers this to be a controlled, responsible and modest approach to executive pay in the round,
particularly in the context of low overall quantum

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 93

GOVERNANCE continued

DIRECTORS’ REMUNERATION
POLICY

The Directors’ Remuneration Policy
set out below is proposed for
shareholder approval at the Annual
General Meeting to be held in early
2022. Subject to shareholder
approval, the 2022 Remuneration
Policy will take effect from the date of
the 2022 AGM.

We have reviewed our existing
Remuneration Policy in light of
IntegraFin’s evolving strategy and
shareholder feedback, however we
have not proposed to make any

Policy table

significant changes. There is only one
key change from the Policy approved
at the 2019 AGM and that is the
addition of in-employment (and
post-employment) shareholding
guidelines. Other minor changes
have been made to either aid
administration or further clarify
information.

The Policy was developed over the
course of 2021. The Committee
undertook a thorough review of
arrangements with a particular focus

on alignment to IntegraFin’s forward
looking strategy and aspirations.
Input was received from the
Chairman and management while
ensuring that conflicts of interest
were suitably mitigated. The
Remuneration Committee Chair met
with a number of shareholders to
understand their perspective on the
Remuneration Policy. The Committee
also considered carefully corporate
governance developments. Input was
provided by the Committee’s
appointed independent advisers.

Element

Link to strategy

Operation

Opportunity

Performance
measures

None

Salary

Benefits

The purpose of
the base salary is
to attract and
retain executive
directors with the
necessary skills,
experience and
expertise.

The purpose of
the Company’s
staff benefits
arrangements is
to attract and
retain executive
directors and
employees with
the necessary
skills, experience
and expertise and
to support their
wellbeing.

Base salary is normally reviewed
annually.

There is no overall maximum
monetary opportunity or cap on
annual increase. Increases will
take into account a number of
factors including, but not limited
to, the scale of the role and the
individual’s experience, and
increases awarded to other staff.

There is no maximum
monetary value.

None

The Company offers a Death in
Service scheme to all staff with
benefits set at four times base salary.

The Company also offers all
employees and their families the
opportunity to participate in a private
medical insurance scheme. The
executive directors have both
participated in the medical insurance
and life assurance schemes.

Other benefits may include buying
and selling of holiday, season ticket
loans, child care vouchers and
discounts on local retailers, eye tests
and discounts for those with portfolios
on the Transact platform. The benefits
provided may be subject to
amendment from time to time by the
Committee within this policy.

Additional benefits may be provided
from time to time (for example in
circumstances where an executive
director is deployed to, or recruited
from overseas). The Committee will
consider whether any additional
benefits are appropriate and
proportionate.

94 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Pension

The purpose of
the employer
contribution to
pension
arrangements is
to attract and
retain directors
for the long-term
and to contribute
to retirement
income.

Contributions are by way of a defined
contribution to the Group’s
contractual enrolment pension
arrangement and by way of employer
matching contributions to a salary
sacrifice personal pension
arrangement.

The maximum company
contribution in respect of
salary-based employer pension
contributions is 12.3% of
salary. This is currently in line
with that of the wider
workforce.

None

In line with our approach for
all employees, executive
directors may also sacrifice an
element of their annual bonus
into their pension, subject to a
prescribed limit. The
companywide policy is that in
these circumstances, and up
to a prescribed limit, a match
is made in part to reflect the
benefit of the employer
National Insurance
Contribution saving. It is
anticipated that the maximum
additional pension under this
arrangement would be 7.5%
of salary.

The pension contribution for
executive directors will not
exceed that of the wider
workforce. Wider workforce for
the purposes of pension
contributions is defined by the
Committee as it considers
appropriate.

The overall maximum limit in
respect of the total annual
bonus is 100% of salary.
However this level of award
would only be made in
exceptional circumstances.

Deferred bonus awards would
normally be made under the
Performance Share Plan rules,
where awards are capped at
33% of base salary.

Performance is assessed
within a framework
which includes
consideration of:

▪ Financial Performance
Stakeholder outcomes

▪ Risk and Regulation

(including ESG)

▪ Strategy delivery

Individual performance
is also considered.
There are no prescribed
targets. Instead, the
Committee considers
qualitative and
quantitative actual
performance within the
above performance
framework.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 95

Annual
bonus
and
deferred
bonus

The purpose of
the cash bonus is
to reward staff by
reference to the
financial success
of the Group with
an adjustment for
individual
performance.

The purpose of
the deferred
bonus is to
support
long-term
retention of
senior staff and
alignment with
the long-term
delivery of the
Group’s strategy
aligned with
stakeholder
interests.

Bonus awards are considered
annually after the end of the financial
year. All bonus awards to executive
directors are made at the discretion
of the Committee.

The Committee retains flexibility to
determine each year the proportion
of the bonus in cash and in deferred
shares, and any performance
condition if authorised by the board.

Where awarded, vesting of a bonus
award deferred into shares will
usually be on the third anniversary of
the grant date.

Dividends do not accrue on the
shares that are the subject of
deferred bonus awards, although the
Committee has the discretion to
award dividend equivalents as further
described below. In certain
circumstances the Committee has
the right to reduce or withhold the
deferred bonus award and has
limited rights to recover deferred
bonus awards already made, as
further described below.

GOVERNANCE continued

All
employee
share
plan

The purpose of
the SIP is to align
the interests of
all employees
– including
executive
directors - and
shareholders.

Executive directors are eligible to
participate in the all-employee share
incentive plan (SIP) in place on the
same terms as all employees. The
scheme is operated in line with HMRC
guidance.

The SIP is subject to the limits
set by HMRC from time to
time.

None

The Committee may make an
award to participants of Free
Shares up to the value of 3%
of salary or £3,600 (whichever
is lower) and may permit
participants to subscribe for
Partnership Shares up to the
value of 1.5% of salary or
£1,800 (whichever is lower).
For every Partnership Share
purchased, the Company has
agreed to award two Matching
Shares. The £3,600 and
£1,800 limits are set by
applicable legislation and will
be revised automatically in the
event of any changes to the
legislation.

In addition to the above, executive
directors are expected to build up
and hold shares equivalent to 100%
of salary over four years whilst they
are in employment. Post-
employment, this guideline will
continue to apply in full for the first
year post departure and at half of
this level for the second year post
departure, reducing to zero after two
years. This policy does not apply to
shares purchased with an executive’s

own funds and will apply only to
awards that are awarded after this
Remuneration Policy is approved.

Michael receives nil remuneration
from the Company for his executive
appointment to the Company, but his
employer ObjectMastery Services Pty
Ltd receives a fee of AUD80,000 for
his executive appointment to
Integrated Application Development
Pty Ltd (IAD Pty), a company within
the Group.

96 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Chair and Non-executive directors

Approach to fees

Operation

Opportunity

Other items

To attract non-executive
directors with relevant
experience to ensure the
appropriate balance on the
board and the effective
management of the
Company.

Non-executive director
fees are reviewed
periodically but at least
triennially. The review is
by reference to the time
commitment and
responsibility of the role
and will not necessarily
result in an increase.

None of the non-executive
directors, including the
Chair, is eligible for
performance-related
remuneration or share
awards.

There is no maximum fee.

The fees are subject to
maximum aggregate
limits, as set out in the
Articles of Association.

The Company reimburses
reasonable expenses
incurred by the Chair and
non-executive directors in
the performance of their
duties. This includes (but
is not limited to) travel
expenses and tax thereon
and independent
professional advice.

Approved payments

Minor amendments

The Committee may make minor
amendments to the Policy (for
regulatory, exchange control, tax,
administrative purposes or to take
account of a change in legislation)
without obtaining shareholder
approval for that amendment.

The Committee reserves the right to
make any remuneration payments
and/or payments for loss of office
(including exercising any discretions
available to it in connection with such
payments) notwithstanding that they
are not in line with this Policy where
the terms of the payment were (i) in
line with the previously approved
Directors’ Remuneration Policy (ii)
agreed before the 2019 AGM (the
date the Company’s first shareholder-
approved Directors’ Remuneration
Policy came into effect) or (iii) at a
time when the relevant individual
was not a director of the Company
and, in the opinion of the Committee,
the payment was not in consideration
for the individual becoming a director
of the Company. For these purposes
“payments” includes the Committee
satisfying awards of variable
remuneration and, in relation to an
award over shares, the terms of the
payment are “agreed” at the time the
award is granted.

Share plan operation and
discretion

The Committee has discretion in
several areas of the Policy. The
Committee may also exercise
operational and administrative
discretions under the relevant plan
rules approved by shareholders as
set out in those rules.

The deferred bonus share awards will
be governed by the rules adopted by
the board from time to time. Awards
under any of the Company’s share
plans referred to in this report may:

▪ Have any performance conditions

applicable to them waived or
amended by the Committee if an
event occurs which causes the
Committee to determine an
amended or substituted
performance condition would be
more appropriate and not materially
less difficult to satisfy.

▪ Incorporate the right to receive an

amount (in cash or additional
shares) equal to the value of
dividends which would have been
paid on the shares under an award
that vest up to the time of vesting.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 97

GOVERNANCE continued

▪ Be settled in cash at the
Committee’s discretion.

Performance measures and
targets

Awards granted under the deferred
bonus share plan will not be subject
to performance conditions unless the
board determines otherwise, in which
case the Committee will determine
the performance conditions that
apply to any awards to executive
directors.

Malus and clawback

The plan under which deferred bonus
awards are intended to be made
contains malus and limited clawback
provisions, whereby the Company
can reduce an unvested award, or
clawback from a vested or unvested
cash bonus, SIP or deferred bonus
award during any period when the
employee has an unvested deferred
bonus award. This ability is limited to
the following circumstances:

(i) the employee’s gross misconduct;

(ii) a material misstatement and/or
significant downward revision in
financial results;

(iii) an error in relation to the extent
to which an award has vested and/or
been granted;

(iv) any other circumstance which
the Committee considers has (or
would have if made public) a
sufficiently significant impact on the
reputation of the Company to justify
clawback applying; or

(v) if the Company is required to
operate clawback by any relevant
regulator. Clawback only applies
when there are unvested awards.

Under our performance measurement
framework, the Committee considers
detailed management information
which is linked to the Group’s
‘quantitative anchors’.

The quantitative anchors are
designed to support our key principle
to create, maintain and improve
value to our four groups of
stakeholders – customers,
shareholders, suppliers and
employees. They have been
developed to reflect our commitment
to our stakeholders, support the
Company’s culture and ensure
alignment with our strategy.

They may include factors such as
financial performance, risk,
compliance, conduct, internal
controls, ESG, stakeholder outcomes
and delivery of strategy.

The anchors are not linked to
numeric targets and no portion of an
executive director’s variable
remuneration is allocated to the
delivery of an individual target.
Rather, the Committee considers the
holistic performance of the executive
director across all of the anchors and
takes into consideration external
factors outside the Company’s
control. The Company believes that
by looking at the performance of the
directors by reference to delivery of
all of the anchors, the directors are
focused on the delivery of sustainable
performance in the context of
internal and external factors, rather
than managing delivery of any one or
more outcome to the detriment of
others.

98 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

▪ Where an executive director is
required to relocate from their
home location to take up their role,
the Committee may provide
assistance and include benefits such
as relocation (either via one-off or
on-going payments or benefits) or
tax equalisation.

▪ In the event that an internal

candidate is promoted to the board,
legacy terms and conditions would
normally be honoured, including
pension entitlements and any
outstanding incentive awards.

To facilitate any buyout awards
outlined above, in the event of
recruitment the Committee may
grant awards to a new executive
director relying on the exemption in
the Listing Rules which allows for the
grant of awards, to facilitate, in
unusual circumstances, the
recruitment of an executive director,
without seeking prior shareholder
approval or under any other
appropriate Group incentive plan.

The remuneration package for a
newly appointed non-executive
director would be in line with the
structure set out in the policy table
for non-executive directors on pages
90 and 97.

The Committee is aware that the
Policy and its limits may put it at a
competitive disadvantage should the
Company need to hire a new
executive director externally. If a
higher maximum award level is
required on the basis of recruitment
the Company will put forward a new
policy for shareholder approval at
that time.

Recruitment remuneration

When determining the remuneration
package for a newly appointed
executive director, the Committee
would seek to apply the following
principles:

▪ The package should be market-

competitive to facilitate the
recruitment of individuals of
sufficient calibre to lead the
business. However, the Committee
would intend to pay no more than it
believes is necessary to secure the
required talent.

▪ When determining the design and
composition of the package, the
Committee will consider the size,
content and scope of the role, the
candidate’s skills, experience and
expertise and the market rate for
the role.

▪ New executive directors will

normally receive a base salary,
benefits and pension contributions
in line with the policy described on
pages 94 to 101 and would also be
eligible to join the annual bonus and
deferred bonus share option plan up
to the limits set out in the Policy.

▪ Where an individual forfeits
outstanding variable pay
opportunities or contractual rights
at a previous employer as a result
of appointment, the Committee may
offer compensatory payments or
awards, in such form as the
Committee considers appropriate,
taking into account all relevant
factors including the form of
awards, expected value and vesting
timeframe of forfeited opportunities.

▪ The maximum level of variable
remuneration which may be
awarded (excluding any “buyout”
awards referred to above) in respect
of recruitment is in line with the
current maximum limit under the
Policy table above.

Service contracts and
appointment letters

All executive directors have written
service contracts in place with an
employing company in the Group. All
non-executive directors have written
appointment letters with the
Company. Shareholders may inspect
the terms of the executive directors’
contracts or non-executive directors
terms of appointment at the
Company’s registered offices.

Executive directors’ service contracts
are terminable on six months’ notice
on either side. In the event that
notice is given to terminate an
executive director’s contract, the
Company may make a payment in lieu
of notice or place the individual on
garden leave. Entitlement to any
variable remuneration arrangements
will be determined in accordance with
the relevant plan rules and this Policy.

Executive directors’ service contracts
do not make any other provision for
termination payments. Provision is
made for salary, life insurance,
private medical insurance, pension
arrangements, holiday and sick pay.

The Chair and the non-executive
directors have been appointed for
three year terms, subject to renewal
thereafter. The Chair and non-
executive directors each have notice
periods of three months and may
receive fees during their notice
period. The Chair and non-executive
directors may receive independent
professional advice.

The Chair and the non-executive
directors receive no benefits from
their office other than their fees and
the reimbursement of expenses
incurred in the performance of their
duties and the benefit of directors’
and officers’ liability insurance. They
are not eligible to participate in the
Group pension arrangements or life
insurance arrangements.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 99

GOVERNANCE continued

The Company reserves the right to
make such payment as may be
necessary to discharge its legal
obligations to the director, or by way
of settlement of any claim arising in
connection with the cessation of a
director’s office or service, including
reimbursement of legal expenses.

Annual bonus
Annual bonus payments may be
made if the Committee consider it
appropriate. Any payment would be
pro-rated for time and normal
performance considerations would
apply. In line with the normal policy,
the award may be in cash or deferred
shares.

Deferred bonus awards
If an executive director dies, the
Committee may permit deferred
bonus awards to be exercised within
the 12 month period immediately
following death.

If an executive director is a good
leaver, unvested deferred bonus
share awards will normally vest on
the vesting date. The Committee has
discretion to permit awards to vest
early on cessation of employment.
“Good leaver” means ceasing
employment due to injury, ill-health,
disability, redundancy, or the
employing company or undertaking
ceasing to be under the control of the
Company, or any other reason at the
discretion of the Committee.

If a director leaves other than as a
good leaver or on death, any
unvested deferred bonus share
awards may ordinarily lapse on
termination of employment. The
Committee has discretion to permit
the executive director to retain and
exercise such awards until the end of
the exercise period, or such earlier
date as the Committee may
determine.

In any case, where the executive
director ceases to be an employee
before the vesting date of an award,
the award will be reduced pro-rata to
the proportion of the vesting period
worked, unless the Committee
determines otherwise and, if the
award is subject to performance
conditions, the Committee shall also
have the discretion to determine the
extent to which performance
conditions have been met or may
waive the performance conditions.

All Staff Share Incentive Plan (SIP)
SIP awards are not forfeitable on
leaving and SIP shares will be
transferred to the executive director
upon leaving.

Change of control

On a change of control or voluntary
wind-up of the Company, deferred
bonus awards, which have been
earned in respect of previous
performance periods, will normally
vest in full, but may be reduced
pro-rata to the proportion of the
vesting period up to the relevant
corporate event, unless the
Committee determine otherwise. If
the awards are subject to
performance conditions, the
Committee will also have the
discretion to determine the extent to
which performance conditions have
been met, or may waive the
performance conditions. The
Committee may determine an annual
bonus in respect of the performance
period within which the change of
control occurs may be made, taking
into account the performance
framework and pro-rated for time.
The Committee has the discretion to
treat a demerger of the Company
that is an exempt distribution as an
early vesting event on the same
basis as a change of control.

Payment for loss of office

In the event that the employment of
an executive director is terminated,
any compensation payment will be
determined by reference to the terms
of the individual director’s service
agreement and the individual’s
statutory rights. The Company may
at its discretion make a payment in
lieu of notice equal to base salary,
pension, contributions (or cash
equivalent) and the cost of providing
life assurance and private medical
benefits only. The Company may, at
the Committee’s discretion, make the
payment by way of a lump sum or by
instalments over what would have
been the notice period and might be
subject to mitigation.

The Company may place the
executive director on gardening leave
for the duration of their notice period.

It is the Company’s intention that the
service contracts for any new
executive directors will contain
equivalent provisions.

100 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Consideration of shareholder
views

Whilst the Committee did not directly
consult with shareholders in the
shaping of the Remuneration Policy,
the Chair of the Committee met with
several investors to share the ethos
behind the Policy to explain the
rationale for the structure of
executive remuneration, and to
better understand shareholders’
perspective. The Committee
welcomes shareholders’ views on
executive remuneration. In the
formulation of the Remuneration
Policy, the Committee took into
account general good governance,
best practice and shareholder and
investor guidance.

The Remuneration Committee takes
the view of shareholders very
seriously when making any changes
to executive remuneration, and it is
the Committee’s intention to consult
with major shareholders in advance
of making any material changes to
remuneration arrangements.

Scenario charts

The chart below illustrates the
amount the executive directors could
receive in the first year in which the
policy is in operation. The charts are
based on the following assumptions:

PAY SCENARIO BASIS OF CALCULATION

Minimum

Average

Maximum

Fixed pay only, consisting of the salaries as at the
beginning of 2022, benefits received in 2021 and
£4,000 pension

Fixed pay as at the beginning of 2022, plus the
expected value of cash bonus (30%) and the deferred
bonus share option plan vesting at threshold (33%)

Fixed pay as at the beginning of 2022, plus the
maximum combined cash bonus and deferred bonus
share option plan at 100%

All scenarios exclude share price growth and dividends.

Consideration of employment
conditions elsewhere in the
Company

Remuneration arrangements are
determined throughout the Group
based on the same principle, which is
to create, maintain and improve our
value to our four groups of
stakeholders – customers,
shareholders, suppliers and
employees. Whenever possible we
are committed to sharing our success
between employees, customers and
shareholders through a balanced
approach to responsible pricing,
balanced remuneration and
sustainable dividends.

Our commitment to our stakeholders
is reflected in our approach to
remuneration which is consistent for
all employees. The Committee is
focused on ensuring reward is aligned
to our culture and our strategy, and
alignment with the wider workforce is
a key feature of our distinctive
approach to remuneration.

Our incentive structure is aligned
across the workforce and all
employees are made awards under
the same performance framework. In
line with our remuneration principles,
pension contributions for executive
directors are aligned with those
available to the wider workforce and
executive directors do not receive
any benefits which are not available
to all employees.

Whilst the Committee does not
specifically consult with employees
on its Remuneration Policy for
executive directors, we are mindful of
the salary increases, the pension and
benefits framework and bonus
awards applying across the whole
business when considering the
remuneration package of executive
directors.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 101

GOVERNANCE continued

15%

32%

19%

17%

15%

32%

19%

17%

100%

64%

53%

100%

64%

53%

1000000

900000

800000

700000

600000

500000

400000

300000

200000

100000

Minimum

Average Maximum

Minimum

Average Maximum

Alexander Scott

Jonathan Gunby

Fixed pay

Cash bonus

Effect of share price increase

(1) Were the Company’s share price
to increase by 50%, Alex Scott’s total
actual remuneration would increase
to £919.8k under a ‘maximum’
scenario – driven by the increased
value of deferred bonus awards
(granted under the deferred bonus
share option plan and SIP).

(2) Were the Company’s share price to
increase by 50%, Jonathan’s total
actual remuneration would increase to
£919.8k under a ‘maximum’ scenario
– driven by the increased value of
deferred bonus awards (granted under
the deferred bonus share option plan
and SIP).

102 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

DIRECTORS’ REMUNERATION
ANNUAL REPORT

This report details the remuneration
arrangements in place for people who
were directors of the Company during
the financial year. Ian Taylor resigned
from the board of the Company on
26 February 2021.

There have been no changes to
directors’ remuneration throughout

How the Policy was applied in 2021

the year save for the annual bonus
award made in December 2020 and
the annual pay award made in June
2021.

Wider workforce/T4A

Note that throughout this report,
there are various references and/or
comparatives to the wider workforce

or the wider UK workforce. In all
instances, at this point in time, this
currently excludes T4A employees
whilst their pay arrangements
continue to be integrated into and
aligned with the IntegraFin business.
It is anticipated that in the future
these references will include T4A
employees.

Summary of total remuneration – executive directors (audited)

Gross
Basic

Salary Benefits Pension

Total
fixed
pay

Annual Bonus

LTIP Other2

Cash
bonus

Deferred
shares

Total
variable
pay

Total

Director

Year £’000

£’000

£’000 £’000

£’000

Alexander
Scott

Jonathan
Gunby

Michael
Howard3

Ian
Taylor

2021

2020

2021

2020

2021

2020

2021

2020

426

356

425

351

116

331

431

364

430

359

116

359

130

135

130

134

136

132

136

130

273

275

273

272

176

704

639

703

631

118

535

1 Benefits for Alex and Jonathan were £795 for 2021 and £665 for 2020. Benefits for Ian were £412 for 2021 and £27,553 for 2020. The difference in the 2020 values is the value of overnight accommodation for Ian. The difference in

the 2021 values for Alex and Jonathan and the value for Ian reflects Ian’s resignation part way through the year.

2 Other remuneration relates to Share Incentive Plan awards and the employee discount on platform charges.

3 Michael received nil remuneration from the Group, but his employer, ObjectMastery Services Pty Ltd, receives a fee of AUD 80k for his executive appointment to IAD Pty Ltd, a company within the Group.

Base salary

The executive directors’ basic annual salaries are reviewed annually. The basic annual salaries for Alex Scott and
Jonathan were reviewed in June 2021 in accordance with the Company’s all-employee pay review resulting in the
following changes to the annualised salary figures:

Director

Basic annual salary at
1 June 2021 £’000

Salary effective at 1
June 2020 £’000

Alexander Scott

Jonathan Gunby

Ian Taylor

433

n/a

422

4171

2782

1 Jonathan and Alex were awarded the same basic salary in 2020 however Jonathan gave up salary to purchase additional annual leave. Jonathan did not purchase annual leave in 2021 because of the travel restrictions applying
during the COVID-19 pandemic.

2 Ian Taylor did not receive a pay rise as the review occurred subsequent to his resignation from office.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 103

GOVERNANCE continued

Benefits

Executive directors do not receive
any benefits which are not available
to all employees. Benefits for
executive directors comprise private
health care and an employee
discount on platform charges.

Incentives

The Company has a distinctive
culture focused on customers,
shareholders and employees. Our
incentive structure has been
developed to support this culture:

▪ Alignment across all staff - All
staff are eligible for an annual
bonus award. Our incentive
structure is fully aligned across the
workforce and all employees are
made awards under the same
performance framework.

▪ Aligned pension provision - The

majority of UK and Isle of Man
employees, including executive
directors have access to three
pension arrangements which
interrelate. It is key that, except for
employees of T4A, which was
acquired by the Company in
January 2021, the Company’s
executive directors are not eligible
for pension benefits which differ
from or exceed those available to
other UK staff.

i) Salary Sacrifice pension.
Employee (incl directors) can fund
as much as they wish. The
Company will match 1% of basic
annual salary for every 2% of basic
annual salary sacrificed, up to a
maximum of 4% employer
contributions.

ii)Employer-funded contractual-
enrolment company pension
scheme. Employer contributions are
9% of post-pension-sacrifice salary
but participants may elect to reduce
that if contributions would exceed
HMRC tax-free contribution
allowance. If an employee does not
sacrifice into (i) above, the

employer contribution to the
contractual enrolment company
pension scheme will be 9% of basic
or lower.

iii) Staff are eligible to sacrifice a
maximum of 25% of any variable
cash bonus award into their
pension. Any such contribution will
receive 30% employer contribution.
We believe that it is appropriate to
allow directors to continue to
sacrifice cash bonus into their
pension if they so wish. The
Company’s directors’ pension
funding arrangements are not
excessive and align completely with
those available to the wider
workforce. We believe that
facilitating directors to contribute to
their pension on the same basis as
the all-staff plan is consistent with
encouraging socially diverse
applicants to the board.

Australian-based employees of the
Group’s software development
company participate in a comparable
arrangement structured to comply
with the Australian tax rules.

In January 2021, the Company
acquired T4A, a wholly-owned
subsidiary providing adviser back
office support technology. T4A
operates an employer and employee
funded auto-enrolment scheme. All
employees of T4A, including
executive directors who do not hold
executive office elsewhere in the
Group, are able to participate on
equivalent terms.

We continue to look at the synergies
between the T4A remuneration
structure and that of the wider
workforce, but will not make any
significant changes to the
arrangements currently in place
without due consideration of the
Company’s and employees’ interests.

104 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

▪ Modest incentive opportunity
– Our maximum total incentive
opportunity for executive directors
is 100% of salary, and in practice
we do not expect awards to exceed
65% of salary.

▪ Cash bonus and deferred shares

– The Company operates a
directors’ discretionary bonus
arrangement with the anticipated
award of 65% of basic salary
arranged as follows:

i) Immediate Cash bonus
Target 10% of salary awarded in
November and settled in December.

ii) Deferred cash bonus
10% of salary paid in February
and a further 10% in April provided
the director remains in service and
not in their notice period by reason
of being a “bad leaver”.

Each element is only payable if the
employee remains employed on the
payment date. We believe that this
both rewards performance and
encourages loyalty.

iii) Deferred bonus into shares
The Company operates a
discretionary deferred bonus share
option plan by which cash bonuses
of up to 33% of salary, less
employer-funded Free and Matching
SIP shares, are deferred into share
options. The holding period is three
years and there is no post vesting
holding period.

The plan therefore does not comply
with the components specified in
the Code relating to a phased
release of awards and a five year
holding period. We believe that a
three year vesting period is
adequate.

We maintain flexibility on the
proportion of each element of the
awards. Deferred bonus awards is
our preferred long-term alignment

mechanism and we do not operate a
long-term incentive plan. The
Company is focused on the long-term
delivery of outcomes which balance
the interests of customers,
employees and shareholders and this
is not best served by managing share
price outcomes linked to vesting and
exercise dates but rather by ensuring
that executive behaviour is focused
on investment in the platform and
ancillary activity in accordance with
the Group’s strategy and purpose.

Our performance framework is
also distinctive. We do not set
predefined targets. Instead the
Committee considers qualitative and
quantitative actual performance
against four ‘quantitative anchors’:

▪ Financial Performance

▪ Stakeholder outcomes

▪ Risk and Regulation and ESG

▪ Strategy delivery

as well as individual performance.

Within these broad categories, the
Committee considers a wide variety
of management information available
to the board and its committees. The
Committee is not constrained by
particular metrics as these can
change year-on-year. The essence of
the process is to use the qualitative
anchors to arrive at a balanced
judgment as to whether an award is
warranted and, if so, at what level.

Annual bonus (cash and deferred
share) awards for the 2020/2021
financial year were as follows:

Director

Cash award

Deferred award

Alexander Scott

£130,000

Jonathan Gunby

£130,000

30% of
salary

£136,000

31% of
salary

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 105

GOVERNANCE continued

The cash and deferred award
percentages are by reference to the
basic salary on 30 September 2021.
This is aligned to the approach taken
for all employees.

The bonus for Alex is recommended
by the board Chair. The bonus for
Jonathan is recommended by Alex.
We considered detailed information
which covers factors such as financial
performance, risk, compliance,
conduct, internal controls, client and
client adviser metrics, and delivery of
strategy.

This year, as in past years, we
reviewed the board Chair’s and the
CEO’s proposals in that context, and
considered whether the executive
directors had delivered appropriate
stakeholder, financial and strategic
performance, whilst also managing
risk and maintaining internal
controls.

Each year, the Committee refers to
the quantitative anchors described
previously to frame that discussion
and challenge. The approach to
performance assessment is part of
our distinctive approach to
incentives, with relatively modest
incentive opportunity and a structure
which is aligned across the
workforce. We believe that applying
formulaic measures and targets can
lead to inadvertent behaviours and
outcomes which are not in the
interests of long-term sustained
performance. Instead, we exercise
independent judgement and
discretion when considering
remuneration outcomes.

For 2021, the assessment of whether
cash and deferred bonus awards
were justified was informed by the
following metrics and performance in
the year:

The Committee will look for delivery of financial performance against forecast (original
and adjusted), in accordance with projections and market expectations, but will take
into account any external factors outside of the Company’s control which might impact
final results e.g. sudden FTSE or global market movements.

In the context of delivery of those financial results, the Committee will look for
sustained service excellence within the context of managed expenses.

In 2021, the Company delivered:

▪ Well managed costs in a challenging market.

▪ Financial performance was delivered against both original and adjusted forecasts.

▪ Dividend flow and distributable reserves/regulatory capital from subsidiaries to

support Group dividend managed effectively.

▪ Forward-looking projections indicate that the Company is well placed to sustain
performance over the coming year taking into account stress-tested scenarios.

In addition improved financial performance in other metrics (net inflows, earnings per
share, expense ratio, profit margin, share price and market cap) have also been
delivered.

QUANTITATIVE ANCHORS

Financial performance

106 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Stakeholder outcomes

Clients and advisers – we look for consistent growth in gross and net inflows and
sustained or improved market share of net inflows; sustained net promoter score and
adviser-voted industry awards as an indicator of adviser satisfaction with the
Company’s proposition; and the results of feedback through market research conducted
by the Company and by independent third parties.

In 2021, the Company delivered the following:

▪ Market share of gross inflows remained above 12% and net flows make up

approximately one fifth of the market.

▪ We have one of the strongest adviser ratings for Net Promoter Score of mainstream

adviser platforms and continue to sign up new advisers every month (these are a mix
of firms who are new to Transact and new advisers at existing firms).

▪ The Group received the 5 Star Investment award in the Financial Adviser Service

Awards.

▪ Topped the Platforum User Leaderboard in November 2021.

▪ Achieved top position in both the CoreData Investment Platform Study and the

Investment Trends UK Adviser Technology & Business Report for the eleventh year
running.

▪ Continued development of online application tools in response to demand for

paperless processes.

Employees - we review attrition rates and employee loyalty and seek feedback on
staff engagement from
the CEO.

In 2021:

▪ Employees remain loyal and committed to the organisation with 48% having
service of more than 5 years and 27% having service of more than 10 years.

▪ 100% of eligible employees took up the SIP free share award and 86% took up the

Partnership Share award.

▪ Employee surveys testing return to office and adaptations made to the plans in

response to feedback received.

Shareholders - we consider the distribution of dividends in line with projections and
the dividend policy.

▪ In 2021, the Company distributed dividends in accordance with its dividend policy.

Suppliers – we consider evidence of the performance and management of third party
suppliers, as well as the Company’s fair treatment of those suppliers.

▪ The Group settled 92% of its invoices within 30 days of receipt in the last fiscal year.

▪ The Company conducted a review of the supplier management process, appointed a

supplier manager and implemented a refreshed policy and procedure.

No one stakeholder is prioritised over the others and the Committee considers the
balance of the outcomes for stakeholders when determining the appropriateness of
variable remuneration awards.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 107

GOVERNANCE continued

Risk, regulation
and ESG

We consider the executive leadership of risk management by reference to capital
liquidity, operational resilience and compliance with regulatory requirements. Metrics
considered by the Committee as indicators of good or poor risk management include
complaint and error metrics, internal audit reports and findings, and the resolution
thereof.

The Committee considers delivery against all regulatory requirements applicable to the
Group, including those applicable to the Company as a UK listed plc and those
applicable to our UK investment firm, UK insurance and Isle of Man insurance
subsidiaries, as well as regulations applicable to the Group as employers and data
managers. When determining variable remuneration the Committee will consider any
non-compliance or sanction affecting the Group.

The Committee considers the internal governance of the Group both at board level and
through the subsidiaries and management structure and the interrelationship with the
delivery of the strategy and financial performance.

The Committee acknowledges that the Company is developing its environmental
response plan.

In 2021 the Company delivered:

▪ Continuation of successful remote working arrangements and development of hybrid

working capability in preparation for return to office working.

▪ Maintenance of capital liquidity and operational resilience during alternative working

arrangements.

▪ Ongoing engagement with the FCA, the PRA and the IoM FSA.

▪ Low and stable complaint and error and fraud rates despite an up-turn in the number

and frequency of fraud attempts both in the industry and against the Group.

▪ Internal Audit programme completed.

▪ Risks including regulatory compliance managed within appetite and minor risk

appetite breaches promptly identified and addressed.

The above achievements are also underpinned by the following:

▪ The Group has shown appropriate adherence to internal, legal and regulatory policies,

laws and rules and board reports demonstrate appropriate understanding and
implementation of regulatory change projects.

▪ Monitoring, auditing and other assurance activities demonstrate appropriate attention

to maintaining the internal control environment.

The Committee considers all of these aspects when determining the appropriateness of
a variable remuneration award. No individual weighting is applied to one or more of
these aspects so that the Committee has the flexibility to adjust the award by
reference to the impact of internal and external constraints on the delivery of each. For
example, delivery of a response to a regulatory market study or implementation of a
new regulatory regime may be prioritised over development of Task Force on Climate-
Related Financial Disclosures (TCFD) reporting. The Committee will consider the
appropriateness of that risk-based decision when determining the appropriateness of
an award, rather than being constrained by numeric targets, having cognisance of
decisions made by other Group committees that may have influenced executive
direction.

108 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

The Company has appointed Willis Towers Watson to advise on our TCFD and environmental
reporting and the Company is developing an action plan. Further information is provided in the
Chief Executives statement. The Company has also appointed Victoria Cochrane as non-
executive director for environmental and social sustainability. When the action plan has been
established, the Committee will receive input from Victoria and consider this alongside evidence
of delivery of the plan when assessing appropriateness of variable remuneration awards to
executive directors.

The Committee considers the steps taken to recruit and retain talent within the organisation. In
doing so, the Committee receives reports on staff numbers, recruitment and retention, internal
development opportunities by way of promotions and movement between departments and
business functions. The Committee also receives reports on the outcomes of staff surveys and
the steps taken by management to respond to survey and unsolicited feedback. The Committee
considers the appropriateness of executive reward in the context of these measures.

Strategy
delivery

We will look for continuous improvement in platform functionality responding to customer
feedback and delivering the objective of being the best platform provider.

Consideration will be given to the enhancement of the resilience of core platform and associated
services and the growth of ancillary services to enhance the adviser and client experience.

Consideration will also be given to the measures in place to facilitate client and adviser retention
and loyalty, and their relative success.

We consider evidence of growth in both the number of advisers and clients choosing to use or
remain with the platform and the number of advisers and groups using CURO but will do so in
the context of ongoing management of expenses.

The balance of these measures will be considered in the context of the overall delivery of the
platform strategy and the ancillary services offered to the client and adviser community such that
any award does not reward inappropriate emphasis on any one aspect of delivery.

In 2021, the key strategic deliverables by the Company were:

▪ Acquisition of T4A adding adviser back office service to the ancillary service offering to our

customers.

▪ Significant improvement in online platform functionality, widening the scope of the online

offering for clients and their advisers.

▪ Enhanced resilience of core platform and associated services.

▪ Growth in both the number of advisers and clients whilst improving efficiency.

▪ Continuing with the “matchmaking service” for advisers and collaboration with a third party

lender where finance is required.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 109

GOVERNANCE continued

How the Committee’s discretion
was applied

In determining the award for the
executive directors, we considered
the performance of the Group in
difficult market conditions, in
particular the effects of the continued
reliance on remote working and the
extent to which the Group met its
strategic objectives. The Committee
weighed up the performance of the
Company in 2021 and the future
projections in 2022 in the context of
the ongoing COVID-19 pandemic and
the objective of superior customer
service in a flexible working
environment and considered whether
the awards were sustainable given
the projections.

We also sought assurance that the
recommendations were made in
accordance with a balanced view of
future profitability and in the
interests of all stakeholders, not just
based on backward-looking
performance. The Committee
concluded that payment of the award
was sustainable in light of the
forward-looking projections and the
forecast performance of the Company
over the coming year.

In considering the anchors we
reviewed the performance of the
external market and the impact of
factors that the Group could and
could not control.

We reviewed the Company’s response
to the increased inflows, the
response to the prolongation of the
remote working model and the way
in which the executive directors lead
the business in ensuring that the
Company continued to delivery
service in the context of the volume
of activity and the agile working
environment.

We considered and challenged on
matters such as the external
employment market and the
Company’s preparedness for and
response to fluctuations in the
retention and attrition rate amongst
the work force, and to the growing
expectation that the hybrid working
model is a normal working pattern,
how the Group is responding to this
shift in employee expectations and
whether this has an effect on the
ability to recruit and retain talent.

We considered the impact of stock
market volatility on the Company’s
financial performance.

We considered the success of the
acquisition of T4A and the Company’s
steps to align the independent
businesses to deliver optimum
outcomes for customers.

Based on a holistic assessment of
Group performance, including
consideration of the 2021 outcomes
set out in the quantitative anchors
table above, and individual
performance, the Committee granted

Alex an overall award (cash and
deferred bonus shares) equal to 61%
of salary and Jonathan an overall
award (cash and deferred bonus
shares) equal to 61% of salary.

The deferred bonus award is granted
following the announcement of the
Group’s annual results. Awards will
vest after three years and will be
subject to malus and clawback
provisions as detailed in the Directors
Remuneration Policy. In certain
circumstances the Committee has the
right to reduce or withhold the
deferred bonus award. This includes
but is not limited to where there has
been a material misstatement and/or
significant downward revision in the
financial results, where the calculated
number of shares awarded to an
individual director is determined to
be too high, or where the Award
Holder has engaged in misconduct
justifying the director's summary
dismissal.

LTIPs

In line with the Group’s approach to
remuneration, no awards will be
made to executive directors that are
dependent on performance conditions
relating to more than one year and
no such award was made in financial
year 2021.

110 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

SIP

Pension Contributions

Executive directors are able to
participate in the SIP. The board may
make an award to participants of
Free Shares up to the value of 3% of
salary or £3,600 (whichever is lower)
and may permit participants to
subscribe for Partnerships Shares up
to the value of 1.5% of salary or
£1,800 (whichever is lower). For
every Partnership Share purchased,
two Matching Shares were awarded.
The £3,600 and £1,800 limits are set
by applicable legislation and will be
revised automatically in the event of
any changes to the legislation.

During financial year 2021, the
maximum SIP award was granted to
qualifying employees (including Alex
and Jonathan). The Partnership and
Matching Share Award was made on
an evergreen basis and therefore all
qualifying employees will be able to
continue to participate in the plan
unless it is revoked by the
Committee. Based on the Group’s
performance in 2021 the board has
not revoked that award. The board
has considered the Group’s
performance in financial year 2021
and, with the approval of the
Remuneration Committee, has
approved the making of a further
maximum SIP Free Share award to
qualifying employees (including Alex
and Jonathan) when the Company is
not in a closed period. This will be
following the announcement of the
Group’s financial results.

Pension contributions for Alex and
Jonathan are currently made by
reference to the relevant personal
allowance. In the 2021 performance
year the employer’s pension
contribution for both Alex and for
Jonathan was £4,000. In line with our
remuneration principles, pension
contributions for executive directors
are aligned with those available to
the wider workforce.

The minimum employer contribution
available to all-employees in 2020
was 9%. For employees other than
executive directors the Group has
made contributions to personal
pension arrangements for those
employees who have sacrificed
salary. Whilst this benefit is available
to executive directors, none of the
current executive directors has
sacrificed salary.

Shareholding guidelines

In employment
In this year’s directors’ remuneration
policy the Company proposes to
adopt in-employment shareholding
guidelines pursuant to which a
serving executive director must build
up and maintain a holding of
IntegraFin shares with a value (as
determined by the Committee) at
least equal to 100% of salary over a
period of four years. Unvested share
options awarded under deferred
bonus arrangements and shares
subject to other share awards which
are no longer subject to any
performance condition (including any
exercisable but unexercised awards)
count towards the requirement, on a
net of assumed tax basis where
relevant.

Post-employment
The Company has adopted post-
employment shareholding guidelines
pursuant to which an executive
director must retain for 12 months
following cessation of employment
such of their ‘relevant shares’ as have
a value (as determined by the
Committee) equal to the in-
employment guidelines most recently
applicable to them, and for a further
12 months such of their ‘relevant
shares’ as have a value (as
determined by the Committee) equal
to 50% of the in-employment
guidelines most recently applicable to
them. Shares which the executive
director has purchased or which they
acquire pursuant to share plan
awards granted before this Policy
came into effect are not “relevant
shares” for these purposes. The
Committee retains discretion to vary
the shareholding guidelines to take
account of compassionate
circumstances.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 111

GOVERNANCE continued

Percentage change in remuneration of directors compared to the
average employee

The table below shows the percentage movement in the salary, benefits
and annual bonus for the directors compared to that for the average Group
employee from FY2018 to FY2019, FY2019 to FY2020 and FY2020 to FY2021.
The Company has no employees and so this has been performed at Group
level.

SALARY AND FEES

BENEFITS

ANNUAL BONUS

Director

2019

2020

2021

2019

2020

2021

2019

2020

2021

Alexander Scott

56%

n/a

0.0%

20%

(9%)

64%

(-1%)

Ian Taylor

(32%)

n/a

(3%)

(41%)

n/a

(10%)

(43%)

n/a

Jonathan Gunby

n/a

3%1

n/a

20%

n/a

Mike Howard

n/a

Caroline Banszky

119%

n/a

Robert Lister

n/a

Christopher Munro

26%

(30%)

(14%)

n/a

Neil Holden

(100%)

n/a

Richard Cranfield

n/a

Victoria Cochrane

n/a

Rita Dhut

n/a

Average employee

27%

20%

13%

18%

1Jonathan’s basic salary increased 2.5% year-on-year however in 2020 Jonathan purchased annual leave and therefore received lower
basic and variable remuneration in 2020 than Alex.

The SIP scheme is provided to all staff, including executive directors, and is not included above.

112 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Notes to the table:

CEO pay ratio table

Ian Taylor resigned from the board
in February 2021. Ian received a
lower annual bonus in 2020 as a
result of the reduction of his basic
salary, following stepping down as
CEO and his accommodation costs
were reduced during the work from
home requirements due to
COVID-19.

Jonathan was appointed in 2020
and there is therefore no comparable
data for 2019.

Mike receives nil remuneration from
the Group.

Chris was appointed interim chair in
2019 and then stood down from this
position in 2020, which is why there
is a salary differential year-on-year.

The change in salary for the directors
is based on the salary as at 30
September for each financial year.

Some staff received a deferred share
bonus award in 2020 and 2021 which
is why there is a significant increase
from 2019.

The table does not include salary
and benefits movement for Australian
employees as their employment
benefit package differs from the UK
staff package in recognition of
different compensation and benefit
rules in Australia. It has therefore
been deemed inappropriate to include
their remuneration in this
comparison.

The following table sets out the ratio
of the CEO’s pay to each of the
Group’s median, lower quartile and
upper quartile pay for UK employees
for the last three years.

FINANCIAL
YEAR

METHOD 25TH

PERCENTILE
PAY RATIO

MEDIAN
PAY
RATIO

75TH
PERCENTILE
PAY RATIO

2021

2020

2019

Total
Remuneration

Salary Total
Remuneration

Method A

14:1
16:1

17:1
18:1

n/a
18:1

11.1
13.1

13.1
15.1

n/a
15:1

7.1
9.1

9.1
10.1

n/a
10:1

The reduction in the pay ratios between 2020 and 2021 are attributed to:

1) additional staff headcount in the year including those employees acquired
with T4A;

2) the grandfathering of remuneration and benefits for T4A employees; and

3) a change in distribution of earnings and demographic of employees within
the Group.

The salary and total remuneration ratios for 2021 above are based on the
following figures:

Financial year
2021

CEO*

25th
Percentile
Pay Ratio

Median
Pay Ratio

75th
Percentile
Pay Ratio

Salary

426,000

31,467

40,333

58,383

Total remuneration

704,000

43,202

55,004

79,335

The CEO pay ratios were calculated using ‘Option A’, set out in the Companies
(Miscellaneous Reporting) Regulations 2018. Under this method, the full pay
and benefits of each UK employee were used to identify those employees that
represented the Group’s median, lower quartile and upper quartile pay for UK
employees. The full pay and benefits of these employees were then used to
calculate the ratios as at 30 September 2021. The Group elected to use
Option A as its method of calculation as it felt that using the full pay and
benefits of all employees was the most accurate method of identifying those
employees that represented the Groups’ mean median, lower quartile and
upper quartile pay for UK employees. To determine the full time equivalent
pay and benefits of non-standard workers, part-time workers’ remuneration
was grossed up to the equivalent full time pay.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 113

GOVERNANCE continued

Executive director remuneration
compared to wider workforce

Relative importance of spend
on pay

The following table sets out the
percentage change in dividends
and overall spend on pay in the
year ending 30 September 2021,
compared to the year ending 30
September 2020. As in previous
years, the percentage change in
profit has also been included as it is
considered an additional relevant
indicator of relative importance of
spend on pay.

Our approach to remuneration for
executive directors is consistent with
that for all employees.

▪ Incentives - our incentive structure
is aligned across the workforce and
all employees are made awards
under the same performance
framework. For more senior
employees a portion is deferred
into shares.

▪ Pension - for all employees the

maximum company contribution
available in financial year 2021
was 14%. Whilst executive directors
are eligible to receive the same
level as (but no more than) all
employees, the pension currently
provided to executive directors is
less than 1% of salary, considerably
lower than the pension provided to
the workforce.

▪ SIP - all-employees receive SIP

shares based on Company
performance. This year the
maximum of 3% of salary (up to a
maximum of £3,600) was awarded,
with additional partnership and
matching shares available.

IFRS profit

Dividends

Employee remuneration costs

2021
£’000

51,106

28,500

34,590

2020
£’000

Percentage
change %

45,484

26,165

30,946

Payments to past directors
(audited)

Payments for loss of office
(audited)

No director received payment for loss
of office in 2021.

Ian and Neil resigned during the
policy year. Neither director received
a payment in respect of any period
after their contractual termination
date. No non-contractual payments
were made to either director either
before or after their termination date.

114 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Share awards made during the year (audited)

Type of interest
awarded

Basis on which award
made1,2

Date of
award

Face value
awarded3

Percentage
receivable
for minimum
performance

Number
of
shares
awarded

End
of
deferral
period

Alexander
Scott

Deferred
bonus

Conditional
share award

SIP

Free
Shares

Partnership
Shares

Matching
Shares

Dividend
Shares

33% salary less award
of SIP Free and Matching
shares

3% (Free and Matching
shares) of Salary subject
to maximum of £3600
each per annum and 1.5%
(for Partnership Shares)
subject to a maximum of
£1800 per annum

Jonathan
Gunby

Deferred
bonus

Conditional
share award

33% salary less award of
SIP Free and Matching
shares

14.01.21

£132,159

100% 23,985 14.01.2024

21.01.21

£3,598

100%

21.01.21

22.01.21
25.06.21

£1,800

£3,600

N/A4

638

343

686

41
30

14.01.21

£130,446

100% 23,674 14.01.2024

Ian Taylor Deferred

bonus

SIP

Free
Shares

Partnership
Shares

Matching
Shares

Dividend
Shares

Conditional
share award

3% (Free and Matching
shares) of Salary subject
to maximum of £3600
each per annum and 1.5%
(for Partnership Shares)
subject to a maximum of
£1800 per annum

21.01.21
21.01.21

21.01.21

22.01.21

25.06.21

£3,598

100%

£1,800

£3,600

638
343

686

N/A4

33% salary less award of
SIP Free and Matching
shares

14.01.21

£84,573

100% 15,349 14.01.2024

Free
Shares

Partnership
Shares

Matching
Shares

Dividend
Shares

3% (Free shares) of Salary
subject to maximum of
£3600 3% for Matching
Shares subject to a
maximum of £3,600 per
annum and 1.5% for
Partnership Shares subject
to a maximum of £1800 per
annum, both pro-rated for
the period in office

21.01.21
21.01.21

21.01.21

22.01.21

£3,598

£750

£1,500

100%

N/A4

638
146

292

1 Deferred share awards form part of the annual incentive, for which awards were determined based on performance to 30 September
2020.

2 SIP Free Share awards were determined based on Group performance to 30 September 2020. SIP Partnership and Matching awards
are loyalty awards. The awards are evergreen and are purchased monthly and will continue unless revoked by the Remuneration
Committee. The award date shown is the first purchase date following publication of the Company’s annual report and financial
statements but the amount reflects the award for the full financial year.

3 The face-value of the deferred bonus share award is calculated using average share price from 11 January 2021 to 13 January 2021
which was £5.51. The face value of the Free Shares is calculated using the share price paid by the SIP administrator on the date of
purchase which was £5.64. The face value of the Partnership and Matching Share award is calculated using the total number of
Partnership and Matching Shares bought on behalf of the relevant individuals during the financial year and an average share price for
matching share purchases.

4 The SIP is operated in line with HMRC guidance.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 115

GOVERNANCE continued

directors. During the 2021 policy
review, the Company considered the
Investor Association guidance which
recommends that executive directors
are required to hold two year’s basic
salary equivalent in shares, and the
relative shareholdings of incumbent
directors.

After consideration, the Company has
determined that a target
shareholding of one year’s basic
salary is appropriate given the
long-term commitment of the
directors to the Group to be achieved
within a four year period from
appointment and has proposed this
change in this year’s Directors’
Remuneration Policy which is being
presented to shareholders for
approval. The Company will include
shares held in the director’s own
name, those held in any pension over
which the director directs the
investment profile, and those

unvested shares held in an employee
share plan when determining
whether the level has been met.

The Company believes that it is
incompatible with social diversity to
require a new director to acquire one
year’s salary equivalent in shares in a
period any less than four years from
appointment. To do so would require
the director to be so economically
advantaged that it would exclude
individuals from wider, more diverse
backgrounds from taking up an
appointment with the board. The
Company believes that by limiting
the requirement to one year’s basic
salary, permitting the inclusion of a
wider range of shares and providing
a period of four years for the accrual
of those shares, the appropriate
balance is struck between inclusion,
and directors’ personal investment in
the long-term outcomes of the
Company.

Shareholding requirements and
directors’ share interests
(audited)

No share awards other than the all
staff Share Incentive Plan and the
deferred bonus Share Option Plan
award were awarded to executive
directors during the financial year.

In prior years, the Company has not
imposed minimum shareholding
requirements by its executive

Director/
Connected
person

1p
ordinary
shares

SIP
shares

Deferred bonus
share scheme
(no performance
conditions)

Vested but
unexercised

Options
exercised

1,148,260

5,518

71,137

803,665

5,518

70,351

Shares
held at
30.09.2021
Total

Shares
held at
30.09.2020
Total

1,224,915

1,199,192

879,534

886,488

32,000,000

35,538,247

1,003,324

7,500

10,000

6.015

6,015

Alexander
Scott

Jonathan
Gunby(2)

Michael
Howard

32,000,000

Christopher
Munro

1,003,324

Caroline
Banszky

Victoria
Cochrane

Richard
Cranfield

Rita Dhut

Robert
Lister

7,500

10,000

6,015

(1) Includes dividend reinvestment shares relating to SIP shares.

(2) Includes Cheryl Gunby shareholdings and family trusts controlled by Jonathan.

No directors have any vested or unvested share options as at the end of the 2021 Financial Year.

116 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Shareholder return Performance Graph and CEO pay over the same
period

This graph shows the Company’s total shareholder return performance from
Admission to 30 September 2021.

The Company has chosen to show total shareholder return against the FTSE
250 total return over the same period, as the board considers this to be the
most appropriate comparator.

TSR performance vs FTSE 250 since 2 March 2018

250

200

150

100

8
1
-
r
a
M

8
1
-
y
a
M

8
1
-
l
u
J

8
1
-
p
e
S

8
1
-
v
o
N

9
1
-
n
a
J

9
1
-
r
a
M

9
1
-
y
a
M

9
1
-
l
u
J

9
1
-
p
e
S

9
1
-
v
o
N

0
2
-
n
a
J

0
2
-
r
a
M

0
2
-
y
a
M

0
2
-
l
u
J

0
2
-
p
e
S

0
2
-
v
o
N

1
2
-
n
a
J

1
2
-
r
a
M

1
2
-
y
a
M

1
2
-
l
u
J

1
2
-
p
e
S

IHP

FTSE 250 TR

The following table shows the Chief Executive Officer’s remuneration for
FY2021:

CEO
remuneration

CEO single figure
of remuneration

Annual bonus
payout
(as a % of
maximum
opportunity)

LTIP vesting
out-turn
(as a % of
maximum
opportunity)

2021

20201

20191

2018

£704

£639

£751

£769

62%

72%

82%

83%

N/A

1 The CEO remuneration reflected in the table is for the incumbent CEO at that financial year end.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 117

GOVERNANCE continued

Chair and non-executive director
remuneration (audited)

There has been no increase to the
remuneration paid to the Chair and
non-executive directors during the
financial year. In respect of the
financial year ending 30 September
2021 the amounts are as follows:

Element of remuneration
by director

Year

Richard Cranfield

Caroline Banszky

Victoria Cochrane

Neil Holden

Robert Lister

Christopher Munro

Rita Dhut

2021
2020

Fees
£’000

100
100

60
60

60
70

2
n/a

Expenses
£’000

0
1

0
0

0
n/a

De minimis expenses are for reimbursement of extraordinary communication costs and taxable travel expenses
grossed up for the tax payable thereon.

118 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Committee membership during
the year

DATE OF APPOINTMENT

Christopher Munro (Chair)

19 January 2018

Richard Cranfield

11 December 2019

Robert Lister

1 September 2021

regulations, the provisions of the
Code, the requirements of the UK
Listing Authority’s Listing, Prospectus
and Disclosure Guidance and
Transparency Rules and other
applicable rules, as appropriate, and
to shareholder feedback.

Composition of the Remuneration
Committee

Since our last annual report the
board has appointed Robert to the
Committee, with Neil stepping down
as member. The Remuneration
Committee composition therefore
complies with the requirements of
the Code.

The Committee ensures that
members take individual
responsibility for identifying training
appropriate to their needs and for
keeping appropriate records of such
training. Each member provides
copies of their training record to the
Company Secretary annually and
undertakes all regulatory training
requested by the Group.

Committee meetings and
attendance

The Remuneration Committee meets
at least twice annually and more
frequently when required. The
Committee has met five times during
this financial year. Attendance by
each member as at 30 September
2021 is set out in the board and
committee attendance table on page
70 of this report.

Only members have the right to
attend Committee meetings.
However, other individuals such as
the CEO, directors of subsidiaries, the
Company Secretary, the Group
Counsel, the Head of Human
Resources and external advisers may
be invited to attend for all or part of
any meeting.

The Committee’s work
throughout the year

The Committee has performed its
duties with a view to aligning
remuneration with the successful
achievement of the Group’s long-
term objectives while taking into
account the Code, relevant regulatory
requirements, market rates and value
for money.

Role of the Remuneration
Committee

The purpose of the Committee is to
review, set and agree aspects of the
overall remuneration policy and
strategy for the Group and the total
compensation package for certain
officers and employees within the
Group. It does so with a view to
aligning remuneration with the
successful achievement of the
Group’s long-term objectives while
taking into account the Code,
relevant regulatory requirements,
market rates and value for money.

The Group monitors the list of
employees who are considered to be
Code Staff by reference to the
Financial Conduct Authority (FCA),
Remuneration Code and the
Prudential Regulation Authority
(PRA) remuneration requirements
for insurers. To the extent that the
Committee does not approve the
remuneration of Code Staff
individually, we consider whether the
total reward for each Code Staff
employee remains compliant with the
provisions of the Remuneration Code.
The Committee is also responsible for
reviewing a remuneration policy
statement (RPS) prepared by IFAL
setting out how the UK regulated
companies within the Group comply
with UK regulatory requirements on
remuneration.

In all its activities, the Committee
gives due consideration to laws and

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 119

GOVERNANCE continued

We have undertaken the following this financial year:

AREA OF FOCUS

WORK CONDUCTED

Governance

▪ Reviewing the Committee Terms of Reference to ensure their continuing

appropriateness.

▪ Reviewing the matters considered by the Committee and their alignment to the

responsibilities set out in the Terms of Reference.

▪ Evaluation of the performance of the Committee.

▪ Considering the membership of the Committee and the provisions of the Code.

▪ Reviewing appropriateness of the framework for NED and Chair fees prior to

consideration by the board.

▪ Reviewing the arrangements for delivery of the Committee’s responsibility for

compliance with the regulatory obligations applicable to Group entities and interaction
with the regulated entity boards.

Remuneration Policy

▪ Reviewing and recommending to the board for approval

of the Directors Remuneration Report.

▪ Reviewing Directors’ Remuneration Policy for 2022-2025

and proxy adviser feedback in relation thereto.

▪ Considering the Group staff remuneration policy and its alignment with directors’

remuneration.

Pay and Awards

▪ Reviewing the appropriateness of the proposed annual staff pay award by reference to

the RPS and the Remuneration Policy.

▪ Approving the proposed remuneration for the Company’s executive directors and

senior managers.

▪ Considering the appropriateness of remuneration for Code staff and the staff pay

award.

▪ Reviewing and, where appropriate, approving the making of PSP awards to executive

directors and senior managers.

▪ Approving the grant of the 2020 Free Share Award.

▪ Recommending to the board a review of the Non-executive pay structure and

confirming that the proposed structure is compliant with regulatory requirements.

120 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Committee self-evaluation

The Remuneration Committee
conducted a self-assessment of
its own effectiveness and a review
of the delivery of its responsibilities
under the committee Terms of
Reference. There were no material
findings.

UK Corporate Governance Code
– Provision 40

When developing the proposed
Remuneration Policy and considering
its implementation, the Committee
was mindful of the UK Corporate
Governance Code and considers that
the executive remuneration
framework appropriately addresses
the following considerations:

AREA OF FOCUS

OUR APPROACH

Clarity

▪ Our distinctive approach to remuneration supports the strategic objectives of the

Company, and we seek to communicate with stakeholders, including shareholders and
employees in a clear and transparent way.

Simplicity

▪ We consider that our remuneration framework is simple and effective. Our incentive

framework comprises only a cash bonus award, and all-employee share incentive plan
and a deferred bonus share option award.

Risk

▪ We believe our distinctive approach to performance measurement supports

appropriate consideration of risk management and a long-term view of the business.
Total remuneration is structured in a way which does not encourage short-term risk
taking in order to deliver financial outcomes for executives. The annual bonus rewards
performance against four quantitative anchors for the business, ensuring a holistic
view of business performance.

Predictability

▪ The maximum opportunities are outlined in the Directors Remuneration Policy. Taking into

account our more modest approach to incentives, total remuneration is more predictable in
comparison with other listed companies.

Proportionality

▪ Executive director remuneration is modest compared to practice in other listed

companies, and our approach is aligned with that of the wider workforce. As there
have not been any changes to the executive remuneration structure, there has been
limited need to engage with the wider workforce on this matter. However, the
Company does engage with staff on annual salary increases and reiterates that the
level of increase is consistent across the Group (including executive directors).

Alignment to culture

▪ Our approach to remuneration for executive directors is consistent with that for all

employees. Our remuneration structure is designed to be responsible, inclusive and to
ensure that we reward on merit. Our incentive structure and pension policy is aligned
across the workforce. We consider that our approach is fully aligned with our culture.

Advisers

Deloitte LLP (Deloitte) is retained as
an adviser to the Remuneration
Committee. Deloitte was appointed
by the Committee, and the
Committee is satisfied the advice
provided by Deloitte is objective and
independent. Deloitte is a founding
member of the Remuneration

Consultants Group and voluntarily
operates under the Code of Conduct
in relation to executive remuneration
consulting in the UK.

Deloitte has provided advice in relation
to reviewing the Directors’
Remuneration Report. For 2021, total
fees were £2,150, with fees on a time

and materials basis. Deloitte has
provided no other services to the
Company during the financial year.

In addition to Deloitte, Helen
Wakeford, Head of Legal and
Company Secretary, has provided
material advice and services to the
Committee during the year.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 121

GOVERNANCE continued

DIRECTORS’ REPORT

The directors present their report and
financial statements for the year
ending 30 september 2021.

The content of the ‘Management
Report’ required by the FCA
Disclosure and Transparency Rule
DTR4.1 is in the Strategic Report and
the Governance section of the Annual
Report and Financial Statements,
which also contains details of likely
future developments identified by the
board. This information is shown in
the Strategic Report rather than in
the Directors’ Report under sections
414 C (11) of the Companies Act.

The Corporate Governance Report on
pages 69 to 74 forms part of the
Directors’ Report.

Information disclosed in accordance
with the requirements of the
applicable sections of the FCA Listing
Rule LR9.8 (Annual Financial Report)
can be found here:

Details of Long-Term
Incentive Schemes

Directors’ Interests
in the Company’s Shares

The Directors’ Remuneration Report

Major Shareholders’ Interests

Directors’ Report

Non-executive directors’ terms
of appointment

Directors’ Report

Directors transactions
in the Company’s Shares

Directors’ Report

Details of non-financial reporting

Corporate Social Responsibility Report

122 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Entitlement to any variable
remuneration arrangements will be
determined in accordance with the
relevant plan rules and the Directors’
Remuneration Policy. Executive
directors’ service contracts do not
make any other provision for
termination payments.

Non-executive directors do not have
service contracts, but are bound by
letters of appointment which are
available for inspection on request at
the Company’s registered office.

Non-executive directors are
appointed for a three-year term,
subject to confirmation by
shareholders at the following annual
general meeting and annual re-
election at each subsequent annual
general meeting.

Details of non-executive
directors’ terms of appointment

Details of the non-executive
directors’ terms of appointment are
set out below:

Principal risks and uncertainties

The review of the business and
principal risks and uncertainties are
disclosed in the Strategic Report at
pages 2 to 65.

Internal control and risk
management systems

A description of the Group’s internal
control and risk management
systems in relation to the financial
reporting process is set out on pages
40 to 51 of the Strategic Report.

Directors

The directors who served during the
financial year were as follows:

Richard Cranfield

Alexander Scott

Jonathan Gunby

Mike Howard

Ian Taylor
(resigned 26 February 2021)

Caroline Banszky

Victoria Cochrane

Christopher Munro

Neil Holden
(resigned 1 September 2021)

Robert Lister

Rita Dhut
(appointed 22 September 2021)

According to the Register of
Directors’ Interests in the Company,
no rights to subscribe for shares were
granted or exercised by any of the
directors or their immediate families
during the financial year.

Rights for share options were granted
to Alex, Jonathan and Ian, under the
Company’s deferred bonus Share
Option Plan.

Rita is standing for election at the
upcoming AGM and all other current
directors are standing for re-election.

The appointment and replacement of
directors is governed by the
Company’s Articles of Association,
the UK Corporate Governance Code,
the Companies Act 2006 and related
legislation. The directors may
exercise all the powers of the
Company.

Service contracts and letters of
appointment

All executive directors have written
service contracts in place with an
employing company in the Group.
Although the executive directors’
service contracts do not have fixed
end dates, they may be terminated
with six months’ notice from either
side. In the event that notice is given
to terminate the executive director’s
contract, the Company may make a
payment in lieu of notice or place the
individual on garden leave.

Non-executive director

Date of first appointment

Date of latest
renewal term

Date for further
renewal term

Christopher Munro

1 February 2017

13 February 2020

13 February 2023

Caroline Banszky

22 August 2018

22 August 2021

22 August 2024

Victoria Cochrane

28 September 2018

28 September 2021

28 September 2024

Richard Cranfield

25 June 2019

25 June 2022

Robert Lister

26 June 2019

26 June 2022

Rita Dhut

22 September 2021

22 September 2024

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 123

GOVERNANCE continued

Status of company

Share capital

The Company is registered as a
public limited company under the
Companies Act 2006.

Stakeholders

The Group considers its principal
stakeholders to be the customers
using the Transact platform and
CURO, the employees of the Group,
its key suppliers and the Company’s
shareholders. The Group also has
longstanding relationships with a
number of key suppliers.

Diversity and inclusion

The Company recognises the benefits
of companies having a diverse board
and sees diversity at board level as
important in maintaining good
corporate and board effectiveness.
The Group has an established Board
Diversity Policy dealing with
appointments to the board.

The objective of the Group’s Board
Diversity Policy is to ensure that new
appointments to any board within the
Group are made on merit, taking into
account the different skills, industry
experience, independence,
knowledge and background required
to achieve a balanced and effective
board. The Policy also states that the
Company will only use executive
search firms that have signed up to
the Voluntary Code for Executive
Search Firms.

When determining the composition of
the board, consideration is given to
the diversity of board members and,
when possible, appointments are
made with a view to achieving a
balance of skills with diversity.

Structure of the company’s
capital

As at 30 September 2021, the
Company’s issued and fully paid
up share capital was 331,322,014
ordinary shares of £0.01 each. The
Company does not hold any treasury
shares. The ordinary shares have
attached to them equal voting,
dividend and capital distribution
rights.

Voting rights

At any General Meeting, on a show of
hands, any member present in
person has one vote and every proxy
present, who has been duly
appointed by a member entitled to
vote on a resolution, has one vote.
On a poll vote every person present
in person or by proxy has one vote
for every share held. All shares carry
equal voting rights and there are no
restrictions on voting rights.

Two employee benefit trusts (EBTs)
operate in connection with the
Group’s deferred bonus share option
plan. The Trustees of the EBTs may
exercise all rights attaching to the
shares in accordance with their
fiduciary duties other than as
specifically restricted in the relevant
Plan governing documents. The
Trustees of the EBTs have informed
the Company that their normal policy
is to abstain from voting in respect of
the Company's shares held in trust.
The Trustees of the Company's two
Share Incentive Plans (SIPs) will vote
as directed by SIP participants in
respect of the allocated shares but
the Trustees will not otherwise vote
in respect of the unallocated shares
held in the SIP Trusts.

Restrictions on share transfers

There are restrictions on share
transfers, all of which are set out in
the Company’s Articles. The Board
may decline to register: a transfer of
uncertificated shares in the

124 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

circumstances set out in the
Uncertificated Securities Regulations
2001; a transfer of certificated shares
that are not fully paid; a transfer to
more than four joint holders; a
transfer of certificated shares which
is not in respect of only one class of
share; a transfer which is not
accompanied by the certificate for
the shares to which it relates; a
transfer which is not duly stamped
and deposited at the Transfer Office
(or such other place in England and
Wales as the directors may from time
to time decide); or a transfer where
in accordance with section 794 of the
Companies Act 2006 a notice (under
section 793 of that Act) has been
served by the Company on a
shareholder who has then failed to
give the information required within
the specified time.

In addition, Mike sold 3,538,247
ordinary shares in the Company on 6

September 2021 via an accelerated
bookbuilt offering to institutional
investors. Following the sale,
Michael’s residual shareholdings are
subject to a 180-day lockup
undertaking with Barclays Bank PLC.

Purchase of own shares

At the 2021 AGM, shareholders
authorised the Company to buy back
up to 10% of its own ordinary shares
by market purchase at any time prior
to the conclusion of the AGM to be
held in 2022.

Whilst such authority would only be
used if the board was satisfied that to
do so would be in the interests of
shareholders, the board considers it
desirable to have the general
authority in order to maintain
compliance with the regulatory
capital requirements or targets
applicable to the Group.

The Company did not purchase any
of its own shares during the financial
year. However, the Employee Benefit
Trusts purchase the Company’s
shares from time to time as
authorised under the Trust Deeds in
respect of awards granted under the
Company’s employee share schemes.

Substantial shareholders

As at 15 December 2021, the
Company had been notified of the
following interests in 3% or more of
the Company’s issued ordinary share
capital disclosed to the Company
under Disclosure Guidance and
Transparency Rule 5. The information
provided below was correct as at the
date of notification. It should be
noted that these holdings are likely
to have changed since notified to the
Company. However, notification of
any change is not required until the
next applicable threshold is crossed.

Shareholder

Michael Howard

BlackRock Inc

Number of
Ordinary
Shares at 30
September
2021

% of
voting
rights at
30 September
2021

Number of
Ordinary
Shares at
15 December
2021

% of
voting
rights at
15 December
2021

Nature of
Holding

Direct

25,911,753

7.82%

25,911,753

Indirect

6,088,247

Indirect
Securities

29,061,050

1.84%

8.77%

6,088,247

29,061,050

7.82%

1.84%

8.77%

Lending

364,140

0.11%

364,140

0.11%

Liontrust Investment Partners LLP

Direct

16,910,112

5.1%

16,910,112

5.1%

Contracts for
difference

3,722,612

1.12%

3,722,612

1.12%

The percentage provided was correct at the date of notification.

The interests of the directors, and any persons closely associated, in the issued share capital of the Company are
shown on page 115.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 125

GOVERNANCE continued

Directors’ interests

Save for the shareholding details set
out in the Directors’ Remuneration
Report, there has been no change to
the interests of any of the directors
or their Persons Closely Associated
during the financial year.

Dividends

In financial year 2021, the Company
paid two interim dividends. Both
dividends were paid by reference to
the Company’s issued and allotted
share capital on the record date.

An interim dividend of 5.6 pence per
share - £18.6 million - was paid on
22 January 2021.

An interim dividend of 3.0 pence per
share - £9.9 million - was paid on 25
June 2021.

An interim dividend of 7.0 pence per
share - £23.2 million - has been
declared by the board and will be
paid in January 2022.

The Trustees of the EBTs have each
waived dividends on shares declared
in the Company held by those trusts
and the Trustees of the SIPs have
waived dividends on unallocated
shares in the Company held by it.

Indemnity provision

Directors’ and officers’ insurance is in
place to indemnify the directors
against liabilities arising from the
discharge of their duties as directors
of the Company.

Employee information and
engagement

The Company has no employees
(2020: nil), but the Group had 574
employees at year end (2020: 487).
The Group continues to promote a
culture whereby employees are
encouraged to develop and to
contribute to the overall aims of the
business.

The Company has considered the
requirements of s.172 of the
Companies Act on pages 63 to 64, to
ensure that the interests of
employees are considered by the
board in discussions and decision
making, and the associated
provisions of the 2018 Corporate
Governance Code regarding the
method of engagement with the
workforce.

The Company and individual directors
engage with the work force on an
informal, formal and regular basis.
Alex Scott communicates with all
staff following each quarterly market
announcement and in the event of
any developments within the
business, and Jonathan shares a
monthly update with staff on the
performance of the investment
platform and key messages from
different departments and divisions
across the Group. This facilitates the
continuing cohesion of the
organisation as remote working
persists. Alex and Jonathan, along
with the wider Senior Management

Team, are available to all staff and
the Group’s culture is one of
openness and inclusivity.

Given the size and location of the
workforce, the flat and accessible
structure of the management team
and the many long and close working
relationships that exist within the
Group, the board has determined
that it is appropriate to continue
engaging with staff through
collegiate, continual collaboration,
combined with more formal staff
surveys as deemed appropriate. In
addition, the board has recently
appointed Rita as the designated
non-executive director, responsible
for board oversight of employee
engagement and ensuring the
employee voice is heard in the
boardroom.

The Group provides the opportunity
for all staff to make suggestions for
improvements to our operating
environment and the board and
senior management team have an
open door policy for all staff, and
encourage constructive and frank
discussion.

During the year, staff were consulted
on returning to the offices. The
feedback received from colleagues
was considered and draft return to
the office plans were revised in order
to address concerns raised.

Significant agreements and
change of control

All the Company’s share plans
contain provisions relating to a
change of control. In the event of a
change of control, outstanding
awards and options may be lapsed
and replaced with equivalent awards
over shares in the new company,
subject to the Remuneration
Committee’s discretion.

126 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Engagement with suppliers

The Group monitors its relationships
with key suppliers and relationship
meetings are held with suppliers of
critical business services. The Group
monitors its payment performance
with suppliers and further details are
set out in the Corporate Social
Responsibility report on pages 58
and 61 above.

Articles of Association

The Articles of Association may
be amended by special resolution
of the shareholders.

Emissions

For commentary on emissions, please
see the Corporate Social Responsibility
report on pages 58 to 61.

Political donations

As per the Corporate Social
Responsibility report on page 61,
the Group does not make political
donations.

Employment of disabled people

For commentary on the Group’s
policy regarding the employment of
disabled people, please see the
Corporate Social Responsibility report
on page 56.

Post year end events

Events after the reporting date are
detailed in note 37. There are no
reportable events (2020: none).

Auditor

BDO LLP undertook the audit for
the year ending 30 September 2021,
having been re-appointed at the
2021 AGM.

On 28 June 2021, the Company
announced that following a
competitive tender process, overseen
by the Audit and Risk Committee and
in compliance with The Statutory
Audit Services for Large Companies
Market Investigation (Mandatory Use
of Competitive Tender Processes and

Audit Committee Responsibilities)
Order 2014, the Board approved the
appointment of Ernst & Young LLP as
its external auditor for the year
ending 30 September 2022.

This appointment remains subject to
approval by shareholders at the
Company’s 2022 AGM. The formal
appointment will effect from the
reporting period commencing 1
October 2021.

In addition to the statutory audit,
BDO LLP have provided permissible
audit related services and non-audit
services to the Group in the period.
The audit related services were an
interim review for the Group;
quarterly profit reviews, country by
country reporting review and a client
money audit for the subsidiary
Integrated Financial Arrangements
Limited. The non-audit services
provided related to two Self-Invested
Personal Pensions (SIPP) audits.

Each of the persons who is a director
at the date of approval of this report
confirms that:

▪ So far as the director is aware,

there is no relevant audit
information of which the Company's
auditor is unaware; and

▪ The director has taken all the steps
that they ought to have taken as a
director in order to make
themselves aware of any relevant
audit information and to establish
that the Company's auditor is aware
of that information.

This confirmation is given in
accordance with the provisions of
section 418 of the Companies Act
2006.

By order of the board,

Alexander Scott
Chief Executive Officer

15 December 2021

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 127

GOVERNANCE continued

STATEMENT OF DIRECTORS’
RESPONSIBILITIES

The directors are responsible for
preparing the Annual Report and the
financial statements in accordance
with the Companies Act 2006 and for
being satisfied that the Annual Report
and financial statements, taken as a
whole, give a fair, balanced and
understandable view which provides
the information necessary for
shareholders to assess the
Company’s position and performance,
business model and strategy.

Company law requires the directors
to prepare financial statements for
each financial year. Under that law
the directors are required to prepare
the Group financial statements and
have elected to prepare the Company
financial statements in accordance
with international accounting
standards in conformity with the
requirements of the Companies Act
2006 and in accordance with
international financial reporting
standards adopted pursuant to
Regulation (EC) No 1606/2002 as it
applies in the European Union.

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
Company and of the profit or loss for
the Group and Company for that
period.

In preparing the financial statements,
the directors are required to:

▪ select suitable accounting policies
and then apply them consistently;

▪ make judgements and estimates
that are reasonable and prudent;

▪ state whether they have been
prepared in accordance with
international accounting standards
in conformity with the requirements
of the Companies Act 2006 and in
accordance with international
financial reporting standards
adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in

the European Union, subject to any
material departures disclosed and
explained in the financial
statements;

▪ prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company and Group will continue in
business; and

▪ prepare a directors’ report, a
strategic report and directors’
remuneration report which comply
with the requirements of the
Companies Act 2006.

The directors are responsible for
keeping adequate accounting records
that show and explain the Group’s
transactions, disclose with reasonable
accuracy at any time the financial
position of the Company and enable
them to ensure that the financial
statements comply with the
Companies Act 2006 and, as regards
the Group financial statements,
Article 4 of the IAS Regulation.

They are also responsible for
safeguarding the assets of the
Company and Group and hence for
taking reasonable steps for the
prevention and detection of fraud and
other irregularities.

The directors are responsible for
ensuring the annual report and the
financial statements are made
available on a website. Financial
statements are published on the
Company’s website in accordance
with legislation in the United
Kingdom governing the preparation
and dissemination of financial
statements, which may vary from
legislation in other jurisdictions. The
maintenance and integrity of the
Company’s website is the
responsibility of the directors. The
directors’ responsibility also extends
to the ongoing integrity of the
financial statements contained
therein.

128 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

undertakings included in the
consolidation taken as a whole,
together with a description of the
principal risks and uncertainties that
they face; and

▪ the Annual Report and financial

statements, taken as a whole, is
fair, balanced and understandable
and provides the information
necessary for shareholders to
assess the performance, strategy
and business model of the Company
and Group.

The directors consider it appropriate
to adopt the going concern basis of
accounting in preparing the
consolidated financial statements as
they believe the Group will continue
to be in business, and meet any
liabilities as they fall due, for a period
of at least twelve months from the
date of approval of the financial
statements.

By order of the board,

Helen Wakeford
Company Secretary

15 December 2021

Directors’ responsibilities
pursuant to DTR4

The directors confirm to the best of
their knowledge:

▪ The Group financial statements
have been in accordance with
international financial reporting
standards adopted pursuant to
Regulation (EC) No 1606/2002 as it
applies in the European Union and
Article 4 of the IAS Regulation and
give a true and fair view of the
assets, liabilities, financial position
and profit and loss of the Group.

The annual report includes a fair
review of the development and
performance of the business and the
financial position of the Group and
the parent company, together with a
description of the principal risks and
uncertainties that they face.

The current directors, whose names
and functions are listed on pages 66
to 68, at the date of approval of this
report, confirm that:

▪ they have taken all of the steps that

they ought to have taken as
directors to make themselves aware
of any information needed by the
Company’s auditor for the purposes
of the audit, and to establish that
the auditor is aware of that
information;

▪ they are not aware of any relevant

audit information of which the
auditor is unaware;

▪ to the best of their knowledge, the
financial statements, prepared in
accordance with the applicable set
of accounting standards, give a true
and fair view of the assets,
liabilities, financial position and
profit or loss of the issuer and the
undertakings included in the
consolidation taken as a whole;

▪ the management report includes a
fair review of the development and
performance of the business and
the position of the issuer and the

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 129

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S
REPORT TO THE MEMBERS OF
INTEGRAFIN HOLDINGS PLC

Opinion on the financial
statements

In our opinion:

▪ the financial statements give a true

and fair view of the state of the
Group’s and of the Parent
Company’s affairs as at 30
September 2021 and of the Group’s
and Parent Company’s profit for the
year then ended;

▪ the Group financial statements have

been properly prepared in
accordance with international
accounting standards in conformity
with the requirements of the
Companies Act 2006;

▪ the Group financial statements have

been properly prepared in
accordance with international
financial reporting standards
adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in
the European Union; and

▪ the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006; and, as regards the Group
financial statements, Article 4 of the
IAS Regulation.

We have audited the financial
statements of IntegraFin Holdings plc
(the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year
ended 30 September 2021 which
comprise the Consolidated Statement
of Comprehensive Income, Company
Statement of Comprehensive
Income, Consolidated Statement of
Financial Position, Company
Statement of Financial Position,
Consolidated Statement of Cash
Flows, Company Statement of Cash
Flows, Consolidated Statement of
Changes in Equity, Company

Statement of Changes in Equity and
notes to the financial statements,
including a summary of significant
accounting policies. The financial
reporting framework that has been
applied in their preparation is
applicable law and international
accounting standards in conformity
with the requirements of the
Companies Act 2006 and
international financial reporting
standards adopted pursuant to
Regulation (EC) No 1606/2002 as it
applies in the European Union.

Basis for opinion

We conducted our audit in
accordance with International
Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our
responsibilities under those standards
are further described in the Auditor’s
responsibilities for the audit of the
financial statements section of our
report. We believe that the audit
evidence we have obtained is
sufficient and appropriate to provide
a basis for our opinion. Our audit
opinion is consistent with the
additional report to the audit
committee.

Independence

Following the recommendation of the
Audit Committee, we were appointed
by the Board of directors to audit the
financial statements for the year
ending 30 September 2011 and
subsequent financial periods. The
period of total uninterrupted
engagement including retenders and
reappointments is 11 years, covering
the years ending 30 September 2011
to 30 September 2021. We remain
independent of the Group and the
Parent Company in accordance with
the ethical requirements that are
relevant to our audit of the financial
statements in the UK, including the
FRC’s Ethical Standard as applied to
listed public interest entities, and we

130 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

have fulfilled our other ethical
responsibilities in accordance with
these requirements. The non-audit
services prohibited by that standard
were not provided to the Group or
the Parent Company.

Conclusions relating to going
concern

In auditing the financial statements,
we have concluded that the directors’
use of the going concern basis of
accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors’
assessment of the Group and the
Parent Company’s ability to continue
to adopt the going concern basis of
accounting included:

▪ Obtained the directors’ assessment

of the entity as a going concern
over a period of 12 months from the
date of approval of the financial
statements which covered
performance, position, cash flows
and solvency;

▪ Considered the consistency of the

going concern assessment with the
directors’ assessment of viability
which covers a 3 year period;

▪ Corroborating inputs in the
assessment to supporting
documentation where appropriate
and considering and challenged the
reasonableness of estimates made
within the forecasts;

▪ Reviewed the prior year forecasts

for the current year against actuals
to determine whether management
historically has been able to
reasonably forecast the financial
information; and

▪ Considered other factors including

the compliance with laws and
regulation in determining whether
the going concern assessment was
appropriate.

Based on the work we have
performed, we have not identified
any material uncertainties relating to
events or conditions that, individually
or collectively, may cast significant
doubt on the Group and the Parent
Company’s ability to continue as a
going concern for a period of at least
twelve months from when the
financial statements are authorised
for issue.

In relation to the Parent Company’s
reporting on how it has applied the UK
Corporate Governance Code, we have
nothing material to add or draw
attention to in relation to the directors’
statement in the financial statements
about whether the directors considered
it appropriate to adopt the going
concern basis of accounting.

Overview

Our responsibilities and the
responsibilities of the directors
with respect to going concern are
described in the relevant sections of
this report.

Coverage

99.57% (2020: 99.10%) of Group profit before tax

100% (2020: 100%) of Group revenue

99.98% (2020: 99.98%) of Group total assets

Key audit
matters

2021

2020

Completeness, existence and accuracy
of revenue

Accuracy of the provision for IntegraLife
UK Limited (‘ILUK’) policyholder tax

Accuracy of the provision for IntegraLife UK Limited (‘ILUK)
policyholder tax is no longer a KAM because this related to
a non-reoccurring error in the 2020 and earlier financial
years which resulted in a prior period adjustment related to
the 2019 financial year.

Since the error was corrected in the prior year the KAM is
no longer relevant for the current year.

Materiality

Group financial statements as a whole

Overall materiality:
£3.15m (2020: £2.71m) based on 5% (2020: 5%) of profit
before tax.

Policyholder assets and liabilities:
£233.45m (2020: £183.65m) based on 1% (2020: 1%)
of total assets.

Parent Company financial statements
£660k (2020: £460k) based on 1% (2020: 1%)
of total assets.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 131

FINANCIAL STATEMENTS continued

phases of their audit.

▪ The Group audit team was actively

involved in the direction of the
audits performed by the component
auditors for Group reporting
purposes, along with the
consideration of findings and
determination of conclusions drawn.

For components that we considered
to be non-significant, these
components were principally subject
to analytical review procedures
performed by BDO as the Group
auditor, together with additional
testing over audit risk areas.

Key audit matters

Key audit matters are those matters
that, in our professional judgement,
were of most significance in our audit
of the financial statements of the
current period and include the most
significant assessed risks of material
misstatement (whether or not due to
fraud) that we identified, including
those which had the greatest effect
on: the overall audit strategy, the
allocation of resources in the audit,
and directing the efforts of the
engagement team. These matters
were addressed in the context of our
audit of the financial statements as a
whole, and in forming our opinion
thereon, and we do not provide a
separate opinion on these matters.

Four components were considered to
be financially significant to the
Group, all four of them being located
in the United Kingdom. Two
components were considered to be
significant due to risk factors, one
being located in the United Kingdom
and one being located in the Isle of
Man. All six components were subject
to a full scope audit. The work for
four of the significant components:
IntegraFin Holdings Plc, Integrated
Financial Arrangements Limited,
IntegraFin Services Limited and Time
for Advice Limited (all within the
United Kingdom) were performed by
the Group audit team and the other
two: IntegraLife UK Limited and
IntegraLife International Limited
were performed by the component
auditors in the Isle of Man, outside
of the BDO network. We had overall
responsibility for directing and
supervising the work of component
auditors.

For the work performed by
component auditors, we determined
the level of involvement needed in
order to be able to conclude whether
sufficient appropriate audit evidence
has been obtained as a basis for our
opinion on the Group financial
statements as a whole. Our
involvement with component auditors
included the following:

▪ Detailed Group reporting

instructions were sent to the
component auditor, which included
the significant areas to be covered
by the audit (including areas that
were considered to be key audit
matters as detailed above) and set
out the information required to be
reported to the Group audit team.

▪ We performed a review of the

component audit files remotely and
held calls and meetings with the
component audit team during the
planning, execution and completion

An overview of the scope of our
audit

Our Group audit was scoped by
obtaining an understanding of the
Group and its environment, including
the Group’s system of internal
control, and assessing the risks of
material misstatement in the financial
statements. Based on this
understanding we assessed those
aspects of the Group’s transactions
and balances which were most likely
to give rise to a material
misstatement. We also addressed the
risk of management override of
internal controls, including assessing
whether there was evidence of bias
by the directors that may have
represented a risk of material
misstatement.

As part of designing our audit, we
determined materiality and assessed
the risks of material misstatement in
the financial statements. In
particular, we looked at where the
directors made subjective
judgements.

We performed an assessment to
determine which components were
significant to the Group. All
components which financially
contributed greater than 15% of the
Group’s profit before tax, net assets
or total expenses were identified as
significant and subject to a full scope
audit of their complete financial
information. Furthermore, we
identified which components were
significant due to risk.

132 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Key audit matter

How the scope of our audit addressed
the key audit matter

Completeness,
existence, and
accuracy of
revenue

As disclosed in
note 1b and
note 5 of the
financial
statements

There are various
performance incentive
schemes in place which
mean management may
be incentivised to
overstate revenue. We
therefore consider the
existence of revenue to
be a significant risk.

Revenue is automatically
calculated by the IT
system based on
Transact (Integrated
Financial Arrangement
Limited’s (IFAL’s) trading
name) published rates.
There is a risk that
revenue may be
misstated due to errors
in system calculations or
manual processes. The
key risks in IFAL,
IntegraLife UK Limited
and IntegraLife
International Limited is
that fees are not
calculated in line with
commissions and
charges schedules in
place. We therefore
consider the
completeness, existence
and accuracy of revenue
to be a significant risk.

As disclosed in note 1b
and note 5 of the
financial statements,
management and the
Board categorise revenue
into four sub categories:

▪ Annual commission

income charged for the
administration of
products on the
Transact platform
(“IAS”);

▪ Wrapper fee income

charged for each of the
tax wrappers held by
clients;

▪ Other income

Controls testing:

We tested the controls in place over accuracy of inputs into the Integrated
Administration System (IAS) IT platform, as these represent key controls
over the accuracy and completeness of revenue recognition. These
procedures included:

▪ Testing the controls over the opening of new client portfolios, as the

number of clients impacts the value of the Funds under Direction (FUD)
and the number of wrappers on wrappers (investment products) on which
revenue is generated from;

▪ Testing the execution controls in place over trade instructions from clients
to provide assurance over accuracy and existence of revenue generated
from these trades;

▪ Testing the controls in place covering the identification and resolution of

rejected trades to provide assurance over the accuracy of revenue
recognised; and

▪ Testing the controls in place covering the approval of fee exceptions (e.g.

staff discounts) as changes in rates could affect revenue recognised.

We tested the controls in place covering client money and custody asset
records held within the IAS IT system as revenue is generated from these
balances which comprise the Funds Under Direction (FUD). The control
procedures provided assurance over the integrity of the data within the IAS
IT system. These procedures included:

▪ Testing the controls over external and internal client money reconciliations;

▪ Testing the controls over external and physical custody asset

reconciliations; and

▪ Testing the controls in place covering the Internal System Evaluation
Monitoring procedures (“ISEM”) which encompasses management’s
controls in place over completeness and accuracy of IAS records, for both
individual client records and for aggregate records of assets. These controls
also cover the systems and controls in place that identify and resolve
discrepancies in any records of custody assets.

Tests of detail procedures:

▪ We tested the accuracy and completeness of revenue by performing a

recalculation of key income streams comprising annual commission; buy
commission and wrapper fee income, with reference to stated commission
rates. This was then compared against the amount recognised in the
financial statements;

▪ We agreed a sample of off-balance sheet FUD holdings to third party

custodian statements;

▪ We agreed a sample of share prices in the IAS system to third party

sources;

▪ We validated the key inputs into the revenue recalculation by corroborating
them to supporting documentation and testing the report logic within the
IAS IT system; and

▪ We assessed the revenue accounting policies and confirmed they are

applicable to international financial reporting standards adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union

comprising buy
commission and dealing
charges; and

Separately, we reviewed the breaches register, complaints register and FCA
correspondence in the year in respect of IFAL to determine whether there
was any indication of control failures.

▪ Adviser back-office

technology.

Key observations:

From testing we have concluded revenue to be appropriately stated and
categorised.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 133

FINANCIAL STATEMENTS continued

Our application of materiality

We apply the concept of materiality
both in planning and performing our
audit, and in evaluating the effect of
misstatements. We consider materiality
to be the magnitude by which
misstatements, including omissions,
could influence the economic decisions
of reasonable users that are taken on
the basis of the financial statements.

In order to reduce to an appropriately
low level the probability that any
misstatements exceed materiality,
we use a lower materiality level,
performance materiality, to determine
the extent of testing needed.

Importantly, misstatements below
these levels will not necessarily be
evaluated as immaterial as we also
take account of the nature of identified
misstatements, and the particular
circumstances of their occurrence,
when evaluating their effect on the
financial statements as a whole.

Based on our professional judgement,
we determined materiality for the
financial statements as a whole and
performance materiality as follows:

134 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Materiality

Basis for determining
materiality

Rationale for
the benchmark applied

GROUP FINANCIAL STATEMENTS

2021
£

3.15m

2020
£

2.71m

5% of profit on ordinary
activities before taxation
attributable to
shareholders of £63.12m

5% of profit on ordinary
activities before taxation
attributable to
shareholders of £55.32m

PARENT COMPANY
FINANCIAL STATEMENTS

2021
£

660k

2020
£

460k

We used 1% of Parent
Company total assets as
the basis of materiality.

Profit on ordinary activities before taxation
attributable to shareholders has been used as we
consider this to be the most significant determinant of
the Group’s financial performance used by
shareholders and other users of the financial
statements.

As the Company is the
parent entity of the Group
it does not earn any income
other than dividends from
subsidiary entities.

Performance materiality

2.362m

2.033m

495k

345k

Basis for determining
performance materiality

Performance materiality was calculated using 75% of overall materiality based on our
risk assessment procedures and the expectation of a low level of misstatements.

Specific higher materiality
level for relevant balances
including policyholder
assets and liabilities’

Basis for determining
materiality

Not
applicable

233.45m

183.65m

Based on the guidance on the audit of insurers issued in
the United Kingdom issued by the Financial Reporting
Council we have applied a higher materiality for
policyholder and related assets and liabilities, solely for
the purpose of identifying and evaluating the effect of
misstatements that are likely only to lead to a
reclassification between line items within assets and
liabilities.

The entities manage investment linked assets on behalf
of their clients (long-term insurance business). Any
liability owed to its client is covered by the assets held
by the entities and the investment return derived on the
associated assets is offset by the change in provision for
investment contract liabilities.

Rationale for the benchmark
applied

Therefore using 1% of Group total assets is appropriate
for determining this materiality level.

Not
applicable

Specific higher performance
materiality level for relevant
balances including
policyholder assets and
liabilities’ materiality

Basis for determining
performance materiality

175.087m

137.74m

Not
applicable

Performance materiality was calculated using 75% of
overall materiality based on our risk assessment
procedures and the expectation of a low level of
misstatements.

Not
applicable

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 135

FINANCIAL STATEMENTS continued

report, we do not express any form
of assurance conclusion thereon. Our
responsibility is to read the other
information and, in doing so, consider
whether the other information is
materially inconsistent with the
financial statements or our
knowledge obtained in the course of
the audit, or otherwise appears to be
materially misstated. If we identify
such material inconsistencies or
apparent material misstatements, we
are required to determine whether
this gives rise to a material
misstatement in the financial
statements themselves. If, based on
the work we have performed, we
conclude that there is a material
misstatement of this other
information, we are required to
report that fact.

We have nothing to report in this
regard.

Corporate governance statement

The Listing Rules require us to review
the directors’ statement in relation to
going concern, longer-term viability
and that part of the Corporate
Governance Statement relating to the
parent Company’s compliance with
the provisions of the UK Corporate
Governance Code specified for our
review.

Based on the work undertaken as
part of our audit, we have concluded
that each of the following elements of
the Corporate Governance Statement
is materially consistent with the
financial statements or our
knowledge obtained during the audit:

For the six significant components in
the Group, we allocated a materiality
that is less than our overall Group
materiality. The materialities for
these entities ranged from £48,300
to £1,660,000, the performance
materialities ranged from £36,200 to
£1,245,000. In respect of the specific
higher material level for relevant
balances including policyholder
assets and liabilities’ materiality
ranged from £22,210,000 to
£210,080,000 and the respective
performance materialities from
£16,657,000 to £157,560,000.

Audits of the components were
performed at a materiality level
calculated by reference to a
proportion of Group materiality
appropriate to the relative scale of
the business concerned.

We agreed with the Audit Committee
that we would report to them all
individual audit differences identified
during the course of our audit in
excess of £63,000 (2020: £54,000).
For policyholder assets and liabilities
and associated income statement line
items we agreed with the Audit
Committee that we would report to
the Committee all individual audit
differences identified during the
course of our audit in excess of
£4.67m (2020: £3.31m). We also
agreed to report differences below
these thresholds that, in our view,
warranted reporting on qualitative
grounds.

Other information

The directors are responsible for the
other information. The other
information comprises the
information included in the Annual
Report other than the financial
statements and our auditor’s report
thereon. Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in our

136 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Going concern and
longer-term viability

▪ The directors’ statement with regards to the appropriateness of adopting

the going concern basis of accounting and any material uncertainties
identified; and

▪ The directors’ explanation as to their assessment of the Group’s prospects,

the period this assessment covers and why the period is appropriate.

Other Code provisions

▪ Directors’ statement on fair, balanced and understandable;

▪ Board’s confirmation that it has carried out a robust assessment of the

emerging and principal risks;

▪ The section of the annual report that describes the review of effectiveness

of risk management and internal control systems; and

▪ The section describing the work of the audit committee.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required
by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report
and directors’ report

In our opinion, based on the work undertaken in the course of the audit:

▪ the information given in the Strategic report and the directors’ report for

the financial year for which the financial statements are prepared is
consistent with the financial statements; and

▪ the Strategic report and the directors’ report have been prepared in

accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Parent Company
and its environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors’ report.

Directors’ remuneration

In our opinion, the part of the directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.

Matters on which we are
required to report by exception

We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:

▪ adequate accounting records have not been kept by the Parent Company,
or returns adequate for our audit have not been received from branches
not visited by us; or

▪ the Parent Company financial statements and the part of the directors’

remuneration report to be audited are not in agreement with the
accounting records and returns; or

▪ certain disclosures of directors’ remuneration specified by law are not

made; or

▪ we have not received all the information and explanations we require for

our audit.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 137

FINANCIAL STATEMENTS continued

Responsibilities of directors

As explained more fully in the
Statement of Directors’
Responsibilities the directors are
responsible for the preparation of the
financial statements and for being
satisfied that they give a true and fair
view, and for such internal control as
the directors determine is necessary
to enable the preparation of financial
statements that are free from
material misstatement, whether due
to fraud or error.

In preparing the financial statements,
the directors are responsible for
assessing the Group’s and the Parent
Company’s ability to continue as a
going concern, disclosing, as
applicable, matters related to going
concern and using the going concern
basis of accounting unless the
directors either intend to liquidate
the Group or the Parent Company or
to cease operations, or have no
realistic alternative but to do so.

Auditor’s responsibilities for the
audit of the financial statements

Our objectives are to obtain
reasonable assurance about whether
the financial statements as a whole
are free from material misstatement,
whether due to fraud or error, and to
issue an auditor’s report that includes
our opinion. Reasonable assurance is
a high level of assurance, but is not a
guarantee that an audit conducted in
accordance with ISAs (UK) will always
detect a material misstatement when
it exists.

Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected to
influence the economic decisions of
users taken on the basis of these
financial statements.

Extent to which the audit was capable
of detecting irregularities, including
fraud

Irregularities, including fraud, are

instances of non-compliance with
laws and regulations. We design
procedures in line with our
responsibilities, outlined above, to
detect material misstatements in
respect of irregularities, including
fraud. The extent to which our
procedures are capable of detecting
irregularities, including fraud is
detailed below:

We gained an understanding of the
legal and regulatory framework
applicable to the Company and Group
and industry in which the Company
and Group operates and considered
the risk of acts by the Company and
Group which were contrary to
applicable laws and regulations,
including fraud. These included but
were not limited to compliance with
Companies Act 2006, the FCA listing
and DTR rules, the principles of the
UK Corporate Governance Code and
IFRSs.

We considered compliance with this
framework through discussions with
the Audit Committee and performed
audit procedures on these areas as
considered necessary.

We gained an understanding of the
relevant laws and regulations
impacting the entity and the Group
and the susceptibility of the financial
statements to fraud through our
brought forward knowledge of the
Company and the Group, review of
the prior year financial statements
and discussions with management at
the audit planning meeting.

We focused on laws and regulations
that could give rise to a material
misstatement in the financial
statements and the susceptibility of
the financial statements to material
misstatement including fraud. We
considered the main areas for
potential misstatement were the risk
of fraud with respect to revenue
recognition and the risk of fraud
associated with management
override of controls which could arise

138 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

through inappropriate journals,
estimates or judgements. Our tests
included, but were not limited to:

▪ agreement of the financial

statement disclosures to underlying
supporting documentation;

▪ enquiries of management and Those
Charged With Governance regarding
compliance with laws and
regulations and potential
contingencies and commitments;

▪ testing of a risk-based sample of
journal postings made during the
year to identify potential
management override of controls;

▪ the procedures in respect of

revenue recognition as outlined in
our key audit matters above;

▪ review of legal invoices and legal

correspondence;

▪ review of minutes of board

meetings throughout the period;

▪ obtaining an understanding of the
control environment in monitoring
compliance with laws and
regulations through undertaking
walkthroughs, review of Board
meeting minutes and where
relevant review of the component
auditor’s audit file;

▪ communication to the audit team

with respect to audit procedures to
undertake to test compliance with
laws and regulations and
identification of fraud was
undertaken at the planning phase in
directing the audit approach; and

▪ we requested the component

auditors to communicate to us
identified significant risks due to
fraud, evidence of fraud, illegal or
questionable acts and other issues
relating to fraud or error.

Our audit procedures were designed
to respond to risks of material
misstatement in the financial
statements, recognising that the risk
of not detecting a material

misstatement due to fraud is higher
than the risk of not detecting one
resulting from error, as fraud may
involve deliberate concealment by,
for example, forgery,
misrepresentations or through
collusion. There are inherent
limitations in the audit procedures
performed and the further removed
non-compliance with laws and
regulations is from the events and
transactions reflected in the financial
statements, the less likely we are to
become aware of it.

A further description of our
responsibilities is available on the
Financial Reporting Council’s website
at: www.frc.org.uk/
auditorsresponsibilities. This
description forms part of our
auditor’s report.

Use of our report

This report is made solely to the
Parent Company’s members, as a
body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006.
Our audit work has been undertaken
so that we might state to the Parent
Company’s members those matters
we are required to state to them in
an auditor’s report and for no other
purpose. To the fullest extent
permitted by law, we do not accept
or assume responsibility to anyone
other than the Parent Company and
the Parent Company’s members as a
body, for our audit work, for this
report, or for the opinions we have
formed.

Justin Chait
(Senior Statutory Auditor)

For and on behalf of BDO LLP,
Statutory Auditor
London, UK

15 December 2021

BDO LLP is a limited liability
partnership registered in England and
Wales (with registered number
OC305127).

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 139

FINANCIAL STATEMENTS continued

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Revenue

Fee income

Cost of sales

Gross profit

Administrative expenses

Credit loss allowance on financial assets

Net income attributable to policyholder returns

Operating profit

Note

2021
£’000

2020
£’000

123,670

(1,490)

122,180

107,320

(865)

106,455

(58,738)

(51,016)

(230)

31,526

94,738

(176)

(3,066)

52,197

Operating profit/(loss) attributable to policyholder returns

31,526

(3,066)

Operating profit/(loss) attributable to policyholder returns

63,212

55,263

Change in investment contract liabilities

Fee and commission expenses

Investment returns

Interest expense

Interest income

Profit on ordinary activities before taxation

Profit on ordinary activities before taxation
attributable to policyholder returns

Profit on ordinary activities before taxation
attributable to shareholder returns

Policyholder tax

Tax on profit on ordinary activities

Profit for the financial year

Other comprehensive income

Exchange gains/(losses) arising on translation of foreign operations

Total other comprehensive income for the financial year

Total comprehensive income for the financial year

Earnings per share

Earnings per share – basic and diluted

All activities of the Group are classed as continuing.
Notes 1 to 38 form part of these Financial Statements.

140 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

(2,736,063)

(204,123)

2,940,167

(167)

82,895

(137,536)

54,677

(233)

256

94,646

52,256

31,526

(3,066)

63,120

55,322

(31,015)

3,066

(12,525)

51,106

(9,838)

45,484

(72)

51,034

45,506

15.4p

13.7p

COMPANY STATEMENT OF COMPREHENSIVE INCOME

Revenue

Cost of sales

Gross profit

Administrative expenses

Credit loss allowance on financial assets

Operating loss

Dividend income

Interest expense

Interest income

Profit on ordinary activities before taxation

Tax on profit on ordinary activities

Profit for the financial year

Other comprehensive income

Total comprehensive income for the financial year

All activities of the Company are classed as continuing.

Notes 1 to 38 form part of these Financial Statements.

Note

2021
£’000

2020
£’000

(4,739)

(32)

(4,771)

(1,208)

(85)

(1,293)

42,103

32,326

(235)

37,173

31,124

37,173

31,124

37,173

31,124

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 141

FINANCIAL STATEMENTS continued

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Non-current assets
Loans
Intangible assets
Property, plant and equipment
Right of use assets
Deferred tax asset
Deferred acquisition costs

Current assets
Financial assets at fair value through profit or loss
Other prepayments and accrued income
Trade and other receivables
Investments held for the benefit of policyholders
Cash and cash equivalents
Current tax asset

Current liabilities
Trade and other payables
Provisions
Lease liabilities
Liabilities for linked investment contracts

Non-current liabilities
Provisions
Contingent consideration
Lease liabilities
Deferred income liability
Deferred tax liabilities

Net assets

Note

18
13
14
15
27
17

22
23
24
19
21

25
29
26
20

29
30
26
17
27

2021
£’000

3,420
22,286
1,827
3,632
716
-
31,881

5,134
15,951
3,719
21,787,106
1,442,362
1,122
23,255,394

17,466
11,624
2,362
23,053,390

2020
£’000

2,647
12,951
2,313
3,961
489
53,482
75,843

5,051
14,412
3,556
16,727,208
1,539,843
53
18,290,123

18,366
-
2,375
18,112,935

23,084,842

18,133,676

6,180
791
2,675
-
29,518

25,208
-
3,712
53,482
8,968

39,164

91,370

163,269

140,920

Capital and reserves
Called up equity share capital
Capital redemption reserve
Share-based payment reserve
Employee Benefit Trust reserve
Foreign exchange reserve
Non-distributable reserves
Non-distributable insurance reserves
Profit or loss account
Total equity
These Financial Statements were approved by the Board of Directors on 15 December 2021 and are signed on their
behalf by:

3,313
2
2,404
(2,055)
(94)
5,722
501
153,476
163,269

3,313
2
1,698
(1,103)
(22)
5,722
501
130,809
140,920

31
32
33
34
34
34

Alexander Scott
Director
Company Registration Number: 08860879
Notes 1 to 38 form part of these Financial Statements.

142 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

COMPANY STATEMENT OF FINANCIAL POSITION

Non-current assets
Investment in subsidiaries
Loans receivable

Current assets
Prepayments
Other receivables
Cash and cash equivalents

Current liabilities
Trade and other payables
Loans payable

Non-current liabilities
Contingent consideration
Loans payable

Net assets

Capital and reserves
Called up equity share capital
Profit or loss account
Share-based payment reserve
Employee Benefit Trust reserve
Total equity

Note

2021
£’000

2020
£’000

16
18

23
24

25
18

30
18

32
33

31,563
3,420
34,983

45
133
30,962
31,140

2,420
1,000
3,420

791
8,000
8,791

16,832
2,647
19,479

56
342
26,090
26,488

491
-
491

-
-
-

53,912

45,476

3,313
50,673
1,715
(1,789)
53,912

3,313
41,962
1,070
(869)
45,476

These Financial Statements were approved by the Board of Directors on 15 December 2021 and are signed on their
behalf by:

Alexander Scott
Director
Company Registration Number: 08860879
Notes 1 to 38 form part of these Financial Statements.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 143

FINANCIAL STATEMENTS continued

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities

Profit before tax

Adjustments for:

Amortisation and depreciation

Share-based payment charge

Interest on cash held

Interest charged on lease

Investment returns

Decrease in policyholder tax recoverable

(Increase)/decrease in current asset investments

(Increase)/decrease in trade and other receivables

(Decrease)/increase in trade and other payables

(Decrease)/increase in provisions

Increase in contingent consideration

Decrease in share-based payment reserve

Note

2021
£’000

2020
£’000

94,646

52,256

3,077

1,879

(94)

167

(11,692)

(83)

87,918

(1,306)

(2,130)

(7,405)

676

(1,166)

2,571

1,776

(256)

234

(36)

(1,515)

55,045

2,305

3,858

6,978

(1,126)

Increase in investments held for the benefit of policyholders

Increase in liabilities for linked investment contracts

(5,059,898)

(1,272,440)

4,940,454

1,447,887

Cash generated from operations

(42,857)

242,507

Income taxes paid

Interest paid on lease liabilities

(13,396)

(13,803)

(167)

(234)

Net cash flows from operating activities

(56,420)

228,470

Investing activities

Acquisition of tangible assets

Acquisition of subsidiary, net of cash acquired

Increase in loans

Interest on cash held

Investment returns

(660)

(7,903)

(773)

(18)

(859)

(1,462)

256

Net cash used in investing activities

(9,260)

(2,029)

Financing activities

Purchase of own shares in Employee Benefit Trust

Equity dividends paid

Repayment of lease liabilities

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Exchange gain/(losses) on cash and cash equivalents

Cash and cash equivalents at end of year

Notes 1 to 38 form part of these Financial Statements.

144 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

(951)

(28,452)

(2,326)

(828)

(26,158)

(2,244)

(31,729)

(29,230)

(97,409)

197,211

1,539,843

1,342,619

(72)

1,442,362

1,539,843

COMPANY STATEMENT OF CASH FLOWS

Cash flows from operating activities

Loss before interest and dividends

Adjustments for:

Decrease/(increase) in trade and other receivables

Increase/(decrease) in trade and other payables

Increase in contingent consideration

Settlement of share-based payment reserve

Net cash flows (used in)/generate from operating activities

Investing activities

Acquisition of subsidiary, net of cash acquired

Purchase of subsidiary share capital

Dividends received

Interest received

(Increase) in loans receivable

Net cash generated from investing activities

Financing activities

Purchase of own shares in Employee Benefit Trust

Settlement of share-based payment reserve

Increase in loans payable

Repayment of loans

Interest expense on loans

Equity dividends paid

Net cash used in financing activities

Note

2021
£’000

2020
£’000

(4,771)

(1,293)

(4,771)

(1,293)

220

1,688

676

(1,131)

(306)

(4)

(3,318)

(1,603)

(8,600)

(4,000)

42,103

(773)

28,806

(920)

10,000

(1,000)

(234)

32,326

(1,462)

30,955

(594)

(843)

(28,462)

(26,167)

(20,616)

(27,604)

Net increase in cash and cash equivalents

4,872

1,748

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

26,090

30,962

24,342

26,090

Notes 1 to 38 form part of these Financial Statements.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 145

FINANCIAL STATEMENTS continued

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Non-
distrib-
utable
reserves
£’000

Share
capital
£’000

Other
reserves
£’000

Share-
based
payment
reserve
£’000

Non-
distrib-
utable
insurance
reserves
£’000

Employee
Benefit
Trust
£’000

Retained
earnings
£’000

Total
equity
£’000

Balance at 1 October 2019

3,313

5,722

(42)

1,008

501

(275) 111,450 121,677

Comprehensive income for
the year:

Profit for the year

Movement in currency translation

Total comprehensive income
for the year

Distributions to owners:

Share-based payment expense

Settlement of share based
payment

Purchase of own shares in EBT

Excess tax relief charged to
equity

Other movement

Dividends paid

Total distributions to owners

1,776

(1,126)

(33)

690

(828)

45,484

45,506

1,776

(1,126)

(828)

(26,158)

(828) (26,125) (26,263)

Balance at 1 October 2020

3,313

5,722

(20)

1,698

501 (1,103) 130,809 140,920

Comprehensive income for
the year:

Profit for the year

Movement in currency
translation

Total comprehensive income
for the year

Distributions to owners:

Share-based payment expense

Settlement of share based
payment

Purchase of own shares in EBT

Excess tax relief charged to
equity

Other movement

Dividends paid

Total distributions to owners

Balance at 30 September
2021

(72)

1,878

(1,166)

(26)

706

(952)

51,106

(72)

51,106

51,034

1,878

(1,166)

(952)

(28,465)

(952) (28,439) (28,685)

3,313

5,722

(92)

2,404

501 (2,055) 153,476 163,269

Notes 1 to 38 form part of these financial statements.

146 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

COMPANY STATEMENT OF CHANGES IN EQUITY

Share-
based
payment
reserve
£’000

Share capital
£’000

Employee
Benefit Trust
£’000

Retained
earnings
£’000

Total equity
£’000

Balance at 1 October 2019

3,313

880

(275)

37,006

40,924

Comprehensive income for the year:

Profit for the year

Total comprehensive income for the year

Distributions to owners:

Dividends

Share-based payment expense

Settlement of share-based payments

Purchase of own shares in EBT

Total distributions to owners

1,032

(843)

189

(594)

31,124

(26,167)

1,032

(843)

(594)

(26,167)

(26,572)

Balance at 1 October 2020

3,313

1,069

(869)

41,963

45,476

Comprehensive income for the year:

Profit for the year

Total comprehensive income for the year

Distributions to owners:

Dividends

Share-based payment expense

Settlement of share-based payments

Purchase of own shares in EBT

Total distributions to owners

646

(920)

37,173

(28,463)

646

(920)

(28,463)

(28,737)

Balance at 30 September 2021

3,313

1,715

(1,789)

50,673

53,912

Notes 1 to 38 form part of these
Financial Statements.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 147

FINANCIAL STATEMENTS continued

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 market leading investment platform which
enables advisers to implement financial plans as simply and efficiently as possible.

The registered office address, and principle place of business, is 29 Clement’s Lane, London, EC4N 7AE.

a) Basis of preparation

The Financial Statements have been prepared and approved by the directors in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act 2006 and in accordance with
International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.

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 functional
currency of the Company and are rounded to the nearest thousand.

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 to continue in operational existence for the next 12 months. This is
supported by:

▪ The current financial position of the Group:

▪ 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.

▪ As at 30 September 2021, the Group had £176 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, including the impact of COVID-19.

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 COVID-19 pandemic. Market volatility and uncertainty is expected to
continue for some time, due to the pandemic and the effect of measures taken to combat it, but the Group’s
fundamentals remain strong.

As detailed in the Going Concern and Viability Statement (page 52), 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 external market shocks, internal
system and security failures, and the worsening of the COVID-19 pandemic.

Having conducted detailed cash flow and working capital projections, and stress-tested liquidity, profitability and
regulatory capital, taking account of the impact of the COVID-19 pandemic and further possible adverse changes in
trading performance, 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).
Accordingly, the board does not believe a material uncertainty exists that would have an effect on the going concern of
the Group and have prepared the financial statements on a going concern basis.

148 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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 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.

The Financial Statements of all of the wholly owned subsidiary companies are incorporated into the consolidated
Financial Statements. Two of these subsidiaries, IntegraLife International LTD (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.

Changes in accounting policies

i) There have been no new standards, amendments to standards or interpretations adopted from 1 October 2020

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 the period beginning 1 October 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 a preliminary assessment regarding the impact of IFRS 17 on the Financial Statements and,
due to the vast majority of contracts written by the business being investment contracts, it is expected such impact
will be negligible.

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

In January 2020, the IASB issued amendments to IAS 1 regarding the presentation of liabilities in the statement of
financial position. Presentation between current and non-current liabilities is to be based on rights in existence at year
end to defer settlement. The standard now explains that settlement includes the transfer of cash, goods, services, or
equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as
an equity instrument, separate from the liability component the instrument. The surrounding wording is expected to
reflect any right to defer the settlement by at least 12 months. Classifications are not expected to be impacted by
expectations on whether the right to defer settlement will be exercised or not.

The Group is assessing the impact of this amendment, however it does not anticipate any significant change to the
current classifications of liabilities.

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 is assessing the impact of this amendment, however it does not anticipate any significant change to the
current assessment of significant accounting policies.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 149

FINANCIAL STATEMENTS continued

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 is assessing the impact of this amendment, however it does not anticipate any significant change to the
current assessment of accounting estimates and accounting policies.

Deferred Tax Related to Assets and Liabilities arising from a Single Transaction

(Amendments to IAS 12)

In May 2021, the ISAB 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 is assessing the impact of this amendment, however it does not anticipate any significant impact.

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 in line
with the provision of the services.

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 in the month.

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.

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.

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.

Deferred acquisition costs and deferred income liabilities

In prior years, incremental costs directly attributable to securing investment contracts were deferred. These costs
consist of fees paid to policyholders’ financial advisers. The costs, relating to Pension, Onshore Life and Offshore Life
contracts, were capitalised as deferred acquisition costs and amortised over the directors’ best estimates of the lives of
the contracts which were deemed to be fourteen, sixteen and eighteen years respectively (2020: fourteen, sixteen and
eighteen years), over which the services are provided.

A corresponding deferred income liability was recognised in respect of charges taken from customers of the Company
at the contract’s inception to meet obligations to financial advisers. Deferred income liabilities were also amortised
over the directors’ best estimates of the lives of the contract, which were again deemed to be fourteen, sixteen and
eighteen years.

150 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Following a review of the terms of the agreements relating to establishment charges paid to policyholders’ financial
advisers, management has concluded that the Group is acting in an agency capacity between the policyholders and
their financial advisers, rather than as a principal. It therefore should not recognise the deferred acquisition costs as
contract costs, nor does it have future service obligations in respect of the deferred fees to justify the recognition of
the corresponding deferred income liability. The deferred acquisition costs and deferred income liabilities have
therefore been derecognised in the financial year ended 30 September 2021, to bring the accounts in line with the
accounting standards.

Further details of this change can be seen in note 17.

Investment income

Interest on cash and coupon on shareholder gilts are the two sources of investment income received. Interest income
is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which
is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that
financial asset's carrying amount.

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 fixed interest securities backing insurance contracts or held as
shareholder investments. These investments are mandatorily held at 'fair value through profit or loss’ at initial
recognition and are stated at quoted bid prices which equates to fair value, with any resultant gain or loss recognised
in profit or loss. Purchases and sales of securities are recognised on the trade date.

Investment contracts – investments held for the benefit of policyholders

Investment contracts are comprised of unit-linked contracts in ILInt and ILUK. 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.

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 are recognised in the accounting period in which the dividends are declared.

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 code would be replaced 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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 151

FINANCIAL STATEMENTS continued

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 Company and the cost can be measured reliably. Repairs
and maintenance costs are charged to the profit and loss and other comprehensive income statement during the
period in which they are incurred.

The major categories of property, plant, equipment and motor vehicles are depreciated as follows:

Asset class

All UK and Isle of Man entities

Australian entity

Leasehold improvements

Straight line over the life of the lease

Straight line over 40 years

Fixtures & Fittings

Straight line over 10 years

Reducing balance over 2 to 8 years

Equipment

Straight line over 3 to 10 years

Reducing balance over 3 to 10 years

Motor vehicles

N/A

Reducing balance over 2 to 8 years

Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if
appropriate.

Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises
the:

▪ fair values of the assets transferred;

▪ liabilities incurred to the former owners of the acquired business;

▪ equity interests issued by the Group;

▪ fair value of any asset or liability resulting from a contingent consideration arrangement; and

▪ fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.

Acquisition-related costs are expensed as incurred.

The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded as
goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the
difference is recognised directly in the statement of comprehensive income.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to
their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being
the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and
conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability

152 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

are subsequently remeasured to fair value, with changes in fair value recognised in the statement of comprehensive
income.

Contingent arrangements payable to selling shareholders that continue providing services are assessed to determine if
there is an element of payment for post-combination services. The element that is determined to relate to post-
combination services is recognised in in the statement of comprehensive income across the periods to which the
services relate.

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 profit or loss
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 on a straight line basis over the estimated useful lives of the assets, which are as follows:

ASSET CLASS

Customer relationships

Software

Brand

USEFUL LIFE

15 years

7 years

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.

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 13.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 153

FINANCIAL STATEMENTS continued

Pensions

The Group makes defined contributions to the personal pension schemes of its employees. These are chargeable to
profit or loss 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. Non-monetary assets denominated in a foreign currency that are measured in terms of historical cost are
translated using the exchange rate in effect at the date when the fair value was determined. Foreign exchange rate
differences that arise are reported net in profit or loss 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 translated 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

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.

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. Recognition of deferred tax assets is restricted to those instances where it is
probable that taxable profit will be available against which the difference can be utilised.

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.

Policyholder Tax

This is based on the “Income minus Expenses plus Gains” (I-E) tax regime and enables HMRC to collect basic rate
income tax from ILUK on its life insurance policies without having to contact the policyholders. Policyholder profits are
calculated as total I-E profits less shareholder profits multiplied by the current policyholder tax rate of 20% (2020:
20%).

Policyholder tax is recorded as an expense in the statement of comprehensive income, with a corresponding liability
recognised on the statement of financial position (under IAS12).

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.

For the year ended 30 September 2021, the business of ILUK and ILInt was the direct insurance of investment linked
pensions business, written by single premium in the United Kingdom, single premium life assurance linked bonds and
linked qualifying investment plans written in the United Kingdom. Insurance risk is minimal as all contracts have been
classed as investment contracts.

ILInt and ILUK policyholder assets and liabilities

Investments held for the benefit of policyholders are stated at fair value and reported on a separate line in the
statement of financial position. They are designated as financial assets at 'fair value through profit or loss’ in order to
reduce an accounting mismatch option with the equivalent financial liabilities. Gains and losses arising from changes in
fair value are presented in the consolidated profit and loss and other comprehensive income statement within
“investment returns”.

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

154 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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 profit and loss and other comprehensive income statement
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 £nil.

Client assets and client monies

IFAL client assets and client monies are not recognised in the parent and consolidated statements of financial position
(see note 28) as they are owned by the clients of IFAL.

Lease assets and lease liabilities

IFRS 16 leases accounting policy applied from 1 October 2019.

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 IAS16: Property, Plant and Equipment. Right-of-use assets are depreciated
over the lease term. See note 14 and 15.

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 the incremental borrowing rate of 3.2% 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 26.

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 expenses 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 Company 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 Company 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 Company 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 and investments in quoted debt instruments.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 155

FINANCIAL STATEMENTS continued

Financial instruments in this category are recognised on the trade settlement date, and subsequently, at fair value.
Purchases and sales of securities are recognised on the trade date. Transaction costs are expensed in the
consolidated profit and loss and other comprehensive income statement. Gains and losses arising from changes in
fair value are presented in the consolidated profit and loss and other comprehensive income statement within
“investment returns” for corporate assets and “net 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

This category includes non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. This is comprised of accrued fees, trade and other receivables, loans, and cash and cash
equivalents. These are included in current assets due to their short-term nature, except for loans which are
included in non-current assets.

Assets held at amortised cost are initially recognised at fair value. Subsequent measurement is at amortised cost
using the effective interest method less any expected credit losses.

(iii) Financial liabilities at amortised cost

Financial liabilities at amortised cost comprise trade and other payables and loans. 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 that do not constitute a financing transaction.

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.

Provisions

Provisions are recognised when the Company has an obligation, legal or constructive, as a result of a past event, and it
is probable that the Company will be required to settle that obligation. Provisions are estimated at the directors’ best
estimate of the expenditure required to settle the obligation at the reporting date, and are discounted to present
values where the effect is material.

The ILUK tax provision, which is 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.

Trade and other payables

Other payables are short-term, not interest-bearing and are stated at their amortised cost which is not materially
different to cost and approximates to fair value.

156 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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) 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) 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. 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. In the prior year financial statements the Group disclosed that the tax provision for its subsidiary,
ILUK, was an area where judgements and estimates had the most significant effect. During the year the Group has
obtained data which allows us to eliminate the need for material judgements and assumptions in our calculations of
amounts payable to HMRC and policyholder. The tax provision is therefore no longer considered a critical accounting
estimate.

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.

3. 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

▪ Cash and cash equivalents

▪ Investments in quoted debt instruments

▪ Listed shares and securities

▪ Trade and other payables

▪ Loans

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 157

FINANCIAL STATEMENTS continued

(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:

Cash and cash equivalents

Listed shares and securities

Loans

FAIR VALUE THROUGH
PROFIT OR LOSS

AMORTISED COST

2021

£’000

165

2020

£’000

2021

£’000

2020

£’000

1,442,362

1,539,843

3,420

2,647

Investments in quoted debt instruments

4,969

4,959

Accrued income

Trade and other receivables

Investments held for the policyholders

21,787,106

16,727,208

12,030

10,244

934

786

Total financial assets

21,792,240

16,732,259

1,458,746

1,553,520

FINANCIAL LIABILITIES:

Trade and other payables

Accruals

Lease liabilities

Deferred consideration

Contingent consideration

FAIR VALUE THROUGH
PROFIT OR LOSS

AMORTISED COST

2021

£’000

2020

£’000

791

2021

£’000

7,056

7,906

5,037

1,741

2020

£’000

8,660

7,792

6,087

Liabilities for linked investments contracts

23,053,390

18,112,935

Total financial liabilities

23,054,181

18,112,935

21,740

22,539

158 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

The following tables show the carrying values of assets and liabilities for each of these categories for the Company:

FINANCIAL ASSETS:

Cash and cash equivalents

Loans

Total financial assets

FINANCIAL LIABILITIES:

Trade and other payables

Loans

Deferred consideration

Contingent consideration

Accruals

Total financial liabilities

FAIR VALUE THROUGH
PROFIT OR LOSS

AMORTISED COST

2021

£’000

2020

£’000

2021

£’000

2020

£’000

30,962

26,090

3,420

2,647

34,382

28,737

FAIR VALUE THROUGH
PROFIT OR LOSS

AMORTISED COST

2021

£’000

2020

£’000

791

2021

£’000

9,000

2,533

359

11,914

2020

£’000

311

367

(iii) Financial instruments not measured at fair value

Financial instruments not measured at fair value include cash and cash equivalents, accrued fees, 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.

(iv) Financial instruments measured at fair value – fair value hierarchy

The table below classifies financial assets 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.

Investments held for the benefit of policyholders are stated at fair value and reported on a separate line in the
statement of financial position. The assets are classified using the 'fair value through profit or loss’ option with
any resultant gain or loss recognised through the statement of comprehensive income.

Assets held at fair value also comprises investments held in gilts, and these are held at fair value through profit
and loss.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 159

FINANCIAL STATEMENTS continued

The following table shows the three levels of the fair value hierarchy:

Fair value
hierarchy

Level 1

Level 2

Description of hierarchy

Quoted prices (unadjusted) in active markets
for identical assets.

Types of investments classified
at each level

Cash equivalents, listed equity securities, gilts,
actively traded pooled investments such as
OEICS and unit trusts.

Inputs other than quoted prices included within
Level 1 that are observable for the asset either
directly (i.e. as prices) or indirectly (i.e. derived
from prices).

Actively traded unlisted equity securities where
there is no significant unobservable inputs,
structured products and regularly priced but
not actively traded instruments.

Level 3

Inputs that are not based on observable
market data (unobservable inputs).

Unlisted equity securities with significant
unobservable inputs, inactive pooled investments.

For the purposes of identifying level 3 assets, unobservable inputs means that current observable market information
is no longer available. Where these assets arise management will value them based on the last known observable
market price. No other valuation techniques are applied.

The following table shows the Group’s assets measured at fair value and split into the three levels:

2021
Investments and assets held for the
benefit of policyholders
Investments and securities
Bonds and other fixed-income securities
Holdings in collective investment schemes

Other investments
Total

2020
Investments and assets held for the
benefit of policyholders
Investments and securities
Bonds and other fixed-income securities
Holdings in collective investment schemes

Other investments
Total

Level 1 valuation methodology

Level 1
£’000

Level 2
£’000

Level 3
£’000

Total
£’000

633,602
14,846
20,858,948
21,507,396
4,964
21,512,360

Level 1
£’000

506,286
12,404
15,930,106
16,448,796
4,959
16,453,755

163,940
589
113,265
277,794
-
277,794

Level 2
£’000

154,810
1,891
120,026
276,727
-
276,727

440
-
1,476
1,916
-
1,916

797,982
15,435
20,973,689
21,787,106
4,964
21,792,070

Level 3
£’000

Total
£’000

751
15
910
1,676
-
1,676

661,847
14,310
16,051,042
16,727,199
4,959
16,732,158

Financial assets 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 financial assets are mainly collective investment schemes and
listed equity instruments.

160 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Level 2 and Level 3 valuation methodology

The Group regularly reviews whether a market is active, based on available market data and the specific circumstances
of each market. Where the Group assesses that a market is not active, then it applies one or more valuation
methodologies to the specific financial asset. These valuation methodologies use quoted market prices where available,
and may in certain circumstances require the Group to exercise judgement to determine fair value.

Financial assets included in Level 2 are measured at fair value using observable mid prices traded in markets that have
been assessed as not active enough to be included in Level 1.

Otherwise, financial assets are included in Level 3. These are assets where one or more inputs to the valuation
methodology are not based on observable market data. The key unobservable input is the pre-tax operating margin
needed to price asset holdings.

Level 3 sensitivity to changes in unobservable measurements

For financial assets assessed as Level 3, based on its review of the prices used, the Company 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.

Changes to valuation methodology

There have been no changes in valuation methodology during the year under review.

Transfers between Levels

The Company’s policy is to assess each financial asset it holds at the current financial year end, based on the last
known price and market information, and assign it to a Level.

The Company 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, whether a
market is now active or not, and whether there are indications of impairment.

Transfers between Levels between 30 September 2021 and 30 September 2020 are presented in the table below at
their valuation at 30 September 2021:

Transfers from

Transfers to

Level 1

Level 2

Level 1

The reconciliation between opening and closing balances of Level 3 assets are presented in the table below:

Opening balance

Unrealised gains or losses in the year ended 30 September 2021

Transfers in to Level 3 at 30 September 2021 valuation

Transfers out of Level 3 at 30 September 2021 valuation

Purchases, sales, issues and settlement

Closing balance

2021

£’000

1,676

(236)

1,114

(578)

(60)

1,916

£’000

524

7,613

2020

£’000

11,529

(57)

224

(8,280)

(1,740)

1,676

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 161

FINANCIAL STATEMENTS continued

Any resultant gains or losses on financial assets held for the benefit of policyholders are offset by a reciprocal
movement in the linked liability.

The Group regularly assesses assets to ensure they are categorised correctly and 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 asset price become
observable following the resumption of trading the FVH level will be updated to reflect this.

(v) Capital maintenance

The regulated companies in IntegraFin Group are subject to capital requirements imposed by the relevant regulators.
As detailed on page 28 in the Financial Review, Group capital requirements for 2021 were £263.4 million (2020:
£212.9 million).

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

This note supplements the details provided in the Risk and Risk Management section of this report on pages 40 to 51.

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

Description of 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 subsidiary IFAL 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.

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. 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 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.

162 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

10% increase in asset values

10% decrease in asset values

Market risk from direct asset holdings

Impact on profit for the year

2021
£’000

7,869

(7,869)

2020
£’000

6,931

(6,931)

The Group and the Company have limited exposure to primary market risk as capital is invested in high quality, highly
liquid, short-dated investments.

(b) Interest rate risk

The Group and the Company's balance sheet and capital requirements are relatively insensitive to first order impacts
from movements in interest rates.

The Company is not directly exposed to significant currency risk. The table below shows a breakdown of the material
foreign currency exposures for the unit-linked policies within the Group:

Currency

GBP

USD

EUR

Others

Total

2021

£’000

22,914,615

111,003

18,074

9,698

2021

99.4

0.5

0.1

0.0

2020

£’000

17,983,651

106,532

13,862

8,890

2020

99.3

0.6

0.1

0.0

23,053,390

100.0

18,112,935

100.0

99.4% 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.

A significant rise or fall in sterling exchange rates would not have a significant first order impact on its 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.

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. However, 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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 163

FINANCIAL STATEMENTS continued

Details of the ECLs recognised in relation to accrued income can be seen in note 23.

(b) Loans

Loans subject to the 12 month ECL are £3.6million (2020: £2.7million). 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 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.

In addition to the above, the Company has committed a further £7.8m in undrawn loans.

Details of the ECLs recognised in relation to loans can be seen in note 18. No ECLs have been recognised on the
undrawn loan commitments, as they not considered to be material.

The Group has a low risk appetite for credit risk, which is 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 £3.4million (2020: £2.6million). 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 £130k (2020: £342k) 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.

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.

164 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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.

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 £12.0 million (2020: £10.2 million) 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. This does not represent a financial liability for the Company, but an increase in the amount of the loan
that is drawn down would lead to a reduction in the cash available to meet the Company's financial liabilities.

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.

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 four 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 entity 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 equal instalments over the next four years 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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 165

FINANCIAL STATEMENTS continued

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 tables show an analysis of the financial assets and financial liabilities by remaining expected maturities
as at 30 September 2020 and 30 September 2021.

In addition to the financial assets and financial liabilities shown in the tables below, the Company committed a further
£7.8m in undrawn loans. These are available to be drawn down immediately.

Financial assets:

2020

Up to
3 months

3-12
months

£’000

Investments held for the policyholders

16,727,208

Investments

Accrued income

Trade and other receivables

Loans

Cash

Total

2021

Investments

Accrued income

Trade and other receivables

Loans

Cash

Total

1-5
years

£’000

4,959

2,647

1-5
years

£’000

4,969

3,420

Over
5 years

£’000

Over
5 years

£’000

Total

£’000

16,727,208

5,051

10,244

786

2,647

1,539,843

18,285,779

Total

£’000

21,787,106

5,134

12,030

934

3,420

1,442,362

23,250,986

165

18,278,001

165

7,613

Up to
3 months

3-12
months

£’000

23,242,425

165

8,396

10,244

614

1,539,843

165

12,030

762

1,442,362

Investments held for the policyholders

21,787,106

166 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Financial liabilities:

2020

Liabilities for linked
investment contracts

Trade and other payables

Lease liabilities

Total

2021

Up to
3 months

3-12
months

£’000

18,112,935

16,257

614

18,129,806

195

1,761

1,956

Up to
3 months

3-12
months

£’000

Investments held for the policyholders

23,053,389

Investments

Accrued income

Trade and other receivables

Loans

Total

(4) Outflow risk

9,871

622

5,090

1,867

1,568

23,063,882

8,525

3,750

1-5
years

£’000

3,712

1-5
years

£’000

2,766

193

791

Over
5 years

£’000

Total

£’000

18,112,935

16,452

6,087

18,135,474

Over
5 years

£’000

Total

£’000

23,053,389

14,961

5,255

1,761

791

23,076,157

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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 167

FINANCIAL STATEMENTS continued

5. Disaggregation of revenue

The Group has disaggregated revenue into the four categories below to enable the users to better understand the
relationship with the segmental information provided in note 6.

Annual commission income

Wrapper fee income

Other income

Adviser back-office technology

Total fee income

For the financial year ended
30 September

2021
£’000

107,658

10,626

3,015

2,371

2020
£’000

94,468

9,743

3,109

123,670

107,320

Total fee income relates to both classes of business (see note 6 for details).

6. Segmental reporting

The revenue and profit before tax are attributable to activities carried out in the UK.

The Group have three classes of business as follows:

▪ provision of investment administration services;

▪ transaction of ordinary long-term insurance and underwriting life assurance; and

▪ Adviser back-office technology.

Adviser back-office technology relates to the acquisition of T4A during the financial period.

Analysis by class of business is given below.

168 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Statement of comprehensive income – segmental information for the year ended 30 September 2021:

Investment
administration
services

Insurance
and life
assurance
business

Adviser
back-office
technology

Consolidated
adjustments

£’000

Revenue

Annual commission income

Wrapper fee income

Adviser back-office technology

Other income

Total fee income

58,896

2,571

48,762

8,055

2,371

1,757

1,258

63,224

58,075

2,371

Cost of sales

(708)

(480)

(302)

Total

£’000

107,658

10,626

2,371

3,015

123,670

(1,490)

Expenses

Admin expenses

Impairment losses

Net income attributable
to policyholders

Change in investment
contract liabilities

Fee and commission expenses

Investment returns

Interest expense

Interest income

(64,776)

(49,616)

(4,502)

60,156

(58,738)

(200)

(30)

31,526

(2,736,063)

(204,123)

2,940,167

(209)

(193)

283

(230)

31,526

(2,736,063)

(204,123)

2,940,167

235

(235)

(167)

Profit/(loss) before tax

(3,219)

39,001

(1,293)

60,157

94,646

Policyholder tax

(31,015)

Tax on profit on ordinary activities

(5,776)

(7,061)

312

(31,015)

(12,525)

Profit for the financial year

44,089

49,605

(164)

(42,424)

51,106

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 169

FINANCIAL STATEMENTS continued

Statement of comprehensive income – segmental information for the year ended 30 September 2020:

Investment
administration
services

Insurance
and life
assurance
business

Other
income

Consolidated
adjustments

£’000

Revenue

Annual commission income

Wrapper fee income

Other income

Total fee income

51,873

42,595

2,337

1,713

7,406

1,354

55,923

51,355

Cost of sales

(543)

(323)

Expenses

Admin expenses

Amortisation of deferred acquisition
costs

Impairment losses

Net income attributable to policyholders

Change in investment contract liabilities

Fee and commission expenses

Investment returns

Interest expense

Interest income

(61,170)

(55,760)

(7,576)

(109)

(120)

121

(67)

(3,066)

82,895

(137,536)

54,677

(113)

135

Profit before tax

41,402

43,180

Policyholder tax

3,066

Tax on profit on ordinary activities

(4,641)

(5,197)

Total

£’000

94,468

9,743

3,109

107,320

(865)

65,914

(51,016)

(7,576)

(176)

(3,066)

82,895

(137,536)

54,677

(233)

256

(32,326)

52,256

3,066

(9,838)

Profit for the financial year

36,761

41,048

(32,326)

45,484

The figures above comprise the results of the companies that fall directly into each segment, as well as a proportion of
the results from the other Group companies that only provide services to the revenue-generating companies. This
therefore has no effect on revenue, but has an effect on the profit before tax.

170 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Statement of financial position – segmental information for the year ended 30 September 2021:

Assets

Non-current assets

Current assets

Total assets

Liabilities

Current liabilities

Non-current liabilities

Total liabilities

Investment
administration
services

Insurance
and life
assurance
business

Adviser
back-office
technology

£’000

Total

£’000

11,884

19,967

31,881

67,309

23,184,219

3,866

23,255,394

79,193 23,204,186

3,896 23,287,275

8,163

23,075,931

748

23,084,842

2,616

36,548

39,164

10,779 23,112,479

748 23,124,006

Net assets

68,414

91,707

3,148

163,269

Non-current assets additions

329

304

660

Statement of financial position – segmental information for the year ended 30 September 2020:

Assets

Non-current assets

Current assets

Total assets

Liabilities

Current liabilities

Non-current liabilities

Total liabilities

Investment
administration
services

Insurance
and life
assurance
business

£’000

11,611

64,232

60,597

18,229,525

72,209 18,293,757

7,763

18,125,913

2,208

89,162

9,971 18,215,075

Total

£’000

75,843

18,290,123

18,365,966

18,133,676

91,370

18,225,046

Net assets

62,237

78,682

140,920

Non-current assets additions

438

421

859

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 171

FINANCIAL STATEMENTS continued

Segmental information: Split by geographical location

Revenue

United Kingdom

Isle of Man

Australia

Total

Non-current assets

United Kingdom

Isle of Man

Total

2021
£’000

2020
£’000

118,893

103,089

4,763

4,231

123,670

107,320

2020
£’000

26,873

26,924

2019
£’000

19,128

19,225

The non-current assets excludes the deferred acquisition costs, loans and deferred tax assets.

7. Earnings per share

Profit

2021
£’000

2020
£’000

Profit for the year and earnings used in basic and diluted earnings per share

£51.1m

£45.5m

Weighted average number of shares

Weighted average number of Ordinary Shares

Weighted average numbers of Ordinary Shares held by Employee Benefit Trust

Weighted average number of Ordinary Shares for the purposes of basic
EPS

Adjustment for dilutive share option awards

Weighted average number of Ordinary Shares for the purposes of diluted
EPS

Earnings per share

Earnings per share – basic and diluted

331.3m

(0.3m)

331.3m

(0.1m)

331.0m

331.2m

0.3m

0.1m

331.3m

15.4p

13.7p

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.

172 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

8. Expenses by nature

The following expenses are included within administrative expenses

Group

Depreciation

Amortisation

Wages and employee benefits expense

Other staff costs

Auditor’s remuneration:

▪ Auditing of the financial statements of the Company pursuant to the legislation

▪ Auditing of the financial statements of subsidiaries

▪ Other assurance services

Other Auditor’s remuneration:

▪ Auditing of the financial statements of subsidiaries

▪ Other assurance services

Other professional fees

Regulatory fees

Short-term lease payments:

▪ Land and buildings

▪ Equipment

Other occupancy costs

Other costs

Other income – tax relief due to shareholders

Total administrative expenses

2021
£’000

2,755

321

41,018

2,840

164

202

149

184

138

2020
£’000

2,561

36,732

200

118

154

4,326

3,531

2,808

3,643

141

1,234

3,980

(2,208)

58,738

2,001

3,589

(1,071)

51,016

“Other income – tax relief due to shareholders” relates to the release of policyholder tax provisions to the statement
of profit or loss and other comprehensive income.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 173

FINANCIAL STATEMENTS continued

Company

Wages and employee benefits expense

Other staff costs

Auditor’s remuneration:

▪ Auditing of the financial statements of the Company pursuant to the legislation

▪ Other assurance services

Other professional fees

Regulatory fees

Other costs

Total administrative expenses

Wages and employee benefits expense

2021
£’000

424

2,227

319

1,228

489

4,739

2020
£’000

475

422

161

1,208

The average number of staff (including executive directors) employed by the Group during the financial year amounted to:

CEO

Client services staff

Finance staff

Legal and compliance staff

Sales, marketing and product development staff

Software development staff

Technical and support staff

The Company has no employees (2020: nil).

2021
No.

231

122

543

2020
No.

213

104

494

Wages and employee (including executive directors) benefits expenses during the year, included within administrative
expenses, were as follows:

Wages and salaries

Social security costs

Other pension costs

Share-based payment costs

2021
£’000

32,908

3,400

2,815

1,895

2020
£’000

29,307

3,085

2,714

1,626

41,018

36,732

174 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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.

Short term employee benefits*

Post employment benefits

Share based payment

Other benefits

Social security costs

Highest paid Director:

Short-term employee benefits*

Other benefits

Post employment benefits

Number of directors for whom pension contributions are paid

*Short term employee benefits comprise salary and cash bonus.

Group
2021
£’000

Company
2021
£’000

9. Interest income

Interest income on bank deposits

Interest income on loans

10. Investment returns

Interest on fixed-interest securities

Realised losses on fixed-interest securities

Unrealised losses on fixed-interest securities

Change in fair value of underlying assets

Investment income

Total investment returns

2021
£’000

2,880

139

414

447

2020
£’000

2,622

522

211

3,884

3,428

555

143

Group
2020
£’000

194

256

2021
£’000

(7)

(27)

2,810,061

130,124

2,940,167

491

140

Company
2020
£’000

2020
£’000

(44)

(73,093)

127,734

54,677

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 175

FINANCIAL STATEMENTS continued

11. Tax on profit on ordinary activities

Group

a) Analysis of charge in year

The income tax expense comprises:

Corporation tax

Current year – corporation tax

Adjustment in respect of prior years

Deferred tax

Current year

Adjustment in respect of prior years

Change in deferred tax charge/(credit) as a result of lowered tax rate

2021
£’000

12,185

418

12,603

(232)

154

2020
£’000

9,879

125

10,004

(38)

(113)

(15)

Total tax charge for the year

12,525

9,838

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:

2021
£’000
94,646
(31,015)
63,631

2020
£’000
52,256
3,066
55,322

12,090

10,511

(76)

(187)

691
(92)
155
(38)
(205)
12,525

(17)
(356)
(15)
30
(128)
9,838

Profit on ordinary activities before tax
Policyholder tax

Profit on ordinary activities multiplied by
effective rate of Corporation Tax 19% (2020: 19%)

Effects of:
Non-taxable dividends
Income / expenses not taxable/deductible for tax purposes
multiplied by effective rate of corporation tax
Adjustments in respect of prior years
Effect of change in tax rate
Rate differences
Other adjustments

176 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Company

a) Analysis of charge in year

Deferred tax charge/(credit) (see note 27)
Total

b) Factors affecting tax charge for the year

Profit on ordinary activities before tax

Profit on ordinary activities multiplied by
effective rate of Corporation Tax 19% (2020: 19%)

Effects of:
Non-taxable dividends
Income/expenses not taxable/deductible for tax purposes
multiplied by effective rate of Corporation Tax
Group loss relief to ISL

12. Policyholder income and expenses – Group

Net income attributable to policyholder returns
Policyholder tax

2021
£’000
-
-

2021
£’000
37,173

2020
£’000
-
-

2020
£’000
31,124

7,063

5,914

(8,000)

(6,142)

614
323
-

9
219
-

2021
£’000
31,526
(31,015)

2020
£’000
(3,066)
3,066

This relates to income and expenses, and the associated tax charges, on policyholder assets and liabilities.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 177

FINANCIAL STATEMENTS continued

13. Intangible assets – Group

Software and
IP rights

Customer

Goodwill

relationships Software

Brand

Cost

At 1 October 2020

Acquisitions through
business combinations

At 30 September 2021

Amortisation

At 1 October 2020

Charge for the year

At 30 September 2021

Net Book Value

At 30 September 2020

At 30 September 2021

Cost

At 1 October 2019

At 30 September 2020

Amortisation

At 1 October 2019

Charge for the year

At 30 September 2020

Net Book Value

At 30 September 2019

At 30 September 2020

£’000

12,505

£’000

12,951

25,456

Total

£’000

5,335

2,086

1,975

12,505

18,286

2,086

1,975

260

9,656

35,112

100

203

12,505

321

12,826

12,505

£’000

12,505

12,951

18,286

£’000

12,951

12,505

12,951

12,505

12,951

1,986

1,772

242

22,286

£’000

25,456

12,505

12,951

Business combinations - acquisition of Time for Advice Limited (T4A)

On 11 January 2021, the Company acquired 100% of the voting equity instruments of T4A, a specialist software
provider for financial planning and wealth management. The principal reason for the acquisition was to support IHP’s
strategy of providing platform and associated services to clients and their advisers.

With effect from the date of acquisition, T4A’s accounts have been consolidated into the Group’s consolidated results,
resulting in the inclusion of £2,371k of revenue achieved from that date to 30 September 2021, and losses after tax of
£968k in the same period.

Had the acquisition of T4A taken place at the beginning of the reporting period, the consolidated revenue of the Group
for the year to 30 September 2021 would have been £124.7 million, and the consolidated profit after tax would have
been £49.9 million.

178 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

T4A generates cash inflows that are independent of the cash inflows from the rest of the Group, and it is therefore
considered to be a separate cash generating unit.

Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as
follows:

Book value

Fair value
adjustments

Fair value

Cash and cash equivalents

Trade and other receivables

Property, plant and equipment

Current liabilities

Customer relationships

Software

Brand

Deferred tax liability

Total net assets

Fair value of consideration

Goodwill

£’000

697

391

(990)

120

£’000

2,086

1,975

260

(821)

3,500

697

391

(990)

2,086

1,975

260

(821)

3,620

8,955

5,335

All contractual cash flows are expected to be received, and the gross contractual amounts receivable therefore equal
the fair value of receivables shown above.

The intangibles assets recognised relate to T4A’s CURO software, the CURO brand and T4A’s customer relationships
obtained through the acquisition, all of which meet the requirement to be separately identifiable under IFRS 3. A
deferred tax liability of £821k has been recognised in relation to these fair value adjustments.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 179

FINANCIAL STATEMENTS continued

The acquisition cost comprised up-front cash payments of £8.6 million, plus £8.6 million of deferred consideration,
payable in phases over the next four years. Additional consideration between £0 and £8.6 million is also payable in
January 2025. The amount is contingent on T4A meeting certain performance targets over the next four years, and
management have estimated the fair value as £3,882k.

The allocation of the above costs between consideration and post-combination remuneration can be seen below:

Up-front cash consideration

Deferred consideration

Additional consideration

Total

Consideration

Remuneration

£’000

8,600

239

116

8,955

£’000

8,342

3,766

12,108

An assessment has been performed by management regarding the deferred and contingent arrangements payable to
selling shareholders that continue providing services, and it has been determined that these relate to payment for
post-combination services and should therefore be treated as remuneration across the four year period to which the
services relate, from January 2021 to December 2024. The deferred and additional arrangements that have been
treated as consideration relate to amounts payable to a selling shareholder who does not provide services to T4A.

The overall cash outflow upon acquisition of T4A can be seen below:

Up-front cash consideration

T4A cash and cash equivalents at acquisition date

Total cash outflow

£’000

8,600

(697)

7,903

The main factors leading to the recognition of goodwill are:

▪ The presence of certain intangible assets, such as the assembled workforce of T4A, which do not qualify

for separate recognition.

▪ The fact that the investment supports the Group’s strategy of delivering the highest quality financial services
infrastructure and associated services to advisers and clients. Management sees the T4A offering, CURO, as
complementary to Transact. Whilst still undergoing further development CURO has already proven to be highly
capable and, with the Company’s support, providing the necessary investment and direction, it is believed that
T4A will be a great long-term fit that will deliver positive outcomes for all.

The goodwill will be tested for impairment annually going forward.

180 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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 goodwill is allocated to the two cash generating units (“CGUs”) that are benefitting from the
acquisition as follows:

IAD Pty

Investment administration services

Insurance and life assurance business

Total

T4A

Adviser back-office technology

Other assumptions are as follows:

Discount rate
Period on which detailed forecasts are based
Long-term growth rate

2021
£’000

7,217

5,734

2020
£’000

7,256

5,695

12,951

2021
£’000
5,335

2021
10.0%
5 years
1.0%

2020
£’000
-

2020
8.8%
5 years
1.0%

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 2026. 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 1.0%.

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.

A sensitivity analysis has been performed, which showed that there were no reasonable foreseeable changes in the
assumptions which would result in the recoverable amount falling below the carrying amount.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 181

FINANCIAL STATEMENTS continued

14. Property, plant and equipment – Group

At 1 October 2020

Acquisition of subsidiary

Additions

Disposals

Foreign exchange

At 30 September 2021

Depreciation

At 1 October 2020

Reclassification

Charge in the year

Disposals

Foreign exchange

At 30 September 2021

Net Book Value

At 30 September 2020

At 30 September 2021

Leasehold
improvements

Equipment

Fixtures and
Fittings

1,732

(12)

1,720

£’000

3,314

642

(325)

(19)

3,624

1,157

1,634

146

(2)

1,303

575

417

960

(325)

(12)

2,289

1,680

1,335

£’000

186

(12)

180

145

(12)

149

Motor
Vehicles

£’000

103

(38)

(4)

(34)

(26)

(5)

Total

£’000

5,335

660

(375)

(35)

5,603

3,022

1,136

(363)

(19)

3,776

2,313

1,827

Cost

£’000

At 1 October 2019

Additions

Disposals

Foreign exchange

At 30 September 2020

Depreciation

At 1 October 2019

Charge in the year

Disposals

Foreign exchange

1,728

2,607

852

(152)

186

1,732

3,314

186

1,008

148

1,020

758

(149)

127

At 30 September 2020

1,157

1,634

145

Net Book Value

At 30 September 2019

At 30 September 2020

The Company holds no property, plant and equipment.

182 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

720

575

1,587

1,680

111

(9)

103

(9)

4,632

852

(161)

5,335

2,227

946

(158)

3,022

2,405

2,313

15. Right of use assets – Property – Group

Cost

Additions on adoption of IFRS 16 – 1 October 2019

Australian dollar foreign exchange adjustment

At 30 September 2020

Depreciation

Charge in the year

Foreign exchange adjustment

At 30 September 2020

Net Book Value

At 30 September 2019

At 30 September 2020

Cost

At 1 October 2020

Additions

Disposals

Foreign exchange

At 30 September 2021

Depreciation

At 1 October 2020

Charge in the year

Disposals

Foreign exchange

At 30 September 2021

Net Book Value

At 30 September 2020

At 30 September 2021

Depreciation is calculated on a straight line basis over the term of the lease.

£’000

5,581

5,586

1,615

1,625

3,961

£’000

5,586

1,301

(412)

(15)

6,460

£’000

1,625

1,623

(412)

(8)

2,828

3,961

3,632

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 183

FINANCIAL STATEMENTS continued

16. Investment in subsidiaries

Carrying value at 1 October

Additions

Share-based payments

Carrying value at 30 September

2021

£’000

16,832

12,955

1,776

31,563

2020

£’000

15,799

1,033

16,832

The Company has investments in the ordinary share capital of the following subsidiaries at 30 September 2021:

Name of Company

Holding

% Held

Incorporation
and significant
place of business Business

Direct holdings

Integrated Financial Arrangements Ltd

Ordinary Shares

100%

United Kingdom

Investment
Administration

IntegraFin Services Limited

Transact IP Limited

Ordinary Shares

100%

United Kingdom Services Company

United Kingdom Software provision
& development

Integrated Application Development Pty Ltd

Ordinary Shares

100%

Australia

Software
maintenance

Objective Asset Management Limited

Ordinary Shares

100%

United Kingdom

Dormant

Indirect holdings

IntegraFin Limited

Transact Nominees Limited

IntegraLife UK Limited

IntegraLife International Limited

ObjectMastery (UK) Limited

Objective Funds Limited

Ordinary Shares

Objective Wealth Management Limited

Ordinary Shares

IntegraFin (Australia) Pty Limited

Transact Trustees Limited

Time For Advice Limited

Ordinary Shares

100%

United Kingdom

Non-trading

United Kingdom

Life Insurance

Isle of Man

Life Assurance

United Kingdom

Consultancy

United Kingdom

Australia

United Kingdom

Dormant

Non-trading

United Kingdom Financial planning
software

184 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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. The results of ILInt and ILUK
are included as described in the basis of consolidation accounting policy in note 1.

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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 185

FINANCIAL STATEMENTS continued

17. Deferred acquisition costs

Opening balance

Capitalisation of deferred acquisition costs and deferred income liabilities

Amortisation of deferred acquisition costs and deferred income liabilities

Derecognition of deferred acquisition costs and deferred income liabilities

Change in deferred acquisition costs and deferred income liabilities

Closing balance

2021
£’000

53,482

(53,482)

2020
£’000

50,443

10,615

(7,576)

3,039

53,482

Following a review of the terms of the agreements relating to establishment charges paid to ILUK and ILInt
policyholders’ financial advisers, management has concluded that the Group is acting in an agency capacity between
the policyholders and their financial advisers, rather than as a principal. It therefore should not recognise the deferred
acquisition costs as contract costs, nor does it have future service obligations in respect of the deferred fees to justify
the recognition of the corresponding deferred income liability. The deferred acquisition costs and deferred income
liabilities have therefore been derecognised in the financial year ended 30 September 2021, to bring the accounts in
line with the accounting standards.

The impact is a reduction in both assets and liabilities of £53.5million. The treatment has had no impact on the profit
or loss or net assets of the Group.

Management has considered the qualitative and quantitative impact of the above change, and has concluded that this
does not have a material effect on the prior year financial statements, and a prior year adjustment is therefore not
required. This is due to the fact that:

▪ the net impact on the statement of comprehensive income and on net assets is nil;

▪ all balances being derecognised on the statement of financial position are equal and opposite;

▪ the total balances are not material in the context of total policyholder assets and linked liabilities; and

▪ the users would not reasonably have any expectations regarding the measurement or disclosure of these items,

as it fundamentally does not relate to them.

186 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

18. Loans

This note analyses the loans payable by and receivable to the Company. The carrying amounts of loans are as follows:

Loans receivable

Loans to third parties

Interest receivable on loans

Total gross loans

Credit loss allowance

Total net loans

2021
£’000

3,540

3,561

(141)

3,420

2020
£’000

2,716

2,732

(85)

2,647

The loans receivable are measured at amortised cost with the credit loss allowance charged straight to the statement of
comprehensive income. The total movement in the credit loss allowance can be seen in Note 23.

Loans payable

Loan payable to subsidiary

To be settled within 12 months

To be settled after 12 months

Total loan payable

2021
£’000

9,000

1,000

8,000

9,000

2020
£’000

The loans payable are initially recognised at fair value. Subsequent measurement is at amortised cost using the effective
interest 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 9 years.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 187

FINANCIAL STATEMENTS continued

19. Investments held for the benefit of policyholders

ILInt

2021
Cost
£’000

2021
Fair value
£’000

2020
Cost
£’000

2020
Fair value
£’000

Investments held for the benefit of policyholders

1,737,512

2,102,209

1,346,990

1,534,080

1,737,512

2,102,209

1,346,990

1,534,080

ILUK

Investments held for the benefit of policyholders

16,146,376

19,684,897

13,482,294

15,193,128

16,146,376

19,684,897

13,482,294

15,193,128

Total

21,787,106

16,727,208

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.

20. Liabilities for linked investment contracts

ILInt

Unit linked liabilities

ILUK

Unit linked liabilities

Total

Analysis of change in liabilities for linked investment contracts

Opening balance

Investment inflows

Investment outflows

Compensation

Changes in fair value of underlying assets

Investment income

Other fees and charges - Transact

Other fees and charges – third parties

Closing balance

188 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

2021
Fair value
£’000

2020
Fair value
£’000

2,199,700

1,636,781

2,199,700

1,636,781

20,853,690

16,476,154

20,853,690

16,476,154

23,053,390

18,112,935

2021
£’000

2020
£’000

18,112,935

16,665,048

3,391,318

2,415,445

(1,130,468)

(834,454)

163

2,940,185

(56,620)

(72,990)

127,735

(50,360)

(204,123)

(137,536)

23,053,390

18,112,935

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.

21. Cash and cash equivalents

Bank balances – Instant access

Bank balances – Notice accounts

Cash and cash equivalents held for the benefit of the policyholders
– instant access - ILUK

Cash and cash equivalents held for the benefit of the policyholders
– term deposits - ILUK

Cash and cash equivalents held for the benefit of the policyholders
– instant access - ILINT

Cash and cash equivalents held for the benefit of the policyholders
– term deposits - ILINT

Total

2021
£’000

169,578

6,502

2020
£’000

148,617

5,500

1,131,567

1,231,043

37,225

51,982

96,458

100,716

1,032

1,985

1,442,362

1,539,843

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.

The 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.

22. Financial assets at fair value through profit or loss

Listed shares and securities

Gilts

Total

Investments are all UK and sterling based and held at fair value.

Group
2021
£’000

165

4,969

5,134

Group
2020
£’000

4,959

5,051

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 189

FINANCIAL STATEMENTS continued

23. Other prepayments and accrued income

Accrued income

Less: credit loss allowance

Accrued income - net

Prepayments

Total

Group
2021
£’000

12,819

(789)

12,030

3,921

15,951

Company
2021
£’000

Group
2020
£’000

10,956

(712)

10,244

4,168

14,412

Company
2020
£’000

Movement in the credit loss allowance (for accrued income, loans receivable and trade and other receivables)
is as follows:

Opening credit loss allowance

Reduction in credit loss allowance

(Increase) during the year

Balance at 30 September

24. Trade and other receivables

Other receivables

Less: credit loss allowance

Other receivables net

Amounts owed by Group undertakings

Amounts due from HMRC

Amount due from policyholders to meet
current tax liability

Total

2021
£’000

(822)

(230)

(1,052)

Group
2020
£’000

1,329

2,227

3,556

2020
£’000

(646)

(176)

(822)

Company
2020
£’000

342

Group
2021
£’000

935

(123)

812

1,800

1,107

3,719

Company
2021
£’000

130

133

Amount due from HMRC is in respect of tax claimed on behalf of policyholders for tax deducted at source.

190 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

25. Trade and other payables

Trade payables

PAYE and other taxation

Due to Group undertakings

Other payables

Accruals and deferred income

Deferred consideration

Total

Group
2021
£’000

437

1,610

5,460

8,216

1,741

17,466

Company
2021
£’000

210

359

1,741

2,420

Group
2020
£’000

1,716

1,420

7,436

7,794

18,366

Company
2020
£’000

312

491

Other payables mainly comprises £4.2million (2020: £6.2million) in relation to bonds awaiting approval.

26. Lease liabilities

Lease liabilities – Property:

Opening balance

Additions

Lease payments

Interest expense

Foreign exchange adjustment

Balance at 30 September

Amounts falling due within one year

Amounts falling due after one year

2021
£’000

6,087

1,283

2020
£’000

8,336

(2,491)

(2,477)

167

(9)

5,037

2,362

2,675

233

(5)

6,087

2,375

3,712

The above table provides a reconciliation of the financial liabilities arising from financing activities.

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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 191

FINANCIAL STATEMENTS continued

27. Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 25% (2020:
19%). The increase in the UK corporation tax rate 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 Asset

At 1 October 2019

Adjustment in respect of prior year

Adjustment to opening balances

Excess tax relief charged to equity

Charge to income

At 30 September 2020

Charge to income

Excess tax relief charged to equity

Charge to income

At 30 September 2021

Deferred Tax Liability

At 1 October 2019

Charge to income

At 30 September 2020

Charge to income

Deferred tax acquired through business
combination

At 30 September 2021

Share
based
payments
£'000

Other
deductible
temporary
differences
£'000

110

108

124

402

192

613

(10)

103

Accelerated
capital
allowances
£’000

Policyholder
tax
£’000

Other
deductible
differences
£’000

121

(49)

13,188

(4,341)

8,847

19,599

28,446

179

821

1,000

The Company has no deferred tax assets or liabilities.

Total
£'000

157

126

114

489

208

716

Total
£’000

13,248

(4,280)

8,968

19,729

821

29,518

192 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

28. Client monies and client assets

2021

Client monies

Client assets

2020

Client monies

Client assets

£’000

2,901,487

Amounts due to clients

49,210,125

Corresponding liability

£’000

3,106,978

Amounts due to clients

37,985,921

Corresponding liability

£’000

2,901,487

49,210,125

£’000

3,106,978

37,985,921

The above client monies are held separately (off balance sheet) in client bank and the above client assets are held on
behalf of Integrated Financial Arrangements Ltd by Transact Nominees Limited.

29. Provisions - Group

Balance brought forward

Increase in dilapidations provision

Increase in ILInt non-linked unit provision

(Decrease)/increase in ILUK tax provision

Balance carried forward

Amounts falling due within one year

Amounts falling due after one year

Dilapidations provisions

ILInt non-linked unit provision

Current ILUK tax provision

Non-current ILUK tax provision

Total

2021

£’000

25,208

(7,469)

17,804

11,624

6,180

516

11,626

5,608

17,804

2020

£’000

18,230

6,924

25,208

464

24,703

25,208

The dilapidation provisions relate to the current leasehold premises at 29 Clement’s Lane, and the current ILInt
leasehold premises at 18/20 North Quay, on the Isle of Man. The Group is committed to restoring the premises to their
original state at the end of the lease term. Whilst it is probable that payments will be required for dilapidations,
uncertainty exists with regard to the amount and timing of these payments, and the amounts provided represent
management’s best estimate of the Group’s liability.

ILUK tax provision 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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 193

FINANCIAL STATEMENTS continued

30. Contingent consideration – Group and company

Contingent consideration

2021
£’000

791

2020
£’000

As explained in note 13, the T4A acquisition cost included additional consideration between £0 and £8.6 million, which
is payable in January 2025 and contingent on T4A meeting certain performance targets over the next four years.

Management have estimated the fair value as £3.9 million, and this is being recognised across the four year period
from January 2021 to December 2024. The contingent consideration balance relates to the element of the additional
consideration that has been recognised up to 30 September 2021.

31. Capital redemption reserve – Group

Balance brought forward

Balance carried forward

2021
£’000

2020
£’000

On 12 December 2013 IFAL was granted authority by shareholders to repurchase £4,500,000 worth of ordinary shares
from shareholders. IFAL purchased 45,917 shares, and they were then cancelled, giving rise to a capital redemption
reserve of £2,271.

32. Share-based payments

Share-based payment reserve

Balance brought forward

Movement in the year

Transfer to profit and loss reserve

Balance carried forward

Group
2021
£’000

1,698

732

(26)

2,404

Company
2021
£’000

1,070

645

1,715

Group
2020
£’000

1,008

723

(33)

1,698

Company
2020
£’000

880

190

1,070

The reduction in reserves of £26k (2020: £33k) is due to former members of staff leaving the SIP 2005 scheme.

194 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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 2021 was £nil (2020: £nil). 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 £3,600 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 2021 was £669k (2020: £649k).

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 2021 was £539k (2020: £555k).

(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 2021 was £687k (2020: £423k). 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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 195

FINANCIAL STATEMENTS continued

Details of the share awards outstanding are as follows:

SIP 2018

Shares in the plan at start of the year

Granted

Shares withdrawn from the plan

Shares in the plan at end of year

Available to withdraw from the plan at end of year

2021
Shares
(number)

473,683

295,210

(76,210)

692,683

148,543

2020
Shares
(number)

251,541

275,249

(53,107)

473,683

83,569

Details of the movements in the share scheme during the year are as follows:

SIP 2005

Outstanding at start of the year

Shares withdrawn from the plan

Shares in the plan at end of year

2021
Weighted
average
exercise price
(pence)

0.00

2020
Weighted
average
exercise price
(pence)

0.00

2021
Shares
(number)

1,201,223

(328,514)

872,709

2020
Shares
(number)

1,630,190

(428,967)

1,201,223

Available to withdraw from the plan at end
of year

0.00

872,709

0.00

1,201,223

The weighted average share price at the date of withdrawal for shares withdrawn from the plan during the year was
507.35pence (2020: 487.76pence).

At 30 September 2021 the exercise price was £nil as they were all nil cost options.

PSP

Outstanding at start of the year

Granted

Forfeited

Outstanding at end of year

Exercisable at end of year

2021
Weighted
average
exercise price
(pence)

0.00

2020
Weighted
average
exercise price
(pence)

0.00

2021
Shares
(number)

434,643

141,445

576,088

2020
Shares
(number)

269,511

165,132

434,643

196 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

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:

PSP

Share price at date of grant

Exercise price

Expected life

Risk free rate

Dividend yield

Weighted average fair value per option

33. Employee Benefit Trust reserve

Group:

Balance brought forward

Purchase of own shares

Balance carried forward

Company:

Balance brought forward

Purchase of own shares

Balance carried forward

2021

555.0

Nil

3 years

0.00%

1.50%

530.7p

2021
£’000

(1,103)

(952)

2020

454.5

Nil

3 years

0.52%

1.7%

431.7 p

2020
£’000

(275)

(828)

(2,055)

(1,103)

2021
£’000

(869)

(920)

(1,789)

2020
£’000

(275)

(594)

(869)

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.

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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 197

FINANCIAL STATEMENTS continued

34. Other reserves – Group

Foreign exchange reserves

Non-distributable reserves

Non-distributable insurance reserves

2021
£’000

(94)

5,722

501

2020
£’000

(22)

5,722

501

Foreign exchange reserves are gains/losses arising on retranslating the net assets of IAD Pty into sterling.

Non-distributable reserves relate to share premium held by one of the Company’s subsidiaries, IFAL, which is classified
within other reserves on a Group level.

Non-distributable insurance reserves arose due to the transition from UK GAAP to IFRS in financial year 2015,
whereupon actuarial reserving required under the old standards became impermissible under new standards.

35. Related parties

Company

Integrated Financial Arrangements Ltd

IntegraFin Services Limited

IntegraFin Limited

IntegraLife UK Limited

Integrated Application Development Pty Limited

Amounts owed by/(to)
related parties

2021
£’000

2020
£’000

(9)

277

(9)

198 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

During the year, a loan of £10million was issued to the Company by IntegraLife UK Limited. This is an arm’s length
transaction as interest is charged at a commercial rate. IHP will pay the loan off over ten years and made the first
payment of £1 million, plus accrued interest, prior to 30 September 2021. The current loan balance is £9 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 2021 or 2020 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 £3.3million (2020: £4.3million) in dividends during the year and
benefitted from staff discounts for using the platform of £2k (2020: £2k). The number of IHP shares held at the end of
the year by key management personnel was 35,206,751, a decrease of 16,050,145 from last year.

All of the above transactions are commercial transactions undertaken in the normal course of business.

36. Contingent liabilities

In January 2020 the Group received notice from HMRC that the inclusion of Integrated Application Development Pty
Ltd (IAD) in the UK VAT Group was terminated with effect from 16 July 2016. The Group included IAD in the UK VAT
Group having taken specialist advice to ensure its actions were in accordance with the relevant laws. The consequence
of the exclusion of IAD from the UK VAT Group is that the services provided from Australia would now be subject to
reverse-charge VAT.

The Group has challenged this notification and opened a discussion with HMRC about its intention to exclude IAD from
the UK VAT Group, therefore the financial implications of this notice, including the timing of any potential payment,
remain uncertain, pending the outcome of the reconsideration of the exclusion.

HMRC’s notice states that the VAT due since July 2016 until October 2019 will be approximately £4.3m and that going
forward there would be an additional annual VAT charge of approximately £1.4m. The Group does not yet know
whether HMRC will charge interest and/or a penalty if the appeal to the notification is unsuccessful.

Due to the ongoing uncertainty around the additional VAT charges, pending the outcome of the dialogue with HMRC,
the directors do not believe it would be appropriate to recognise a provision in these financial statements. Payment of
the additional VAT charges is considered to be less than probable and this is supported by both the original VAT advice
received from specialists when the VAT Group was created, and subsequent specialist advice following HMRC’s
challenge in January 2020.

37. Events after the reporting date

As per the Chair’s statement on page 2, a second interim dividend of 7.0 pence per share was declared on 15
December 2021. This dividend has not been accrued in the consolidated statement of financial position.

38. Dividends

During the year to 30 September 2021 the Company paid interim dividends of £28.5million (2020: £26.2million) to
shareholders. The Company received dividends from subsidiaries of £42.1million (2020: £32.3million).

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 199

OTHER INFORMATION

DIRECTORS, COMPANY DETAILS, ADVISERS

Executive Directors

Corporate Advisers

Ian Taylor (resigned 26 February 2021)

Michael Howard

Alexander Scott

Jonathan Gunby

Non-Executive Directors

Richard Cranfield

Christopher Munro

Neil Holden (resigned on 1 September 2021)

Caroline Banszky

Victoria Cochrane

Robert Lister

Rita Dhut (appointed 22 September 2021)

Company Secretary

Helen Wakeford

Independent Auditors

BDO LLP,
55 Baker Street,
London,
W1U 7EU

Solicitors

Eversheds Sutherland,
One Wood Street,
London,
EC2V 7WS

Peel Hunt LLP,
7th Floor 100 Liverpool Street,
London,
England,
EC2M 2AT

Barclays Bank PLC,
5 The North Colonnade,
Canary Wharf,
London,
E14 4BB

Principal Bankers

NatWest Bank Plc,
135 Bishopsgate,
London,
EC2M 3UR

Registrars

Equiniti Group plc,
Sutherland House,
Russell Way,
Crawley,
RH10 1UH

Registered Office

29 Clement’s Lane,
London,
EC4N 7AE

Investor Relations

Jane Isaac
020 7608 4900

Website

www.integrafin.co.uk

Company number

8860879

200 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

GLOSSARY OF TERMS

AGM Annual General Meeting

ORSA Own Risk and Solvency Assessment

CASS Client Assets Sourcebook

Outflow Business leaving the platform

CEO Chief Executive Officer

CFO Chief Financial Officer

SCR Solvency Capital Requirement

TCF Treating Customers Fairly

COO Chief Operating Officer

The Company IntegraFin Holdings plc

COREP

Common Reporting, as required by the
Capital Requirements Directive IV

The Group

IntegraFin Holdings plc and
its subsidiaries

COSO

Committee of Sponsoring Organisation
of the Treadway Commission

VCT Venture Capital Trust

ETF Exchange-traded Fund

FCA Financial Conduct Authority

FRC Financial Reporting Council

FUD Funds Under Direction

GDPR General Data Protection Regulation

GIA General Investment Account

HMRC Her Majesty’s Revenue and Customs

IAD

Integrated Application Development
Pty Ltd

ICA Individual Capital Assessment

ICAAP

Internal Capital Adequacy
Assessment Process

IFAL Integrated Financial Arrangements Ltd

IFRS

International Financial
Reporting Standards

ILInt IntegraLife International Limited

ILUK IntegraLife UK Limited

Gross inflow Gross new business onto the platform

IntegraFin IntegraFin Holdings Limited

IP Intellectual Property

ISA Individual Savings Account

ISAs (UK) International Standards on Auditing (UK)

IT Investment Trust

MiFID II

Second Markets in Financial
Instruments Directive

NED Non-Executive Director

Net inflow Net new business onto the platform

OEIC Open Ended Investment Company

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 201

OTHER INFORMATION

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

Financial data
page ref

Definition
and purpose

Operational performance measures

Funds under direction (“FUD”)

Data sourced
internally

Calculated as the total market value of all cash and
assets on the platform, valued as at the respective
year end.

Cash

Assets

FUD

% increase on the
previous year

2021
£bn

2.91

49.20

52.11

27%

2020
£bn

3.12

37.97

41.09

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 Net inflows

Data sourced
internally

Calculated as gross inflows onto the platform 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.

Gross inflows

Outflows

Net inflows

% increase on the
previous year

2021
£bn

7.70

2.74

4.95

38%

2020
£bn

5.75

2.16

3.59

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.

202 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Investment in the business

Data sourced
internally

Calculated as the total amount directly spent on
platform development during the respective financial
year. This is made up of fixed asset additions, training
costs, IT expenses and software development costs.

Investment in the
business

% increase on the
previous year

2021
£m

10.0

2020
£m

9.8

The measurement of investment in the business
demonstrates that management are spending excess
cash to drive the continuous development of the business.

These values are not reported directly within the financial
statements or the accompanying notes.

Adviser and client numbers

Data sourced
internally

Calculated as the total number of advisers or clients as
at the financial year end.

Advisers are calculated as the number of advisers with
over £1k of client FUD on the platform.

Clients are calculated as the total number of clients on
the platform.

Advisers

% increase

Clients

% increase

2021
£’000

6.5

208.6

2020
£’000

6.2

191.9

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

Data sourced
internally

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.

Client retention

2021

96%

2020

96%

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.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 203

OTHER INFORMATION

Income statement measures

Non-underlying expenses

Consolidated
statement of
comprehensive
income

Page 140

Cash flow measures

Shareholder returns

Consolidated
statement of
comprehensive
income

Page 140

204 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021

Calculated as costs which have been incurred outside
of the ordinary course of the business.

Acquisition costs

Post-acquisition
remuneration

Non-underlying expenses

2021
£m

1.1

2.2

3.3

2020
£m

Acquisition costs consist of professional fees and stamp
duty.

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 2021
to December 2024. This non-underlying expense will
continue in subsequent years and is expected to be £3
million in financial years 2022 to 2024, before reducing
to £0.8 million in financial year 2025.

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.

Calculated as dividend per share paid to shareholders,
which relate to the respective financial years.

1st Dividend

2nd Dividend

2021

2020

3.0 pence

2.7 pence

7.0 pence

5.6 pence

Shareholder Returns

10.0 pence

8.3 pence

% increase on previous
financial year

20.5%

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

Consolidated
statement of
comprehensive
income

Page 140

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.

Total cash dividends
paid

Profit for the financial
year

Dividends as a % of
profit

2021
£’000

33,133

2020
£’000fprofit

27,485

51,106

45,484

65%

60%

Our policy is to pay 60% to 65% of full year profit after
tax as two interim dividends.

Delivery on dividend policy is a measurement of our
performance against the policy and the businesses
ability to generate distributable profits.

INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2021 205

M137 September 2021

IntegraFin Holdings plc,
29 Clement’s Lane, London, EC4N 7AE
Tel: (020) 7608 4900 Fax: (020) 7608 5300

(Registered office: as above; Registered in England and Wales under number: 08860879)
The holding company of the Integrated Financial Arrangements Ltd group of companies.