ANNUAL REPORT
AND FINANCIAL
STATEMENTS
FOR THE YEAR ENDED
30 SEPTEMBER 2022
Progression
Ian Anthony Taylor
Original punk rocker
to City entrepreneur
Our Co-founder and former Chief
Executive, Ian Taylor, died on 17
October 2022, aged only 58. Ian was
a true pioneer and giant of the
financial services industry. He was an
entrepreneur who leaves a legacy of
a transformed world for financial
advisers and clients. He genuinely
changed things for the better, during
his working life. To us, he was also a
much loved colleague and friend, who
will be greatly missed, not least for
his razor sharp sense of humour.
Ian was born in Southend in 1964 to
Kate and Tony and was joined two
years later by his brother James.
Kate and Tony passed away in recent
years.
Ian attended Westcliff High School for
Boys where he was soon identified as
Highly Talented. His academic career
was outstanding and Ian earned a
place at Peterhouse College,
Cambridge where he read English,
graduating in 1985.
Ian supplemented his student grant
by working variously as a ride
attendant at Peter Pan’s Playground,
an assistant at an antiquarian
bookshop and a DJ!
Ian met the love of his life, Frances,
at Cambridge in 1983. They got
engaged within a year and married in
1986.
His student escapades were many.
After reading George Orwell’s Down
and Out in Paris and London Ian
spent four days homeless in London
and another adventure resulted in a
bizarre hitch-hiking trip around
Belgium and France. Fortunately,
Kate and Tony remained oblivious to
these events.
After graduating, Ian first tried his
hand as a novelist but soon
concluded that he preferred to use
his analytical and commercial skills.
He joined Royal Life Fund
Management in 1988 where his sharp
mind was spotted very quickly and he
was soon promoted to a management
role. After Royal he joined John
Govett Investment Management as
Marketing Manager, but on his very
first day was promoted to Marketing
Director! Only Ian Taylor could
achieve that. He excelled in this role
and stayed at John Govett for several
years. Throughout this time Ian was
a frequent contributor to the media
and became a prominent figure in the
City, known throughout the
investment industry.
It was in 1999 that Ian met with Mike
Howard and early in 2000 they
launched Transact. The company
began in two rented rooms above an
Italian restaurant in the then
distinctly untrendy Shoreditch. Ian
later claimed to have been one of the
first bearded people in that part of
London. Mike says of Ian in those
days, “He was larger than life. Almost
literally. It was April, 1999 and we
wouldn't be open for business for
another eleven months. It was the
guidance, always best shared over
beer and a curry.”
Transact and parent Company
IntegraFin continued to grow rapidly
under Ian’s leadership and
successfully IPO-ed on the London
Stock Exchange main market in
2018. Ian continued as Chief
Executive until March 2020 when he
stepped back a little before fully
retiring in 2021. He said at the time
“I have had to live away from home
for 22 years. So now I have to pay
back some of that time I owe to my
family” adding “We found the right
people and decided the time was
right for me to go and sit on the
beach and have a cigar.”
In 2020/21 he and Frances restored
a beautiful property in the
quintessential English town of
Stamford to pave the way for a
different life. They were going to
travel. Ian was going to spend even
more time loving test cricket and
heading to town for a beer and a
curry with old mates. There was even
talk of returning to the world of
antiquarian books with a bookshop.
But it wasn’t to be. Less than two
years after stepping down as Chief
Executive, illness struck and he died,
peacefully, after a short illness. He is
survived by his beloved wife Frances
and three adult children Patrick,
Elizabeth and Annie and we send our
continued love and condolences to
them. He remains close to so many
of us at Transact and forever in our
hearts. We’d like to think that he
could rest in peace, but that wouldn’t
be our Ian, industry visionary and
original punk rocker.
the dot com boom. Freeserve
(remember them?) was launched,
listed and its share price went up
every week. Everyone wanted to
work with an internet start-up. It was
in those days that we laid the
foundations for Transact, including its
name which Ian thought of. Before
you're actually a business, anything
seems possible. In our case, it
actually worked out that way”.
The success of Transact is legendary
but it is rooted in simplicity, in
helping advisers do a better job for
their clients, harnessing advanced
technology allied to human service.
Ian once said that “people say it’s an
online business, but it’s the offline
stuff which is most difficult”. He
strived to continually improve the
service, whilst also continually
reducing charges. He never lost sight
of the fact that his ultimate customer
was “Mrs Miggins”.
Ian saw Transact, as he did many
things, through the lens of the music
he loved. Comparing Transact to life
companies trying to enter the
platform space, he said “We weren’t
a glam rock band trying to get into
the punk rock scene - we were one of
the original punk rock bands”.
Transact CEO, Jonathan Gunby, who
worked closely with Ian, as friend
and colleague, for over 30 years,
remembers “Ian was the smartest
and one of the funniest people I have
ever met. I was privileged to have
worked with him at the beginning
and end of his career. We enjoyed a
long and happy journey together.”
IntegraFin CEO Alex Scott, who
joined the business in 2009 said
“From the first time I met Ian back in
1999, when Transact was being
created, through the years of building
a successful business, to the last time
I saw him in retirement, Ian remained
the same grounded individual, funny,
erudite and generous in thought and
deed. Ever the great raconteur, I will
deeply miss his friendship and
OUR PURPOSE
The Group’s business model centres on making the financial planning and
investment process easier and better for both clients and their financial
advisers. In order to achieve that, we provide a comprehensive infrastructure
via our two market facing brands: Transact and CURO.
Our proprietary investment platform, Transact, enables clients and their
families, through their financial adviser, to hold their investments across all
tax wrappers in one place. We provide custody, tax wrapping, trading and
reporting. Then, through our Time4Advice system, CURO, we provide advisers
with a tool set that helps them efficiently manage their business. 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 who are able to deliver great service using our proprietary systems.
FINANCIAL YEAR 2022 HIGHLIGHTS
OPERATIONAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Funds Under Direction*:
Revenue:
£50.07bn
(2021: £52.11bn)
-4%
£133.6m +8%
Average Daily FUD*:
£52.54bn +11%
(2021: £47.24bn)
Net inflows*:
£4.40bn
(2021: £4.95bn)
-11%
(2021: £123.7m)
Profit before tax:
£54.3m
(2021: £63.6.m)
Profit after tax:
£44.0m
(2021: £51.1m)
-15%
-14%
Client numbers*:
Earnings per share:
224.7k
(2021: 208.6k)
+8%
13.3p
(2021: 15.4p)
-14%
Client retention:
Shareholder returns in 2022*:
(2021: 96%)
97%
10.2p
(2021: 10.0p)
+2%
Adviser numbers*:
6.9k
(2021: 6.5k)
+5%
* 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 230.
CONTENTS
Performance Highlights
Strategic Report
Financial Statements
Other Information
Chair’s Statement.........................3
Independent Auditor’s Report......149
Chief Executive Officer’s Statement 5
Consolidated Statement of
Market Overview...........................8
Comprehensive Income..............163
Business Model.......................... 14
Consolidated Statement of Financial
Directors, Company Details,
Advisers...................................229
Glossary of Terms......................230
Our Strategic Objectives..............17
Key Performance Indicators..........21
Responsible Business – Taskforce on
Climate Related Financial Disclosures
(TCFD) Statement.......................24
Position....................................164
Glossary of Alternative Performance
Measures (“APMs”).....................231
Company Statement of Financial
Position....................................166
Consolidated Statement of
Cash Flows...............................167
Responsible Business – Our People 37
Company Statement of
Financial Review..........................45
Risk and Risk Management ..........52
Going Concern and Viability
Statement..................................67
Governance
Cash Flows...............................169
Consolidated Statement of Changes
in Equity...................................170
Company Statement of Changes in
Equity......................................171
Notes to the Financial
Corporate Governance Report.......73
Statements...............................172
Board of Directors.......................74
Board Leadership and Company
Purpose.....................................77
Section 172(1) Statement............83
Division of Responsibilities............88
Audit and Risk Committee Report..96
External Auditor.........................103
Nomination Committee Report.....105
Directors’ Remuneration Report...110
Directors’ Report.......................140
Share Capital............................143
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 1
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STR ATEGIC
REPORT
2 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT
Richard Cranfield
Chair
CHAIR’S STATEMENT
Overview
The last financial year for the Group
has been dominated by the political
and economic consequences of the
war in Ukraine and rising global
inflation, and Central Banks’ response
of increasing interest rates. All of
these have been headwinds for the
Group to deal with, creating
significant financial challenges.
In particular, maintaining best in
class service levels to our 224.7k
retail clients on the Transact platform
has been a major focus, and I am
pleased to report industry surveys
show Transact continuing to
outperform its peers on service
quality. This remains a key
distinguishing KPI for the Group.
Over the financial year, advisers
registered on the platform increased
by 5% and retail clients by 8%. We
continue to invest to maintain our
leading position.
Our financial and operational
performance has been very resilient,
and our people have coped extremely
well with the many challenges they
have faced. Alexander Scott
comments on the results in more
detail in his Chief Executive Officer’s
Review.
Hybrid working
In the London office, we are now
operating a hybrid model of a
minimum of two days in the office,
and three days working from home,
with local variants in the Isle of Man,
Australia and within Time4Advice
(T4A). This has been welcomed
across the work force and is working
well. The pandemic has also speeded
up the adoption of more IT enabled
working practices through, in
particular, Transact Online. The
reorganisation of our client
operations in London has
underpinned our service to our
advisers, whilst driving further
efficiencies through the Group.
The Group remains proud that it did
not furlough any employees, or take
advantage of any other Government
assistance, during the pandemic.
Time4Advice
The integration of T4A into the Group
continues, with live testing with a
beta version of the next generation
CURO software scheduled before the
end of calendar 2022. This is
commented on in more detail by Alex
in his report.
Transact - BlackRock Model
Portfolio Service (MPS)
We are continuously improving our
proposition to our advisers and we
are pleased to have developed MPS,
which was launched in September
2022, available exclusively to
Transact Platform clients.
The IHP board
The membership of the IHP board
has been stable throughout the year,
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 3
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT with Victoria Cochrane, our Senior
Independent Director (SID), as the
designated Non-Executive Director
(DNED) for Environmental and Social
Sustainability and Rita Dhut as the
DNED for Employee Engagement.
As a result of work, following the
external independent evaluation of
the IHP board, carried out in 2021,
we decided to undertake a corporate
reorganisation of the Group
structure. This involved moving the
insurance subsidiaries, IntegraLife UK
Limited (ILUK) and IntegraLife
International Ltd (ILInt), immediately
under IHP, thereby gaining balance
sheet and accounting efficiencies, as
well as benefits from reorganising the
audit and risk Committee structures
in our regulated subsidiaries.
We have instructed head hunters to
undertake a search for a Group CFO.
Governance and culture
meetings with all of them. These
meetings gave shareholders the
opportunity to discuss several
interesting topics, and were felt by us
to be constructive and transparent.
We have taken on board that
feedback and have sought to address
their concerns. We plan to continue
to have open engagement with our
stakeholders outside of the
boardroom and this forms a critical
aspect of board-level activity.
We have rigorous Audit and Risk,
Nomination and Remuneration
Committees, which meet regularly
and review and challenge in depth
the work of the executive. Further
detail on their activities over the year
can be found in this report. We are
committing significant resources to
enhancing our corporate governance
processes and its constituent parts
and expect to see continued benefits
from doing so.
This is the third 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 73.
On pages 83 to 87, 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.
We take great care of our corporate
culture and values - which are
reflected both in our employee
relations and in our interactions with
clients and other key stakeholders.
We believe that a core part of us
meeting the new Consumer Duty,
being implemented by the FCA, will
be underpinned by our culture and
values of putting our customers first.
It is particularly pleasing we continue
to rank so highly in client service
polls undertaken by Investment
Trends and CoreData, and that our
senior employees have such longevity
with the Group.
Following the publication of our
interim results in May 2022, I and
our Company Secretary, Helen
Wakeford, offered meetings with our
largest ten shareholders, and had
The board effectiveness review and
review of the Chair is discussed on
pages 93 to 95.
Remuneration
The Directors’ Remuneration Report
is set out on page 110. In particular,
there are changes noted in the
forward looking incentive
arrangements for executive
management and employees more
generally, which are a result of
shareholder feedback; see in
particular on page 112.
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
4 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
3.2 pence per ordinary share, this
takes the total dividend to 10.2
pence per ordinary share.
Ian Taylor
We were all shocked and saddened to
learn of the death of Ian Taylor on 17
October 2022, after a short illness.
Ian founded the Transact platform
with Mike Howard in 1999, and was
CEO for 20 years until he stepped
back in March 2020 (finally leaving
the Group in February 2021). His
contribution to what is now the IHP
Group cannot be overstated, in
particular, on building the culture and
values of putting our clients at the
centre of all that we do. Our
condolences go to his widow Frances
and their three children.
Closing
This has been my third year as Chair
and I remain enormously impressed
by the professionalism of our
employees, in particular continuing to
put our clients first.
The members of the board would like
to thank again all our hard working
colleagues for their extended efforts
dealing with the continuing
challenges posed by the pandemic
and the other headwinds I mention
above. These results, the published
clients’ satisfaction surveys, and our
ranking within the platform sector
are the product of their efforts.
Our clear purpose enables us to
continue to build on a position of
strength. Although we are mindful of
what we can control, we believe the
changes we have implemented this
past year ensure the Group remains
resilient and forward looking for the
benefit of all stakeholders in the
years to come.
Richard Cranfield
Chair
13 December 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT
continued
Alexander Scott
Chief Executive Officer
CHIEF EXECUTIVE
OFFICER’S STATEMENT
Overview
The business has remained resilient
throughout the year, with robust net
flows and strong adviser and client
growth. This is an achievement in a
financial year that has seen a serious
downturn in investor sentiment. Any
positivity from the lifting of COVID
restrictions has been eroded by
increasing levels of geopolitical
tension, inflation levels not
experienced in 30 years, industrial
unrest and political turmoil.
At such times of economic
uncertainty, clients rely even more on
the support and knowledge of their
financial adviser. Our business model
is centred on providing long-term
support for our clients and financial
advisers, enabling them to stay on
track with their long-term financial
plans, helping retain business on our
investment platform.
For the delivery of that support to
clients and advisers we combine our
leading proprietary technology with
high quality client service. Our
employees, who deliver that service,
have been impacted by the current
economic climate, especially the
effects high interest rates are having
on mortgage and rent payments,
coupled with the significant rise in
the general cost of living. We have
managed these concerns by
assessing and reshaping our
remuneration packages to provide
greater certainty of income for
employees, whilst adding modest
additional cost to the Group. Our
focus has been on retention of key
employees and on recruitment into
roles that drive efficiency.
With our consistent approach, we
have continued to grow Transact,
with the platform’s adviser base
increasing by 5% over the period,
leading to over 7.5k advisers being
registered on the Transact platform
at the end of the year. Advisers have
brought a further 17k clients to the
platform, an increase of 8% over the
year, with 224.7k clients now using
Transact to manage their financial
plans.
Gross inflows eased over the year,
falling back from the previous year’s
record high of £7.70 billion to £7.28
billion. The first quarter of this year
continued to benefit from the positive
market sentiment seen in FY21, but
there was a gradual slowing from the
second quarter onwards as economic
and political impacts took effect. The
Transact platform is utilised by clients
and advisers for long-term financial
planning and this long-term view has
helped outflows remain relatively
stable during the course of the year.
This resulted in robust net inflows to
the Transact platform for the financial
year ended 30 September 2022 of
£4.40 billion, relative to the prior
year £4.95 billion.
Even with strong positive net inflows,
the impact of negative market
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 5
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT fulfilment and feeling they are
accepted as themselves, are both
valued highly, even more so following
COVID lockdowns. We foster a
culture of belonging, where
everyone’s views are important and
listened to. Expanding our employee
engagement programme, to better
demonstrate this on issues such as
flexible working, performance
structures and office environment,
has proven beneficial in retaining
employees.
We have increased the breadth of our
services for Transact clients, with the
September launch of the Transact -
BlackRock Model Portfolio Servicer
(MPS). Available exclusively to
investment platform clients, this will
extend the choice of Discretionary
Investment Managers available on
our platform even further. The
Transact - BlackRock MPS will use
BlackRock’s market leading
investment process, at a highly
competitive ongoing cost for
movements resulted in a decrease of
4% in FUD at the year-end, finishing
at £50.07 billion.
Revenue in the year has increased to
£133.6 million (+8%). The Group’s
revenue is predominantly generated
by the value of funds under direction
(FUD) held on Transact. The average
daily FUD on the Transact platform
during the financial year was £52.5
billion, compared with an average
during the prior financial year of
£47.2 billion. This has helped drive
revenues up, despite the year end
FUD being below the level at the
prior year end, as markets fell
sharply from mid-August through to
our year end.
Core expenses have increased,
mainly due to employee costs, driven
by growth in employee numbers to
support and develop the business
and inflationary pressure on salary
levels required to recruit and retain
high quality employees. Additionally,
HMRC upholding its original decision,
at second review, of our VAT dispute
has added £1.8 million to our core
expenses this year.
The VAT decision has also had a
significant impact on non-underlying
expenses, as we have paid all prior
year contested VAT and interest, £8.8
million in total, in order to allow us to
formally appeal the findings to the
First-tier Tribunal (Tax Chamber).
After these costs, the Group’s profit
before tax has decreased by 15%, to
£54.3 million. Removing non-
underlying VAT and T4A expenses, in
both 2021 and 2022, shows a modest
increase in underlying profit from
£65.2 million in FY21 to £65.8 million
in FY22.
Market background
Equity market performance was
strong in the first quarter of our
financial year and this was reflected
in the advised platform market, with
strong year-on-year growth of gross
inflows in the quarter. There was a
gradual slowdown in the second
quarter, which resulted in tax year
end flows falling below prior year
levels across the sector.
The second half of the year
deteriorated more rapidly, as the
combined economic effects of
Russia’s invasion of Ukraine, trade
tensions between the US and China
and the longer-term costs of COVID
lockdowns took hold. Interest rate
increases, made globally in an
attempt to quell persistent inflation,
have further added to negative
sentiment among investors.
Activity in the investment platform
market slowed considerably in the
second half of the year, following
several changes of platform
ownership in the first half. Over the
full year, the retail advised platform
market FUD fell by 7% from £553.28
billion (September 2021) to £516.65
billion (September 2022).
Our activity
Our focus through the year has been
on organic platform growth, service
quality and the addition of
incremental platform functionality.
We have also been working to
enhance our platform operating
efficiencies in a hybrid working
model. Amongst many enhancements
to our platform were further additions
to our online Guided Applications
capabilities, accelerated portfolio
creation and anti-money laundering
checking, which has allowed us to
switch off the use of paper forms in
line with our environmental strategy.
The employment market has
continued to be buoyant, with an
excess of jobs over available quality
recruits. We have been able to
leverage our reputation to continue
to attract quality employees, but we
are not immune to the salaries being
offered to attract our employees
away. Money isn’t enough by itself to
retain good employees, for whom job
6 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT control. Continuing to invest in our
people and our infrastructure, whilst
managing our societal impact, will
ensure we are well positioned to face
the challenges ahead, enabling us to
continue to deliver for all of our
stakeholders.
Ian Taylor
I cannot close without a few words
about my long-time friend and
colleague, who sadly passed away in
October. Ian was an incredible
individual who, with Mike Howard, set
out to completely transform the
delivery of financial plans in the UK
market.
Ian’s focus was always to deliver the
best outcome for “Mrs Miggins”. This
focus built a principled business,
years ahead of the RDR curve and
the forthcoming Consumer Duty
rules.
Ian was always happy to share his
thoughts and experience and equally
willing to listen to others, but never
diverted from his principles. We
continue to drive the business on
those principles: “Do the right thing”
and “Stick to our knitting”.
Alexander Scott
CEO
13 December 2022
investments. We expect this to
contribute both to the retention of
our current clients and financial
advisers, as well as being attractive
to new clients and financial advisers.
We have again been able to reduce
the cost of Transact to clients.
Reductions were made to both ad
valorem and buy transaction charges,
further increasing the value of the
offering to clients.
Development of T4A’s next
generation CURO software has
progressed well, with a beta client
live by the end of the year. A live
testing period will then follow, before
rollout to pipeline clients commences
later in 2023. In the meantime, the
current CURO3 product has been
selling well, with a good flow of new
clients opting to implement this
system ahead of the new release.
Throughout the financial year, we
have been continuing work with our
external consultants, Willis Towers
Watson, to help the Group establish a
prioritised and thoughtful
environmental plan. This will be
aligned to our ambitions, supports a
low carbon-emissions economy and
remains flexible enough to
accommodate changes in regulation.
With these criteria in mind, we have
set out a phased approach. The first
phase, in which we are making
progress, clarifies the best
opportunities across the IHP Group
over the short, medium and longer-
term to directly influence and shape
the scope 1, 2 and relevant elements
of scope 3 carbon emissions arising
from our business.
The outlook
We are mindful of the difficult
economic environment, with inflation
and interest rate stresses expected to
persist, leading to continued volatility
in asset markets. However, given the
strength of our proposition and its
careful management, we expect the
performance of the Transact platform
to remain robust during the
forthcoming financial year, with new
clients and advisers joining and
continued resilient flows onto the
Transact platform. Despite the
adverse headwinds, the advised
platform market is expected to grow
in 2023, and we aim to carry on
growing our share of it.
In 2023, we will continue to execute
on our priorities, investing in the
development of our proprietary
software, we will train users in how
to best use the extensive
functionality now available to deliver
operational excellence efficiently. All
of this will enable our clients, with
their advisers, to stay on track with
their long-term financial plans.
Once T4A’s next generation CURO
software has been proven with the
beta client, we will begin the
implementation process with the
adviser firms in the current pipeline.
The focus will be on ensuring that
new users are properly supported
throughout the process, building the
foundations of enduring relationships.
July 2023 brings the primary
implementation deadline for the
FCA’s Consumer Duty regulations,
with all reviews necessary to meet
the consumer outcome rules being
complete before the end of April. As
the business has always been
focused on consumer outcomes, we
feel well-positioned for these new
rules, but undoubtedly there will be
additional costs incurred in
demonstrating compliance. We have
factored this in to our development
plans and costs.
We will take a measured approach to
our appeal to the First-tier Tribunal
(Tax Chamber) on the VAT ruling,
ensuring both legal costs and
management time are kept to a
minimum.
We do not underestimate the
uncertainty of our environment,
however, we focus on what we can
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 7
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
MARKET OVERVIEW
The UK wealth market
The UK wealth market is one of the largest globally, with circa £3.0 trillion
held in cash and investments. Our target markets are the assets currently
managed by advisers on competitor investment platforms and those assets
managed by advisers, but yet to be placed on a platform. Investment
platforms are very popular amongst advisers and clients, allowing for a wide
range of assets to be held within an extensive range of wrappers, such as the
various types of ISAs and Personal Pensions. Additionally, with assets on a
platform, administration can be streamlined, with efficiencies translating into
a highly cost effective solution. Investment platforms now capture more than
97%1 of annual flows placed by advisers.
This means that we see cash and assets migrating away from individual
product providers to platforms every day.
c. £3.0 trillion+ of addressable market for platforms including cash
savings
Estimated components of UK financial wealth (£tn 2021)
£8.0tn
£6.0tn
£4.0tn
Limited potential
to move to
Platforms over time
£1.4tn
£7.4tn
Greater potential
to move to
Platforms over time
£2.0tn
£1.4tn
£2.0tn
£0.9tn
£0.5tn
£0.6tn
Greater potential to
move to platforms as
people retire
£0.3tn
£0.3tn
£0.0tn
Cash ISAs Stocks and
Shares ISAs
Unwrapped Non workplace
DC personal
pensions and
drawdown
Workplace
DC
pensions
Cash
Savings
Private DB
pensions
Other
assets
UK gross
household
financial
assets
Source: BNP Paribas Exane Estimates (Other assets includes NS&I, annuities,
life insurance, bonds etc.)
Structural drivers of growth
Advisers focus on clients with savings of £100,000+ and those accumulating
wealth. The advised platform market has grown strongly since launch in 2000,
at a CAGR of 9.6% over the last 5 years.
1 CoreData Survey 2022
8 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
STRATEGIC REPORT continued
FUNDSCAPE ADVISED PLATFORM MARKET AUM
s
n
o
i
l
l
i
B
£600
£500
£400
£300
£200
£100
£0
FY18
FY19
FY20
FY21
FY22
Source: Fundscape
We expect this growth to continue due to significant and growing UK wealth.
Tax wrappers available
The UK is the fifth largest wealth market in the world2 and growing, with many
investable assets yet to migrate over to platforms. Advised platform AUA is
expected to grow at 8.1% per annum3 over the long-term. The UK Government,
in response to fiscal constraints and a larger and growing share of the
population in retirement, encourages retail saving by providing tax incentives
for certain wrapper types, including (from a UK population of c. 60m):
▪ Individual Savings Accounts (ISAs) - 7.9 million adults own a stocks and
shares ISA in the UK4.
▪ Junior Individual Savings Accounts (JISAs) – Around 1 million JISA’s are
subscribed to in the UK5.
▪ Lifetime Individual Savings Accounts (LISAs) – Around 0.7 million LISA’s
are subscribed to in the UK6.
▪ Personal Pensions – 30.2 million people in the UK had a private pension in
accumulation7.
▪ Workplace Pensions – In 2020 nearly 8/10 employees in the UK were
workplace pension members, the figure rising from less than 5/10 in 2012
in response to new legislation for ‘Auto Enrolment’8.
▪ Venture Capital Trusts – UK Venture Capital Trusts issued shares to the
value of £688 million in 2020 an increase of 4% on the previous year9.
2 Credit Suisse Global Wealth Databook 2021
3 Oliver Wyman Private Wealth Estimates
4 FCA Financial Lives Survey February 2021
5 GOV Annual Savings Statistics June 2021
6 FCA Financial Lives Survey February 2021
7 FCA Financial Lives Survey February 2021
8 GOV Employee workplace pensions in the UK 2020
9 National Statistics VCT Statistics 2021
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 9
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Complex personal taxation environment
The UK has seen a movement from defined benefit to defined contribution pension schemes, putting the onus back on
the individual to manage their own wealth. As well as pension regulation complexities, individuals are seeking the help
of financial advisers to ensure compliance with inheritance and capital gains tax, as well as obtaining any tax benefits
associated with particular tax wrappers. For example, ensuring that when an individual prepares for, approaches, and
then enters into, retirement they do not incur personal tax liabilities that could have been avoided. A growing area of
financial planning is around the transfer of wealth from older to younger generations. Advisers combine their tax and
investment expertise with use of various trust types. This is easily done on the Transact platform.
Wide range of investment options
The recent proliferation of investment products has given individuals greater access to a wide range of investment
products from a large number of product providers. Platforms like Transact afford investors access to a wide open
architecture range of assets from third party providers. This significantly greater level of asset choice has been a
further driver of the growth of FUD through platforms.
Transact’s highly competitive proposition
The 16 largest adviser platforms administer over £550 billion in total and these other adviser platforms form our main
competition. Transact retained the top spot in annual independent research studies Investment Trends and CoreData
for the thirteenth year running (2010-2022 inclusive), as well as consistently performing strongly in quarterly and
annual Platforum surveys.
2022
2021
2020
2019
2018
2017
2016
2015
Category:
Large Platforms
(> £12bn FUD)
Category:
Large Platforms
(> £10bn FUD)
Category:
Large Platforms
(> £10bn FUD)
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
1st
The Transact proposition has been developed putting clients and their advisers at the heart of our activities. The core
components ensure that:
We are UK adviser focused
Transact will remain focused on UK financial advisers and their clients, solely concentrating on delivering the market
leading advised platform. Our model ensures expertise, flexibility and efficiency, hence we service advisers and our
mutual clients through a combination of Transact Online and ten regionally focused teams.
10 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Each team consists of 15-20 people,
including subject specialists and two
field-based sales personnel per
region. Advisers work with the same
team each day through secure
communication channels and are able
to interact with experts in real time,
to answer their requirements. Our
online functionality is extensive and
most routine instructions are self-
keyed by advisers. We support online
users with both live chat and co-
browse technology.
We offer a comprehensive
proposition
Transact offers access to over 16,000
assets and funds from around 400
fund managers, and is the leading
platform providing access to the
largest population of investment
trusts. Our wide range of investment
propositions are complemented by a
comprehensive range of tax-efficient
wrappers, including an extensive
suite of Pension types, ISA types plus
both onshore and offshore bonds
through our domestic and
international insurance companies.
Transact offers additional
functionality to advisers including:
template portfolio management tools,
lifetime cash flow modelling, and
broad tax and other reporting
facilities. The depth and breadth of
our proposition and functionality has
been recognised by NextWealth,
through our ‘Digital Process
Champion’ status.
Access to the Transact -
BlackRock Model Portfolio Service
(MPS)
We launched the new Transact -
BlackRock MPS in September 2022.
Assets held on the Transact platform
with third party DIMs have more than
doubled in recent years, and this
highly attractive discretionary model
portfolio service will be made
available exclusively to Transact
clients and their financial advisers.
Our investment platform is built
on proprietary technology
Controlling its own technology allows
Transact to continue to innovate and
respond swiftly to client and financial
adviser demands as they arise. It
avoids significant set up costs
involved with outsourcing and
ensures we can be holistic and
economical in our approach to
developing and servicing the
investment platform.
We own our Insurance Company
subsidiaries
Having both our domestic and
international insurance companies
in-house and fully owned within the
IHP Group enables the consistent and
co-ordinated provision of investment
bonds and insured pension wrappers,
which is another advantage for
Transact clients and their advisers.
Client developments
Internal developments throughout
the year included:
▪ Through our “responsible pricing”
approach, we implemented price
reductions in March and July 2022,
which resulted in both existing and
new clients benefiting.
▪ Re-shaped our Client Service teams
– we have reshaped our client
service team structure, reducing the
number of client service teams,
whilst increasing the number of
service employee on each team, in
turn widening the experience and
support each team can offer.
▪ Enhancements to our online
functionality has seen an increase in
our adviser ‘Self-Serve’
functionality, freeing resources for
our client service teams to help
advisers in more complex matters.
Whilst the COVID pandemic and
other external economic factors have
made this a challenging year,
Transact is consistently ranked in the
top three platforms for net inflows.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 11
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT In FY22, Transact saw inflows split as follows:
Transact Split of Inflows
4%
61%
35%
Customers topping up their Transact portfolio
Existing advisers introducing more clients
New advisers introducing clients
Adviser and client numbers
Of over 35,000 financial advisers in the UK, around 13,000 are operating in
our target market and are contestable. There is significant growth potential
for Transact within the existing contestable market – both converting
registered users to supporters (advisers who place a large proportion of their
client wallet with us) and signing up new advisers.
At the end of FY22, there were 7,537 registered advisers with Transact
(compared to 7,161 a year earlier). This strong adviser support led to our
customer numbers growing from 208,611 to 224,705.
In our own adviser survey, Transact was the 1st choice for the majority of
responding advisers, with 74% believing their clients are ‘satisfied’ or ‘very
satisfied’ with the service Transact provides. Our website continues to be
popular with our advisers with 70% using Transact online daily, upgrades we
have made in the last 12 months have also been well received.
REGISTERED ADVISER NUMBERS
s
r
e
b
m
u
N
r
e
s
i
v
d
A
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22
Financial Year Ended
In our own client satisfaction survey, 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.
12 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
CLIENT NUMBERS
250,000
200,000
s
r
e
b
m
u
N
t
n
e
150,000
100,000
i
l
C
50,000
-
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22
Financial Year Ended
Market outlook
Despite a volatile environment, the fundamental growth drivers for the sector
remain intact, with a requirement for clients and their advisers to be
supported by comprehensive and robust tools.
Within the market place, Transact continues to deliver a competitive
proposition and we are pleased it has performed resiliently in a difficult
environment, demonstrated through significant net flows and industry
recognition. Unsurprisingly, given the sector fundamentals, competition in the
sector has not abated. However, as always, we rise to the challenge and
continue to carefully invest and evolve the proposition further, ensuring we
maintain high quality of service and clear value-for-money for our clients and
their advisers.
Jonathan Gunby
Executive Director and Transact CEO
13 December 2022
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 13
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
STRATEGIC REPORT continued
BUSINESS MODEL
IHP Group has two core business propositions, which complement
each other in making it easier to deliver financial advice and planning
to clients. Transact – our investment platform - aims to make financial
planning easier and CURO – our adviser support system - supports
advisers through the financial advice process.
“Do the right thing”
This is our core value, which we believe ensures the right outcomes for all of
our stakeholders.
How?
Through our market-leading investment platform which makes financial
planning easier and CURO software that supports the financial advice process.
The systems enable advisers to implement financial plans for our mutual
clients, simply and efficiently, actively supported by skilled client service and
adviser support teams. Our people provide real time, consistent day-to-day
and technical support, no matter how basic, or complex, the query may be.
Why Transact and CURO stand out
Award-winning
proposition
We are a long-established yet progressive, financially secure, investment
platform
▪ We have championed a consistently high level of service for 22 years
▪ We have won numerous awards (see page 10)
Client service
excellence
We have a proven client servicing model
▪ Skilled, dedicated, regionally allocated client service employees, who
put clients first
▪ Efficient and personal client and adviser experience
Adviser
relationships
Over 7,500 advisers have independently chosen Transact as an investment
platform for their clients and over 2,200 CURO end-users are benefitting
from CURO supporting the financial advice process:
▪ We value and nurture our relationships with advisers
▪ Many of the advisers that use Transact and CURO have done so for
many years
People excellence
Our people are our most valued asset
▪ People retention through a strong, values-driven culture
▪ Encourage excellent performance and all people have the opportunity
to develop and progress, be it through technical specialism, people
management skills, promotion within a department, or changing roles
14 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Tax wrapper and
asset offering
Our investment platform provides a wide range of in-house tax-efficient
wrappers:
▪ Pensions
▪ ISAs (LISA and JISA)
▪ Onshore life insurance bonds
▪ Offshore life insurance bonds
▪ General Investment Accounts
Our investment platform is whole of market and provides 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
In-house
technology
Total control over what our systems do, through proprietary software
systems technology, maintained and supported by our wholly owned
software development companies:
▪ Full control of development direction, priorities and costs, leading to
full control of the client and adviser experience
▪ Agility and responsiveness to client and adviser requirements
Financial stability
We have a highly cash generative business model, which has led to
shareholder cash increasing:
▪ No debt on our balance sheet
▪ Expenses are managed in line with our business plan
▪ We have a strong regulatory capital position that remains stable
through the economic cycle
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 15
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT Shareholders - in respect of financial
year 2022, the first interim dividend
of 3.2 pence per ordinary share
(£10.6 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.
Regulator – we strive to maintain an
open and respectful relationship with
our regulators; we understand the
importance of their role in our
business.
Suppliers – we treat suppliers as we
want to be treated.
STRATEGIC REPORT continued
We use our resources to create
value
1. People
We invest in our people. Our client
service and support teams receive
extensive training through our
internal training programmes and
they are instrumental in our success.
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.
Our investment platform has been
consistently differentiated from our
competitors’ over the years, through
sustained customer service
excellence.
2. Infrastructure
Our systems and processes are
designed to meet the needs of our
clients and their advisers. The
development and implementation of
the investment platform and CURO
system enhancements has been
carried out in a considered, controlled
manner for many years and this
proven approach will continue for the
foreseeable future.
3. Growing FUD
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 our ability
to invest in our people and the
platform, and it means that the best
service in the platform market is
even better value-for-money, which
should drive increased flows, leading
to 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.
4. Growing earnings
Revenue is generated from the fees
clients pay for using our platform and
for licence and consultancy fees
advisers pay T4A. The business
model we operate is sustainable, as
98% of the investment platform
revenue, as detailed on page 46 in
the Financial Review, is recurring (i.e.
relates to regular commission or fees
taken based on the value of assets or
the number of wrappers held) and
has been for many years. T4A licence
fee income has also proven
sustainable and is expected to grow
further with the introduction of next
generation CURO.
5. Managing costs
Insourcing the key components of
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 and
adviser support teams to operate
particularly effectively.
6. Delivering fair outcomes for all
stakeholders (see Stakeholder
engagement on page 78)
We engage with our stakeholders,
with the clear aim of delivering fair
outcomes for all, and this is central
to our business model:
Clients – we run a financially stable
platform and aim to offer clients the
best value- for-money proposition,
where we can sustainably afford to.
People – we offer structured training
and development, career progression
and a reward package that reflects
our loyalty to our people.
Advisers – we listen to advisers, we
want to run a platform that is
responsive to the needs of their
clients and provide back-office
systems that fully support their
needs.
16 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
OUR STRATEGIC OBJECTIVES
Purpose
IHP Group’s purpose is to help our
clients and their families manage
their investments.
Core strategic objective
We do this through focusing our
business model on our overarching
strategic objective of making financial
planning easier.
Values
Our values are summed up in “doing
the right thing” for all our
stakeholders. This is embedded in
our culture and central to delivering
our strategic objectives.
How we deliver
Our core strategic objective of
making financial planning easier is
accomplished through the delivery of
high quality, value-for-money
financial services infrastructure, and
associated services, to UK advisers
and our mutual clients. We keep our
offering relevant to current and
future new clients, through ongoing
development, which ensures we meet
the needs of clients, their families
and their advisers.
We aim to create, maintain and
improve value, relationships and
outcomes for our principal
stakeholders: our clients, our
employees, our advisers, regulators,
our suppliers and our shareholders.
We detail what the directors have
done for our stakeholders in the year
in our Section 172 statement on
page 83.
Strategic priorities and key risks
Our strategic priorities and the key
risks to achieving them are below,
and sit alongside risk management
activities and controls, on pages 52
to 57.
1. Drive growth
We aim to grow platform FUD by
attracting and retaining clients,
introduced to us through their
advisers, by delivering a superior,
value-for-money service.
We aim to grow the numbers of
advisers using Transact and CURO
through the financial planning
benefits the respective services offer
to them and their clients.
We develop the core proposition, and
modify business plans, in order to
maintain focus on helping clients
achieve their financial objectives and
positive customer outcomes. By
putting the client experience at the
heart of our business model, we
believe we will retain existing clients,
through their financial adviser, and
attract new clients.
We will also review and consider
potential acquisition opportunities,
where there is an expectation of
accelerated growth, or expansion of
the current proposition that would
enhance stakeholder value. We have
a high hurdle for taking any such
opportunities forward, applying a
rigorous and disciplined approach.
Financial year 2022 progress:
FUD ended the year at £50.07 billion
(2021: £52.11 billion), falling 4%
year on year, the reduction at year
end was the impact of net flows onto
the platform of £4.4 billion offset by
market falls of £6.2 billion. However,
average daily FUD on the platform in
FY22 increased by 11% to £52.54
billion.
Advisers with over £1k on the
investment platform grew by 5% and
the number of advisers using CURO
has grown by 44%.
Financial year 2023 outlook:
We will continue to target advisers
not yet using our services that are in
our identified core markets.
We will encourage existing adviser
users to move additional clients onto
Transact, as they have experienced
the benefits that our service brings.
T4A will focus on the planned soft
release of next generation CURO, live
in December 2022 and also continue
to support the existing CURO3
software and users.
Key risks:
▪ Service standards failure
▪ Stock market volatility
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 17
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Financial year 2023 outlook:
We will continue the IT and platform
developer recruitment plan
announced at our FY22 half year,
investing in additional headcount to
support systems and platform
development. We look forward to
making further enhancements that
benefit and support the client and
adviser online experience in financial
year 2023, as well as driving
efficiencies through our operations,
including implementing systems
improvements which are already
designed and timetabled.
Key risk:
▪ Diversion of investment platform
and CURO development resources
▪ Employee retention
the deployment of new technologies
and where new opportunities are
identified, the Group looks to
introduce insourced solutions.
Investment decisions must not:
▪ Risk Group capital beyond
reasonable levels;
▪ Bring the Group into commercial
conflict with our target market; and
▪ Make it difficult for us to meet our
regulatory responsibilities.
Through these measures, we aim to
continue to grow profits and generate
the best outcomes for our
stakeholders.
Financial year 2022 progress:
£14.1 million (2021: £12.4 million)
invested in platform and CURO (and
next generation CURO) development
in the year. This is comprised of
platform developer and management
cost, acquisition of new equipment
and training costs.
We accelerated the investment
platform digitalisation initiative in
FY22, due to the efficiencies and
improved service that it generates for
clients and their advisers, it also
generates efficiencies for us.
T4A’s FY22 priority was developing
next generation CURO, which went
live with a client in December 2022.
T4A have invested in headcount to
support software development and
ancillary support services.
2. Invest
We have a proven track record of
investing in our people and our
technology, and this has ensured our
service quality has been award-
winning and operationally resilient.
We know that high calibre, well-
trained, engaged employees and
intuitive, progressive systems are
critical to our ongoing success and
we recruit and train client-focused
people, so that we will maintain our
record of excellent service.
We invest in system development
resource, not only to enhance the
services we offer and drive operating
efficiencies, but also to ensure our
systems are operationally resilient
and we can “keep the lights on”. We
believe that under-investing in our
people would damage the
propositions in the longer term.
We ensure we develop our systems
to meet all statutory and regulatory
change. We are often guided by
feedback from clients and their
advisers when preparing roadmaps
for discretionary changes to the
investment platform software.
However, where we can see
operational efficiencies that will
reduce overheads and improve
service standards, we will divert
development resource to focus on
those changes.
T4A listened to feedback from
advisers when developing CURO and
have applied the same principles to
developing next generation CURO.
The emergence of new investor
practices and product, wrapper and
functionality additions may all require
18 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
3. Earnings
Financial year 2022 progress:
4. Cash generation
Average FUD through the year
increased by 11% from £47.24 billion
in FY21 to £52.54 billion in FY22, this
led to a 7% increase in investment
platform revenue to £129.7 million
(2021: £121.3 million). Solid net
flows helped to dampen the impact of
falling markets.
T4A’s licence and consultancy fee
income grew from £2.4 million for
the nine months it was in the Group
in FY21, to £3.9 million for the full
financial year 2022. This growth
includes the £390k reduction in
licence revenue from the departing
client, which has reduced to £179k in
FY22. Excluding this client, monthly
revenue has grown from £209k to
£310k in FY22.
Financial year 2023 outlook:
Financial year 2022 closed on a weak
FY23 economic outlook. In order to
protect revenue, we will continue to
focus on investing in the platform,
CURO and next generation CURO, so
that we support and retain existing
users and increase market share.
Key risks:
▪ Service standards failure
▪ Stock market volatility
▪ Increased competition
We are a highly cash-generative
business as all our fees are received in
cash, which we collect directly from
client portfolios as they become due, or
through invoicing advisers using CURO.
Shareholder cash, which is combined
with policyholder cash in the financial
statements, has increased over time
as a result of our cash-generative
business model. Combined with
appropriate expense management,
we expect to continue generating
cash profits.
Financial year 2022 progress:
Profit before tax in financial year
2022, generating profits from the
cash received, was £54.3 million,
which is a decrease of 15% from
£63.6 million in financial year 2021.
This fall has mostly been caused by
higher employee costs (+£6m),
professional fees (+£2m), and the
recognition and settlement of the
backdated and FY22 VAT liability of
£9.4 million, plus interest of £0.8
million, for the period July 2016 to
September 2022. All items are
further detailed in the Financial
Review on page 45.
The operating profit also includes
expected T4A losses, of £1.9 million
(FY21: £1.3 million), noting that a
full year is included in FY22, versus
nine months in FY21.
Through retaining and growing
investment platform FUD and
wrappers, we grow investment
platform revenue. T4A grow revenue
through increasing the number of
adviser user licences. We achieve this
growth through:
▪ The investments managed by
Transact’s current adviser base
increasing value 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 and their clients’ assets on
our investment platform.
▪ Attracting new advisers by
maintaining leading ratings amongst
advisers and keeping our platform
relevant to new advisers and clients,
by developing and improving the
service to meet their needs.
▪ T4A will continue to be loss-making
for the next financial year, albeit the
loss is expected to halve, and this
will reduce Group profitability. In the
longer term we expect the growth in
adviser users of CURO, coupled with
the investment in and launch of next
generation CURO, to generate profits
from FY24 onwards.
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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 19
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Financial year 2023 outlook:
5. Strong balance sheet
6. Deliver on dividend policy
We will continue to manage expenses
carefully, whilst continuing to invest
as necessary in our people and
system development. It is expected
the Group’s strong liquidity profile
will be maintained.
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.
We project that T4A’s costs will again
exceed revenue in financial year
2023, although the loss is expected
to halve.
Key risks:
▪ Stock market volatility
▪ Uncontrolled expenses
Financial year 2022 progress:
The Group capital position, as defined
by Group net assets, grew 6% and
ended the year at £173.2 million, up
from £163.3 million at 2021 year
end. The growth in net assets was
hampered by the outflow of £10.2
million in settlement of backdated
and current year VAT and associated
interest.
Financial year 2023 outlook:
We will continue to manage our
capital prudently, to enable us to
meet our regulatory capital
requirements as the business grows.
Our policy is to pay 60% to 65% of
full year profit after tax as two
interim dividends.
Financial year 2022 progress:
A first interim dividend was paid of
3.2p per ordinary share and a second
interim dividend declared of 7.0
pence per ordinary share, in line with
our dividend policy (after excluding
non-underlying expenses).
Financial year 2023 outlook:
Our dividend policy remains
unchanged, however, our income
may be impacted by continuing
market uncertainty due to the
Russian invasion of Ukraine, high
inflationary pressure on all costs,
including recruitment, and political
instability and our post tax profits will
be affected by changes in the tax
rates in the UK and Isle of Man.
Key risks:
Key risks:
▪ Stock market volatility
▪ Stock market volatility
▪ Capital strain
▪ Uncontrolled expenses
▪ Capital strain
20 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT 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
and they are linked to our strategic
objectives.
Year-end FUD* £50.07 billion (-4%)
£52.11bn
£50.07bn
£41.09bn
STRATEGIC OBJECTIVE
Drive growth
)
n
b
£
(
D
U
F
Invest in the business
Grow earnings
Maintain cash
generation
Maintain strong balance
sheet
Deliver on dividend
policy
FY 20
FY 21
FY 22
The value of FUD is the primary driver of Group revenue, as it forms the basis
of annual commission payable, which is the largest component of Group
revenue. The value of FUD generates cash and drives earnings growth. Whilst
year end FUD fell £2.04 billion from 30 September 2021 to 30 September
2022, average daily FUD increased year on year by 11%.
Net inflows* of £4.40 billion (-11%)
£4.95bn
£4.40bn
£3.59bn
)
n
b
£
(
s
w
o
l
f
n
I
t
e
N
FY 20
FY 21
FY 22
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 are a
crucial component of FUD growth and, therefore, drive cash generation and
earnings growth.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 21
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
STRATEGIC REPORT continued
224,705 clients* (+8%)
192k
s
r
e
b
m
u
n
t
n
e
i
l
C
225k
209k
Client numbers continue to grow at a
steady rate, bringing new money
onto the platform and also retaining
existing money. Client numbers help
drive FUD, which generates cash
through fees and which then grows
earnings.
FY 20
FY 21
FY 22
Client retention 97% (+1%)
FINANCIAL YEAR
Levels of client retention
2020
96%
2021
96%
2022
97%
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, whilst other metrics may have
suffered in FY22, this is an important one in evaluating the strength of the
core proposition.
6,854 advisers with > £1k on the investment platform* (+5%)
6,205
6,524
6,854
s
r
e
b
m
u
n
r
e
s
i
v
d
A
FY 20
FY 21
FY 22
22 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
We continue to experience steady
growth in the number of advisers
using the platform. 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, again driving FUD, cash
generation and earnings growth.
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
STRATEGIC REPORT continued
Profit before tax £54.3 million (-15%)
£63.6m
£55.3m
£54.3m
)
m
£
(
x
a
t
e
r
o
f
e
b
t
i
f
o
r
P
FY 20
FY 21
FY 22
Operating margin 41% (-20%)
49%
51%
41%
i
%
n
g
r
a
m
g
n
i
t
a
r
e
p
O
FY 20
FY 21
FY 22
Earnings per share (diluted) 13.3p (-14%)
)
p
(
d
e
t
u
l
i
d
d
n
a
c
i
s
a
b
S
P
E
13.7p
FY 20
15.4p
FY 21
13.3p
FY 22
Profit before tax has decreased by
15% in FY22, primarily due to:
increased staff costs, as we invest in
both investment platform and T4A
people; and, growth in non-
underlying expenses due to
recognition and settlement of
backdated (£8.0 million) and current
year VAT (£1.8 million) and
associated interest (£0.8 million).
Operating margin is operating profit
over revenue, expressed as a %. It
represents the % of revenue that
translates to profit. In past years it
has been consistently close to 50%,
and the reduction in FY22 is due to
increased expenses as we invest in
people and recognise the backdated
and current VAT liability.
Earnings per share is a measure of the
amount of profit after tax the Group
has generated for shares in issue. EPS
has reduced in FY22 due to higher
expenses in FY22.
*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 230.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 23
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
STRATEGIC REPORT continued
RESPONSIBLE BUSINESS - TASKFORCE ON CLIMATE RELATED
FINANCIAL DISCLOSURES (TCFD) STATEMENT
Foreword from Victoria Cochrane – Designated Group Non-Executive
Director for Environmental and Social Sustainability
The measurement and monitoring of
progress against these targets will be
overseen by the Audit and Risk
Committee, reporting to the Board,
and independent assurance will be
sought from the Group’s external
Auditor.
We have not included any metrics for
scope 3 emissions relating to the
investments on our platform; we
have no control over the selection of
investments which is made by our
clients and their independent
financial advisers. We will, however,
look for opportunities to assist clients
and financial advisers in addressing
climate-related data challenges
relating to their investments.
Whilst this is the first year in which
we are in our Annual Report formally
reporting under TCFD, we have been
reporting on our GHG emissions for
scope 1, 2 and 3 in relation to
operations for the last three years
and have been improving the depth
and quality of our reporting over that
period.
We are mindful of the UK
government’s overall ambition to
reach a net zero position by 2050
and we are committed to meeting
this goal. Our strategy and
aspirations will be set accordingly,
however, every opportunity will be
sought out and taken to allow us to
meet a carbon net zero position
across our group earlier within the
decade leading up to 2050 and to
playing our part in tackling climate
change.
Our next step is to carry out a full
assessment and to set out a concrete
action plan to deliver carbon net zero
by that date or before. We have
decided to use 2019 as our baseline
year and we will measure the
performance of our metrics and
targets against this position.
We are conscious that we have a lot
of work to do to create detailed
targets, building on the work done so
far to measure our GHG emissions,
and to understand the implications of
those on our current ways of working
as they bed down following the
pandemic.
We have the opportunity to move our
London office when the lease expires
and to make a substantial reduction
in our carbon emissions at that
stage. I will be at the forefront of
supporting the business in setting the
climate-related strategic targets and
securing Board approval for these.
24 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
We report against the four pillars recommended by the TCFD below:
TCFD PILLAR
TCFD
RECOMMENDED
DISCLOSURE
OUR CURRENT PROGRESS
1. Governance
Disclose the
organisation’s
governance around
climate-related risks
and opportunities.
Climate is a standing agenda item at IHP board
meetings. Updates on activities undertaken are given
by the Executive and open to challenge by the
Non-Executive Directors. Future actions are noted
and reported against.
FURTHER
INFORMATION
See Governance
section, pages
26 to 27.
2. Strategy
3. Risk
management
4. Metrics
and targets
Disclose the actual
and potential impacts
of climate-related
risks and
opportunities on the
organisation’s
businesses, strategy,
and financial planning
where such
information is
material.
Disclose how the
organisation identifies,
assesses, and
manages climate-
related risks.
Disclose the metrics
and targets used to
assess and manage
relevant climate-
related risks and
opportunities where
such information is
material.
We have set out our current understanding of the
risks impacting the business based upon the primary
climate change drivers. We have established with
external consultancy support our strategy and
identified areas of opportunity for our business.
See Strategy
section, pages
28 to 29.
We have a well-established risk management
framework which assists in our understanding of the
likelihood and impact of risks to our business. We
facilitate regular cross functional discussions and
these will help us to understand the physical and
transitional related climate risks and opportunities
impacting the business directly and indirectly.
See the Risk
Management
section, pages
52 to 58.
We continue to refine our metrics as we aim to
include all relevant emissions, hence we have
restated some prior years. We will measure the
performance of our targets against our chosen
baseline year of 2019.
See Metrics and
Targets section,
pages 33 to 36.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 25
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
1. Governance
Our objective is to embed the Group’s actions on climate change
throughout our organisation, supported from the top by a strong
governance structure.
Set out below is a summary of the governance structure which provides
strategic direction and oversight for managing our climate-related strategy,
risks and opportunities.
IHP plc Board
Audit and Risk Committee
Remuneration Committee
Chief Executive Officer - IHP
Senior Leadership Team
Business Teams
Further details of our governance structures are set out on pages 53 to 54.
The board
The board provides leadership and direction and is accountable for the
long-term success of the Group. It sets the Group strategic priorities, see
pages 52 to 58, within a framework of controls and prudent levels of appetite.
The board is ultimately responsible for risks and opportunities facing the
business and this includes climate–related considerations.
Given the increasing importance of climate-related issues, in September
2021, Victoria Cochrane was appointed as the designated Group Non-
Executive Director (DNED) for Environmental and Social Sustainability (ESS).
Victoria assists the board in ensuring the Group has appropriate
environmental and social strategies that are integrated with its core business
strategy and contribute to the long-term sustainability of the Group;
reviewing the strategies, policies and performance of the Company in relation
to environmental and social matters suggesting ways to drive improvement in
these areas; and ensuring these strategies continue to evolve and are aligned
to the culture and values of the Group.
Collectively, strong board engagement will support stewardship, as well as
leadership and direction for our ESS initiatives.
26 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Audit and Risk Committee (ARC)
The ARC is responsible for oversight of the risks in the business. It places
reliance on the Group’s embedded risk management framework, which
facilitates the assessment of the operational, financial and reputational effects
that risks might have on the business, including climate-related risks.
The ARC is also responsible for ensuring the integrity of the Group’s financial
reporting including the TCFD disclosures in the Annual Report and Accounts.
Going forward, the ARC will monitor progress of Greenhouse Gas reductions in
scope 1, 2 and 3 operational emissions against Board approved targets.
Remuneration Committee (Rem Co)
The Rem Co is responsible for the oversight of remuneration against
performance metrics and targets, which includes Environmental Social
Governance (ESG) related elements within the four pillars, for the purposes of
assessing the executive scorecard and employee performance for reward
purposes. See page 119.
Chief Executive Officer (CEO)
The CEO defines, in conjunction with the board, the strategy, values and
culture of the Group. This will include leadership of the senior management
team in driving the initiatives associated with setting out, and delivering, the
strategies of climate-related aspirations along with the wider ESG compliance
agenda, see pages 5 to 7.
Senior leadership and business teams
The senior leadership team and the business teams support the CEO in
discharging his responsibilities. Effectively applying the risk management
framework, to ensure that the risks and opportunities facing the business,
including those related to climate-change going forward, are captured and
adequately assessed. This includes undertaking physical and transitional
climate-related scenario analysis, to achieve a better understanding of the
impacts on the business.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 27
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
2. Strategy
The Group’s aim is to achieve net zero by 2050, in line with government targets.
We are mindful of the overall UK government’s ambition to reach a net zero position by 2050 and we are committed to
meeting this goal. Our strategy and aspirations will be set accordingly, however, every opportunity will be sought and
taken in order to enable us to meet a carbon net zero position across our Group earlier within the decade leading up to
2050. This includes scope 1, 2 and 3 operational emissions.
Following the publication of the TCFD framework by the Financial Sustainability Board in 2017, we have assessed the
risks and opportunities of climate change on our business based upon the following aspects;
CLIMATE RISK DRIVER
CHALLENGES
Acute, e.g.
RISKS
Operational
▪ Change in frequency of weather
Reputational
Physical
The immediate risks arising from
weather-related events and slow
onset climatic changes
Transition
The financial risks arising from the
transition to a lower carbon economy
Liability/Regulatory Action
The risk of actions initiated by
claimants who have suffered loss and
damage arising from climate change
and non- compliance with regulations
Business Planning and
Environment
events
e.g. flooding, wildfires, high winds
▪ Change in the severity of weather
events
e.g. heatwaves, lower temperatures
Chronic, e.g.
▪ Sea level rises
▪ Changing precipitation
▪ Rising temperatures
▪ Arising from changes in policy
Market
(changes in emission reduction
targets), technology (new low
carbon technologies imposed), social
pressures and consumer preferences
(demand for lower carbon products
and services)
Business Planning and
Environment
Reputational
Legal and Regulatory
▪ Potential big shifts in the value of
assets or costs of doing business
▪ Active litigation ranges from
Legal and Regulatory
Reputational
individuals and corporates, as well
as class actions where damage has
been caused and restitution sought
from climate change
▪ Climate laws and regulations are
being developed across jurisdictions
and lack of compliance could lead to
fines and/or penalties
28 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Understanding the risks
Set out on the following pages is our articulation of the risks arising from the
climate change risk drivers. This represents an assessment of the risks posed
to the IHP group by climate-related issues, as well as the risks posed by IHP
Group operational activities on the climate.
A comprehensive level of insight will evolve as a greater understanding of the
scope and implications of climate change risk becomes apparent. For
example, physical and transitional risks may be related, where the failure to
transition to a lower carbon economy might in itself present more severe
physical risks in the longer term.
Over financial year 2023 we will develop climate related scenarios and stress
testing to understand the impact of these risks and opportunities for our
business.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 29
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
RISK
CATEGORY
CLIMATE
RISK DRIVER
OPERATIONAL
Physical
REPUTATIONAL Physical
Transition
Litigation/
Regulatory
action
MARKET
Transition
COMMENTARY
POTENTIAL IMPACT
Potential disruptive impact
on our technology centres
and property, causing
disruption to operational
processes, important
business services, damage
to assets as well as
threatening the safety and
wellbeing of employees. In
addition, we need to
consider the operational
resilience of our third party
suppliers who may also be
impacted by the extreme
weather patterns.
The perception from our
key stakeholders, being
our customers, advisers,
investors and employees,
that our business is failing
to embrace and consider
the climate-related risk
challenges. Any long term
failing to understand and
take steps to directly
minimise environmental
damage through the
operations of our business
will create significant
reputational damage.
Shifts in the advisers’ and
clients’ investment demand
for strong climate focused
companies. Assets on our
platform are exposed to
climate-related risks, which
leads to poor performance
during the transition to a
low carbon emissions
economy, impacting
customer returns and
values of FUD.
Unacceptable levels
of disruption may well
cause harm to
customers through loss
of our important
business services. The
cost of disruption is
likely to cause financial
loss to the firm and
increase expenses and
costs.
Reduced market share
as advisers seek
alternative companies
who present a more
proactive approach to
managing climate-
change. Share price
pressure, threatening a
hostile bid. Potential
litigation/regulatory
action through lack of
compliance with
requirements.
FORWARD LOOKING
RESPONSE
▪ Review of the
operational resilience
of our important
business services.
▪ Incorporating climate-
related considerations
into future supplier
contracts.
▪ Review the operational
infrastructure and
continuity
arrangements of our
offices and data
centres.
▪ Building a culture in
the business that
supports and delivers
against climate-related
change.
▪ Progression of
strategic planning and
initiatives to reduce
our operational
emissions.
▪ Developing fuller and
more in-depth
climate–related
disclosures.
Revenue streams are
impacted from a
reduced FUD value.
Exposure to adviser
preferences as our
platform holds assets on
client’s behalf.
▪ Proactive sales team
and MI metrics that
analyses trends and
preferences to ensure
our products continue
to meet customer
demands.
▪ Make available
external climate
related ratings to
clients and advisers
prior to and
throughout the
investment process.
30 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
RISK
CATEGORY
CLIMATE
RISK DRIVER
BUSINESS
PLANNING AND
ENVIRONMENT
Physical
Transition
LEGAL AND
REGULATORY
Transition
Litigation/
Regulatory
action
COMMENTARY
POTENTIAL IMPACT
FORWARD LOOKING
RESPONSE
The level of incremental
costs arising as a result of
failing to understand and
take appropriate measures
to address the physical
impacts of climate-related
changes on our operations.
Managing and remediating
operational disruption
without plans are likely to
present significant
unplanned costs. Failure to
transition to a lower carbon
economy may also impact
the physical costs or force
unexpected cost penalties
for the business.
Enhanced regulatory driven
reporting requirements
demanding increased
information and disclosure.
The potential for
mandatory policies and
deadlines to be
implemented that
accelerate the drive for
reduced carbon-emissions
and targets for premium
listed organisations.
Unexpected and
uncontrolled increase in
cost base of the
business impacting
financial performance.
▪ Progression of
strategic planning and
initiatives to reduce
our operational
emissions.
▪ Remain compliant with
disclosure obligations
and continue
developing information
in line with the
climate-related (TCFD)
requirements.
Potential to increase the
cost base if the drive
towards net-zero is
accelerated. Potential
for future litigation as a
result of non-compliance
or of conveying a
misleading message on
our corporate climate
profile.
▪ Accelerate the
development of our
ESG agenda.
▪ Further enhance and
build the sustainable
business initiatives.
▪ Commitment to net
zero by 2050 at the
very latest.
Setting a prioritised plan and moving into delivery
During the financial year, we have been working with our external consultants in order to establish a Group prioritised
plan for reducing operational carbon emissions in scope 1, 2 and 3.
Reducing our operational carbon emissions
2022
Now
Short term
Medium term
Longer term
Measure and baseline*
Reduce
Renewables
Removal and Offsets
• Confirmation of our
baseline year
• Create baseline inventory
• Measure emissions and
baseline to a level of
granularity that will
enable decisions on
achieving Net zero
*see Metrics and Targets section
• Seek to reduce emissions,
where possible, through:
> Efficiency measures
> Equipment replacement
> Procurement policy
• Move to renewable
energy via:
> Data centres and
> Current premises
and future premises
strategy
• Find credible carbon
removal options and
negotiate contracts in
line with ambition
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 31
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
STRATEGIC REPORT continued
Key climate-related opportunities for the Group
The table below sets out three pillars representing decarbonisation opportunities and strategies that are available to
the IHP group as part of the operational carbon reduction. These will focus activities on scope 1, 2 and 3 emissions.
OPPORTUNITIES
STRATEGIC OPTIONS
Infrastructure
Covering premises and support
functions across our UK, Isle of
Man and Australian locations
Systems
Seeking opportunities to adopt a
low carbon data systems
approach. Defining highly
efficient IT hardware systems
Buildings - review leased building terms to ensure landlord maintains GHG
strategy aligned to our aspirations. Medium term options to consider premises
strategy and occupancy rates.
Datacentres – ensure the legacy sites are decommissioned as planned and
reduce carbon overhead.
Energy and utilities – continue to source green or sustainably supplied energy
sources (gas/electricity). Seek efficiency opportunities to reduce usage.
Waste management – seek further opportunities to improve recycling of waste
material as well as reduction in the demand for services or supplies that create
waste. Seek innovative recycling terms and contracts available on the market.
Supplier management contracts – review and update supplier process
selection and management to ensure contracts capture operational activities that
align to our strategy.
Review and seek opportunities to ensure that we maintain IT with high-efficiency
standards, following key areas;
Server systems – mainframes, on desk computers remaining on standby,
duplication of home (laptops) office based computer equipment.
Storage systems – solid state, hard disk drives, controllers. Consider a longer
term cloud storage option.
Network – LAN switches, remote access networks.
Other IT – telecommunication systems, printers, monitors and remote
conferencing.
Processes and procedures – review the digitalisation of processes increasing
the automation of straight through processing of transactions and administration.
Procurement decisions will consider the energy efficiency of these components
and the cost of recycling on an end of life basis.
Commute to work – obtain a better level of insight on the employee commute.
Highlight and support climate friendly initiatives and schemes.
Culture – promote and embed a climate conscious culture into the business.
Build into performance management and allow employee to make a difference.
People
Empower employee and increase
engagement of employee to
make a positive contribution
towards fighting climate change
32 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
3. Risk management
The IHP group has a well-defined risk management framework, which is actively deployed and embedded across all
business areas of the Group and which supports the assessment of climate-related risks. Details can be found on pages
52 to 58.
The risk is re-assessed after consideration of the effectiveness of controls to arrive at a residual risk score. Where this
score exceeds board approved appetites, or acceptable management triggers, remedial actions are put in place which
either strengthen the design of operating effectiveness of the controls in order to reduce the residual risk to an
acceptable level.
Activities embedded during the year
During the course of the year, we have progressed the following activities:
▪ Board and NED engagement throughout the Group - briefings have been made to the members, with support from
external consultants, covering our current reporting and further opportunities to enhance reporting in the future on
climate–related matters; and proposals on the pathway towards net-zero carbon emissions.
▪ Senior management engagement and reflection of the impact of climate-related issues on the operations and
strategy of the business for the future, e.g. premises, working model, utility supplies.
▪ Enhanced key policies and procedures, e.g. supplier management that will ensure future procurement of goods and
services are aligned to our own climate-related strategies.
▪ Premises and utility suppliers – refurbishment of offices at T4A, with the landlord confirming the effective use of
sustainable materials. Increasing usage of green certified utility supplies (gas and electricity) and the extension of
existing lease terms on current premises which allows the business time to secure new facilities in line with our
operating requirements and climate-related strategy.
▪ Inclusion in our life insurance company Own Risk and Solvency Assessments (ORSAs) of a high level review of the
financial impacts of climate-related change and impacts.
The management of risks is an iterative process, requiring the business to consistently assess the emergence of new
areas of potential exposure impacting the business. This philosophy remains true for climate-related risks and we will
be working hard over the coming years to embed our climate-related strategies across the business.
4. Metrics and targets
The Group has adopted the reporting requirements of the Streamlined Energy and Carbon Reporting (SECR) policy, as
implemented by the UK Government in 2019. We have been collating greenhouse gas emission data covering several
financial years and this has allowed us to establish further insight into the areas of our scope 1, 2 emissions and
estimates regarding scope 3 covering our operational activities.
The general waste statistics are included below and the movement this year, is attributable to the full reporting year
being worked from the office, where as the comparative was a full year working from home due to the COVID
pandemic.
Over the course of the year we saved 99 trees (FY21: 80) through recycling confidential waste; we recycled 53% of
total waste (FY21: 41%).
We have maintained a similar ratio of waste recycled versus not recycled in the year, however, the volume of waste
produced this year has significantly increased due to returning to working from the office.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 33
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Our emissions data for the financial year is presented below.
GREENHOUSE GAS EMISSIONS DATA 2022
CO2 Tonnes
For the financial year ended 30 September 2022
Scope 1
Scope 1
Scope 2
Printer emissions
Purchase of gas
Purchase of electricity
Total Scope 1 and 2
Scope 3
Scope 3
Scope 3
Scope 3
Scope 3
Scope 3
Scope 3
Business flights
Vehicle usage
Disposal of waste
Water
Employee commute - train and tube
Employee commute - car and bus
Employee home working
Total Scope 1, 2 and 3
Employee numbers
Emissions Intensity Ratio (CO2 tonnes per member of
employee)
Square metres of office space
Emissions Intensity Ratio (CO2 tonnes per m2 of
office space)
Total energy consumption UK (MWh)
Total energy consumption overseas (MWh)
Waste
CO2 Tonnes
Not recycled
Recycled
Total
2022
5.1
4.9
10.0
UK
5
369
148
522
13
34
9
201
84
72
25
960
509
1.9
4,937
0.19
2021
0.1
0.2
0.3
34 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
Aus
IoM
Total
-
16
49
65
15
-
1
46
2
33
4
166
78
2.1
1,107
0.15
-
4
5
9
1
-
-
3
-
-
-
13
8
1.8
161
0.09
5
389
203
596
29
34
10
250
86
105
29
1,139
595
1.9
6,205
0.18
2,484
376
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
GREENHOUSE GAS EMISSIONS DATA 2021
CO2 Tonnes
For the financial year ended 30 September 2021
Scope 1
Scope 1
Scope 2
Printer emissions
Purchase of gas
Purchase of electricity
Total Scope 1 and 2
Scope 3
Scope 3
Scope 3
Scope 3
Scope 3
Scope 3
Scope 3
Business flights
Vehicle usage
Disposal of waste
Water
Employee commute - train and tube
Employee commute - car and bus
Employee home working
Total Scope 1, 2 and 3
Employee numbers
Emissions Intensity Ratio (CO2 tonnes per member of
employee)
Square metres of office space
Emissions Intensity Ratio (CO2 tonnes per m2 of
office space)
Total energy consumption UK (MWh)
Total energy consumption overseas (MWh)
UK
2
158
156
316
-
9
-
-
-
5
84
414
467
0.9
4,937
0.08
Aus
-
15
52
67
-
-
-
-
1
25
21
114
101
1.1
1,107
0.10
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.
In order to calculate emissions we have collected usage data from suppliers,
where possible, and applied conversion factors obtained from the UK
government’s publication of greenhouse gas reporting conversion factors.
Where usage data was not available from suppliers, we have estimated based
on historical data or from extrapolating current year data. The categories of
data which include estimates are energy, water, waste, commute to work and
recycling.
IoM
Total
-
2
6
8
-
-
-
-
-
-
2
10
6
1.6
161
0.06
2
175
214
391
-
9
-
-
1
30
107
539
574
0.9
6,205
0.09
1,474
360
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 35
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Scope 1 (direct emissions)
Intensity metrics
Baseline position
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.
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.
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, and commuting
to the office via train, tube or bus.
We produce these emissions from
employee business flights and
employee driving for work in London,
Norwich, Melbourne and Douglas in
the Isle of Man.
Restatement 2021
We have restated the financial year
2021 emission data for the inclusion
of metrics for which we did not
previously have data, which include
emissions from our data centres,
employee commutes to work,
employee emissions from working
from home and water emissions.
The board has agreed that we will set
out our pathway strategies towards
meeting carbon net zero in
recognition of our commitment to
meeting the 2050 goal. Accordingly,
the board has approved setting 2019
as a baseline position in order to
measure the success of our strategies
against future targets on our journey
towards carbon net zero.
The decision to baseline our carbon
emissions on the 2019 available data,
has been made on the basis that;
▪ The year represents the last full
operational year of the business
which has not unduly been affected
by COVID.
▪ The level of operational activity has
been sense checked to ensure it is
reflective of our operational trend,
▪ It allows the group to measure the
impacts of our strategies and
operational requirements going
forward.
▪ The collection of data for an earlier
period would prove difficult and
unreliable for a baseline position.
We recognise that 2019 still retains a
degree of uncertainty which will
contain elements of estimation and
levels of extrapolation. Known areas
will include the estimation of T4A as
at 2019 with the Company acquired
in January 2021 and information
around running our IT data centres.
Our reporting for financial year 2023
will set out our targets and metrics
for measuring the successes against
the baseline position now agreed.
We believe number of employees and
office space are appropriate business
specific metrics for calculating the
Emissions Intensity Ratio, as they are
the main drivers of our energy
consumption and, therefore,
emissions.
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.
Setting targets for the future
We have set out above the areas of
opportunity which will support
managing and driving our aspirations
to reduce the climate-related impact
of our business and in delivering
towards being a carbon net zero
business by 2050 and would expect
that, at the latest, our business will
be meeting these goals during the
decade leading up to this date.
Our appointed DNED will be working
with the business, setting climate
related targets and goals. These will
be operationalised into delivery
strategies and will be recommended
to the board for approval.
The DNED will be actively sponsoring
the development of our scenarios,
which will provide further insight on
the impacts of climate-related
changes on the business. Appropriate
assumptions will be set, ensuring the
completeness of data and metrics for
assessment in a scenario analysis
exercise. These will be presented to
the board for approval together with
the quantitative output.
In support, the board will consider
the articulation of the Group’s
climate-related risk appetites and
triggers which will be proactively
used to monitor and track progress
against our strategies and climate-
related targets.
36 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT ▪ Further develop our D&I strategy
and track the progress of the
diversity of our people
▪ Introduce employee engagement
forums
▪ Evolve the training and
development strategy.
STRATEGIC REPORT continued
RESPONSIBLE BUSINESS -
OUR PEOPLE
Our people have always been, and
will continue to be, our priority.
internally, we have also deepened
efforts to be transparent about our
strategy, purpose and values to
prospective candidates through our
newly designed careers pages.
People and culture
Delivering the best client experience
and going above and beyond, our
people are fundamental to our
success. We continue to evolve our
collaborative and supportive culture
through our people strategy, aiming
to recognise, motivate and develop
our talent by:
▪ Reinforcing our purpose, strategy
and values;
▪ Enabling our employees to
develop and grow through
training, development and career
opportunities;
▪ Providing our employees with a
‘voice’ through engagement
activities;
▪ Ensuring our practices support
inclusivity and employee
wellbeing.
The hybrid working environment has
required our people to adapt and we
have looked to support them through
this. In the past year we have
focused on re-engagement with our
strategy, purpose and values to
ensure that our people continue to
work towards this common purpose,
as we understand that having a clear
sense of purpose is fundamental to
success both of the individual and the
organisation. Activities included
sessions with our senior management
team, helping them to reaffirm but to
also support them in cascading that
engagement amongst their teams,
and town halls with the Group CEO
and Transact CEO. We are pleased
that surveys of our people taken post
our activities reflected well on the
alignment within the Group, creating
a solid base from which to continue
our actions. In addition to ongoing
activities to build on our culture
We acknowledge an effective
feedback loop between the board and
employees instils the culture and
values of the business throughout the
organisation. The board have
approved a refreshed employee
engagement framework and work
has started on implementing
activities to enhance the existing
practices in place for employees to
share their views. We will look to
further evolve these activities in
2023.
Looking forward, we are dedicated to
maintaining a culture which ensures
that employees are motivated and
committed to their role, supporting
the Group in achieving its goals. We
are proud of the culture we have
created and we will continue to
strengthen our employee brand so
we retain and attract the best talent
to drive our continued success.
FY22 highlights
▪ Embedded our hybrid working
model
▪ Implemented our inaugural
annual engagement survey
▪ Re-structured our total
compensation package and
performance management
framework
▪ Rolled out mental health training
for managers
▪ Introduced the People Platform
FY23 priorities
▪ Continue to enhance employee
engagement and motivation
▪ Embed our new performance
management framework to
underpin our performance related
variable pay structure
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 37
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Employee engagement survey
Since the Group was formed, we
have striven to ensure employee
engagement has been core to our
activities. This year we introduced
our first Group wide employee
engagement survey to analyse what
we are doing well and identify future
opportunities for improvement.
The survey was comprised of eight
sections: strategy, customers,
training and development, reward
and recognition, leadership,
wellbeing, inclusion and
communication.
We were very pleased with the
results of this survey, which showed
high levels of engagement in almost
all areas. We scored particularly
highly in relation to employee
wellbeing (91%), inclusion (91%)
and our values being aligned to the
way we do business (90%). Our
results in these areas were higher
than the external benchmarks.
A key take-away from the survey this
year has been to take positive action
in response to collated feedback,
committing to develop Group-wide
plans which we are working towards
fulfilling in 2023. Layered within, in
response to tailored feedback from
employees, we have been able to
create localised action plans for each
of the subsidiary companies
recognising this multi-tracked
approach best engages our people.
Hybrid working model
The pandemic had a profound impact
on working practices of the Group
and resulted in moving a
predominantly office-based work
force to remote working in a short
space of time.
In February 2022, when the UK
government deemed it safe to do so,
we transitioned our UK employees
back to the office. We conducted a
number of surveys to provide people
with the opportunity to provide their
feedback on their return and
considered their views on long-term
remote working.
Noting the significant benefits that
employees felt they had gained from
home working, we commenced a six
month hybrid working pilot at our
London and Isle of Man offices, which
required employees to work from the
office a minimum number of days per
week dependent on office location.
The feedback on the pilot was
positive, as employee were able to
retain many of the gains from remote
working. The hybrid working pilot did
not provide evidence of a detrimental
impact on our customers or individual
performance and the senior
management team confirmed that
varied practices ensured
communication within teams
remained effective. The employee
engagement survey also confirmed
that employees felt that they were
able to fulfil their role effectively,
referencing it was in part because
they were able to achieve a better
work/life balance and had been
supported with effective technology
solutions and team processes to do
so.
We adopted a formal hybrid working
model in August 2022.
We have invested in our IT
infrastructure to enable a seamless
hybrid working experience. We will
continue to ensure that our culture is
maintained within our hybrid working
environment and that managers are
provided with the appropriate
training and development to support
this new working environment. The
success of our hybrid model will
continue to be monitored and we will
adapt our approach accordingly to
balance our employees’ needs and
support and motivate our people.
38 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT ▪ Implement a mentoring scheme
▪ Create a corporate social calendar,
to bring our Group community
together.
STRATEGIC REPORT continued
Health and wellbeing
We recognise that the promotion of
the health and wellbeing of our
employees is important and we
encourage open communication
across the business, so that our
employees are comfortable talking
and listening to each other.
We were pleased that this was
recognised within our employee
engagement survey, as 91% of
employees felt that their manager
supports and cares about their
wellbeing. We will measure this again
in next year’s survey and hope to see
this figure continue to rise.
To ensure that we promote the health
and wellbeing of our employees, we
have zero tolerance for any form of
bullying and harassment and this is
underpinned by our Anti-harassment
and Bullying Policy, to which all
employees are required to adhere.
We place great importance on our
managers being able to provide the
best support to their employees and
this year’s focus in Health and
well-being has been on mental
health. We have enrolled managers
on a mental health training course,
facilitated by an external expert
provider, to provide them with the
skills and confidence to support their
team members.
Additionally, we have a dedicated
team of mental health first aiders
that employees are able to contact if
they are experiencing mental health
issues and need someone to talk to.
This is further complemented by a
suite of benefits that our employees
and their families can utilise, if they
are struggling with their physiological
or psychological health.
professional help and support on
a wide range of life and domestic
concerns.
Over the next year we will continue
to prioritise the health and wellbeing
of our employees. We will support
positive mental health and shine a
light on other important topics to our
people, such as menopause. Our first
step will be to publish a Menopause
Policy and appoint menopause
champions in the business.
The People Platform
We have recently established the
‘People Platform’. The main objective
of this forum is to enhance our
employees’ experience through a
range of different people initiatives
and to provide people with a platform
to contribute their views and ideas.
This direct communication with
employees will further enable us to
embed our open culture and enhance
the feedback loop between
employees and the board.
All employees have direct access to
this forum and are able to put
forward their thoughts and ideas as
to how we can create the best
working environment and interaction
with colleagues.
The forum has taken steps to
respond to feedback and hosted a
summer party to bring employees in
our London office together following
the pandemic. In response to
employee ideas we have built a
well-being suite at our London office,
comprised of a multi-faith room, a
well-being room and a medical room.
The People Platform will develop on
the following initiatives in FY23:
▪ Introduce Group employee fora
Our people and their families are
eligible to join our Company-funded
private medical insurance. They also
have access to our employee
assistance programme, which is a
confidential service and offers
▪ Introduce people champions to
support the workforce and our
ongoing strategy around inclusivity
and diversity (green champion, D&I
champion, women in leadership
champion)
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 39
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT their teams in an objective and
consistent manner. Our performance
management framework will continue
to evolve over the next year and all
managers will be provided with the
appropriate training and support.
STRATEGIC REPORT continued
Internal communications
Our executive team recognises the
importance of strong communication
with our employees, in order to
identify opportunities for the future.
This year, we are pleased we were
able to return to utilising a variety of
fora to communicate. Our online
updates and internal monthly
newsletter ensures that all employees
across the Group are aware of the key
business updates and feel included in
the business and its successes.
Alex and Jonathan have continued to
provide their all-employee Company
update and we were thrilled that we
were able to do this in person from
the UK offices this year. These events
updated colleagues on our financial
results and our objectives for the
future. The attendees are provided
with the opportunity to ask questions
of the senior management team in
the session, as well as at the social
events that followed.
Our board host regular ‘meet the
manager’ sessions with members of
the senior management team. This
forum allows the senior manager to
provide an update on key
departmental issues and plans for the
future. These meetings are invaluable,
as they provide the board with insight
into the culture and operational detail
of the business in a structured format.
The format of the sessions will be
further refined in 2023.
Engagement fora
We have taken steps this year to
enhance the feedback loop between
the board and the rest of the
workforce and utilise the knowledge
gained to improve on our employee
offering.
Our DNED, Rita Dhut, attended our
Company updates and provided
employees with the opportunity to
provide their feedback on a variety of
issues. We have also arranged for our
first employee fora to be held early in
FY23 Q1. Employees from each
subsidiary Company will be invited to
attend with the focus on the key
points of feedback from the employee
engagement survey which will feed
into our People strategy, as mentioned
earlier in this section, and provide
direct intelligence to the board.
Talent management
We believe ongoing training and
development of our people is a
prerequisite to ensuring the ongoing
success of our business and the
opportunity for long-term growth.
Therefore, it is important that we
continue to retain our talent, attract
future talent and create opportunities
for individual growth and
development.
Our internal Training and
Development team are available for
all of our employees to utilise for
their personal development and they
work closely with the business to
help our employees progress in their
careers.
Ensuring that we have robust talent
maps and succession plans in place is
key to preparing ourselves for the
future. This year we have ensured
that succession plans are in place for
the senior management team and we
will now work towards providing the
appropriate training and support for
these successors.
We have taken steps to re-define our
performance management
framework, also establishing variable
remuneration to be more tangibly
linked to performance. We believe
that this change is positive for talent
retention and motivation, and has
been considered very carefully in the
context of the culture of the Group.
All managers have been involved in
this process and it has been rolled
out in conjunction with the
companywide talent mapping
initiative. This is to ensure that
managers understand what ‘good’
looks like and can review and support
40 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
We also provided employees with the
opportunity to partake in an appeal
to support war-torn Ukraine. The
Company committed to matching the
employee donations and we raised a
total of £24,500 for the Ukraine
Humanitarian appeal.
Over the next year we will continue
to explore ways in which we can
enhance our community support and
the evolution of our ESG strategy.
Diversity and inclusion
We firmly believe that creating a
culture of belonging is of primary
importance and we recognise the
value of a diverse and inclusive
workforce, regardless of ethnicity,
disability, age, gender, sexual
orientation, or religion. We operate
on the principle that greater diversity
of thought within our business will
deliver a more robust performance
for our stakeholders.
The Group already has a number of
processes in place to ensure that its
employees are treated fairly and
equitably, which is underpinned by
our Equal Opportunities Policy, which
we will continue to evolve.
We have taken steps to ‘break the
stigma’ internally and encourage
employees to talk about topics such
as mental health and menopause
awareness. This year, we supported
mental health awareness week and
advertised resources to employees.
A priority for 2023 is to enhance our
Diversity and Inclusion strategy,
establish a framework and agree
metrics to monitor the progress of
the diversity of our workforce.
Our suite of training and
development opportunities will also
evolve to provide employees with the
opportunity to attend mental health
training and we will continue to
provide refresher training on our
Equal Opportunities policy and
practices.
Community
Each year we pro-actively source
opportunities to support charitable
causes that our employees care
about. To this end, at the end of
2021, we donated over £3,000 to a
range of charities: Great Ormond
Street Hospital, The Trussell Trust,
Age UK, Crisis UK and The Book Trust
Appeal.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 41
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Our workforce
Our workforce is located in the UK, Australia and the Isle of Man. The
headcount per subsidiary Company, as at 30 September 2022, is as follows:
HEADCOUNT
IntegraFin Services Limited
IntegraLife International Limited
Integrated Application Development UK
Time 4 Advice Ltd
IAD - Australia
IntegraFin Holdings headcount
408
8
26
72
78
592
The charts below detail the gender ratio at each of the Group’s subsidiary
companies. These ratios are accurate as at 30 September 2022.
ISL
64%
36%
Female
Male
ILINT
13%
Female
Male
87%
IAD UK
76%
24%
Female
Male
T4A
67%
33%
Female
Male
IAD
76%
24%
Female
Male
42 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Gender pay gap
IntegraFin Services Limited, one of our Group subsidiaries, is required to
publish its gender pay gap information on an annual basis. These results have
always compared favourably to other companies in our sector and our 2021
results demonstrate the ongoing steps we have taken to support an equitable
and inclusive workplace.
Mean gender pay gap incl. bonus
13.01%
11.87%
13.14%
13.92%
2017
2018
2019
2020
2021
9.8%
Median gender pay gap incl. bonus
4.28%
3.44%
4.91%
8.53%
3.58%
Across the Group we employed 592 employee, and six NEDs are officers of the Company. The breakdown of our people
by gender, as at September 2022, was as follows:
Board directors
Senior managers
Direct reports
All employee
Total
MALE
FEMALE
%
67
33
76
65
6
2
58
327
393
3
4
18
180
205
%
33
67
24
35
Whilst the Company will not exclusively advantage females, it will continue to
remove any actual, or perceived, barriers its female employees could have
been more likely to face than their male colleagues. The Group will also
continue to take the following steps to promote diversity and equality in the
workplace:
▪ Ensure that fair, non-discriminatory and consistent recruitment processes
continue
▪ Promote family friendly leave and actively encourage female employee
members to return to work from maternity leave
▪ Provide all employees with the opportunity to develop their career
▪ Ensure that robust policies are in place, supporting equality at work and
reinforcing the expected standards of conduct and behaviour
▪ Continue to adopt a fair and consistent remuneration approach across the
business, providing guidance to managers who are involved in pay reviews
to ensure a fair structure.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 43
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Anti-bribery and corruption
The Group are committed to high standards of governance, ethical and moral
standards. This commitment is underpinned by our Anti-bribery and
Corruption policy, Whistleblowing policy and Anti-Money Laundering policy.
Additionally, our core value of ‘doing the right thing’ threads through all of our
people and operational practices and processes.
All of our processes are made available to employees on our intranet and are
regularly reviewed and updated. We also require all of our employees to
undertake regular, mandatory training to enhance awareness and
understanding.
Political donations
The Group does not make political donations.
Human rights and modern slavery
We continue to recognise the important role we have to play in the support of
human rights and we do not tolerate modern slavery of any kind. The Group
continues to underpin this support through the publication of a modern
slavery statement which can be found at: www.integrafin.co.uk/modern-
slavery
44 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
FINANCIAL REVIEW
In a fundamentally solid year for core operations, Group revenue
increased by 8% to £133.6 million.
There was steady growth in investment platform clients (+8%),
investment platform advisers (+5%) and T4A licence users (+ 46%).
Profit before tax was £54.3 million (-15%). The year on year
reduction is due to investment in people, recognition of current year
VAT on software fees and an increase in non-underlying expenses of
£8.2 million to £11.5 million, as we recognised and settled backdated
VAT and interest thereon.
Underlying PBT is £65.8 million (FY21: £65.2 million), an increase of
1% on underlying PBT for FY21, after VAT of £1.7 million is included
in FY21.
EPS is 13.3p (FY21: 15.4p). After removing all non-underlying
expenses in FY22, underlying* EPS is 16.3p and it was 16.0p in FY21.
Transact platform operational performance
YE 2022
YE 2021
Opening FUD
Inflows
Outflows
Net flows
Market movements
Other movements1
Closing FUD
£m
52,112
7,275
(2,873)
4,402
(6,248)
(196)
50,070
£m
41,093
7,695
(2,744)
4,951
6,297
(229)
52,112
1 Other movements includes fees, tax charges and rebates, dividends and interest.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 45
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Transact’s gross inflows for 2022
financial year were £7.28 billion and
outflows were £2.87 billion, leading
to net flows of £4.40 billion, which is
a year on year decrease of 11%. FUD
has ended the year down 4% at
£50.07 billion, impacted by £6.25
billion of negative market
movements.
Inflows for the majority of the first
half of the year were strong, at £4.07
billion (FY21: £3.73 billion), and
contributed 56% of the full year
inflows. However, as markets fell and
inflation took hold, inflows were
impacted and each month
subsequent to February 2022 was
lower than the same month in the
year before. This was due to client
sentiment weakening and the value
of asset transfers onto the platform
falling, resulting in a full year inflow
reduction of £420.0 million (5%),
when compared against FY21.
The year-on-year reduction in net
flows is due to the fall in inflows, and
the annualised rate of platform
outflows remains within the range we
expect at 6% (FY21 7%). The
steadiness of the outflow rate is
supported by the continuing strength
in client numbers and advisers using
the platform.
GROUP FINANCIAL
PERFORMANCE
Revenue
Following the acquisition of T4A in
January 2021, there have been two
streams of Group revenue:
investment platform revenue (97% of
total revenue) and T4A revenue (3%
of total revenue).
Investment platform revenue
Investment platform revenue has
increased by 7% year-on-year to
£129.7 million and comprises three
elements, 98% (FY21: 98%) of which
is from a recurring source.
Annual commission income (an
annual, ad valorem tiered fee on
FUD) and wrapper administration fee
income (quarterly fixed wrapper fees
for each of the tax wrapper types
available) are recurring. Other
income is composed of buy
commission and dealing charges.
Investment platform revenue
Annual commission income (recurring)
Wrapper fee income (recurring)
Other income
YE 2022
YE 2021
£m
115.9
11.6
2.2
£m
107.7
10.6
3.0
T4A operational performance
Total platform revenue
129.7
121.3
T4A was acquired by IHP in January
2021 and, therefore, this is the first
full financial year of T4A being part of
the IHP Group.
In the 12 months to September
2022, T4A has increased CURO
licence users by 44%, from 1,566 at
30 September 2021, to 2,253 at
September 2022. These numbers
exclude a large user that had
commenced the process of
terminating their CURO licences at
the point T4A was acquired by IHP.
46 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Annual commission income increased
by £8.2 million (8%) versus the prior
financial year. Annual commission
revenue was impacted by: financial
markets weakening from February
onwards, demonstrated by daily
average FUD of £53.04 billion for the
first half of the financial year
reducing to ££52.05 billion for the
second half of the financial year; and,
we reduced the annual commission
rate from 0.27% to 0.26%, with
effect from 1 July 2022.
Recurring wrapper administration fee
income increased by £1.0 million
(9%) year-on-year (FY21: 9%),
reflecting the increase in the number
of open tax wrappers and broadly in
line with the increase in client
numbers.
Buy commission, included in other
income, reduces as a component of
revenue each year and was £1.5
million (FY21: £2.3 million) in FY22.
We reduced the threshold at which
clients receive a rebate of buy
commission with effect from 1 March
2022, from £0.3 million which
effected on 1 March 2021, to £0.2
million from 1 March 2022.
T4A revenue
T4A’s revenue was £3.9 million for
FY22, compared with £2.4 million
from 11 January 2021 to 30
September 2021.
Operating expenses
Employee costs
Occupancy
Regulatory and professional fees
Other income – tax relief due to
shareholders
Current year VAT
Other costs
Non-underlying expenses – backdated VAT
and interest
Non-underlying expenses - other
Total expenses
Depreciation and amortisation
Total operating expenses
YE 2022
YE 2021
£m
47.1
2.3
9.8
(2.4)
3.2
3.2
8.8
2.7
74.7
3.0
77.7
£m
41.6
1.4
7.6
(2.2)
1.2
2.8
-
3.3
55.7
3.1
58.8
Operating expenses have increased
by £18.7 million, or 32%. This is
attributable to the following notable
increases in expense categories. Note
that FY22 includes a full year of T4A
expenses of £5.3 million, versus £3.4
million for nine months in FY21.
Non-underlying expenses –
backdated VAT (£8.0 million) and
interest (£0.8 million)
Other non-underlying expenses -
£2.7 million
In our FY20 and FY21 Annual Report,
we disclosed a contingent liability in
respect of potential reverse charge
VAT payable on services provided by
our wholly owned Australian software
development Company, Integrated
Application Development Pty (IAD).
The contingent liability arose because
HMRC had notified us in January
2020 that the inclusion of IAD in our
VAT Group was terminated with effect
from July 2016.
We have been unsuccessful in two
stages of requesting HMRC review
their original decision to exclude IAD
Pty from our VAT Group, as detailed
in a Regulatory News Announcement
released on 20 September 2022, and
as a result we have had to settle
backdated VAT of £8.0 million for the
period to September 2021. We have
also paid non-recurring interest on
the VAT due of £800k.
We are appealing the original
decision to the First-tier Tribunal (Tax
Chamber), however, we will be
required to recognise and pay VAT on
software fees going forward whilst
our appeal progresses, as such we
have also recognised an ongoing VAT
liability in the current year of £1.8
million.
Other non-underlying expenses of
£2.7 million comprise a credit of £0.3
million upon the release of a
dilapidations accrual for the
Clement’s Lane office, which has now
been confirmed as not required, and
£3.0 million of ongoing expenses due
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 47
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
to the IFRS requirement that we
recognise the post combination
deferred and additional consideration
payable to the original T4A
shareholders in relation to the
acquisition of T4A as remuneration
over the four years from January
2021 to December 2024. The
remuneration cost is expected to be
£3.0 million in both FY23 and FY24,
and will reduce to £760k in FY25.
Employee costs £47.1 million (+£5.5
million (+13%))
Employee costs have increased from
£41.6 million to £47.1 million
(+13%), including T4A employee
costs of £4.1 million (FY21 nine
months: £2.5 million). Average
monthly employee costs have risen
8% from £3.6 million to £3.9 million
and average Group employee
numbers through the year have also
increased by 8% (FY21: 2%) from
543 in FY21 to 594 in FY22.
Notable headcount additions are 15
roles across the Group in software
development and information
technology areas, with more roles
being recruited over the coming
months, in line with our intent to
significantly increase system
development capacity across the
Group which will drive efficiencies.
We have also added eight roles in
order to better support advisers
using our investment platform
software, in order to increase
self-service, which again increases
efficiencies.
We awarded our people, excluding
T4A, an average pay rise of 7.5%
(FY21: 5%) in June 2022, in
recognition of the increase in the cost
of living in 2022, which also
increased employer National
Insurance, already impacted by the
1.25% social care levy introduced in
April, and contractual enrolment
costs.
Regulatory and professional fees £9.8
million (+£2.2 million (+29%))
Regulatory fees and FSCS costs have
increased by £700k (19%), from
£3.5 million in FY21 to £4.2 million in
FY22. This is due to an increase in
fees levied on two of the regulated
entities in the Group: Integrated
Financial Arrangements Ltd (IFAL)
and IntegraLife UK Ltd (ILUK). The
uplift in these costs arises due to
increasing business volumes and
impacts the financial services
industry as a whole.
Professional fees have increased
year-on-year by £1.5 million (37%),
from £4.1 million in FY21 to £5.6
million in FY22. The uplift in
professional fees relates to one-off
consultancy and advisory
engagements, which have been
necessary in order to progress
Corporate projects, such as the
Group restructure.
Occupancy £2.3 million (+£0.9
million (+64%))
Occupancy costs have increased by
£0.9 million in FY22, due to a
reduction in the rates rebate for the
Clement’s Lane Head Office of £0.5
million to £0.2 million in FY22. There
has also been a very sharp
inflationary increase in energy costs
from December 2021 onwards,
resulting in an increase in FY22 of
£0.4 million. These inflated energy
costs are projected to continue for
the foreseeable future.
Current year VAT (£3.2 million
(+£2.0 million (+167%))
Current year VAT has increased by
£2.0 million, largely due to
recognition of VAT on software fees in
FY22. This cost will be ongoing,
whilst the next stage appeal process
progresses.
48 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Tax
The Group has operations in three tax jurisdictions: UK, Australia and Isle of
Man. This results 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.
Shareholder tax on ordinary activities for the year decreased by £2.2 million,
or 18%, to £10.3 million (FY21: £12.5 million) due to the reduction in taxable
profit. Our effective rate of tax over the period was 18% (FY21: 20%). The
decrease in effective rates compared to FY21 was due to the increase in
allowable non-underlying expenses incurred in FY22, as the backdated,
non-recurring VAT was tax deductible.
Our tax strategy can be found at: www.integrafin.co.uk/legal-and-
regulatory-information
Profit
Group gross profit for the year to September 2022 rose by £9.3 million to
£131.5 million, from £122.2 million, an increase of 8%.
Group profit before tax (PBT) has reduced by 15% to £54.3 million. Excluding
all non-underlying expenses, Group PBT has risen by 1%, or £0.6 million, year
on year, to £65.8 million, including a full year of T4A losses of £1.9 million
(FY21 nine months: £1.2 million).
Group profit after tax has reduced by £7.1 million (14%) year on year, from
£51.1 million to £44.0 million.
Earnings per share
YE 2022
YE 2021
Profit after tax for the period
£44.0m
£51.1m
Average number of shares - basic EPS
331.0m
331.0m
Average number of shares - diluted EPS
331.3m
331.3m
Earnings per share – basic and diluted
13.3p
15.4p
Earnings per share have fallen by 2.1p per share to 13.3p, a fall of 14%.
Consolidated statement of financial position
Net assets have grown 17%, or £8.9 million, in the year, and the material movements on the consolidated statement
of financial position are as follows:
Cash and significant cash flows
Shareholder cash has increased by £6.9 million year on year to £183.0 million (FY21: £176.1 million). Growth of 4%
(FY21: 14%) reflects the cash generative nature of the business and ongoing Group liquidity, but is offset by dividends
paid in the year of £33.8 million (FY21: £28.5 million) and the one off payment of £8.8 million of backdated VAT and
interest, plus £1.4 million paid in respect of VAT due for ten months of FY22.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 49
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Deferred tax asset, non-current provisions and non-current deferred tax liability
The large increases in the deferred tax asset of £5.3 million to £6.0 million
(FY21: £0.7 million), the non-current provisions of £34.9 million to £41.9
million (FY21: £7.0 million) offset by the reduction of the non-current
deferred tax liabilities of £28.6 million to £0.9 million (FY21: 29.5 million) are
all a function of the realised and unrealised losses that have arisen on
policyholder assets, as the value of linked funds has fallen year on year.
ILUK holds tax charges deducted from ILUK policyholders in reserve to meet
future tax liabilities and the tax reserve may be paid back to policyholders if
asset values do not recover such that the tax liability unwinds.
Investments and cash held for the benefit of policyholders and liabilities for
linked investment contracts (notes 17, 18 and 20)
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.
Cash and investments held for the benefit of ILUK and ILInt policyholders have
fallen to £22.17 billion (FY21: £23.05 billion). This fall of 4% is entirely
consistent with the fall in total FUD on the investment platform.
Capital resources and capital management
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.
IFAL, from the 1 January 2022, has been subject to new regulatory capital
and liquidity rules with the implementation in the UK of the MIFIDPRU rule
book. The new prudential rules introduce revised approach for the calculation
of capital requirements reflecting new ‘K’ factor requirements that cover
potential harms arising from business activities. The K factors are calculated
on formulas for assets and cash under administration.
50 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Regulatory Capital as at 30 September 2022
IFAL
ILUK
ILInt
Regulatory Capital
requirements
Regulatory Capital
resources
Regulatory
cover
£m
32.6
186.9
23.7
£m
39.7
244.0
42.0
%
121.9
130.6
177.0
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 employees.
Capital as at 30 September 2022
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
£m
173.2
(30.6)
142.6
(23.2)
119.4
(76.2)
43.2
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 pages
67 to 69.
The board considers the impact of regulatory capital requirements and risk appetite levels on prospective dividends
from all of its regulated subsidiaries.
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 10.2 pence per share (2021: 10.0p).
Dividends
During the year to 30 September 2022, IHP (the Company) paid a second interim dividend of £23.2 million to shareholders
in respect of financial year 2021 and a first interim dividend of £10.6 million in respect of financial year 2022.
In respect of the second interim dividend for financial year 2022, the board has declared a dividend of 7.0 pence per
ordinary share (FY21: 7.0p).
The financial year 2022 total dividends paid and declared of £33.8 million compares with full year interim dividends of
£33.1 million in respect of financial year 2021.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 51
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
RISK AND RISK
MANAGEMENT
Understanding our risks is key to
safeguarding our customers,
shareholders and employees. By
maintaining an effective risk
management framework we aim to
achieve good outcomes that meet
the Group’s strategic objectives
within approved risk appetites.
Overview
Effective risk management is critical
for the delivery of the Group’s
strategic objectives and manages and
supports positive outcomes for our
primary stakeholders.
Risk management 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 strategic
objectives, as set out on pages 17 to
20. The inherent risk environment
faced by the Group develops over
time, the impact and mitigation of
these risks are set out in the Principal
Risks and Uncertainties section on
pages 59 to 66.
Risks are managed and
embedded as part of our culture
Promoting a culture of awareness and
ownership is essential for ensuring that
risk implications are considered and
managed for our primary stakeholders,
who are defined on page 77.
The Group Risk Management Policy
(RMP) establishes the requirement for
risk to be taken into account across all
the Group’s operations. The RMP is
overseen by the IHP Chief Executive
Officer (CEO), supported by the senior
management team. The IHP CEO is
accountable to the board and the
Group’s regulators for effective risk
management across the Group. The
RMP is reviewed at least annually.
The Risk Management Framework
(RMF), which supports the RMP,
defines the Group’s systems of
governance, risk appetite and risk
management processes. This
framework drives a consistent
approach to identifying and assessing
risks, forming a continuous and
disciplined part of the evaluation of
business opportunities, uncertainties
and threats in managing good
stakeholder outcomes, within
approved risk appetites.
We have established our RMF with
consideration of the Committee of
Sponsoring Organisation of the
Treadway Commission (COSO)
Integrated Framework Principles. The
process of risk identification (including
horizon scanning), measurement and
control is integrated into the risk
governance framework.
Risks are captured through regular
discussions with senior management
and risk owners across the Group, using
a robust and consistent measurement
methodology, which is designed to
ensure the capture of potential harms
arising from business activities.
The measurement includes the
application of stress testing and
scenario analysis and considers
whether relevant controls are in place,
along with available management
actions before the risks are incurred.
We ensure an embedded and
consistent risk management
approach is adopted, coupled with
effective policies and procedures,
designed to detect any risk of failure
to comply with regulatory obligations.
The extent of the risk is compared to
board-approved risk appetites, as
well as specific limits and triggers.
Reporting forms an integral part of
the governance framework and
breaches in limits or appetite
thresholds are escalated through the
relevant Committees. There is also a
clear process for the escalation of
risks events.
52 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Governance
The Audit and Risk Committee (ARC) supports the board and is responsible for reviewing and challenging the manner
in which the Group implements and monitors the adequacy of the RMF. The role and activities of this Committee are
set out on pages 88 to 95.
The Group reviewed its corporate structure during the year. As a result, on 1 July 2022, the audit and risk governance
arrangements of the Group’s regulated entities, formerly undertaken by the IFAL Group Risk Committee and IFAL
Group Audit Committee respectively, were removed and replaced by newly formed co-joined Audit and Risk
Committees for each regulated entity. The Committees, which provide risk and compliance challenge and oversight,
along with Internal Audit assurance of the regulated subsidiaries, are made up of independent NEDs. The Group ARC
receives updates at each meeting from the respective Committee chair of the regulated entity ARCs on key areas of
escalation.
Together, they assist the respective boards and senior management in fostering a culture that encourages good
stewardship of risk and an emphasis that demonstrates the benefits of a risk-based approach to management of the
Group.
The IHP Group governance structure and application of the Group Risk Management Framework is shown below:
ASSURANCE
3rd Line
Audit and Risk
Committee
Reporting
Internal
Audit
Matters
Group Internal
Audit
Independent
Challenge
OWNERSHIP
1st Line
Board
Approved Risk Appetite Statements
Group Chief Executive
Principal Risks
Strategy/Business, Operational, Market,
Capital/Liquidity, Credit/Counterparty,
Insurance, Group, Concentration
Systems and Controls
Group policies, processes and procedures
principles and guidance documents
Senior Management
and Business Functions
Actuarial, Business Intelligence,
Client Operations, Corporate and Client
Accounting, Facilities, Human Resources
and Recruitment, Information Technology,
Investor Relations, IAD, IntegraLife
International, Legal, Management,
Marketing, Operational Resilience, Sales,
Sucession Planning,System and Service
Development, T4A, Technical, Trading
Operations, Training, Transact Support
Business Functions
1st Line
Risk
Management
Framework
Identify
(the risks in
the business)
Analyse
(assess impact
and likelihood)
Manage
(mitigate the risk)
Monitor
(the effectiveness
of controls)
Report
(review and report
performance)
OVERSIGHT
2nd Line
Audit and Risk
Committee
Reporting
Risk
and
Compliance
Group Risk and
Compliance
Review,
Monitor
and Challenge
Key:
Primary area of activity
Accountability and reporting
Support, review, communicate
The Group’s RMF is implemented through a “three lines” model, (illustrated above) which provides at least three stages of
oversight to ensure that the Company operates within the risk appetite defined by the ARC and approved by the board.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 53
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
STRATEGIC REPORT continued
The “three lines” risk governance model
First line
The first line are 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, which
are recorded in the Group risk register. The business lines are also responsible
for complying with Group and specific Company policies and standards which
comprise the Group Risk Management Framework.
Second line
Our second line comprises two functions: Group Risk Management and
Compliance.
▪ Group Risk Management function is responsible for coordinating the risk
management activities within the business. The Group Risk Management
team reviews, monitors and challenges the business risk owners on their
risk and control profile.
▪ Compliance function is primarily responsible for supporting the Group to
ensure that its activities are conducted in accordance with all applicable
regulatory requirements.
The second line functions provide reports to the respective ARCs on at least a
quarterly basis, with information and analysis on the principal risks and
regulatory matters the Group faces (including forward-looking risks), capital
requirements and comparison against risk appetite.
Third line
The Group Internal Audit function provides independent assurance on the
adequacy and effectiveness of the Group’s risk management and internal
controls. It performs regular audits across the business, testing the adequacy
and effectiveness of the systems and controls and the processes and
procedures operated by the business units, reporting findings to the Audit and
Risk Committees. The Head of Internal Audit reports directly to the Audit and
Risk Committee chairs.
54 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
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 principal risk taxonomy set out in
our RMF. 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, business strategy and our desire to ensure good
outcomes for all our stakeholders, can be articulated as follows:
RISK CATEGORY
COVERAGE
RISK APPETITE PREFERENCES
Strategic and
business risk
Risks associated with our brand and
reputation as well as poor customer
outcomes arising from the implementation
and delivery of our products, services and
the business plan. Any negative or
unexpected impact on earnings could have a
resulting adverse effect on IHP’s market
credibility and financial standing. The need
for the business strategy to respond to the
climate change* social and governance (ESG)
agenda.
*Refer to the Responsible Business section, pages 24 to 36
for further information on TCFD reporting.
We ensure that our business provides an
acceptable level of return within the
boundaries of the risks that are taken which
are aligned with our strategic aims and
approved appetites. We aim to manage
market consensus to be in line with internal
business planning forecasts. We proactively
engage with external agencies including,
analysts, media, regulators and industry
groups. Our business model and investment
supports our ambitions and strategy for
delivering against the Climate and ESG
obligations.
Operational risk
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 which
creates harm to, or results in poor client
outcomes arising from systematic failures,
from 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 2022 55
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
RISK CATEGORY
COVERAGE
RISK APPETITE PREFERENCES
Market risk
The risk of loss arising from fluctuations in
the level and/or volatility of market prices of
assets, liabilities and financial instruments.
We have a preference for secondary market
risk through charges determined on clients’
portfolio values. This is central to our
proposition and we accept the potential
impact of market volatility on financial
performance.
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.
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.
Credit and
counterparty risk
The risk that a borrower defaults on any type
of debt due to the Group or Group Company,
by failing to make payments which it is
obligated to do.
We limit our exposures to credit institutions
with a high credit quality score for bank
deposits, trading debtors and pre-funding
risk.
Insurance risk
The risks of writing and administering
insurance business within the Group.
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 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.
The risks facing the Group are identified and
recorded in the risk register. The inherent
and residual risk profile is regularly reviewed
to understand and assess any concentration
of risks and to ensure these are appropriately
managed and monitored through our risk
appetites and governance arrangements.
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 IHP Group Audit and
Risk Committee and the respective
IFAL, ILUK and ILInt Audit and Risk
Committees and senior management.
56 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Investment Firm Prudential
Regime (IFPR)
IFAL, from 1 January 2022, has been
subject to new regulatory capital and
liquidity rules, with the
implementation in the UK of the
MIFIDPRU rule book. The new rules
aim to streamline and simplify the
prudential requirements of MIFID
investment firms regulated by the
FCA. The new prudential rules
introduce wholesale changes to the
prudential framework, not least the
introduction of a revised approach for
the calculation of capital
requirements reflecting new ‘K’ factor
requirements that cover potential
harms arising from business
activities.
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
new prudential regulations.
As at 30 September 2022, IFAL has
regulatory capital resources of
£39.7m (FY21: £37.2m, restated
under MIFIDPRU) and a regulatory
capital requirement of £32.6m (FY21:
£25.4m, restated under MIFIDPRU)
which gives a capital requirement
coverage ratio of 122% (FY21: 147%
restated under MIFIDPRU).
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 as required.
Risk capital frameworks
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 principal
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, pages 59 to 66.
Oversight is provided 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 2022 57
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Isle of Man risk based capital
regime
As at 30 September 2022, ILInt, an
Isle of Man based life Company in the
Group, has Own Funds of £42.0m
(FY21: £43.4m) and SCR of £23.7m
(FY21: £23.9m) which gives a SCR
coverage ratio of 177% (FY21: 181%).
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.
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 Solvency
II balance sheet (as applicable during
the financial year). As at 30
September 2022, ILUK has own funds
of £244.0m (FY21: £268.7m) and an
SCR of £186.9m (FY21: £214.1m)
which gives a solvency coverage ratio
of 131% (FY21: 125%).
During the reporting period, ILUK
was fully compliant with the SCR.
Additionally, the 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.
58 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
PRINCIPAL RISKS AND
UNCERTAINTIES
The directors, in conjunction with the
board and ARC, 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 tables below set out the Group’s
principal risks and uncertainties, the
risk trend for 2022 together with a
summary of how we manage and
mitigate the risks. These have been
referenced to the strategic objectives
set out on pages 17 to 20.
Business and strategic risks
PRINCIPAL RISK AND
UNCERTAINTY
MANAGEMENT AND
CONTROLS
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.
Aligned to strategic objectives
1. Drive Growth
3. Grow Earnings
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.
2022 RISK TREND:
Increase
We remain a recognised top
platform service provider by the
industry, with steady increases in
the number of advisers and clients
on our core platform system. The
challenges facing the business and
the wider industry, have increased
during the year, however
monitoring service metrics has
allowed us to identify the areas
where processing backlogs have
arisen and to deliver targeted
remediation plans to ensure
customer outcomes and service
standards are maintained.
T4A continues to develop the
delivery of next generation CURO
and the team has grown to meet
client demand.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 59
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PRINCIPAL RISK AND
UNCERTAINTY
MANAGEMENT AND
CONTROLS
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, regulatory developments)
may affect our competitive position.
Aligned to strategic objectives
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.
1. Drive growth
2. Invest in the business
3. Grow earnings
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.
Aligned to strategic objectives
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 process and
operational base. We continue to
develop our digital strategy expanding
our Transact on-line interface allowing
advisers direct processing onto the
platform. This is more cost effective
and 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 Group continues to review its
business strategy and growth potential.
In this regard, it primarily considers
organic opportunities that will enhance
or complement its current service
offerings to the adviser market.
60 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
2022 RISK TREND:
Stable
The risk has remained broadly
unchanged over the year. We
remain proactive in embedding
regulatory changes (e.g. IFPR,
Operational Resilience) through our
business as usual model. Our
platform developers remain
responsive to the business and
have increased developer resources
over the year.
We are responsive to tax rate
changes relevant to our products
without lengthy Platform
development lead times.
Increase
The market remains competitive
with an increasing number of
on-line application based products
available to individuals. In addition
the FCA undertake ongoing reviews
on the delivery of the “Investment
platforms market study” from 2019
which encourages the transparency
of communication to clients and
advisers on pricing and charging
structures. The new FCA Consumer
Duty rules further raise
expectations for platform providers
to test and assess value-for-money
products, services and fee advice.
The advised market remains our
key target and our platform service
and developments remain award
winning. Positioning and delivering
our digital TOL services forms a key
part to our business strategy
improving both functionality and
service efficiency.
T4A continues to broaden 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.
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
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Financial risks
PRINCIPAL RISK AND
UNCERTAINTY
MANAGEMENT AND
CONTROLS
CHANGE OVER THE YEAR:
Stock and bond market volatility
(Market Risk) – our core business
revenue is derived from our platform
business which has a fee structure
based upon a percentage of our FUD.
Sustained equity and bond volatility has
an impact on the revenue streams of
the platform business.
Aligned to strategic objectives
1. Drive growth
3. Grow earnings
4. Maintain cash generation
5. Maintain strong balance sheet
6. Deliver on dividend policy
Increase
The risk to FUD from stock and
bond market volatility remains high.
External factors continue to
influence equity markets in 2022
which have significantly unwound
much of the post COVID 2021
re-bound. The Ukraine/Russia war
has set inflationary and economic
shockwaves globally, impacting
energy prices and supply chains.
The changes in Prime Ministers in
the UK has seen a shift in policy on
tax and fiscal support at a macro-
economic level as well as for
individuals and businesses. A
significant level of uncertainty
remains in the success the
measures taken by Governments
and Central Banks, who are facing
decade highs in interest rates in
their attempts to tackle inflation,
will have. Stock and bond market
volatility is expected to continue for
the foreseeable future with a
consequential impact on the value
of our FUD.
The risk of stock and bond 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 market volatility as they
are based on a fixed quarterly charge.
We retain a good insight of our
business processes in order to ensure
efficiencies are captured which
coupled with further online processing
allows us to closely monitor and
control expenses. A strong investment
platform service and sales and
marketing activity ensures we attract
new advisers and clients. Sustaining
positive net inflows during turbulent
times presents the potential for longer
term profitability.
Our average daily FUD for the financial
year has increased at £52.5bn (2021:
£47.2bn). The Transact platform is
utilised by clients and advisers for
long-term financial planning and
outflows have remained relatively
stable during the course of the year.
However, the closing value of FUD year
on year has reduced by 3.9% which is
a direct reflection of the downward
market movements in the first six
months of 2022. Net inflows onto the
platform remained robust throughout
the year and represents a strong
pipeline for future platform growth.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 61
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PRINCIPAL RISK AND
UNCERTAINTY
MANAGEMENT AND
CONTROLS
CHANGE OVER THE YEAR:
Uncontrolled expense risk – Higher
expenses than expected and budgeted
for would adversely impact cash
profits. Economic drivers e.g. sustained
levels of high inflation can impact the
cost base of the business irrespective
of business volumes e.g. through
salary rises, premises, utility bills and
external levies and legal fees. The
suppliers are also wrestling with the
requirements of climate initiatives with
unit costs for sustainable or green
energy and supplies likely to attract a
premium as organisations stride
toward a net zero carbon footprint.
Such costs are difficult to control
directly and also unexpectedly impact
the base case budget.
Aligned to strategic objectives
4. Maintain cash generation
6. Deliver on dividend policy
Capital strain (including Liquidity)
- Unexpected, additional capital or
liquidity requirements imposed by
regulators may negatively impact our
solvency coverage ratio.
Aligned to strategic objectives
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.
Aligned to strategic objectives
5. Maintain strong balance sheet
The most significant element of our
expense base is employee costs. These
are controlled through modelling
employee requirements against
forecast business volumes. Planned
investment in IT and software
development deliver enhancements to
our proprietary platform enabling us to
implement enhanced straight through
processing of operational activities. A
robust multi-year costing plan is
produced which reflects the strategic
initiatives of the business. This
captures planned investment
expenditure which build our operational
capability and cost effective scalability
of the business. Cost base variance
analysis is completed with any
expenditure that deviates unexpectedly
from plan being rigorously reviewed to
assess the likely trend with reforecasts
completed accordingly.
Increase
The risk has increased over the
year as a direct result of inflationary
pressures on the UK and Global
economy. The Group has made
supportive cost of living salary
increases to employees, and
actively recruited IT and developers
to support the business. Occupancy
and utility costs as a result of
inflation and employees returning
to the office have increased.
Regulatory fees and professional
fees have also increased during the
year as a result of the broad
regulatory agenda. Slower rates of
increase are expected in 2023.
Stable
The expectation for capital and
liquidity requirements meets
regulatory expectation.
Stable
No change.
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.
62 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
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Non-Financial risks
PRINCIPAL RISK AND
UNCERTAINTY
MANAGEMENT AND
CONTROLS
CHANGE OVER THE YEAR:
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.
Aligned to strategic objectives
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.
Stable
Unchanged for the year.
1. Drive growth
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.
People
The inability to attract, retain and
motivate employees within the
business. Significant attrition rates of
experienced employees or an inability
to attract new employees can have a
detrimental impact on the service
provided as well as poor adherence to
regulatory procedures and
requirements resulting in reputational
damage and potential compliance
breaches.
People
Increase
We are very aware of our need to
retain and attract experienced and
competent people within the business.
The business announced a new
performance management and talent
recognition programme which seeks to
reward high performing employee
members and identify future leaders
and talent within the business. We
maintain a comprehensive career and
training development programme and
provide a flexible working environment
that meets our employee and business
needs. These are supported by robust
Group HR policies and practices.
The “great resignation” from
mid-2021 into the early part of
2022 presented some initial
difficulties with the retention of
employees and the ability to attract
new recruits in our UK and
Australian operations. Through a
strong group engagement process
we have been able to identify and
address the gaps.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 63
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
PRINCIPAL RISK AND
UNCERTAINTY
MANAGEMENT AND
CONTROLS
CHANGE OVER THE YEAR:
IT Infrastructure and software
An aging and underinvested IT
infrastructure and software has the
potential for causing the Company
disruption through systems outages, a
failure to plan and maintain operational
capacity and create vulnerabilities to
operational resilience and loss of a
competitive market share as newer
technology emerges.
IT Resiliency and Information
Security
The nature of the business requires the
Group to store and retrieve significant
volumes of information some of which
is highly sensitive.
Regulatory risk
The regulated entities within the Group
have a full and stretching agenda. A
range of pronouncements made during
the last 18 months need transitioning
effectively into business as usual,
including FCA PS22/9 Consumer Duty
and FCA PS21/3 Operational Resilience.
It is imperative that these activities
remain on plan and meet the high
standards expected.
Aligned to Strategic Objectives
1. Drive growth
2. Invest in the business
3. Grow earnings
4. Maintain cash generation
Initiatives that include, a supportive
cost of living pay increase;
implementation of a new
performance management
approach; defined future talent
mapping with a focus on training
and career development; the
adoption of flexible working
arrangements between the office
and home, have collectively
managed the risk position.
Key developments in our IT
infrastructure are due to complete
at the end of 2022 with the full
commissioning of new datacenters
giving more capacity and
operational resilience.
Continued investment in IT and
software development will deliver
enhancements to our proprietary
investment platform and back office
software - with enhanced
functionality for UK clients and their
advisers. Furthermore, this
investment will enable us to
implement enhanced straight
through processing of our
operational activities, meaning that
we improve our operational
efficiencies and the cost effective
scalability of our investment
platform. This will reduce the
additional operational employees
required to service additional clients
and advisers over the next 3 years.
Meeting the regulatory agenda is
primary to our operations for our
core platform business. The agenda
remains challenging but we remain
on track to deliver in line with
required target dates.
IT Infrastructure and software
The continuous and evolving
sophistication of the cyber threat to
our IT infrastructure and maintaining
business resilience remain high on the
operational risk agenda. Cyber
detection tools are deployed,
penetration testing and the assessment
of controls to NIST standards is
regularly undertaken. Awareness
training is provided to ensure
employee understand and recognise
threats to our business systems.
IT Resiliency and Information
Security
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.
Beyond IT and cyber security, the
Company also has a function lead by
the Company’s data protection officer
to manage information security risk
and compliance with UK GDPR.
Regulatory focus
The Group has established a series of
projects to deliver against the regulatory
requirements it faces. We use our
subject matter experts to interpret and
business lines to implement policies and
procedures aligned to expectations. In
addition, Group Internal Audit undertake
thematic reviews of the regulatory
projects throughout the course of
delivery to ensure scoping, gap analysis
and delivery plans and actions are
adequately covered. This review also
reflects on our internal governance
ensuring the board retain ownership
receiving effective communication and
updates.
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PRINCIPAL RISK AND
UNCERTAINTY
MANAGEMENT AND
CONTROLS
CHANGE OVER THE YEAR:
Operations 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. A consistent
application of the risk management
framework, has supported the Group
allowing management to make
effective and informed risk based
operational decisions.
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.
Increase
The external geo-political
environment in 2022 has become
increasingly uncertain through a
series of significant global events
including the Ukraine/Russia war,
trade tensions between USA and
China, global energy crisis and
supply chain issues. Within the UK,
political events are causing
disruption to markets and
macroeconomics with a direct
impact on FUD for the Group.
assessed through the governance
Committees.
We have classified the profile of these
risks as follows; Near-term is
considered to represent the next 12
months; Medium-term between 1
and 3 years and longer-term is 3
years and beyond.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 65
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 objectives
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
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
PRINCIPAL
RISK AND
UNCERTAINTY
MANAGEMENT
AND
CONTROLS
CHANGE OVER THE YEAR:
NEAR-TERM
RISKS
MEDIUM-
TERM RISKS
▪ Prolonged poor
economic
outlook for the
UK
▪ A sustained level of UK economic disruption with high inflation and interest
rates, volatile bond and equity markets and potential house price slumps is
expected to impact investing clients’ confidence. Investors might seek to
withdraw funds to meet their cost of living increase which would impact the
value of our FUD and future income streams.
▪ Geopolitical risk
▪ The potential for further geopolitical global shocks is increasing. In addition
to the humanitarian impact of the Ukraine/Russia war, a severe energy crisis
has emerged impacting European countries which is impacting the post
COVID economic recovery and cost of living. The potential for a further
deterioration in USA and China trading arrangements may well impact supply
chains especially the computer chip market. Sanctions reprisals with Russia
might lead to technology reprisals through cyber threats on the financial
services sector.
▪ Financial Crime
▪ The emergence of more sophisticated instances of financial crime impacting
Fraud
our security and reputation across the client base.
▪ 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.
▪ Climate change
▪ A disorderly transition towards a low carbon economy might lead to additional
and burdensome regulation and policies being imposed on companies. This has
the potential to have two impacts, firstly on the value of other companies and,
hence, our FUD with the consequence of impacting our revenues; secondly on
the cost base from our suppliers imposing a premium as we strive to deliver our
operational climate strategies in terms of premises, workforce travel, energy
suppliers and the supply and disposal of consumables, e.g. IT equipment, paper,
water.
▪ Regulatory
▪ Changing expectations of the UK and Isle of Man regulators. Increasing
changes and a
shifting focus
regulatory scrutiny or focus impacting our platform business model.
▪ Shift in tax regime which may alter the tax benefits of pensions and ISAs. The
shift in the tax treatment of savings commonly referenced as EET and TEE10.
▪ Changes in international tax rules and the impact on the Group’s Isle of Man
Company, ILInt, with the potential for IOM corporate profits to be taxed at
15%.
▪ Generational
▪ The aging population is shifting the longer term savings habits and
LONGER-TERM
RISKS
shift in
customers and
expectations
expectations. The cost of an aging demographic population suggests that
higher taxes may be required of a smaller working population creating less
savings opportunities. 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. Details of the results and
conclusions of this assessment can be found in the "Going Concern and viability statement" section on pages 67 to 71.
10Investments made under EET indicates that the initial investment is made exempt of tax first E, the second E denotes that income and gains on the
investment is also exempt whilst in the wrapper. The T in this case represents that the withdrawal is taxed in line with the individual’s personal tax rate. E.g.
Pensions. In contrast TEE denotes that the investment is made from taxed income but income and gains on the investment and withdrawals are exempt
represented by the second and third E. e.g. ISAs.
66 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT 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 2 to 71.
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 163, 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 the economic climate.
When making this assessment, the
board has taken into consideration
both the Group’s current performance
and the future outlook, including the
impact of sustained levels of high
inflation and volatile and downward
trending equity markets. Market
volatility and uncertainty is expected
to continue for some time, due to the
geopolitical and global economic
factors facing the UK and world
economies. The threat of COVID has
not yet fully passed and our approach
to employee health and safety
remains of paramount importance.
Our shift in operating model provides
a flexible home and office working
balance which supports employees’
as well as our clients’ needs. The
environment has been challenging
during the year, 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
geopolitical issues and impact of
Ukraine/Russia war; 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 10);
the number of advisers using the
platform increased by 5% during the
year; the number of clients on the
platform increased by 8%; and, our
Net Promoter Score remained the
highest score for an advised
platform.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 67
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
These 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
advisers through our service delivery.
97% of revenue is of recurring nature
(page 45).
Our approach is to focus on organic
growth of FUD through positive net
flows to the platform. We aim to
generate growth of revenue, and to
control costs, to ensure that the
Group's profit margin is resilient over
the medium term.
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 and Risk
Assessment process (ICARA) 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. We
recognise the importance that
climate change may have on our
business and our approach for the
current financial year towards climate
related scenarios is set out in our
TCFD disclosures on page 25.
The key scenarios considered for the
financial year are as follows:
Cyber-attack
Considers the impact of a hacker
exploiting a loophole in security
allowing then to gain network access
and extracting data and information
which is used for fraudulent purposes
attracting significant media attention.
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.
Employee shortage causes sub-
optimal system development and/or
testing
The release of an internal change
programme with undetected faults
results in prolonged errors in trades
executed on TOL. Remediation plans
require significant resource along
with compensation payments to
clients and a review of buy
commission charges.
Unforeseen customer harms as a
result of a systemic process failure
Failure by our UK regulated entities
to appropriately identify, implement
or embrace appropriate conduct
standards which causes consumer
harm.
68 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
Ukraine war induced inflation
Combined scenario
Escalation of the Ukraine/Russia war
results in sharp fall in financial
markets and further increases to
inflation rates. High inflation persists
in the long-term impacting expenses
whilst a fall in equity markets
reduces FUD and negatively impacts
revenues.
Breach of IOM sanction regime (ILInt
only)
ILInt is judged to have breached the
Sanctions Regime as a result of
making a payment to a third party
subject to asset freezing.
Considers the impact of the
combination of cyber-attack and the
geopolitical and global economic
events 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.
Table: Assumptions underlying the stress scenarios
RISK FACTOR
STRESS APPLIED TO BASE CASE ASSUMPTION
Market downturn
A market fall of 33% over a one month period.
Mass lapse
30% drop in the number of clients over three months.
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.
Expense increase
Expense increase over business planning period 10%.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 69
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT STRATEGIC REPORT continued
In accordance with the Code, the
directors have assessed the Group’s
prospects by reference to the
three-year planning period to
September 2025. 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
the regulators over the period of this
assessment and beyond.
The results of the previous 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 economic climate
globally and in the UK as well as the
geopolitical uncertainty.
70 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT 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
Employees
RELEVANT STRATEGIC
REPORT SECTION
Responsible business –
Taskforce for Climate-
related Financial Disclosures
(TCFD) statement, page 24
Responsible business –
our people and our culture,
page 37
RELEVANT POLICY
We are still formulating our environmental strategy
and policy, following further consultation with Willis
Towers Watson.
Employee Handbook
Anti-Harassment and Bullying Policy
Health and Safety Policy
Equal Opportunities Policy
Flexible Working Policy
Social and community
Responsible business –
our people, page 41
Over the next year we will continue to explore
ways in which we can enhance our community
support and the evolution of our ESG strategy
Human rights
Responsible business –
our people, page 44
Human Rights Policy
Modern Slavery Policy
Anti-bribery and corruption
Business model
Responsible business –
our people, page 44
Our business model –
page 14
Anti-Bribery and Corruption policy
Principal risks and how they
are managed
Principal risks and
uncertainties – page 59
Non-financial key
performance indicators
Key performance indicators –
page 63
Approval of the Strategic report
operations on the community and environment.
The directors believe that the Strategic report on pages 3
to 71 meets all relevant statutory objectives and
requirements.
By order of the board,
Helen Wakeford
Company Secretary
13 December 2022
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
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 71
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT GOVERNANCE
T
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72 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
FINANCIAL STATEMENTSOTHER INFORMATION
CORPORATE GOVERNANCE
REPORT
Introduction
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 17 to 20 and these are
supported by the corporate culture
set out in the Responsible Business
section on page 37.
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 83;
▪ 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 83;
▪ 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 52; and
▪ provide the necessary disclosures to
stakeholders to make a meaningful
analysis of the Group’s business
activities and its financial position.
Statement of compliance
The UK Corporate Governance Code
(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 Company has, throughout the
year ended 30 September 2022,
applied the principles, and complied
with the provisions, of the Code
except in relation to the following:
▪ 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.
Minimum shareholding and post-
employment shareholdings
requirements are in place for
executive directors as recommended
by the Code. 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.
Richard Cranfield
Chair
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 73
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT GOVERNANCE continued
BOARD OF DIRECTORS
Richard Cranfield
Alexander Scott
Jonathan Gunby
Non-Executive Chair
Chief Executive Officer (CEO)
Executive Director
Appointed to the board:
Appointed to the board:
Appointed to the board:
26 June 2019
11 February 2014
2 March 2020
External appointments:
Alexander joined the Group as Actuary
Joined the Group in 2011 as Chief
▪ Henderson High Income Trust Plc
– Director 2020 to present
and Head of Group Technical Operations
Development Officer and became an
in October 2009. From November 2010
Executive Director in March 2020.
he was Chief Financial Officer and Head
Richard is a qualified solicitor and has
of Risk, becoming a director in July
an MA in Economics and Law from
2011. Alex became Chief Executive
Cambridge University. His previous
Officer in March 2020.
Jonathan has a BA in Business Studies
from De Montfort University, Leicester,
and is a Fellow of the Chartered
Institute of Marketing. His previous
experience includes working for Allen &
Overy LLP (and its predecessor firm)
between 1978 and 2022, being a
partner from 1985 to 2021.
Alexander has a BSc in Actuarial Science
experience includes being an Executive
from City University and is a Fellow of
Director of NMG Holdings between 1999
the Institute of Actuaries. Alexander has
and 2011.
spent thirty years in the insurance
Committee appointments:
market, quantifying and assessing risk
Nomination Committee (Chair)
and has held the Chief Risk Officer
Remuneration Committee
function for insurance and investment
companies. His previous experience
includes various roles at Criterion
Assurance Group, including: Non-
Executive Director (2003-2010); Group
Director (2002-2003); Director
(1999-2002); and Actuary (1997-1999),
and Life Director and Chief Actuary at
Sterling Insurance Group between 2004
and 2009.
Committee appointments:
Nomination Committee
74 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued GOVERNANCE continued
Michael Howard
Caroline Banszky
Victoria Cochrane
Executive Director
Appointed to the board:
11 February 2014
Michael co-founded the Group in 1999,
Independent
Non-Executive Director
Senior Independent Non-
Executive Director
Appointed to the board:
22 August 2018
Appointed to the board:
28 September 2018
was Executive Chair of the Group from
External appointments:
2001 until stepping down in October
2017 and becoming an Executive
Director. He founded ObjectMastery in
Australia in April 1992, which developed
▪ 3i Group plc - Chair of Audit &
Compliance Committee, 2014
to present
External appointments:
Appointed Designated Non-Executive
Director for environmental and social
sustainability as of 15 September 2021.
the software underpinning Transact.
▪ Gore Street Energy Storage Fund plc
▪ Ninety one plc – Chair of the Audit and
Michael holds a BA in Economics from
York University and is a qualified
- Chair of Audit Committee, 2018
Risk Committee, 2019 to present
to present
▪ Euroclear Bank SA/NV – Non-Executive
chartered accountant. His previous
▪ Benefact Trust Limited– Director and
Director, 2016 to present
experience includes working for Touche
Trustee, 2018 to present
Ross in the audit division in London
(1980-1984) and Melbourne (1984-
1986) and working for Norwich Union
Life Insurance, where he was
▪ The Open University - Member of
- Non-Executive Director, 2014 to present
the Investment Committee, 2016
to present
Victoria is a qualified Solicitor, with over
twenty years’ experience as General
▪ HM Courts and Tribunal Service
responsible for marketing and
Caroline is a qualified Chartered
Counsel and, latterly, as Global Head of
administration of investment funds
Accountant, having originally trained at
Risk with Ernst & Young where she
including the launch of the platform
what is now KPMG. Her previous
created the global enterprise risk
Navigator in 1990.
experience includes being Chief
management framework, set up the
Executive of The Law Debenture
internal audit function and implemented a
Corporation plc between 2002 and
crisis response policy. Victoria’s previous
2016, COO of SBV Holdings PLC (now
roles include being Non-Executive
Novae Group plc) between 1997 and
Director of Perpetual Income and Growth
2022 and Finance Director of N M
Investment Trust plc between 2015 and
Rothschild & Sons Limited between
2020; Non-Executive Director of
1995 and 1997.
Committee appointments:
Audit and Risk Committee (Chair)
Gloucester Insurance Ltd between 2008
and 2013; Global Executive Board
Member of EY between 2008 and 2013;
Executive Board Member of EY (NEMIA
and UK) between 2006 and 2009; and,
Senior Adviser at Bowater Industries Ltd
between 2014 and 2015.
Committee appointments:
Audit and Risk Committee
Nomination Committee
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 75
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Rita Dhut
Robert Lister
Christopher Munro
Independent
Non-Executive Director
Appointed to the board: 22
September 2021
Independent
Non-Executive Director
Appointed to the Board:
26 June 2019
Independent
Non-Executive Director
Appointed to the board:
1 February 2017.
Appointed Designated Non-Executive
External appointments:
External appointments:
Director for employee engagement as
of 15 December 2021.
External appointments:
▪ finnCap Group plc – Non-Executive
▪ Pembroke Square Freeholders
Chair, January 2021 to present
Association Limited – Director 2013
▪ The Salvation Army International
to present
▪ Financial Times Foundation for
Trustee Company – Director 2016 to
Christopher is a qualified Chartered
Financial Literacy – Founder Trustee
present
and Non-Executive Director, 2021 to
present
Robert has a BA in Classics from
Oxford University. His previous
▪ JP Morgan European Investment
experience includes: Non-Executive
Trust Plc – Non-Executive Director,
Director of Credit Suisse Asset
2019 to present and Chair from
Management (UK) Limited, between
2022 to present
▪ Ashoka India Equity Investment
trust Plc – Non-Executive Director,
2018 to present
2012 and 2022; Director of Aberdeen
Smaller Companies Income Trust PLC,
between 2012 and 2022, Non-
Executive Director of Investec Wealth
and Investment Limited between
▪ Newable Ventures – Venture investor
2010 and 2020; Director of Rensburg
for a range of deep technology
Sheppards PLC, between 2008 and
funds, 2018 to present
2010, as well as working for Dresdner
Accountant and has an LLB from
Edinburgh University. Chris’s previous
experience includes being Founding
Partner of London and Continental
Partners LLP from 2016 to 2021,
Director of Pacific Capital Partners
from 2004 to 2021, Director of Jupiter
Enhanced Income Trust from 1996 to
2009, CEO of River & Mercantile
Investment Management from 1994
to 1996, Director of Robert Fleming
Holdings Limited between 1988 and
1994 and Director of Jardine Fleming
Holdings between 1983 and 1986.
Kleinwort Wasserstein between 1998
Committee appointments:
and 2008 and Barclays de Zoete Wedd
Remuneration Committee (Chair)
between 1983 and 1998.
Nomination Committee
Committee appointments:
Audit and Risk Committee
Remuneration Committee
▪ The Girls Day School Trust – Non-
Executive Director and Trustee, 2016
to present
Rita has a BSc in Business Studies from
City University. Her previous experience
includes: various positions at Aviva
Investors between 2001 and 2012,
including Head of European Equities
and Head of Pan European Equity Value
Investing; and, various positions at
M&G between 1994 and 2000, including
Director of European Equities.
All other directors were in office throughout the financial year up to the date of the report.
76 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Considering stakeholders
The board’s role in promoting the
long-term success of the Group
requires consideration of the balance
of interests between all stakeholders
– those being our clients and
advisers, employees, regulators,
shareholders, suppliers and the
community. Details of how the board
has delivered its responsibilities
under s.172(1) of the Act during the
financial year are outlined on pages
83 to 87. In addition, our s.172
statement outlines how the board
has considered stakeholders in its
principal decision-making processes.
The following table supports our
s.172 statement by setting out how
we have engaged and considered our
key stakeholders during the year and
the outcomes and any highlights of
such efforts.
BOARD LEADERSHIP AND
COMPANY PURPOSE
The board establishes the Group’s
purpose, values and strategy and is
responsible for ensuring the
maintenance of a sound system of
internal controls and for reviewing
the overall effectiveness of the
Group’s risk management systems.
Details on how the governance
around the Group’s risk management
framework contributes to the delivery
of its strategic objectives can be
found on pages 52 to 66.
The board also oversees the Group’s
culture to ensure it is aligned with
the Company’s purpose, values and
strategy. More details on the Group’s
culture can be found under the
Responsible Business section on
pages 37 to 44.
Measuring performance against
strategic objectives
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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 77
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued ENGAGING WITH OUR STAKEHOLDERS
OUR
STAKEHOLDER
HOW WE ENGAGE AND CONSIDER OUR
STAKEHOLDERS
OUTCOMES AND HIGHLIGHTS
Our clients and
advisers
Transact
Transact
▪ Speaking/presenting to advisers and
▪ Results from client and adviser surveys are
paraplanners at eight annual ‘Connect day’
events, with attendance ranging from 40 to
120 advisers per event.
▪ Engaging with advisers at regional
‘breakfast briefing’ events across the UK,
with attendance of over 300 advisers per
year.
▪ Engaging with advisers and paraplanners
at annual PFS and CISI events and other
conferences during the year.
▪ Distribution of annual client and adviser
surveys to gain feedback on common
development requests from clients and
advisers, in an effort to tailor and enhance
our services.
▪ Liaising and coordinating with our user
firms as part of our Account Management
Programme to gain feedback on how best
we can develop our proposition for use by
user firms and their end clients.
▪ Management directly engage monthly with
adviser firms to provide technical guidance
and support in such areas as pensions
legislation, Trust registration and tax
changes.
distributed amongst the senior management
team and are discussed in detail at regular
internal development forums, the outcomes of
which directly impact the priorities of new
functionalities.
▪ Examples of developments we’ve introduced that
are directly attributable to feedback from clients,
advisers & firms include:
▪ The ability to move cash between wrappers of
linked family groups e.g. grandfather funding
his grand-children’s JISAs
▪ ‘Expected Deposit’ functionality that auto-
matches and auto-reconciles client deposits so
these monies are invested without delay
▪ e-signature capability with multiple providers
▪ Document upload feature to eliminate
paperwork
▪ Increased security authentication
▪ The ability to change address online for clients
▪ Online and physical help functions such as
‘Live-Chat & Co-Browse’ i.e. real people and
not algorithms or bots!
▪ The addition of wider investment performance
reporting for clients via the website.
T4A
T4A
▪ Prior to seeking commitment from
▪ Client feedback helps T4A to continually improve
prospective clients, T4A engage with their
clients in a process that we call “Discovery”
to ensure suitability between our software
capability and the needs of the firm.
▪ Implementation Consultants are assigned
to ensure that all aspects of our service
delivery is planned and delivered to clients
until handed over to an appointed Account
Manager, ensuring relationship continuity.
▪ The account management team proactively
engages with clients in order to progress
understanding and use of technology and to
ensure best customer service is provided.
features within our software and with their
real-world use and it helps us remain current with
regulatory requirements.
▪ Feedback directly influences our product roadmap
(prioritised via client consensus, coordinated
through Account Management, which helps drive
general feature improvements.
▪ Client influence on Product Providers and
Platforms also helps drive up the availability of
electronic services such as valuations and
remunerations.
78 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued OUR
STAKEHOLDER
HOW WE ENGAGE AND CONSIDER OUR
STAKEHOLDERS
OUTCOMES AND HIGHLIGHTS
Employees
▪ Employee engagement and pulse surveys
▪ Based on employee survey feedback, the
focussing on strategy and values,
customers, hybrid working model, training
and development, leadership, and reward
and recognition.
▪ Establishment of new ‘People Platform’ for
the London and Isle of Man offices,
comprising various senior managers, with a
designated e-mail to employees to provide
input on well-being initiatives to create the
best working environment and interaction
with employees.
▪ At IAD, team leader/project lead meetings
and all-employee sessions are held
fortnightly.
▪ Multiple in-person town halls led by
executive directors showcasing Group
performance and a business update. Our
DNED for Employee Engagement attended
one of the sessions and spent some time
liaising with employee.
▪ Multiple ‘Meet the Managers’ sessions with
the NEDs during the year to give them a
deeper understanding of the Group.
▪ Monthly Transact newsletters distributed to
employees.
▪ Non-executive director deep dive session
on employee engagement led by DNED for
Employee Engagement and Head of HR to
discuss engagement strategy and
monitoring of culture.
Company:
▪ Rolled out communication of new Group values
and refresh of purpose and strategy for
Transact and T4A
▪ Approved permanent hybrid working models for
all of its sites, designed to suit each of the
companies
▪ Developed and communicated a change to
employees’ remuneration structure below the
leadership team level (excluding T4A and IAD
employees) by implementing a base pay increase
of 10% and adding performance metrics for
annual bonus variable pay for all employees
▪ Rolled out mental health training for managers
▪ Well-being initiatives led by the People Platform
include:
▪ Hosting a summer party to bring employee
together following the pandemic
▪ Weekly employee breakfasts and new coffee
machines and snacks in each floor kitchen
▪ Multi-functional ‘wellbeing suite’ designed in
London headquarters.
▪ Outcomes from the NED deep dive session
included:
▪ a refresh of the content of the People update to
ensure more effective Board insight and oversight.
This includes monitoring of a broader set of KPIs
and more regular discussion of our behaviours and
values in action
▪ a review of the format and scope of attendees of
the ‘Meet the Managers’ sessions to ensure it
remains fit for purpose and adds to the NEDs
engagement below the board
▪ a review of how internal communications can
support employee engagement most effectively
▪ development of group-wide employee fora as a
mechanism to garner employee perspectives to
influence our People strategy and impact board
decision-making
▪ consideration being given as to how to support
further volunteering and other charitable
activities of our employee.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 79
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued OUR
STAKEHOLDER
HOW WE ENGAGE AND CONSIDER OUR
STAKEHOLDERS
OUTCOMES AND HIGHLIGHTS
▪ All UK executive and NEDs received consumer
duty training in preparation of the new Consumer
Duty Regulation coming into force.
▪ Regulator feedback on the IFAL and ILUK boards’
composition and succession planning has been
taken into consideration and the Nomination
Committee is reviewing each board’s succession
plans for 2023.
▪ Detailed insights were provided to the ILInt board
following an FSA information request on
Policyholder Compensation and an FSA ‘Dear
CEO’ letter on the new requirements in the
Corporate Governance Code regarding Recovery
Planning.
▪ Feedback following the Annual Business Meeting
with the FSA was circulated to the ILInt board
and relevant senior management.
▪ Non-executive directors participated in, and
contributed to, a session on the development of
the Group’s climate change strategy.
Regulators
▪ The IHP CEO provided regular updates at
the IHP board and IHP ARC meetings on
topics discussed with the regulators during
the year including non-standard assets,
diversity and inclusion, and consumer duty.
▪ The boards of IFAL, ILUK and ILInt are
regularly briefed on regulatory
developments and expectations, and the
UK boards’ respective ARCs receive
detailed insights into specific areas where
relevant, such as the ICARA, ORSAs, CASS,
the new Consumer Duty and consumer
outcomes.
▪ I HP’s Remuneration Committee, whose
remit covers the Group, is also regularly
informed of relevant regulatory
developments and expectations, a recent
example being IFPR.
▪ The boards of IFAL and ILUK also receive
updates in relation to specific matters,
such as areas of interest to the FCA
including operational resilience; climate
change and diversity and inclusion.
▪ The ILInt board receives updates on FSA
initiatives and its Compliance team
maintains contact with the FSA.
▪ IFAL and ILUK’s Compliance team
maintains regular contact with the FCA and
the PRA on behalf of IFAL and ILUK to
ensure awareness of their concerns,
expectations and priorities. This is then
shared with the business to ensure that the
business takes these into account.
▪ The IFAL and ILUK’s Compliance team
actively participates in the UK Platforms
Group, which engages with the FCA.
▪ ILInt’s managing director sits on the
Executive Committee of the Isle of Man
Insurance Association which meets
quarterly with the FSA.
80 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued OUR
STAKEHOLDER
HOW WE ENGAGE AND CONSIDER OUR
STAKEHOLDERS
OUTCOMES AND HIGHLIGHTS
Shareholders
▪ Institutional shareholder roadshows hosted
by CEO for half-year and year-end results.
▪ Ad hoc meetings with investors after key
▪ Constructive dialogue with institutional
shareholders to ensure that their views are fully
considered by the board, which resulted in:
information updated to the market.
▪ The Remuneration Committee agreed more
clarity over performance metrics for executive
variable remuneration rewards for 2023
onward;
▪ The Nomination Committee approving the
scope for a Group Chief Financial Officer and
overseeing the appointment of a Group Chief
Risk Officer and Chief Technology Officer ; and
▪ Our taking account of requests and supportive
information from shareholders in the
development of our ESG strategy.
▪ Institutional shareholders provided feedback on
the Company’s performance and plans, and IHP
executives were able to update on the strategic
goals and value enhancing plans of the Company.
▪ Ad hoc meetings with investors to explain the
results of the HMRC review of the UK tax Group,
including an explanation of the underlying
background to the HMRC decision, and the plans
for appeal.
▪ In-person Annual General Meeting at our
London headquarters with the Chair and all
non-executive directors in attendance to
take questions from shareholders.
▪ Proactive consultation by the Board’s Chair,
Senior Independent Director, Remuneration
Committee Chair and the Company
Secretary with major shareholders on
various governance matters including ESG,
executive remuneration and succession
planning, with 17 meetings held during the
year (more details are available on page
92).
▪ Board members receive a quarterly Investor
Relations report which includes analysis of the
Company’s share price performance,
shareholder register, share buyers and sellers,
platform and adviser sector corporate
activities, prospective investor targeting, sell
side analyst views of the Group, as well as
business performance by the Group and its
listed peers.
▪ CEO and Head of Investor Relations
provide updates at each board meeting on
investor engagement and market
movements.
▪ Ad hoc briefings to the board on
shareholder feedback.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 81
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued OUR
STAKEHOLDER
HOW WE ENGAGE AND CONSIDER OUR
STAKEHOLDERS
OUTCOMES AND HIGHLIGHTS
Suppliers
▪ We do not seek to disadvantage, or
▪ Information is shared with management and
compromise, suppliers with whom we
conduct business, in line with one of our
core principles of ethical behaviour.
board Committees where appropriate, in order to
provide assurance regarding supplier selection
and management.
▪ We endeavour to pay all suppliers within agreed
payment terms.
▪ We work with suppliers to ensure no modern
slavery or enforced labour exists in the supply
chain. We include specific clauses in supplier
contracts that their employees must be paid
National Minimum Wage.
▪ We have refocused our efforts on supplier
management as we continue to enhance
our due diligence with regard to cyber-
security and business resilience. As we
evolve our ESG strategy, we will collaborate
with our suppliers in order to achieve our
ESG goals.
▪ We have a designated Supplier
Management Manager who is responsible
for ensuring the tendering and onboarding
of suppliers is followed in accordance with
internal policies. Our Supplier Management
Procedure governs our approach with how
we engage with suppliers.
Communities
▪ We considered the possible impact to
▪ The Company gave all London and Isle of Man
communities when reviewing the UK and
Isle of Man office suite (see ‘Principal
Decisions’ section for more detail).
▪ The DNED for Environmental and Social
Sustainability is supporting the board and
management in developing the Group’s
social strategy.
employees £10 to donate to one of five selected
charities.
▪ London and Isle of Man employees were given
the opportunity to participate in an appeal to
support Ukraine, whereby the Company matched
employee donations, resulting in £24,500 being
donated to the Ukraine Humanitarian Appeal.
82 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Group’s success with its key
stakeholders.
Interests of our employees
We value our people. They are the
core of our impeccable service
delivery to our clients and advisers
so our employees’ well-being is
paramount to the business’s long-
term sustainable success. Details on
employee well-being and the culture
of the Group (and how we monitor
both) is outlined in the Responsible
Business section on page 37. In
addition, the Directors’ Remuneration
Report on page 110 sets out the
Group’s approach to remuneration
which is intended to ensure equitable
remuneration across the Group and
which improves value for employees.
Fostering business relationships
The Group’s business model and
strategic objectives are set out on
pages 14 to 20 and make clear the
focus of the business on delivering
impeccable service to clients and
advisers through investment in
infrastructure and employee. An
integral part of our service offering is
the provision of regular relationship
management to clients and advisers
as they are our target market.
Fostering good relationships with our
suppliers is an important factor in
ensuring we can continue to service
our clients and advisers effectively.
To help embed good supplier
management processes, we have a
Supplier Management Framework.
We also ensure suppliers are paid
within payment terms and do not
seek to disadvantage or compromise
suppliers with whom we do business.
SECTION 172(1) STATEMENT
Understanding the views and interests
of our stakeholders helps the Group
make responsible and balanced
decisions. In doing so, we aim to
generate long-term value for the
Company’s shareholders whilst
contributing to wider society by building
strong and lasting relationships with
our other key stakeholders.
Section 172(1) of the Companies Act
2006 (the ‘Act’) requires the directors
to act in a way they consider will
promote the success of the Company
for the benefit of our shareholders as
a whole whilst having due regard for
the matters set out in section 172(1)
(a) to (f) of the Act.
The board considers the key
stakeholders to be our clients and
advisers, our employees, our
shareholders, our regulators, our
suppliers and our communities.
These groups are considered key as
they are fundamental to the
continuing success of the Group.
You can read more about how we
engage with and consider the needs
of our key stakeholders on pages 77
to 82 of the Governance Report.
Long-term consequences of
decisions
IHP Group’s strategic objectives are
stated on page 17. How the Group’s
strategy has been delivered during the
financial year and the forward looking
risks to being able to deliver it in
future are set out on pages 17 to 20.
The directors make strategic decisions
on future direction, investment and
stakeholder value based on the clear,
sustainable, long-term 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
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 83
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Impact on the community and
the environment
Acting fairly between
shareholders
All shareholders are treated equally,
with all information being made
available to all shareholders in a
consistent manner. The board,
supported by the Chair and CEO,
actively engages with the Group’s
largest shareholders regularly and
feedback received is shared with the
entire board.
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 and this is
considered during any principal decision-
making processes by the board.
The Responsible Business section on
pages 37 to 44 sets out the impact of
our operations on the environment
and outlines our community activities
that occurred during the year.
High standards of business
conduct
The directors recognise that our
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 board supports the CEO in
embedding a culture that encourages
employees to act with integrity and
to ‘do the right thing’ in line with the
Group’s values.
The Group does not tolerate unethical
behaviour and employees undergo
annual training on financial crime
including anti-bribery and corruption
prevention and detection. The Group
also maintains various policies,
including an Anti-Bribery and
Corruption Policy and an Anti-Money
Laundering Policy that employees are
required to abide by. If employees
have any concerns about unethical
behaviour within the organisation,
there is a process available to them
under the Group’s Whistleblowing
Policy to report the matter.
The directors also recognise that as
the business is regulated by three
separate regulators, as detailed on
page 67, maintaining strong, open
and productive relationships with the
respective regulators is also business
critical.
84 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued PRINCIPAL DECISIONS AND CONSIDERATIONS OF
STAKEHOLDER INTERESTS
The table below summarises how the board and the wider Group have had
regard to the duties under Section 172(1) when considering specific matters
during the year.
PRINCIPAL
DECISION
STAKEHOLDERS
IMPACTED
OUR CONSIDERATIONS
Transact
- BlackRock
Model Portfolio
Service (MPS)
Clients
Advisers
Shareholders
Employees
Regulators
In September 2022, we launched a new MPS in collaboration with BlackRock
to create a new discretionary investment service available to advisers via the
Transact platform and to further extend a wide range of discretionary
investment managers on offer. More details on the Transact - BlackRock MPS
initiative are available in the CEO letter on page 6.
Price
reductions for
the Transact
Platform
Clients
Advisers
Shareholders
Regulators
Moving to
permanent
hybrid working
model
Employees
Shareholders
Communities
The decision to proceed with this collaboration was made by the Transact
operating board, IFAL, and remains in line with the Group’s business model
and strategic objectives. As part of the initiative:
▪ a full risk assessment was completed and considered by the board
▪ the approach to pricing was assessed and agreed based on the objective of
providing clients with a value-for-money investment proposition, and a
transparent and an easy to understand pricing structure
▪ BlackRock’s ESG credentials were considered when selecting them as our partner.
In February 2022, the IHP board approved price reductions for the Transact
Platform (which is further outlined in the Market Overview section on page 8).
This decision was in line with the Group’s strategy to share the benefits of our
scale with clients while investing in our service delivery for advisers and
clients, and is expected to increase client and adviser loyalty and attract new
flows to the Transact platform, which ultimately supports the long-term
sustainability of the business.
A capital and liquidity risk assessment was undertaken to ensure the Group’s
regulated entities continue to have sufficient capital to cover their respective
solvency risk appetites.
In early 2022, employees were consulted on their views of the temporary
hybrid working model and its effectiveness. Senior management were keen
to understand the mental and physical impact to employees of the
Company’s working arrangements post-COVID. Management also wanted to
better understand the associated impacts to colleague engagement and any
efficiencies or inefficiencies surrounding remote working when agreeing the
longer-term permanent working arrangements for employee.
Once the consultation results had been received, management reviewed the
data and considered the impact that hybrid working may have on other
areas including service delivery, IT capacity and capabilities, overhead costs,
employee retention, office requirements and environmental footprint. After
all considerations had been discussed, management made the decision that
it was in the best interests of the employees that the we would move to
hybrid working models appropriate for each Company in the Group.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 85
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued PRINCIPAL
DECISION
STAKEHOLDERS
IMPACTED
OUR CONSIDERATIONS
Governance
restructure
Employees
Regulators
Shareholders
Increased
investment in
IT and software
development
Clients
Advisers
Employees
Shareholders
In June 2022, the IHP and IFAL boards agreed to complete a governance
restructure, following a review of the current structure of IHP and its Group
companies and the operational challenges that the current structure
presented. One of the resulting changes of the restructure was to
incorporate new Audit and Risk Committees for ILUK and ILInt, which were
previously overseen by the IFAL Audit and Risk Committees.
It was considered that the proposed restructuring of six subsidiaries within
the Group was in the best interests of the Group as a whole and each Group
Company, as doing so would:
▪ improve the efficiency of the Group’s operations
▪ improve corporate governance, for example by incorporating new Audit and
Risk Committees of the operating subsidiaries; and
▪ serve to enhance liquidity
In addition, our Regulators were satisfied that we continue to have
appropriate governance controls in place to fulfil all of our regulatory
obligations.
As part of our strategy, we are continuously investing in our proprietary
software and operational systems to ensure that we retain our competitive
advantage.
In advance of the release of the IHP interim results in May 2022 the Board
made a strategic decision to increase investment in IT and software
development, including the recruitment of additional software development
and systems employees during FY22 and FY23.
This decision was deemed to be in the best interests of the Group and all
stakeholders as a whole, as it would:
▪ help maintain our strong position as a focused provider of services to
clients and UK advisers
▪ improve operational efficiencies and efficiently scale the business which
would ultimately reduce the additional operational employees required to
service additional clients and advisers from FY25
▪ deliver enhanced future profitability.
86 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued PRINCIPAL
DECISION
STAKEHOLDERS
IMPACTED
OUR CONSIDERATIONS
Review of UK
and Isle of Man
office estate
Employees
Shareholders
Communities
In 2022, the CEO undertook a review of the Group’s UK and Isle of Man
office estate. The board received multiple updates from the CEO about the
review and ultimately endorsed management’s plans to renew leases for the
London, Norwich and Isle of Man office spaces and to release the temporary
office space in Chelmsford. A variety of factors were considered when
deciding whether to renew the office spaces which included:
▪ responding to employee feedback from pulse surveys and ensuring
employee wellbeing was paramount in any decisions
▪ practicalities of new hybrid working model and its impact on each
workplace environment
▪ reviewing costs comparisons of staying in current offices vs relocating
In addition, sustainability and consideration of our environmental footprint
have been key factors in reviewing each office estate. Some examples of
how we considered this include:
▪ London – a short lease extension was used to allow time to refine hybrid
working model, whilst building our ESG strategy so that any appropriate
new estate can be sourced in line with the plan.
▪ Norwich – the office development has recently been refurbished by the
landlord with sustainability in mind and, where possible, various
environmentally-conscious improvements had been made
▪ Isle of Man – the current office space remained suitable for the size of
employee and avoided the need to refit a new office space to deliver the
infrastructure needed to provide the level of service expected by advisers
and clients.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 87
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued DIVISION OF RESPONSIBILITIES
The role of the board
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 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/
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.
88 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Key board activities during the year
Business performance and strategy
Finance and reporting
▪ Consider current and future business initiatives
including Transact-BlackRock MPS and Vertus
▪ Review quarterly and half-year results
▪ Monitor performance and capital position
▪ Discuss Group strategy including review of business
plans and pricing strategy
▪ Review Transact, T4A and wider industry market
▪ Approve annual report and financial statements
▪ Approve two interim dividends
performance updates
▪ Review HMRC VAT decision and subsequent action
▪ Review quarterly investor relations updates including
▪ Review Group tax strategy
analyses of Company share price performance
▪ Receive updates on and discuss IT infrastructure and
systems and IT strategy
Risk management controls
Sustainability and stakeholder engagement
▪ Review quarterly risk reports
▪ Deep dive sessions on environmental, social and
▪ Approve Group’s Risk Appetite Framework and Risk
employee engagement strategies
Management Policy
▪ Review Board Diversity Policy
▪ Receive cyber security and consumer duty training
▪ Receive HR updates including monitoring culture and
employee survey feedback
▪ Review shareholder feedback from engagement
sessions with Chair, SID, Remuneration Committee
Chair and Company Secretary
Governance
▪ Review board evaluation results and progress of prior
year’s evaluation actions
▪ Review board and management succession plans
▪ Approve corporate restructure
▪ Receive board committee updates
▪ Approve AGM documentation
▪ Approve Modern Slavery Statement
▪ Review and approve changes to various Group policies
▪ Approve Delegation of Authority Framework
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 89
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Independence and time commitment
All of the non-executive directors are considered to be independent and the
Chair was considered to be independent on his appointment to the role. There
are a number of ways in which the independence of non-executive directors is
safeguarded:
▪ Meetings between the Chair and non-executive directors without
management present occur regularly;
▪ The Senior Independent Director meets at least once annually with each
non-executive director to discuss feedback on the Chair’s performance;
▪ Non-executive directors’ tenure on the board is reviewed annually by the
Nomination Committee as part of board succession planning;
▪ Any external commitments must be disclosed to the board as and when they
arise for consideration and approval before accepting; and
▪ When making new director appointments, the board takes into account other
demands on directors’ time.
The board has reviewed the other commitments of the non-executive
directors and concluded it is satisfied that each non-executive director
remains able to commit sufficient time to dedicate to their role as a director.
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 Nomination Committee
and 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 or as recommended by the Nomination Committee.
90 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Subsidiary governance
The Group’s regulated principal operating subsidiaries carry out their business
of providing investment firm and life insurance Company activities. Members
of the Group’s Executive team together with various independent non-
executive directors sit on the boards of Integrated Financial Arrangements Ltd
(IFAL), IntegraLife UK Limited (ILUK), and IntegraLife International Limited
(ILInt) in line with UK (IFAL and ILUK) and Isle of Man (ILInt) regulatory
requirements.
New subsidiary board and Committee governance framework
In June 2022, the IHP and IFAL boards agreed to complete a governance
restructure following a review of the current structure of IHP and its Group
companies and the operational challenges that the current structure
presented. One of the resulting changes of the restructure was to incorporate
new Audit and Risk Committees (ARCs) for ILUK and ILInt, which were
previously overseen by the IFAL Audit Committee and IFAL Risk Committees.
The new board and Committee governance framework of the main regulated
operating subsidiaries is outlined below:
IHP board
IHP
Remuneration
Committee
IHP
Nomination
Committee
IHP Audit
and Risk
Committee
IFAL board
ILUK board
ILInt board
IFAL Audit
& Risk
Committee
ILUK Audit
& Risk
Committee
ILInt Audit
& Risk
Committee
Each operating subsidiary ARC is responsible for overseeing the internal
controls and risk management systems for their respective subsidiary and
reporting assurances up to the IHP ARC annually that these systems remain
effective.
More details of how the board fulfilled its s.172(1) duties in relation to this
decision is noted in the “Principal Decisions” section on pages 85 to 87.
Further information on how the Nomination Committee has been involved in
subsidiary board composition and succession planning under the new
structure is outlined on pages 106 to 108.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 91
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Composition, succession and evaluation
Board composition
The Company has three executive directors and six independent non-
executive directors (including the Chair).
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 other members of the Nomination Committee
comprise the SID, the CEO and one other independent non-executive director,
meaning the Committee has a majority of independent directors.
The membership and terms of reference of these board Committees are
reviewed annually. The Terms of Reference for each Committee is available on
the Company’s website www.integrafin.co.uk/corporate-governance/.
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
Michael Howard
Robert Lister
Christopher Munro
Alexander Scott
Jonathan Gunby
Rita Dhut
Board succession
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
-
-
6
-
-
-
-
6
6
-
-
6
-
-
-
-
-
5
5
-
-
5
5
-
-
-
5
5
-
-
5
5
-
-
-
-
7
-
7
7
-
-
-
-
-
7
-
7
7
-
-
-
During the year, the board considered its composition, skills and resource
requirements. The board agreed that the appointment of a Group Chief
Financial Officer (CFO) would add strength and depth to the board, as well as
providing additional and valuable support to the CEO. The duties that would
ordinarily be assigned to a CFO were currently undertaken between the CEO,
the Group’s Chief Financial Controller and members of the Finance team.
The CEO, supported by the Head of Human Resources, undertook a process
to review the allocation of responsibilities and any changes to the distribution
of those responsibilities that would arise with the creation of a stand-alone
CFO function. Subsequent to that exercise being completed, the Nomination
Committee was asked to appoint an independent search firm to identify
suitable candidates and commence the selection process.
At the time of publication of this report, the process to appoint an
independent search firm has been completed and the process to identify
suitable candidates has commenced.
92 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Directors’ induction
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,
information on Company values and culture, 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.
During the financial year, no new directors joined the IHP Board.
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 financial year, training and deep
dive sessions were facilitated for the directors, covering the following topics:
▪ cyber security
▪ employee engagement strategy and monitoring culture
▪ investor sentiment and market reaction
▪ climate change including path to net zero
▪ consumer duty including FCA’s approach to supervision and firm evaluation
model.
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.
Board effectiveness
In line with best practice and the requirements of the Code, the board and its
Committees undertake an external evaluation every three years. The last
external evaluation was carried out in 2020, with the assistance of
Independent Audit and the next external evaluation will be conducted in 2023.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 93
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued 2021 board evaluation – progress update
AREA OF ASSESSMENT
AGREED ACTIONS
PROGRESS
People/culture - More focus on
people and culture matters.
Chair to review board calendar and
add people and culture to the
agenda to be led by the Head of HR.
Governance structure - Review
alternatives to the current corporate
governance structure and operating
models.
Board agreed that management
initiate the process of a governance
restructure.
Board engagement - Consider other
opportunities for directors to discuss
issues other than at board meetings,
including more NED-only sessions,
informal social gatherings and
Director-Chair one-to-one informal
contact.
Boardroom dynamics – review time
allocation of agenda items to ensure
sufficient time is available to discuss
key matters.
Company Secretary to schedule
NED-only sessions in the board
calendar.
Board agendas to be reviewed once
the governance restructure has
completed.
2022 board evaluation
In 2022, the Company undertook an internal evaluation of the performance of
the board and individual directors. The evaluation process is outlined below.
A deep dive session on employee
engagement and culture monitoring
was held in June 2022 with the Head
of HR. ‘HR Update’ (including
monitoring culture) was added to the
board agenda for reporting quarterly.
Management led the governance
restructure project which was
completed in June 2022. More details
on this are available on page 86.
Standing NED-only sessions and NED
pre-meets were added to the
calendar. The board has also
attended multiple social dinners in
2022 both with and without
management present.
The board schedules and agendas
have been amended to reflect the
governance restructure and flow of
information between the various
boards and committees.
Scope and Planning
Obtaining Feedback
Analysing and Reporting
• The Chair and
Company Secretary
met to determine the
proposed scope and
approach of the
questionnaires to
be circulated for
completion.
• Tailored questionnaires
were agreed and
loaded in Diligent
board software for
completion by all
directors and other
non-board attendees
to gain diverse feedback
on the board's
effectiveness.
• The results of the
questionnaires were
analysed with key
themes summarised
and a final report
presented to the Board
in September 2022
with actions agreed
to take forward.
94 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued The areas identified for the board to emphasise focus on in 2022 and beyond are summarised below:
AREA OF ASSESSMENT
AGREED ACTIONS
Designated strategy session
Stakeholder engagement and ESG
The board would reinstate, post-COVID, an annual deep dive
strategy session to allow for more time to discuss longer-term
strategy and performance horizon scanning.
The board has improved its oversight of stakeholder
engagement in 2022, in particular that of employees. The
board will continue to increase its understanding of the Group’s
stakeholder engagement and ESG strategies.
Information flows between parent and subsidiaries With the recent governance restructure, continue to improve
the framework of information flow between the operating and
other subsidiaries and the parent Company.
Chair evaluation
The SID led the performance evaluation of the Chair by meeting separately with each of the executive and non-executive
directors. The SID then met with the Chair to discuss the directors’ feedback and agree actions for 2022 and beyond.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 95
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued AUDIT AND RISK COMMITTEE REPORT
Statement from the Chair
I am pleased to present the Audit and Risk Committee’s report for the year
ended 30 September 2022. The report provides insight into our work
undertaken this year.
This is the first financial year that our external auditor, Ernst & Young LLP
(EY), newly appointed, has audited the Group.
In carrying out its remit, the Committee has paid particular attention to the
BEIS consultation on Corporate and Audit Reform, and the FRC’s response to
the government’s paper. Management, together with the Committee, will
continue to closely monitor these developments and how our reporting may
be impacted in the future.
It is noted that this is the first year of the Group’s mandatory TCFD reporting,
more details of which are outlined on page 25.
I will be available to answer any questions at the AGM. Further details will be
set out in the Notice of AGM.
Further information on the activities of the Audit and Risk Committee (‘ARC’ or
‘Committee’) is provided below.
Membership and attendance
The members of the Committee as at 30 September 2022 were:
MEMBER
DATE OF APPOINTMENT
Caroline Banszky (Chair)
Victoria Cochrane
Robert Lister
22 August 2018
28 September 2018
4 September 2019
The Committee meets at least four times a year and may meet at other times,
as requested by the Chair. The Committee met six times during this financial
year. The Committee’s attendance is outlined on page 92.
All Committee members are independent non-executive directors, as required
by the Code, with the ARC Chair being a qualified accountant. The board is
satisfied that the Committee as a whole has an effective balance of skills and
experience to perform its responsibilities. Details of each member’s skills,
education and experience are outlined in the Directors’ Biographies on pages
74 to 76.
Committee membership is kept under review by the Chair of the Committee,
in collaboration with the Nomination Committee. In 2022, there were no
changes to the Committee’s composition.
All Committee members are provided with initial and ongoing training to
support them in carrying out their duties effectively. During the year, the
Committee received training on consumer duty, climate change and ESG
reporting, including receiving a benchmarking review against our peers by
Willis Towers Watson.
96 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Regular attendees at Committee meetings include the board’s Chair, IHP CEO,
the IFAL CEO, Group Chief Financial Controller, Head of Actuarial and Risk,
Group Counsel, Group Head of Internal Audit and Company Secretary.
The Group’s external auditor, EY, also attended specific Committee meetings
for external audit planning and reporting purposes. Other non-executive
directors are invited to attend meetings.
The Committee Chair meets privately with the Group Chief Financial
Controller, Head of Internal Audit, Head of Actuarial and Risk, external Audit
Partner and Head of Assurance at EY to discuss issued reports and relevant
financial and risk reporting and regulatory developments.
Role of the Committee
The primary role of the Committee is to ensure the integrity of the financial
reporting and auditing processes and monitor the effectiveness of the Group’s
internal control and risk management systems to ensure there are continuing,
appropriate levels of external and internal audit and risk assessment to cover
all material risks (including fraud) and controls, including financial, operational
and compliance processes and procedures.
The Committee is also responsible for oversight of the Group’s relationship
with the external auditor. This includes making recommendations to the board
in relation to the (re)appointment of the external auditor, approving its scope
of work, fees and terms of engagement, as well as regularly reviewing its
independence, objectivity and effectiveness.
The detailed responsibilities of the Committee are set out in its terms of
reference which can be found at www.integrafin.co.uk/corporate-
governance.
Details of the work of the Committee in discharging its responsibilities during
the financial year are outlined further below.
Financial reporting
During the financial year, the Committee:
▪ Reviewed and challenged the financial reporting undertaken by the Group,
with input and support from the Group’s external auditor;
▪ Reviewed and considered the disclosures in the entire Annual Report and
Financial Statements, recommended to the board the published Annual
Report and financial statements and Half-year report and concluded that the
reports were fair, balanced and understandable;
▪ In conjunction with the entire board, reviewed the two HMRC VAT
announcements and other formal announcements relating to financial
performance;
▪ Considered the consistency of accounting policies, the financial reporting
process and the disclosure of key accounting and financial risks. Further
information on the key financial and non-financial risks can be found on
pages 61 to 66; and
▪ 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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 97
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Significant issues and accounting judgments and estimates
As part of the process for monitoring the integrity of the Group’s financial statements, the Committee assessed and
challenged the appropriateness of the judgements and estimates applied by management, and considered any
significant issues that have arisen, in the preparation of the Annual report and financial statements. This included
consideration of the following:
AREA FOR CONSIDERATION COMMITTEE REVIEW AND CONCLUSION
Investments held for
policyholder and linked
liabilities
ILUK tax provisions
Goodwill
Share-based payments
Vertus loan
T4A post combination
remuneration
HMRC VAT Ruling
Reviewed the key assumptions used in the valuation of the above balances,
including the methodology for valuing assets based on unobservable market inputs.
The Committee was satisfied that the assumptions and methodology are
appropriate.
Reviewed the key assumptions and judgements used in respect of the calculation and
treatment of the policyholder tax provision. The Committee was satisfied that the
assumptions and judgements used are appropriate.
Considered the key assumptions underpinning the Group’s goodwill impairment
testing, which relate to the investments in IAD Pty and T4A. This included
assumptions on the value in use of the Cash Generating Units, details of which are
provided in note 13 of the Financial Statements. The Committee was satisfied that
the assumptions and estimates used are appropriate.
Reviewed the key assumptions used in respect of the valuation of options granted
under the Company’s employee share schemes, which are calculated using the
Black-Scholes model. The Committee was satisfied that the assumptions and
methodology used are appropriate.
Reviewed the key assumptions used in calculating the carrying value of the
Company’s loan to Vertus and the measurement of the expected credit losses in
accordance with IFRS 9. The Committee was satisfied that the assumptions used
are appropriate.
Reviewed the key assumptions used in the fair value measurement of the
additional consideration relating to the acquisition of T4A, as detailed in note 30 of
the Financial Statements. The Committee was satisfied that the assumptions used
are appropriate.
Reviewed the impact of the HMRC VAT ruling on the Financial Statements. As
detailed in page 47 of the Financial Review, costs of £8.0 million in relation to
backdated VAT up to September 2021, costs of £1.8 million in relation to financial
year 2022, and interest of £0.8 million have all been recognised in the Financial
Statements. The Committee was satisfied that the accounting treatment in relation
to these costs was correct, and that a contingent liability is no longer required to
be disclosed, as all payments due were paid before 30 September 2022.
These areas have been discussed with the external auditor to satisfy them that the Group makes appropriate
judgements and provides the required level of disclosure. 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.
98 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued The Committee concluded that, taken
as a whole, the interim and annual
reports were fair, balanced and
understandable and provided the
information necessary for
shareholders, and other stakeholders,
to assess the Group’s position and
performance, business model and
strategy.
TCFD reporting
This is the first year that the
Company has published climate-
related reporting in its Annual Report
and Financial Statements based on
the TCFD’s recommendations. Details
on this disclosure can be found on
pages 24 to 36.
In preparing the Annual Report and
Financial Statements, the Committee
considered the Company’s exposure
to climate risk and assessed the
potential impact of climate-related
matters on the financial statements.
The Committee was also provided
with information on the methodology
used by management for collecting
climate-rated data for publication in
the Annual Report and Financial
Statements. The Committee
concluded that the impact of climate-
related matters will not have a
material effect on the Group’s
financial statements.
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 2022 and included
consideration of various scenarios as
set out on pages 67 to 71, 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 various risks, and can
continue operations for the
foreseeable future. The Committee
has therefore concluded that the
going concern basis is appropriate.
Fair, balanced and
understandable assessment
The Committee also undertakes a
wider review of the content of the
Annual Report and Financial
Statements to advise the board as to
whether, taken as a whole, it is fair,
balanced and understandable and
provides the information necessary
for shareholders to assess the
Group’s performance, business model
and strategy. This supports the board
in providing the confirmations set out
on page 146 of the Statement of
directors’ responsibilities.
In considering the wider content of
the Annual Report and Financial
Statements, the Committee pays
particular attention to ensuring the
narrative sections provide context for,
and are consistent with, the financial
statements, and that an appropriate
balance is struck between the
articulation of successes,
opportunities, challenges and risks.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 99
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Risk management
assessed the impact;
Internal controls
Due to the nature of the Group’s
corporate structure and IHP being a
holding Company, risk and control
matters, which are entity-specific,
are overseen by the three regulated
subsidiary ARCs. Consistency is
achieved through the application,
across all entities, of the Group Risk
Management Policy and Framework.
Each subsidiary ARC has Terms of
Reference outlining their
responsibilities and the Committee
receives updates at each meeting on
key areas for escalation from each
Committee Chair including consumer
duty, vulnerable customers, service
risk, and non-standard assets.
During the financial year, the
Committee:
▪ Oversaw the risk appetite
statements and risk management
framework and reviewed its
effectiveness in relation to IHP, and
how Group companies have
implemented the framework;
▪ Reviewed Group Risk Management’s
development of T4A’s and IAD’s risk
profiles;
▪ Reviewed how market disclosures
including where consensus may not
align with the Group’s earnings
forecast may impact the Group’s
risk appetite framework;
▪ Reviewed the regular quarterly risk
reports presented by Group Risk
Management to ensure the business
continues to operate effectively with
the appropriate risk profile under
the hybrid working model;
▪ Reviewed and challenged the Risk
Reports presented by Group Risk
Management, and considered the
progress of management action taken
in order to address management
points raised on IHP specific risks;
▪ Considered the climate-related risks
and opportunities facing the Group
and how the regulated entities have
▪ Reviewed and assessed the Group’s
principal risks, uncertainties and
emerging risks and updated them
as appropriate;
▪ Assurance was sought from the
Chairs of the IFAL, ILUK and ILInt
ARCs 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; and
▪ Considered the points escalated
from the Group Company boards or
Committees which affect IHP, or the
Group as a whole.
More details on the Group’s risk
management processes are outlined
on pages 52 to 66.
The Committee provides assurance to
the board on the Group’s system of
internal controls. A key aspect of this
is the review of the financial controls
systems that identify, assess,
manage and monitor financial risks,
which are an important aspect of
ensuring the integrity of the Group’s
financial statements as a whole.
As part of its oversight of the Group’s
wider system of internal controls, the
Committee receives reports from
management on the effectiveness of
those controls, as well as
independent assurance on the
effectiveness of controls by the
Group’s Internal Audit function and
the external auditors.
During the financial year, the
Committee:
▪ received regular reports from the
Group’s Internal Audit function on
the sufficiency of the internal
controls in those areas of the
business included in the Internal
Audit Plan for the period;
▪ challenged management on the
progress against delivery of the IT
strategy to address any identified
weaknesses;
▪ Received updates on progress
against management actions
identified; and
▪ Reviewed the Head of Internal
Audit’s annual assessment of the
Group’s internal control framework.
In addition, in preparation for year-end,
the Committee reviewed a report from
Legal on the Group’s effectiveness of
controls to prevent financial crime,
including detecting and preventing
fraud, bribery and corruption, money
laundering and market abuse during
the Financial Year.
100 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Whistleblowing
Internal audit
▪ Reviewed all Group Internal Audit
reporting escalated by either the IFAL,
ILUK, or ILInt ARCs, or activities
within other companies in the Group,
which represent a significant risk to
the Group as a whole;
▪ Noted the conclusion of the annual
Internal Audit report that there
were no significant deficiencies that
would need to be disclosed in the
Annual Report;
▪ Received reports on matters
relevant to the financial reporting
processes including assurances on
internal controls, processes and
fraud risk; and
▪ Assessed the effectiveness and
independence of the Group Internal
Audit function.
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 Holden, as a member of the IFAL
Audit and Risk 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.
During the financial year, the
Committee reviewed the
Whistleblowing Policy and the
framework for reporting, and
confirmed that each are appropriate
to the Group structure and
organisation.
The Committee appointed a new
Group Head of Internal Audit in
March 2022. During the selection
process, the IHP ARC Chair met with
various candidates and recommended
the preferred candidate to the
Committee for approval.
The Group Internal Audit department
is focused on the delivery of internal
audit services to the Group, and aims
to protect and enhance the value of
the Group, and to help the board and
executive management of the Group
to meet its objectives.
To do this, the Group Internal Audit
department performs independent,
objective assurance and consulting
services that provide assurance,
advice, and insight in respect of risk
management, governance and
internal controls. The Committee
monitors the scope, activity, and
resource of the Group Internal Audit
department formally on a quarterly
basis, with several touchpoints
throughout the year.
During the financial year, the
Committee:
▪ Received and challenged Group
Internal Audit reports at Committee
meetings including detailed review
of any control recommendations
made to management,
management's response, and views
over risk and control culture;
▪ Monitored the status of any open
management action plans including
receiving updates from the Chair of
the IFAL, ILUK and ILInt ARCs on
the management actions in
response to the findings and
recommendations of internal audit
reports pertaining to those entities;
▪ Approved the Group Internal Audit
Charter and Group Internal Audit
Plan, including specific areas of
review on matters relating to IHP or
any proposed changes to the plan;
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 101
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Effectiveness and independence
of Group internal audit function
In addition to the internal audit
engagements and the appointment a
new Group Head of Internal Audit,
the Committee reviewed and
approved the department’s revised
strategy and updates to
methodology. A private session also
took place between all ARC members
and the Group Head of Internal Audit
in August 2022.
During the financial year, the
Committee performed its annual
assessment on the independence and
effectiveness of the Group Internal
Audit function. To facilitate this
assessment, the Group Internal Audit
function provided a report to the
Committee that consisted of a
self-assessment of its independence
and effectiveness, declarations of
independence, objectivity, and
compliance with the Group Internal
Audit Methodology, and a
questionnaire on the Group Internal
Audit function's independence and
effectiveness for completion by the
Committee members.
Based on the scale and focus of the
work conducted by Group Internal
Audit during the year, and the results
of Group Internal Audit's report in
respect to its effectiveness and
independence completed during the
year, the Committee concluded that
the Group Internal Audit function is
working effectively and independently
and that the team is appropriately
qualified and employees.
Delivery of internal audit plan
There were a number of internal
audit engagements completed
in-house during 2022 in line with the
agreed Internal Audit Plan. The
results of these internal audit
engagements were reported and
discussed and follow up actions were
reviewed or requested where
necessary. The internal audit
engagements included, but were not
limited to, the following:
▪ client assets and client money
compliance;
▪ financial projections model;
▪ oversight of third party and key
outsourcing arrangements;
▪ IT management information;
▪ Human Resource and UK payroll
activities;
▪ identification, treatment, and
monitoring of vulnerable customers;
▪ compliance with operational
resilience requirements; and
▪ adherence with the Isle of Man
economic substance rules.
The Group Internal Audit function
also completed its annual assessment
of the Group's risk management and
key internal controls relating to the
Group’s major business processes
and top risks that included an
evaluation of the Group’s annual
fraud risk assessment.
Furthermore, out-source internal
audit engagements, using external IT
security testing experts, were
completed on IT security across the
Group’s sites and IT environments
including the IT security
infrastructure of T4A and IAD. These
engagements assessed and
benchmarked against good practice
IT Security standards.
102 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued External auditor
Tenure
The last tender for the external
auditor was conducted in 2021, when
BDO resigned after 11 years of
service. EY has been the Group’s
External Auditor for one year since
their appointment by shareholders at
the 2022 AGM. Mike Gaylor has been
the lead audit partner for one year.
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 2022.
Scope of the external audit plan
and fee proposal
During the financial year, the
Committee:
▪ reviewed EY’s overall work plan;
▪ advised EY, through regular
communication, of any specific
matters which the Committee was
considering from previous audits
and current operations;
▪ approved EY’s remuneration and
terms of engagement, taking into
consideration feedback from the
three operating subsidiary ARCs;
▪ assessed EY’s independence and
objectivity;
▪ reviewed and approved external
auditor fees;
▪ approved revisions to the External
Auditors Policy in relation to the
provision of non-audit services and
hiring of ex-employees; and
▪ assessed the effectiveness of the
external audit.
External auditor independence
and non-audit services
Effectiveness of external audit
process
In order to safeguard the
independence and objectivity of the
external auditor, the ARC is responsible
for the development, implementation
and monitoring of the Group’s policy
on the provision of non-audit services
and oversight of the hiring of
personnel from the external auditor,
should this occur. The Committee must
pre-approve any non-audit services, in
line with the requirements of the FRC’s
Revised Ethical Standard 2019. The
Committee receives a report each year
analysing fees paid for any non-audit
work by the external auditors. EY did
not perform any non-audit services
during the 2022 financial year. EY did
provide Other Assurance Services, in
line with the Revised Ethical Standard
2019. These services were required by
regulation and are further disclosed
under Note 8.
Full details of EY’s remuneration are
set out in Note 8 of the Financial
Statements.
The ARC is responsible for assessing
the qualifications, expertise and
resources of the external auditor and
for reviewing the effectiveness of the
external audit process. As part of this
process, the views from executive
management, ARC members, and the
Chairs of the three subsidiary ARCs
are sought on the following:
▪ the efficiency of the year-end
process;
▪ the quality of the audit partner and
team;
▪ the planning and execution of the
audit;
▪ quality of audit reporting and
delivery;
▪ extent and nature of challenge
demonstrated by EY in its work and
interaction with management; and
▪ EY’s independence and objectivity.
The Committee also reviews the
FRC’s annual Audit Quality Inspection
and Supervision Report of EY and
receives a report from EY on its own
internal quality control procedures.
The responses indicated that, overall,
EY was performing in line with
expectations and has demonstrated
challenge and professional scepticism
in performing its role. The ARC
concluded that the external audit
process was effective and the
Committee remains satisfied that EY
continues to display the necessary
attributes of independence and
objectivity. Accordingly, the
Committee has recommended to the
board a proposal for reappointment
of EY as external auditor at the next
AGM.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 103
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Committee self-evaluation
The Committee conducted a self-
assessment of the effectiveness of
the committee, the individual
members and the Committee Chair in
2022. The internal evaluation
considered the performance of the
Committee and concluded that the
Committee continues to be effective.
The following areas were agreed as
priority areas of focus for the
Committee in 2023:
▪ Schedule a risk identification deep
dive session
▪ The induction and transition of
responsibilities to the incoming
Chief Financial Officer
▪ Monitor developments in relation to
the BEIS corporate governance and
audit reform and ESG reporting.
Caroline Banszky
Chair, Audit and Risk Committee
13 December 2022
104 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued NOMINATION COMMITTEE REPORT
Statement from the Chair of the Nomination Committee
I am pleased to present the Nomination Committee’s report for 2022. It has
been a busy year with the governance restructure and the establishment of
new subsidiary board Committees and management succession planning.
Further information on the activities of the Committee is set out below.
Membership and attendance
The members of the Nomination Committee as at 30 September 2022 were:
MEMBER
DATE OF APPOINTMENT
Richard Cranfield (Chair)
Victoria Cochrane
Christopher Munro
Alexander Scott
1 August 2019
28 September 2018
2 February 2018
2 March 2020
The Committee meets at least once a year and may meet at other times as
requested by the Chair. The Committee met five times during the financial
year, due to the Committee’s wider remit of oversight of subsidiary board
succession planning and increased senior management succession planning.
The Committee’s attendance is outlined on page 92.
Composition
In adherence with the Code, the majority of members of the Nomination
Committee are independent NEDs. The Chair of the board chairs the
Committee. However, he is not permitted to 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 recuses himself from any discussion or
recommendation about him.
During the year the Company, through the SID, engaged with shareholders to
understand their views on the composition of the Committee. The feedback
did not indicate any significant concerns 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.
Training
The Group provides initial and ongoing training for Committee members, to
support them in carrying out their duties effectively. This is delivered through
in-house technical employees, through the attendance at formal conferences
as required, and an in-house training programme.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 105
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Role of the Committee
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.
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.
Key Committee activities through the year
AREA OF FOCUS
WORK CONDUCTED
Board composition
and succession
planning
▪ Considered the skills, tenure and independence of
the non-executive directors and made
recommendations to the board for reappointment.
▪ Reviewed composition of the IHP board with a
view to recommending to the board succession
plans for directors, including emergency cover of
executive director, Chair, and SID roles.
Management
succession planning
▪ Reviewed the emergency and long-term
management succession plans.
Operating Subsidiaries
board succession
planning
Diversity and
Inclusion
▪ Discussed the necessary skills, experience, and
expertise required for senior management roles
and talent development, including agreeing the
scope of the Group CFO role.
▪ Discussed succession plans for the IFAL board Chair.
▪ Reviewed board and Committee member
composition and succession plans for operating
subsidiaries in preparation of the Group’s
governance restructure and upcoming resignations
of long-standing board members.
▪ The Committee discussed the Group’s diversity
and inclusion strategy including obtaining various
diversity data going forward.
▪ The Committee reviewed the board’s Diversity
Policy
▪ Board composition in relation to tenure, skills
and diversity at operating subsidiary level was
also reviewed.
Committee evaluation
▪ The Company Secretary assisted the Chair in
preparing an internal evaluation for completion by
all Committee members. A written report was
then provided to the Chair, which was shared with
the Committee and actions were agreed.
106 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Succession planning
IHP board succession planning
The IHP board composition remained
stable during 2022. There were no
resignations or appointments made
during the year.
The Committee formally reviewed the
size, composition and skillset of the
board and its Committees taking
account of the feedback received as
part of the board evaluation process.
It agreed the executive team would
benefit from the appointment of a
Group CFO and that in any future
non-executive search, particular
focus should be given to individuals
with direct and relevant commercial
experience and/or information
technology experience. We continue
to keep under review board
succession planning and directors’
term renewals.
Subsidiary board and Committee
succession planning
One of the areas that the Committee
has spent significant time on during
the year was succession planning for
the operating subsidiary boards and
committees. Until 2022, there had
been only two board committees of
IFAL that oversaw the audit and risk
activities for all three operating
subsidiaries. In the past years, the
boards of the unlisted operating
entities have had long-standing
members and their composition
remained steady with limited
alteration, until recently.
With the recent governance
restructure, there are now three
board Committees supporting IFAL,
ILUK and ILInt. The corporate
structure is set out on pages 88 to
91. Each of their respective boards
have requested that the IHP
Nomination Committee supports
them in reviewing each board’s
composition and overseeing board
and Committee succession planning.
The main purpose for this change is
to ensure a holistic and consistent
approach to succession planning that
with aligns the Group’s diversity and
inclusion strategy and ensuring that
sufficient skills are represented
across each of the respective boards.
During the financial year, the
Committee assisted the regulated
operating subsidiaries in reviewing
the composition of each subsidiary
board to ensure adequate
representation of financial and risk
expertise in each newly formed Audit
and Risk Committee. The Committee
also reviewed the ILInt board’s
composition to ensure there was
adequate representation to appoint a
new Audit and Risk Committee Chair.
Senior management succession
planning
Senior management succession
planning was one of the key feedback
points communicated by shareholders
during the year and continues to be a
key focus of the Committee. As a
result of this feedback, the Company
has reviewed the Group’s and
regulated entities’ senior
management structure and has
decided to recruit additional senior
management into positions of IHP
Group CFO, IHP Group CRO and CTO.
The Nomination Committee has been
responsible for reviewing and
agreeing the scope of the Group CFO
role. The process for recruitment for
these new roles is underway and we
expect to announce an update to the
market in due course.
Diversity and inclusion
Inclusivity throughout the business is
important to us and we continue to
focus on this by developing our
diverse talent pipeline. The board
supports the Hampton-Alexander
Review on gender diversity and the
Parker Review on ethnic diversity. I
am pleased to say that we have 33%
representation of women on our
board (2021: 33%) and 67% female
representation in roles which we
define internally as our senior
management equivalent (2021:
67%). In addition, one member on
our board is ethnically diverse (2021:
one) and our Senior Independent
Director is a female.
We recognise that developing diverse
talent at the executive, senior
management and direct report levels
is important and this is being
considered in the Group’s ongoing
leadership succession plans.
In April 2022, the Financial Conduct
Authority announced additional
diversity targets for FTSE listed
companies, the reporting of which
will be effective for financial
accounting periods commencing 1
April 2022 onward. Whilst we
currently already meet two of the
three additional diversity targets, the
Company will continue to monitor the
Board’s diversity when recruiting new
directors, in an effort to meet the
FCA’s target for 40% female board
representation.
Board diversity policy
The board has a Diversity Policy
which is reviewed and assessed
annually. In 2022, there were no new
director searches or appointments
made by the Company.
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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 107
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Equal opportunities policy
The Group also has an Equal Opportunities Policy which applies to all
employees. The Group is proud to have a culture of developing its workforce
to provide opportunities for promotion within the organisation, alongside
recruiting external talent to enhance diversity of thought. Internal
opportunities not only include 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 employee by providing
relevant training, assistance and resources to help them succeed in their new
roles. In the last year, 118 employees accepted internal job opportunities
(2021: 55).
Composition of the board
The board membership comprises a mix of long-standing and more recent
appointments who collectively deliver a balance of historical knowledge and
industry experience.
Age profile of the board
(number of directors)
1
3
2
3
50-55
60-65
65-70
70+
Tenure of board
(number of directors)
2
2
0-3 years
3-6 years
6-9 years
5
Board gender split (%)
Ethnic diversity of the board (%)
Women
33%
Men
67%
Caucasian
Ethnitically
Diverse
11%
89%
108 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued BOARD SKILLS MATRIX DISCLOSURE
(number of Directors)
Accounting/Finance
Actuarial
Asset/Fund Management
Audit
Compliance
ESG
Executive Management
Financial Services
Insurance
IT/Technology
Legal/Governance
Marketing
People
Risk Management
Renewal of existing NED appointments
The Committee reviewed the profile of board tenure of our non-executive
directors in light of its future needs. As part of this, it considered the renewal
of each of Richard Cranfield’s and Robert Lister’s term as a non-executive
director, their first three-year term of which was due to expire in 2022. The
Committee agreed, taking account of the current cycle of board development
and succession and the feedback on their contributions in the 2022 board
evaluation, to recommend to the board for approval the renewal of each of
Richard and Robert’s appointment for a further three-year term, subject to
annual re-election by shareholders at the AGM.
Board effectiveness
An internal board evaluation effectiveness review was conducted during the
year. It concluded that the board and its Committees continued to operate
effectively. Victoria Cochrane, the Senior Independent Director, also met with
the directors to appraise my own performance, and Victoria and I have
discussed the feedback received.
Committee self-evaluation
The Nomination Committee conducted a self-assessment of the effectiveness
of the Committee, the individual members and the Committee Chair in 2022.
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.
The following areas were agreed as priority areas of focus for the Committee in 2023:
▪ Continue to strengthen oversight and input into the Group’s operating
subsidiary NED appointments
▪ Further oversight into executive’s pipeline and talent development.
Richard Cranfield
Chair, Nomination Committee
13 December 2022
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 109
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued subsidiaries, IFAL, ISL and the UK
employees of IAD. The Committee
has considered the code and
incorporated the changes required
into the forward-looking reward
framework for the Group. These
changes are, in the main, aligned
with our own equitable and measured
reward structure set out in our
Directors’ Remuneration Policy, and
with the feedback we have received
from investors over the year.
Further details of all these themes
are provided in the Directors’
Remuneration Report opposite.
DIRECTORS’ REMUNERATION
REPORT
Annual statement by the Chair of
the Remuneration Committee
Remuneration Overview
As Chair of the Remuneration
Committee, I am pleased to present
the Directors’ Remuneration Report
for the year ended 30 September
2022.
Our current Directors’ Remuneration
Policy (‘Policy’) was approved by over
91% of shareholders at the 2022 AGM.
We remain committed to our
responsible and equitable
remuneration structure, recognising
that employees are one of our key
stakeholders. To deliver this we
remain committed to ensuring that
they participate in our success on
broadly the same terms as our
executive directors and senior
managers. Where we take steps to
drive exceptional performance
amongst our management team, we
do so in a way that focuses delivery,
not on short-term outcomes, but on
the future success of the Group,
aligning their financial interests with
the interests of our investors, whilst
keeping their reward measured and
proportionate, avoiding a “them and
us” culture within the workforce.
With this in mind, since the 2021
report, we have continued to invest
in our people and our infrastructure,
against the backdrop of the
inflationary market and cost of living
pressures. The Committee has
engaged with management regarding
the appropriate response to the
external market, and response to
feedback from the workforce
provided by way of this year’s
employee survey.
Recognising the challenges of the
external economy, the Company
awarded meaningful, but responsible,
pay-rises in June. With effect from
the 2023 financial year, and in direct
response to the feedback received
from our engagement with the
workforce, the reward structure for
all London and Isle of Man based
employees below the Board and the
most senior management, has been
restructured to enhance the link
between variable remuneration and
the performance of the Company and
the individual employees. As part of
this restructuring the Group
prioritised increasing basic salary for
these individuals, recognising that
this is where the greatest pressure
from the cost of living crisis was
being experienced. In turn, bonuses
will be settled within an agreed
range, but with individual and
Company performance driving
individual out-turns. Feedback to the
change has been positive.
For the executive directors and most
senior leaders, basic pay was
increased at a level aligned with that
awarded to the wider workforce in
June 2022. Amending the structure
for executive directors in line with the
change made for the wider workforce
in October would have resulted in an
increase to salaries. The Committee
decided not to make these changes
to executive director reward. Instead,
the Committee has commenced a
review of the composition of variable
remuneration for directors and senior
leaders, with a view to maximising
the opportunity to align reward with
performance of the individuals and
the sustainable growth of the
business, whilst remaining within the
overall limits set out in the Directors’
Remuneration Policy. At this time, the
Committee is not seeking to increase
the incentive limits set out in the
Directors’ Remuneration Policy
approved by shareholders last year,
as these reflect our ongoing
commitment to workforce alignment
and sustainable, responsible reward.
During the year, the FCA issued a
new remuneration code applicable to
the Company and three of its
110 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Board and senior management
changes
There were no changes to the Board
composition during the year.
However, after reflecting on its
composition and the growing
demands on listed companies, the
Board has decided to commence a
search for a Chief Financial Officer to
further enhance the skills of the
executive team. The Nomination
Committee has been asked to lead
the search and the Remuneration
Committee will support the process,
ensuring any appointment is made
within the Directors’ Remuneration
Policy. An announcement will be
made once a suitable candidate has
been appointed.
One change to the senior
management team occurred during
2022, with the retirement of Judith
Davidson, Chief Operating Officer of
Integrated Financial Arrangements
Ltd, in April. IFAL has decided not to
recruit a new COO at this time.
Instead IFAL’s Chief Development
Officer, Tom Dunbar, is supporting
Jonathan Gunby in driving forward
enhancement to our Transact
platform and a UK Chief Technology
Officer has been appointed, who will
join the management team in the
New Year. A search is also under way
for a Group Chief Risk Officer to join
the senior management team of IHP,
following the planned retirement of
the Group’s Senior Risk Manager.
Together with the Senior Independent
Non-Executive Director, the Chair of
the Board and the Company
Secretary, I attended a number of
investor meetings throughout the
year to understand investor
sentiment on, amongst other
matters, executive reward. I am
pleased to report that the messages
we received were in line with our own
views on linking reward to
performance, although we remain of
the view that our simple reward
model is more appropriate to our
organisation’s culture and risk profile
than more traditional LTIPs with
enhanced income multiples.
remuneration award to exceed
65% of salary.
▪ Distinctive approach to
Executive Directors’
Remuneration
It remains one of our key principles
to create, maintain and improve
value provided to our customers,
shareholders and employees and to
share profits between all three of
these stakeholders. This reward
philosophy remains unchanged. We
take a very distinctive approach to
remuneration and are committed to
sharing our success evenly across the
workforce through the use of
responsible and proportionate
variable remuneration. We have set
out further rationale to our approach
to executive director remuneration on
pages 113 to 115.
The key features of our reward
framework are as follows:
▪ Base salary – Our ethos is to
pay base salaries which are set at
a level to attract and retain staff
but not above market rate.
Salaries are benchmarked
externally but the external market
is only one factor taken into
consideration when assessing
appropriateness of salaries.
Internal parity and the desire to
maintain an inclusive and
responsible reward framework are
equally important. As a result,
fixed remuneration for senior
roles currently sits in the lower
quartile of the FTSE 250 which
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. In accordance
with our approach of keeping staff
and executive award aligned, it is
rare for any executive director’s
total annual variable
performance measurement
– Historically, we have not had
mechanical performance targets
which apply to variable pay
awards, because we believe that
applying formulaic measures can
lead to undesirable behaviours
and / or outcomes. However, we
recognise that there is a need to
hold management responsible
and accountable for the long-term
success and stability of the
business. The Committee will
therefore continue to exercise
independent judgement and
discretion when authorising cash
bonus and deferred bonus
remuneration outcomes, taking
into account both Company and
individual performance, but,
going forward, there will be more
specific target deliverables,
including ESG outcomes, against
which performance will be
assessed when awards are
granted. We will also be
introducing performance metrics
for the exercise of the deferred
element of any awards. Our
performance measurement
framework will still consider the
same four anchors – financial
performance; stakeholder
outcomes; risk, regulation and
ESG; and strategy delivery, but
within those criteria will be
specific target deliverables.
▪ Alignment with wider workforce
– Our approach to remuneration for
executive directors is consistent
with that for all employees. It has
always been our culture that we do
not use reward to grow the wealth
of our executives and senior
managers at the expense of our
wider workforce. Our reward
framework is designed to drive
equitability in the remuneration
outcomes in order to drive
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 111
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued alignment in the high performance
of all our employees. We recognise
that our proposition relies upon our
workforce performing to the highest
standard to deliver the best service
proposition to the market. Our
variable cash bonus and Share
Incentive Plan reward incentive
structure reflects this ethos because
it is aligned across the workforce
and all employees are made cash
bonus and Share Incentive Plan
awards under the same
performance framework.
We do, however, recognise the
importance of focusing more senior
management on the long-term
sustained performance of the
business and, as a result, members
of the management team, including
executive directors, may be
considered for a bonus award
deferred into shares. However, the
quantum of these awards is capped
at 33% in order to ensure that the
awards drive exceptional
performance without creating a
division between management and
the wider workforce.
The pension policy for executive
directors is equivalent to that of the
workforce. However, both Jonathan
and Alex elected to cap their
contributions at the HMRC annual
allowance of £4,000. As a result, at
0.9% for Alex and 0.9% 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. Our current pension
arrangements therefore align with
the new Corporate Governance
Code as regards the alignment of
executive pensions with the wider
workforce. Employees (including the
executive directors) may elect to
sacrifice their remuneration and
receive additional employer
contributions. This diverges from
the Code provision. However,
neither Alex nor Jonathan take
advantage of this opportunity.
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 typical
long-term incentive plan as we
believe the provisions of those
plans 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 but, commencing this
year, link the award and the
out-turns of the award, to more
defined performance metrics, with
malus and clawback applying to
non-delivery.
We believe our 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.
▪ Share ownership – Our executive
directors are significant
shareholders in the Company with
Alex and Jonathan having a direct
or indirect interest in 1,253,833
shares and 908,452 shares
respectively. Michael Howard as
founder executive director has a
direct interest in 32,000,000
shares. With the exception of
employees of T4A, all UK and Isle
of Man based employees 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 2022,
has once again had a 100% uptake
for Free Shares and has had an
94.36% uptake for Partnership and
Matching shares. All Australian
employees are invited to
participate in a parallel scheme
created in accordance with local
remuneration rules.
In summary, we believe in: simple
and transparent reward which is
linked to Group success and
individual personal performance; long
term engagement amongst the more
senior management; and, which is
delivered in a way that does not drive
a “them and us” reward culture,
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
workforce.
▪ We encourage share ownership by
all staff 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
112 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued 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 of the IHP Remuneration
Committee
13 December 2022
Remuneration outcomes for year
ended 30 September 2022
develop the performance based
assessment of variable reward.
The Company achieved robust and
resilient financial results with profit
before tax of £54.3 million (-15%).
Directors’ salary and bonus awards
were made in accordance with the
Policy.
The Company and the Committee
reviewed salaries in June and
determined that, against a backdrop
of inflationary and talent pressures, it
would be appropriate to make higher
than normal increases. The average
award to all employees who were
eligible for an increase was 7.3%.
Salary increases for executive
directors were also considered
carefully, taking into account the
competitive positioning of their
packages, and similar awards were
made of 7% for Alex and Jonathan,
which was marginally lower than the
average for all employees.
Directors’ bonuses were awarded
within the parameters of the Policy.
Alex was awarded a cash bonus of
20% and a target bonus award
deferred into shares of 31.4%.
Jonathan was awarded a cash bonus
of 25% and a target bonus award
deferred into shares of 31.4%.
Michael Howard did not receive a
bonus. The Committee considered
that these bonus awards were a fair
reflection of the Company’s overall
performance.
In order to further align incentives
with performance, the deferred share
awards for our more senior managers
including Alex and Jonathan will this
year have been assessed by
reference to individual and Group
performance. Awards made to
executive directors in financial year
2023 in respect of financial year 2022
will be dependent on performance
conditions and the Company is
developing individual performance
metrics for each executive director
and senior manager to further
In making these awards, the
Remuneration Committee considered
the quantitative and qualitative
anchors. In particular, the
performance of the Company over
the financial year in an increasingly
challenging external market, the
response to internal and external
pressures, the delivery of the
business strategy, the impact of the
reduction in charges to clients, the
Company’s response to external
feedback and management actions
taken to maintain and enhance staff
engagement whilst driving service
improvements.
Alignment with shareholders
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.
To this end I, along with other
non-executive members of the board
and our Company Secretary met with
a selection of our investors to better
understand their views and questions
around our reward structure. We
have listened to those views and
hope that the changes we have made
clearly articulate our ethos whilst also
connecting reward out-turns to
individual performance, which we
hope will be welcomed by our
investors.
We are pleased with the support we
have received in the past from
shareholders with 92% approval for
our previous Remuneration Policy in
2022 and 91% approval for the
Annual Remuneration Report at the
2022 AGM. We have engaged with
shareholders who voted against the
2022 report and have enhanced our
disclosures in response to feedback
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 113
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued This report has been prepared in accordance with the provisions of the Companies Act 2006 and the Large and
Medium-Sized Companies and Groups Regulations 2013, as amended.
It also meets the requirements of the UK Listing Authority’s Listing Rules and the Disclosure and Transparency Rules.
The Report describes how the board has complied with the provisions set out in the UK Corporate Governance Code
2018 relating to remuneration matters.
The Remuneration Committee confirms throughout the financial year that the Company has complied with these
governance rules and best practice provisions.
UK Corporate Governance Code – Provision 40
When developing the 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 approach to remuneration supports the strategic
Simplicity
Risk
objectives of the Company, and we seek to maintain a
simple remuneration model which is communicated to
stakeholders, including shareholders and employees in
a clear and transparent way.
▪ We consider that our remuneration framework is simple
and effective. Our incentive framework comprises only
a cash bonus award, an all-employee share incentive
plan and a deferred bonus share option award.
▪ We believe our approach to performance measurement
supports appropriate consideration of risk management
and a long-term view of the business based on
sustainable growth. 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 anchors
for the business, ensuring a holistic view of business
performance. The absence of a traditional LTIP avoids
behaviours seeking to maximise share-price growth over
the short-to medium-term at the expense of long-term
managed and sustainable growth of the business.
Predictability
▪ The maximum opportunities are outlined in the
Proportionality
Alignment to
culture
Remuneration Policy. Taking into account our approach
to incentives, total remuneration is more predictable in
comparison with other listed companies.
▪ Our executive director remuneration is aligned with that of
the wider workforce and the result is a reward structure
that is low in comparison to the wider FTSE 250.
▪ 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 pension policy is
aligned across the workforce. We consider that our
approach is fully aligned with our culture.
114 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Remuneration Policy ‘at a glance’
ELEMENT
OPERATION
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.
OUT-TURNS 2022 AND IMPLEMENTATION
IN 2023
The salary increase awarded was 7% for Alex and
7% for Jonathan which was below the UK and
IoM workforce increase of 7.3%.
Salary with effect from 1 June 2022:
▪ Alex Scott, CEO: £463,200
▪ Jonathan Gunby, Executive Director: £463,200.
Benefits
▪ Includes, for example, death in service,
▪ Benefits for Alex and Jonathan comprise private
private medical insurance and a discount
to the fees for use of the Transact
Platform.
▪ Executive directors are eligible to receive
the same benefits on the same terms as
the wider workforce.
healthcare, death in service and PMI.
▪ Alex, Jonathan and Michael Howard benefited
from the discounted platform charges.
Pension
▪ The pension policy is equivalent to that of
▪ Alex received a £4,000 pension contribution
the wider workforce.
(0.9%).
Variable reward
comprising
i) an annual cash
bonus element;
and
ii) a deferred
bonus award
of shares
▪ The executive directors’ current pension
▪ Jonathan received a £4,000 pension
arrangements are lower than those of the
workforce.
contribution (0.9%).
▪ Total maximum opportunity is 100% of
▪ Ordinarily, we do not expect awards to be in
salary.
excess of 65% of salary.
▪ 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.
▪ Awards are made by reference to delivery of
defined metrics which are based on a mixture of
individual and Group performance.
▪ 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
anchors – financial performance; stakeholder
outcomes; risk, regulation and ESG, and
strategy delivery.
▪ For 2022 Alex was awarded a cash bonus of
20% and a bonus award deferred into shares of
31.4%. Jonathan was awarded a cash bonus of
25% and a bonus award deferred into shares of
31.4%.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 115
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued ELEMENT
OPERATION
OUT-TURNS 2022 AND IMPLEMENTATION
IN 2023
All employee
share incentive
plan
Executive directors are eligible to
participate in the all-employee SIP on the
same terms as all employees.
Executive directors are eligible to participate in
the all-employee SIP on the same terms as all
employees.
Shareholding
guidelines
▪ Executives are expected to build up and hold 100% of salary in shares over four years, for
in-employment shareholding guidelines.
Non-executive
director fees
▪ 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
▪ No changes for 2022/23.
2022 remuneration outcomes for our executive directors
Alexander Scott, CEO
Fixed – £448,000
Cash bonus –
Deferred bonus –
£92,700
£145,656
Jonathan Gunby, Executive Director
Fixed – £448,000
Cash bonus –
Deferred bonus –
£116,000
£145,656
Total remuneration
£695,000
£718,000
Other –
£7,854
Other –
£8,186
Directors’ Remuneration Policy summary - The IntegraFin approach to executive remuneration
Our approach to executive director remuneration is, we believe, aligned to our culture, our strategy and our success to
date. In 2021 we considered it afresh as part of our triennial Policy review and still believe that it supports our success.
116 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Modest incentive quantum
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 such that our executives and the wider workforce are
rewarded on the same terms, with only the addition of the deferred bonus
element being available to the more senior managers, the purpose of which is
to drive forward and strategic thinking and resilience of the Group. A
comparison with a more typical FTSE 250 package is illustrated below.
ILLUSTRATIVE FTSE 250 PACKAGE
INTEGRAFIN APPROACH TO EXECUTIVE PAY
Salary
▪ Market rate
Salary
▪ No more than
market rate
▪ Maximum of 100%
of salary, but
ordinarily not
expected to exceed
65% of salary
▪ Typical deferral of
half for 3 years
(33% of salary max)
▪ Performance assessed
on “lookback” basis
Bonus max
150% of salary
▪ Deferral of half
for 3 year
▪ Targets set up fronts
Bonus max
100% 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
As illustrated above, our overall incentive levels are modest, and we believe
that our approach to incentives and assessing performance should be viewed
in this context.
Why we do not operate a traditional LTIP
We firmly believe that a traditional LTIP with three year time horizons would,
for our business model, drive the wrong behaviours. 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, sustainability and stewardship of
our business.
The low level of all 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. It also aligns executive reward
closely with that of the workforce ensuring common interest in the delivery of
the business goals and vision.
Our experience is that this policy does not impair executive performance or
the recruitment or retention of talent in key roles in the organisation.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 117
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Approach to performance measurement
We use a “look-back” approach when it comes to assessing performance and
determining bonus outcomes. Going forward, we will continue to award cash
and deferred bonuses based on the look-back approach but the awards
themselves will be more closely linked to the delivery of metrics which are
defined and subsequently developed by the Committee at the beginning of
each performance year. Those metrics will still be aligned with the four
anchors that underpin our business success. We believe that this design
continues to promote long-term thinking, and to promote actions which
deliver long-term success whilst maintaining alliance with workforce reward
and reflecting our culture of not creating wealth for our directors at the
expense of our workforce.
A critical contributor to the success of the Group is the high standard of client
service delivered, collectively, by our staff. Our business model and focus on
customer service makes it difficult for us to set “hard” targets. The Committee
considers that it would not be in the interest of our shareholders to set hard
targets for the annual bonus. Our current approach allows the Committee to
assess performance in the round, taking into account all relevant factors in
order to ensure that outcomes are appropriate and aligned with the
experience of our wider stakeholder. As a result our Executives’ strategic focus
can be on growing inflows in a controlled and responsible trajectory in order
to maintain the level of customer satisfaction through delivery of the best
platform, supported by exceptional service and the provision of associated
ancillary services which make it easier for our clients and advisers to plan and
manage their financial affairs.
Through this approach we look to drive sustainable long-term value for all of
our stakeholders. 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
individual and Company performance against four anchors and, for individual
performance, pre-set metrics.
PERFORMANCE ASSESSMENT – OUR FOUR QUANTITATIVE ANCHORS
Financial performance
Stakeholder outcomes
Risk and regulation
(including ESG)
Strategy delivery
Approach to performance assessment is underpinned by the Remuneration Committee considering
qualitative and quantitative actual performance within this framework
(individual performance is also considered)
The Committee considers that this continues to be a controlled, responsible
and proportionate approach to executive pay in the round, particularly in the
context of low overall quantum and internal alignment.
118 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Annual Remuneration Report
This report details the remuneration arrangements in place for people who
were directors of the Company during the financial year.
There have been no changes to Directors’ remuneration throughout the year,
save for the annual bonus award made in December 2021 and the annual pay
award made in June 2022.
Wider workforce/T4A
Note that throughout this report, there are various references and/or
comparatives to the wider workforce or the wider UK workforce. The structure
of reward for T4A employees continues to be integrated into the IntegraFin
business model. Whilst basic pay rise awards have been benchmarked and
aligned, variable remuneration continues to differ reflecting the different
incentives applicable to the T4A business. Therefore, references to wider
workforce currently excludes T4A employees, save where expressly included.
In some instances, it also excludes our Australian employees as Australian
employment arrangements differ from those in the UK.
Governance
Committee membership during the year
The members of the Remuneration Committee at 30 September 2022 were:
MEMBER
DATE OF APPOINTMENT
Christopher Munro (Chair)
Richard Cranfield
Robert Lister
19 January 2018
17 December 2019
1 September 2021
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.
By delegation from IFAL and ILUK, the Committee monitors the content and application of the Company’s
remuneration policy to individuals whose roles bring them into scope of the FCA and PRA remuneration codes and the
Corporate Governance Code (together “Code Staff”). To the extent that the Committee does not approve the
remuneration of Code Staff individually, the Committee considers whether the total reward for each Code Staff
employee remains compliant with the provisions of the relevant Code. The Committee is also responsible for reviewing
a remuneration policy statement (RPS) prepared by IFAL setting out how IFAL complies with FCA regulatory
requirements on remuneration.
In all its activities, the Committee gives due consideration to laws and 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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 119
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Composition of the Remuneration Committee
The Remuneration Committee is comprised of three non-executive directors of the board and therefore the composition
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 Committee 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
seven times during this financial year. Attendance by each member of the Committee as at 30 September 2022 is set out in
the board and Committee attendance table on page 92.
The Head of Legal & Company Secretary and the Head of Human Resources attend all meetings and other individuals
such as the CEO, the Group Counsel, 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.
The Committee has undertaken the following this financial year:
AREA OF FOCUS WORK CONDUCTED
Governance
▪ Reviewing the Committee Terms of Reference to ensure
their continuing appropriateness.
▪ Considering the membership of the Committee and the
provisions of the Code.
▪ Considering the FCA and PRA remuneration
requirements in respect of employees who hold Senior
Management Functions within the business or who
have been identified as Remuneration Code Staff.
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 executive
directors and senior managers.
▪ Considering the appropriateness of remuneration for
Code staff and the staff pay award.
▪ Reviewing and approving the making of deferred bonus
awards to executive directors and senior managers.
▪ Approving the grant of the Free Share Award.
▪ Considering the proposed structure and quantum of
remuneration of the new IFAL Chief Technology Officer.
▪ Considering the proposed re-structure of wider UK
workforce remuneration to introduce greater emphasis
on individual performance when setting variable awards.
120 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Committee self-evaluation
The Remuneration Committee conducted a self-assessment of its own
effectiveness. The Committee considered the feedback and has taken steps to
more closely align the linkage of variable remuneration to individual as well as
Company performance.
As a result of the evaluation feedback, the Committee has sought more direct
engagement with the Head of HR throughout the year and has benefited from
advice on remuneration matters and guidance on the internal workforce
engagement and external employment market.
The Chair of the Committee has also met with a selection of our institutional
investors to share more insight into and receive feedback on our remuneration
model.
Feedback regarding the interaction between the Committee and the regulated
subsidiary boards continues to be considered and there is a structure in place
for cascade of information from the Committee Chair to the Chairs of the UK
regulated subsidiary ARCs.
Directors’ remuneration policy
The Directors’ Remuneration Policy was approved by ordinary resolution at the
Company’s AGM held on 24 February 2022 and can be found on pages 94 to
102 of the Company’s Annual Report and Financial Statements for the year
ended 30 September 2021, which is available in the Investor Information
section of the Company’s website www.integrafin.co.uk.
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 three annual meetings:
YEAR
RESOLUTION
VOTES FOR /
DISCRETIONARY
% OF
VOTE
VOTES
AGAINST
% OF
VOTE
VOTES
WITHHELD
2022
2022
2021
2020
Approve the Directors’
Remuneration Policy
Approve the Directors’
Remuneration Report
Approve the
Remuneration Report
Approve the
Remuneration Report
216,703,830
91.90
19,098,977
8.10
1,361,995
214,085,945
90.89
21,456,381
9.11
1,622,476
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
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 121
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Application of the Policy in 2022
Summary of total remuneration – executive directors (audited)
Benefits1 Pension
Gross
Basic
Salary
Total
fixed
pay
Annual
Bonus
LTIP Other2
Total
Total
variable
pay
Cash
bonus
Deferred
shares
Director
Year £’000
£’000
£’000
£’000 £’000
£’000
£’000
£’000
£’000 £’000
Alexander
Scott
Jonathan
Gunby
Michael
Howard3
2022
2021
2022
2021
0
0
443
426
443
425
0
0
1
1
1
1
0
0
4
4
4
4
0
0
448
431
448
430
0
0
93
130
116
130
0
0
146
135
146
135
0
0
0
0
0
0
0
0
8
7
8
7
0
0
247
273
270
273
0
0
695
704
718
703
0
0
1 Benefits for Alexander Scott were £842 for 2022 and £795 for 2021
Benefits for Jonathan Gunby were £842 for 2022 and £795 for 2021
2 Other remuneration relates to Share Incentive Plan awards and the employee discount on platform charges.
Michael Howard receives nil remuneration from the Company, but his employer, ObjectMastery Services Pty Ltd,
receives a fee of AUD 80k for his executive appointment to IAD Ltd Pty, a Company within the Group.
Base salary (audited)
The basic annual salaries for Alexander Scott and Jonathan Gunby were reviewed in June 2022 in accordance with the
Company’s all-employee pay review resulting in the following changes to the annualised salary figures:
Director
Basic annual salary as at 1 June 2021
Salary effective as at 1 June 2022
Alexander Scott
Jonathan Gunby
£’000
433
433
£’000
463
463
122 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued
of the wider workforce but will not
make any significant changes to the
arrangements currently in place
without due consideration of the
interests of both the Company and
the employees.
Proportionate incentive
opportunity
Our maximum total variable
remuneration opportunity for
executive directors is 100% of salary,
and ordinarily in practice we do not
expect awards to exceed 65% of
salary. This relatively modest
incentive level (compared to normal
UK practice) supports the alignment
of executive and workforce reward.
Benefits
Executive directors do not receive
any benefits which are not available
to all employees. Benefits for the
executive directors comprise private
health care, death in service and an
employee discount on platform
charges.
Incentives
IntegraFin has a culture focused on
our principal stakeholders –
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
cash bonus award and to participate
in the all staff Share Incentive Plan.
Our incentive structure is designed
to align across the workforce and all
employees are made awards under
the same performance framework.
This ensures that the executive
team and the workforce share in
the success of the business and
drives a culture of inclusivity in the
reward structure.
▪ 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, save with
respect to employees of a Company
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.
Employees (including 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 the HMRC tax-free
contribution allowance. If an
employee does not sacrifice into
(i) the employer contribution to
the contractual enrolment
Company pension scheme will
be 9% of basic or lower.
iii) Employees (including directors)
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 IAD
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
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 123
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued 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.
Four qualitative and quantitative
anchors
The Committee considers Company
and individual performance against
four qualitative and quantitative
anchors:
▪ Financial performance
▪ Stakeholder outcomes
▪ Risk and Regulation (including
Environmental Social and
Governance)
▪ Strategy delivery.
Each director’s delivery of their
objectives is assessed against each
anchor, as well as the Group’s
delivery in the round. Whilst the
Committee has not set targets for
apportionment of variable awards
against each anchor, the awards are
assessed by reference to delivery of
those anchors and awards are
adjusted for non-delivery.
Within those anchors, the
Remuneration Committee considers a
wide variety of management
information available to the board
and its Committees. The Committee
is not constrained by the metrics it
places particular emphasis on as this
can change year-on-year. The
essence of the process is to use the
metrics to arrive at a balanced
judgement as to whether an award is
warranted and, if so, at what level.
Variable reward comprises cash
bonus and deferred shares
awards
The Company operates a directors’
discretionary bonus arrangement
with the anticipated award of 65% of
basic salary arranged as follows:
i) Immediate cash bonus
Anticipated 10% of salary awarded
in November and settled in
December.
ii) Deferred cash bonus
Anticipated 20% of salary awarded
in November with 10% settled 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
124 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Annual bonus (cash and deferred share) awards for financial year 2022 (audited):
Director
Alexander Scott
Jonathan Gunby
Cash award
Deferred award
£92,700
20% of salary
£145,656
31.4% of salary
£116,000
25% of salary
£145,656
31.4% of salary
The cash and deferred award percentages are by reference to the basic salary
on 30 September 2022. 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. The Committee considers 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.
For 2022, the assessment of whether cash and deferred bonus awards were
justified was in particular informed by the following metrics and performance
in the year:
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 125
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued QUANTITATIVE ANCHOR (METRICS AND PERFORMANCE)
OUT TURNS
Financial
performance
Ensure effective financial performance of
the Group by:
In 2022:
▪ Financial performance fell below original
▪ Delivering financial performance against
forecast, in accordance with projections and
market expectations.
projections but in the main, this was due to
negative market movements outside the
Company’s control.
▪ Sustaining service excellence within the
context of managed expenses.
▪ Managing costs and headcount effectively.
▪ Managing the dividend flow and distributable
reserves/regulatory capital from subsidiaries.
Measures of success
▪ Net inflows
▪ Earnings per share
▪ Expense ratio
▪ Profit margin
▪ Share price
▪ Market cap
▪ T4A user licences
▪ Payment of a dividend
▪ External factors outside of the Company’s
control, e.g. sudden FTSE and global
movements.
Stakeholder
outcomes
Create, maintain and improve value to our
four groups of stakeholders – customer,
shareholders, suppliers and employees by:
▪ Identifying and executing opportunities for
consistent growth in gross and net inflows and
sustained or improved market share of net inflows.
▪ Sustaining our platform’s net promoter score
and adviser-voted industry awards.
▪ Profit margin has reduced as a result of the
historical VAT charges and interest thereon.
Underlying profit results in increased profit of
1% which results from the reduced ad valorem
charge arising as a result of the negative
market movements, and the impact of price
reductions in April 2022.
▪ Service delivery, whilst subject to stretch,
continued to be regarded as market leading by
our Financial Advisers and has not impacted
on financial performance.
▪ Dividend flow and distributable reserves/
regulatory capital from subsidiaries to support
Group dividend were managed effectively and
dividends to shareholders have been paid in
line with policy.
▪ Costs have been reviewed and reprojected to
ensure sustainability of delivery of a market
leading proposition in the long term.
▪ Forward-looking projections indicate that the
Company is well placed to sustain performance
over the coming year taking into account
stress-tested scenarios.
In 2022, the Company delivered the following:
Clients and advisers
▪ Market share of gross inflows remained above
12% and net flows make up approximately
one fifth of the market.
▪ Transact rated equal second for overall
satisfaction in the Platforum Adviser Rated
Leaderboard for all platforms.
▪ Ensuring adviser satisfaction with the
▪ Transact rated second in CoreData UK
Company’s propositions.
▪ Creating a culture which encourages openness,
honesty, prevents harm and results in
behaviours that are consistent with the
Group’s values.
▪ Maintaining a staff attrition rate that remains
within appetite.
Investment Platform study 2022 and topped
the Investment Trends Adviser Technology &
Business Report 2022.
▪ Clients benefited from further price reduction
on both ad valorem fees and on buy
commission.
126 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued QUANTITATIVE ANCHOR (METRICS AND PERFORMANCE)
OUT TURNS
▪ Ensuring that the Group does not risk capital
beyond reasonable levels, does not create any
commercial conflict or make it difficult to meet
regulatory responsibilities.
Measures of success
▪ Net inflows
▪ Adviser and user/client retention
▪ Market share of inflows
▪ Net promoter score
▪ Adviser voted awards received
▪ Market research results (internal
and external)
▪ Staff attrition rates
▪ Staff engagement survey results
▪ Under performance rates
▪ Shareholder engagement
▪ Performance and management of third party
suppliers.
Risk,
regulation and
ESG
▪ Effective leadership of risk management by
reference to all capital liquidity, operational
resilience and compliance with 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 firm and Isle of
Man insurance firm.
▪ Demonstrable adherence to internal, legal and
regulatory policies, law and rules.
▪ Clients and advisers benefit from continued
investment in the development of digital
onboarding tools.
Employees
▪ Changes to performance-related pay for
London and Isle of Man staff has addressed
concerns over basic pay levels and
strengthened the basis on which performance
is measured and rewarded.
▪ 100% of eligible employees took up the SIP
free share award and 86% took up the
Partnership Share award.
▪ Employee surveys resulted in the creation of a
People Platform for the London and Isle of Man
offices, and the delivery of enhancements to
the work environment for all offices, in
response to feedback received.
Shareholders
▪ The Company distributed dividends in
accordance with its dividend policy.
▪ The share price has underperformed relative to
peers, primarily due to increased costs in the
platform business and increased investment in
T4A.
▪ In order to add strength and depth to our
investor relations the board has commenced a
search for a CFO.
Suppliers
▪ The Group settled around 90% of its invoices
within 30 days of receipt in the last fiscal year.
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.
In 2022 the Company delivered:
▪ Implementation of hybrid working for the
workforce, each office implementing a model
which delivered a balance reflective of its
business needs against the backdrop of
employee feedback.
▪ Ongoing engagement with the FCA, the PRA
and the IoM FSA on matters such as board
succession and non-standard assets.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 127
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued QUANTITATIVE ANCHOR (METRICS AND PERFORMANCE)
OUT TURNS
▪ Effective management of 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.
▪ Making moral decisions and demonstrating a
values-driven approach that seeks to prevent
rather than cure.
▪ Effective delivery of the environmental
response plan.
Measures of success
▪ Complaint and error metrics
▪ Internal Audit programme completed.
▪ Risks including regulatory compliance
managed within appetite, with T4A and IAD
brought into the Group processes. Minor risk
appetite breaches promptly identified and
addressed.
▪ Implementation of action plan in response to
strain on service and to address corresponding
customer and adviser feedback.
▪ TCFD reporting designed to follow the four
anchors approach of Governance, Strategy,
Risk Management and Metrics & Targets.
▪ Review of non-compliance or sanctions
▪ Continued work with Willis Towers Watson to
affecting the Group
▪ Customer satisfaction
▪ Internal audit reports and findings, and the
resolution thereof
establish a prioritised plan aligning the Group’s
ambitions to support a low carbon-emissions
economy with the requirement to
accommodate changes in regulation. Further
information is provided on page 33.
▪ Performance against risk control self-
assessment
The above achievements are also underpinned
by the following:
▪ Progress on environmental response plan.
▪ Completion of the restructure of the Group
entities to deliver internal efficiencies and
enhanced reporting.
▪ 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 demonstrates appropriate attention
to maintaining the internal control
environment.
128 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued QUANTITATIVE ANCHOR (METRICS AND PERFORMANCE)
OUT TURNS
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.
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, and
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.
In 2022, the key strategic deliverables by the
Company were:
▪ Significant improvement in online platform
functionality, widening the scope of the online
offering for clients and their advisers.
Strategy
delivery
Ensuring that the Group and each of its
subsidiary companies achieves its strategic
goals through:
▪ Continuous improvement of the platform
functionality.
▪ Responding to customer feedback.
▪ Launch of the BlackRock MPS on the Transact
platform.
▪ Investment in T4A and the development of an
enhanced CURO proposition due to launch in
2023.
▪ Continuing with the “matchmaking service” for
advisers and collaboration with a third-party
lender where finance is required.
▪ Enhanced resilience of the core platform and
associated services.
▪ Increased number of advisers and clients using
CURO.
▪ Growth of ancillary services to enhance the
adviser and client experience.
Measures of success
▪ Assessment of the ancillary services offered to
clients and advisers
▪ Management of expenses
▪ Number of retained advisers and clients
▪ Number of new advisers and clients
▪ Number of advisers and clients using CURO.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 129
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE 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 transition to hybrid
working, the ongoing volatility in the
markets, the pressure on staff and
customer spend as a result of the
super-inflationary environment, and the
extent to which the Group met its
strategic objectives. The Committee
weighed up the performance of the
Company in 2022 and the future
projections in 2023. Consideration was
given to the extent to which we
delivered the superior customer service
to which we aspire and to the Group’s
financial performance. Financial
performance was considered by
reference to the Transact platform, the
wider associated activities within the
Group and to the delivery of
stakeholder expectations. Having
balanced these deliverables the
Committee then considered whether
the proposed awards were sustainable
given the current projections and future
plans and deliverables within the
Group.
We 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, and
that the awards were consistent with
the expectations of our regulators and
our other stakeholders regarding
proportionate reward, that focused
executive remuneration on sustainable
delivery over the medium to long-term
whilst discouraging inappropriate risk
taking or focus on driving up share
price at the expense of other
stakeholder outcomes.
The Committee concluded that
payment of an award was appropriate,
given the Group’s delivery in the
financial year, and sustainable in light of
the forward-looking projections and the
forecast performance of the Company
over the coming year. The Committee
discussed the quantum of the proposals
and evaluated the appropriate level of
awards to the Directors.
In considering the anchors, we
reviewed the performance of the
external market and the impact of
factors that the Group could not
control, alongside the delivery of the
platform and stakeholder outcomes
that it could.
We reviewed the Company’s response
to the pressure on service driven from
the stretch in the recruitment market,
and the way in which the executive
directors lead the business in ensuring
that the Company continued to deliver
service in the context of the volume of
activity and the agile working
environment.
We considered 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. In particular, consideration was
given to the Group’s preparedness for
the strain on IT resource in the
recruitment market and how the
response to the market in Australia was
managed and communicated.
We considered the impact of stock
market volatility on the Company’s
financial performance.
We considered the ongoing investment
in T4A, their delivery of their business
plan, and the Company’s steps to align
the independent businesses to deliver
optimum outcomes for customers.
Finally, we considered the Group’s
communications to external
stakeholders and the clarity of
disclosures to manage stakeholder
expectations.
Based on a holistic assessment of
Group performance, including
consideration of the 2022 outcomes set
out in the table previous, and individual
performance, the Committee granted
the following awards:
Alex was granted an overall award
(cash and deferred bonus shares)
equal to 51.5% of his salary. In
making this award, the Committee
gave particular regard to the financial
performance of the Group, the
delivery of the shareholder
experience, shareholder
communications and management of
the market’s understanding and
expectations of the business. The
Committee felt particularly that,
whilst the performance of the Group
had been robust and resilient in
challenging markets and our
employee, customer and supplier
stakeholder metrics had been met,
the award should be scaled back this
year to reflect that shareholder
outcomes had been below
expectations as a result of the
response of the market to our
disclosures. The Committee allocated
the award as 20% cash and 31.4%
deferred into shares. The Committee
felt that it was essential that the
maximum amount of the award be
deferred into shares in order to align
Alex’s reward with long-term stability
and the delivery of stakeholder
outcomes for the medium to long-
term.
Jonathan was granted an overall
award (cash and deferred bonus
shares) equal to 56.5% of his salary.
In making this award the Committee
gave particular regard to the financial
performance of the Group, the
delivery of the shareholder
experience through the platform
proposition and management of the
market’s understanding and
expectations of the business. The
Committee felt particularly that the
award should be scaled back this
year to reflect that throughout the
year the platform had not delivered
the service that customers have
come to expect and that the
performance of T4A had fallen behind
expectations. However, the
Committee recognised that the
platform remained at the forefront of
130 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued SIP
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 2022, the
maximum SIP award was granted to
qualifying employees (including
Alexander Scott and Jonathan
Gunby). 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 2022 the board has
not revoked that award. The board
has considered the Group’s
performance in financial year 2022
and, with the approval of the
Remuneration Committee, has
approved the making of a further
maximum SIP Free Share award to
qualifying employees (including
Alexander Scott and Jonathan
Gunby) when the Company is not in
a closed period. This will be following
the announcement of the Group’s
financial results.
customer experience, albeit in a
market where customer outcomes
were noted to have reduced across
the sector. The Committee allocated
the award as 25% cash and 31.4%
deferred into shares. The Committee
felt that it was essential that the
maximum amount of the award be
deferred into shares in order to align
Jonathan’s reward with long-term
stability and the delivery of
stakeholder outcomes for the
medium to long-term.
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
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.
Going forward, the Committee is
giving consideration to applying
performance conditions to the
deferred share award.
LTIPs
In line with the Group’s approach to
remuneration, the Company does not
operate a traditional LTIP and no
award to executive directors, which is
dependent on performance conditions
relating to more than one year, was
made in financial year 2022. Awards
made to executive directors in
financial year 2023 in respect of
financial year 2022 will be dependent
on performance conditions however
they will not be under the framework
of an LTIP.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 131
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Pension contributions
Shareholding guidelines
Pension contributions for Alexander
Scott and Jonathan Gunby are
currently made by reference to the
relevant personal allowance. In the
2022 performance year the
employer’s pension contribution for
Alexander Scott was £4,000 and for
Jonathan Gunby was £4,000. In line
with our remuneration principles,
pension contributions for executive
directors are aligned with those
available to the wider workforce. In
2022, at less than 0.9% of basic
salary, both Alex Scott and Jonathan
Gunby received pension contributions
below the minimum level contributed
in respect of the wider workforce.
The minimum employer contribution
available to all-employees in 2022
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.
In-employment
In the 2021 Directors’ remuneration
policy, the Company adopted
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.
132 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE 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 FY18 to FY19, FY19 to FY20, FY20 to FY21 and FY21 to FY22.
SALARY AND FEES
%
BENEFITS
%
ANNUAL BONUS
%
Director
2019 2020
2021 2022 2019 2020 2021 2022 2019 2020 2021 2022
Alexander Scott
3.8
56.4
2.5
7.0
n/a
0.0
19.5
26.6
(9.4)
63.8
(0.7)
(10.1)
Jonathan Gunby
n/a
n/a
2.51
7.0
n/a
n/a
19.5
26.6
n/a
n/a
0.6
(1.4)
Mike Howard
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Caroline Banszky
119.1
0.0
0.0
33.3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Robert Lister
n/a
0.0
0.0
28.3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Christopher Munro
25.8
(30.0)
(14.3)
45.0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Richard Cranfield
n/a
0.0
0.0
40.0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Victoria Cochrane
0.0
0.0
0.0
29.2
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Rita Dhut
n/a
n/a
0.0
0.0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Average employee
3.6
2.9
3.2
7.3
26.8
5.5
19.5
26.6
1.1
12.8
18.0
16.8
The SIP scheme is provided to all staff, including executive directors, and is not included above.
Notes to the table:
Alexander Scott’s basic remuneration increased in 2020 upon appointment as CEO.
Jonathan Gunby was appointed in 2020 and there is therefore no comparable data for 2019.
Michael Howard receives nil remuneration from the Group.
Chris Munro was appointed to interim chair in 2019 and then stood down from this position in 2020, which is why
there is a salary differential year-on-year.
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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 133
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued 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, 2021 and 2022 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.
CEO pay ratio table
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
2022
2021
2020
2019
Salary
Method A
Total
Remuneration
Salary
Method A
Total
Remuneration
Salary
Method A
Total
Remuneration
Salary
Method A
Total
Remuneration
14:1
16:1
14:1
16:1
17:1
18:1
n/a
18:1
10:1
12:1
11:1
13:1
13:1
15:1
n/a
15:1
6:1
8:1
7:1
9:1
9:1
10:1
n/a
10:1
The salary and total remuneration ratios for 2022 above are based on the following figures:
Financial year 2022
CEO 25th percentile pay ratio
Median pay
ratio
75th percentile pay ratio
Salary
443,000
Total remuneration
693,000
32,533
44,342
43,583
59,553
72,700
84,621
134 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued 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 Group’s 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.
The ratio for the median and 75th percentile has decreased in 2022. There
has been no overall change to the reward structure or benefits provision in
the year. The Company has however experienced higher turnover in 2022
compared to prior years resulting in a net reduction in the number of
employees included in the comparative calculation. In addition, the
remuneration used to calculate the gap is based upon remuneration awarded
in respect of the reference year and therefore the reduced bonus awarded for
the IHP CEO in 2022 has resulted in a decreased pay gap.
Executive director remuneration compared to wider workforce
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 2022 was 15.2%. 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.
Relative importance of spend on pay
The following table sets out the percentage change in profit, dividends paid
and overall spend on pay in the year ending 30 September 2022, compared to
the year ending 30 September 2021.
IFRS profit after tax
Dividends
Employee remuneration costs
Payments to past directors (audited)
There were no payments to past directors.
2022
£’000
44,000
33,700
38,342
2021
£’000
51,106
28,500
34,590
Percentage
Change
(14%)
(18%3)
11%
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 135
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Payments for loss of office (audited)
No director received payment for loss of office in 2022.
Share Awards made during the year (audited)
TYPE OF INTEREST
AWARDED
BASIS ON
DATE
WHICH AWARD
OF
FACE
VALUE
MADE 1 2
AWARD
AWARDED3
PERCENTAGE
NUMBER
RECEIVABLE
OF
FOR MINIMUM
SHARES
PERFORMANCE
AWARDED
END OF
DEFERRAL
PERIOD
Alexander
Scott
Deferred
bonus
Conditional
share
award
SIP
Free Shares
Partnership
Shares
Matching
Shares
Dividend
Shares
Jonathan
Gunby
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
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
22.12.2021 £135,360
100%
26,573
22.12.2024
07.01.2022
21.01.2022
£3,596
£1,800
21.01.2022
£3,600
100%
21.01.2022
30.06.2022
658
329
658
77
98
N/A4
22.12.2021 £135,360
100%
26,573
22.12.2024
07.01.2022
21.01.2022
£3,596
£1,800
21.01.2022
£3,600
100%
21.01.2022
30.06.2022
658
329
658
77
98
N/A4
1Deferred share awards form part of the annual incentive, for which awards were determined based on performance to 30 September 2021.
2 SIP Free Share awards were determined based on Group performance to 30 September 2021. 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 17 December 2021 to 21 December 2021 which was £5.11.
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 £5.06. 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.
4The SIP is operated in line with HMRC guidance.
136 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued 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.
During the 2021 policy review, the Company considered the Investor Association guidance which recommends that
executive directors are required to hold two years’ basic salary equivalent in shares, the directors’ personal holdings
and determined that a target shareholding of one year’s basic salary is appropriate, this level of holding to be achieved
within a four-year period from appointment. 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.
Director/
1p ordinary
SIP
NetDeferred
Net Vested
Options
Shares held
Percentage
Shares held
Percentage
Connected
shares
Shares1
bonus share
but
exercised
at
of basic
at
of basic
person
Scheme
unexercised
30.09.2022
pay/fee
30.09.2021
pay/fee
(no
performance
conditions)
Alexander
1,148,260
7,863
36,288
15,558
803,665
7,863
35,873
15,496
Scott
Jonathan
Gunby2
Michael
Howard
32,000,000
Christopher
1,003,324
Munro
Caroline
Banszky
Victoria
Cochrane
Richard
Cranfield
Rita
Dhut
Robert
Lister
7,500
3,750
10,000
15,000
6,015
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Total
held in
shares
Total
held in
shares
0
0
1,253,833
629% 1,224,915
1457%
908,452
441%
879,534
1022%
0
32,000,000
175532% 32,000,000
407595%3
0
0
0
0
0
0
1,003,324
1,003,324
7,500
3,750
10,000
15,000
6,015
7,500
0
10,000
0
6,015
1 Includes dividend reinvestment shares relating to SIP shares.
2 Includes Cheryl Gunby shareholdings and family trusts controlled by Jonathan.
3 Michael Howard’s shareholding is shown as a percentage of the fee paid to ObjectMastery for his services to the IHP board.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 137
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued The value of each director’s shareholding has been calculated by reference to the average of the share price over the
final three months of the financial year.
The value of unvested and unexercised share options is shown net of Income Tax at the additional rate and Employee’s NI.
The rate for Michael Howard has been calculated by reference to the exchange rate on 30 September of the relevant
financial year.
No Directors have any other vested or unvested share options as at the end of the 2022 Financial Year.
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 2022.
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.
Total shareholder return performance vs FTSE 250 since 2 March 2018
IHP vs FTSE250 Total return
250
200
150
100
50
0
8
1
-
b
e
F
8
1
-
r
p
A
8
1
-
n
u
J
8
1
-
g
u
A
8
1
-
t
c
O
8
1
-
c
e
D
9
1
-
b
e
F
9
1
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r
p
A
9
1
-
n
u
J
9
1
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g
u
A
9
1
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t
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O
9
1
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c
e
D
0
2
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b
e
F
0
2
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r
p
A
0
2
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n
u
J
0
2
-
g
u
A
0
2
-
t
c
O
0
2
-
c
e
D
1
2
-
b
e
F
1
2
-
r
p
A
1
2
-
n
u
J
1
2
-
g
u
A
1
2
-
t
c
O
1
2
-
c
e
D
2
2
-
b
e
F
2
2
-
r
p
A
2
2
-
n
u
J
2
2
-
g
u
A
2
2
-
t
c
O
IHP
FTSE 250 TR
The following table shows the history of the Chief Executive Officer’s remuneration since admission:
CEO
REMUNERATION
CEO SINGLE FIGURE OF
REMUNERATION
ANNUAL BONUS PAYOUT
(AS A % OF MAXIMUM
OPPORTUNITY)
LTIP VESTING OUT-TURN
(AS A % OF MAXIMUM
OPPORTUNITY)
2022
2021
2020
2019
2018
£695k
£704k
£639k
£751k
£769k
52%
62%
72%
82%
83%
N/A
N/A
N/A
N/A
N/A
138 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Note to the table
The figures for 2018 and 2019 relate to the previous CEO, Ian Taylor. The figures for 2020 to date relate to the current
CEO, Alexander Scott.
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 2022 the amounts are as follows.
Element of
remuneration
by director
Richard Cranfield
Caroline Banszky
Victoria Cochrane
Rita Dhut
Robert Lister
Christopher Munro
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Fees
£’000
140
100
80
60
78
60
70
2
78
60
88
60
Expenses
£’000
0
1
0
0
0
0
0
0
0
0
0
0
De minimis expenses are for reimbursement of extraordinary communication
costs and taxable travel expenses grossed up for the tax payable thereon.
Advisers
Deloitte LLP (“Deloitte”) is retained as 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 on the content of this Directors’ Remuneration
Report. For 2022, total fees were £20,000, 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 the following people have provided material advice or
services to the Committee during the year:
▪ Alexander Scott – IHP CEO
▪ Helen Wakeford – Head of Legal and Company Secretary
▪ Lucy Smith – Head of Human Resources.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 139
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued
DIRECTORS’ REPORT
The directors present their report and financial statements for the year ending
30 September 2022.
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 page 73 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
The Directors’ Remuneration Report
Major Shareholders’ Interests
Directors’ Report
Non-executive directors’ terms
of appointment
Directors transactions in the
Company’s Shares
Details of non-financial reporting
Directors’ Report
Director’s Report
Corporate Social Responsibility
Report
Principal risks and uncertainties
The review of the business and principal risks and uncertainties are disclosed
in the Strategic Report at pages 3 to 71.
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 59 to 66 of the
Strategic Report.
140 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Directors
The executive directors who served during the financial year were Alexander
Scott, Jonathan Gunby and Mike Howard.
The non-executive directors who served during the financial year were Richard
Cranfield, Caroline Banszky, Victoria Cochrane, Rita Dhut, Christopher Munro
and Robert Lister.
All of the current directors are standing for re-election at the upcoming AGM.
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. 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.
NEDs 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.
NEDs 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:
NON-EXECUTIVE
DIRECTOR
Christopher Munro
DATE OF FIRST
APPOINTMENT
DATE OF LATEST
RENEWAL TERM
DATE FOR FURTHER
RENEWAL TERM
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
Robert Lister
Rita Dhut
25 June 2019
26 June 2019
25 June 2022
26 June 2022
25 June 2025
26 June 2025
22 September 2021
n/a
22 September 2024
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 141
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Directors’ interests
Diversity and inclusion
Details of the Directors’ interests in
the Company’s ordinary shares can
be found on page 133 of the
Remuneration Report. During the
financial year, rights for share options
were granted to Alex and Jonathan
under the Company’s deferred bonus
Share Option Plan.
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. More
information on the Group’s approach
to Diversity and Inclusion is outlined
in the People section on page 107.
Throughout the financial year, no
director had any material interest in
a contract to which the Company or
any of its subsidiary undertakings
was a party (other than their own
service contract) that requires
disclosure under the requirements of
the Companies Act 2006.
Directors’ indemnities
The Company has made qualifying
third-party indemnity provisions for
the benefit of its directors. These
provisions were for the purposes of
section 234 of the Companies Act
2006 and were in force throughout
the financial year and remain so at
the date of this report. In addition,
the Company maintains directors’
and officers’ liability insurance which
gives appropriate cover for legal
action brought against its directors.
Status of Company
The Company is registered as a
public limited Company under the
Companies Act 2006.
Stakeholders
The Group considers its principal
stakeholders to be clients and
advisers, employees, regulators,
shareholders, suppliers, and
communities. Details on the Group’s
stakeholder engagement is outlined
on pages 78 to 82.
142 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Share capital
Restrictions on share transfers
Structure of the Company’s
capital
As at 30 September 2022, 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.
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
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.
Purchase of own shares
At the 2022 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 2023.
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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 143
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Substantial shareholders
As at 13 December 2022, 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
Nature of
holding
Michael Howard
Direct
Indirect
Number of
Ordinary
Shares at 30
September
2022
25,911,753
6,088,247
% of voting
rights at
30 September
2022
Number of
Ordinary
Shares at 13
December 2022
% of voting
rights at
13 December
2022
7.82%
1.84%
25,911,753
6,088,247
7.82%
1.84%
6.53%
BlackRock Inc.
Indirect
21,651,470
6.53%
21,651,470
Securities
Lending
Contracts for
difference
570,804
0.17%
570,804
0.17%
2,169,066
0.65%
2,169,066
0.65%
Direct
16,910,112
5.10%
16,910,112
5.10%
Direct
10,040,000
3.03%
10,040,000
3.03%
Liontrust
Investment
Partners LLP
Montanaro Asset
Management
Limited
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 133.
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.
144 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Dividends
In financial year 2022, 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 7.0 pence per
share - £23.2 million - was paid on
21 January 2022.
An interim dividend of 3.2 pence per
share - £10.6 million - was paid on
30 June 2022.
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 (2021:
nil), but the Group had 595 employees
at year end (2021: 574). 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 83 to 87, 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. Details of how the Company
has engaged with its employees is
outlined on page 81 of the Governance
Report and in the Responsible Business
section on page 38.
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.
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 Stakeholder Engagement
section on page 82.
Articles of Association
The Articles of Association may be
amended by special resolution of the
shareholders.
Emissions
For commentary on emissions, please
see the Responsible Business section
on pages 32 to 36.
Political donations
As per the Responsible Business
Section on page 44, the Group does
not make political donations.
Disclosure of information to
external auditor
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.
Auditor
Resolutions to reappoint EY as
external auditor of the Company and
to authorise the Audit and Risk
Committee to determine its
remuneration will be proposed at the
AGM to be held on 23 February 2023.
2023 AGM
The AGM will be held in person at the
Company’s headquarters in London on
23 February 2023. Details of the
resolutions to be proposed at the AGM
are set out in the separate circular
which has been sent to all shareholders
and is available on the Company’s
website at www.integrafin.co.uk/
shareholder-information.
Employment of disabled people
By order of the board,
For commentary on the Group’s policy
regarding the employment of disabled
people, please see the Responsible
Business section on page 42.
Alexander Scott
Chief Executive Officer
13 December 2022
Post year end events
Events after the reporting date are
detailed in note 34. There are no
reportable events (2021: none).
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 145
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Statement of directors’
responsibilities
The directors are responsible for
preparing the Annual Report and the
financial statements in accordance
with applicable United Kingdom law
and regulations.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law
the directors have elected to prepare
the Group and parent Company
financial statements in accordance
with UK-adopted international
accounting standards (“IFRSs”).
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
the Company and of the profit or loss
of the Group and the Company for
that period.
In preparing these financial
statements the directors are required
to:
▪ select suitable accounting policies in
accordance with IAS 8 Accounting
Policies, Changes in Accounting
Estimates and Errors and then apply
them consistently;
▪ make judgements and accounting
estimates that are reasonable and
prudent;
▪ present information, including
accounting policies, in a manner
that provides relevant, reliable,
comparable and understandable
information;
▪ provide additional disclosures when
compliance with the specific
requirements in IFRSs is insufficient
to enable users to understand the
impact of particular transactions,
other events and conditions on the
Group and Company financial
position and financial performance;
▪ in respect of the Group financial
statements, state whether UK-
adopted international accounting
standards have been followed,
subject to any material departures
disclosed and explained in the
financial statements;
▪ in respect of the parent Company
financial statements, state whether
UK-adopted international accounting
standards have been followed,
subject to any material departures
disclosed and explained in the
financial statements; and
▪ prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company and/or the Group will
continue in business.
The directors are responsible for
keeping adequate accounting records
that are sufficient to show and
explain the Company’s and Group’s
transactions and disclose with
reasonable accuracy, at any time, the
financial position of the Company and
the Group and enable them to ensure
that the Company and the Group
financial statements comply with the
Companies Act 2006. They are also
responsible for safeguarding the
assets of the Group and parent
Company and hence for taking
reasonable steps for the prevention
and detection of fraud and other
irregularities.
Under applicable law and regulations,
the directors are also responsible for
preparing a strategic report,
directors’ report, directors’
remuneration report and corporate
governance statement that comply
with that law and those regulations.
The directors are responsible for the
maintenance and integrity of the
corporate and financial information
included on the Company’s website.
146 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued Directors’ responsibilities pursuant to DTR4
The directors confirm, to the best of their knowledge:
▪ the consolidated financial statements, prepared in accordance with UK-
adopted international accounting standards give a true and fair view of the
assets, liabilities, financial position and profit of the parent Company and
undertakings included in the consolidation taken as a whole;
▪ the annual report, including the strategic report, includes a fair review of the
development and performance of the business and the position of the
Company and undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they
face; and
▪ they consider the annual report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to
assess the Company’s position, performance, business model and strategy.
By order of the board,
Helen Wakeford
Company Secretary
13 December 2022
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 147
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORTGOVERNANCE continued FINANCIAL
STATEMENTS
148 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
INTEGRAFIN HOLDINGS PLC
Opinion
In our opinion:
▪ IntegraFin Holdings plc’s Group financial statements and Parent Company
financial statements (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 2022, and of the Group’s profit for the year then ended; and
▪ the Group financial statements have been properly prepared in accordance
with UK-adopted international accounting standards; and
▪ The Parent Company financial statements have been properly prepared in
accordance with UK-adopted international accounting standards as applied in
accordance with section 408 of the Companies Act 2006; and
▪ the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of IntegraFin Holdings plc (the
‘Parent Company’) and its subsidiaries (together the ‘Group’) for the year
ended 30 September 2022 which comprise:
GROUP
PARENT COMPANY
Consolidated Statement of
Comprehensive Income for the year
ended 30 September 2022
Consolidated Statement of Financial
Position as at 30 September 2022
Company Statement of Financial
Position as at 30 September 2022
Company Statement of Cash Flows
for the year ended 30 September
2022
Consolidated statement of Cash
Flows for the year ended 30
September 2022
Company Statement of Changes in
Equity for the year ended 30
September 2022
Consolidated Statement of Changes
in Equity for the year ended 30
September 2022
Notes 1 to 35 to the financial
statements
Notes 1 to 35 to the financial
statements
The financial reporting framework that has been applied in their preparation is
applicable law and UK-adopted international accounting standards and as
regards the Parent Company financial statements, as applied in accordance
with Section 408 of the Companies Act 2006.
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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 149
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
Independence
We are independent of the Group and
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
have fulfilled our other ethical
responsibilities in accordance with
these requirements.
The non-audit services prohibited by
the FRC’s Ethical Standard were not
provided to the Group or the Parent
Company and we remain independent
of the Group and the Parent
Company in conducting the audit.
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 Parent
Company’s ability to continue to
adopt the going concern basis of
accounting included:
▪ obtaining an understanding of the
Directors’ going concern assessment
process and obtaining the Directors’
going concern assessment covering
the period 12 months from the date
of authorisation of the financial
statements;
▪ assessing and challenging the
assumptions used in management’s
forecast and determining the model
are appropriate to enable the
Directors to make an assessment
on the going concern;
▪ testing the clerical accuracy of the
model;
▪ evaluating the capital and liquidity
position of the Group;
▪ assessing the appropriateness of
the stress and reverse stress test
scenarios that consider the key
risks identified by management. We
evaluated management’s analysis
by testing the clerical accuracy and
challenging the conclusions reached
in the stress and reverse stress test
scenarios;
▪ performing enquiries of
management and those charged
with governance to identify risks or
events that may impact the Group’s
ability to continue as a going
concern. We also reviewed the
management paper presented to
the board, minutes of meetings of
the board and regulatory
correspondence; and
▪ assessing the appropriateness of
the going concern disclosures by
comparing the consistency with the
Directors’ assessment and for
compliance with the relevant
reporting requirements.
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 Parent
Company’s ability to continue as a
going concern for a period of twelve
months from the date the financial
statements are authorised for issue.
In relation to the Group and Parent
Company’s reporting on how they
have 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.
Our responsibilities and the
responsibilities of the Directors with
respect to going concern are
described in the relevant sections of
this report. However, because not all
future events or conditions can be
predicted, this statement is not a
guarantee as to the Group’s ability to
continue as a going concern.
150 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
Overview of our audit approach
Audit scope
▪ We performed an audit of the complete financial
information of seven components and audit
procedures on specific balances for a further one
component.
▪ The components where we performed full or specific
audit procedures accounted for 100% of profit before
tax and non-recurring items, 100% of revenue and
98% of total assets.
Key audit matters
▪ Recognition of revenue.
▪ Valuation of assets held for the benefit of
policyholders to cover unit-linked liabilities.
▪ Impairment of goodwill and intangibles for Group,
and Investments in Subsidiaries for Parent Company.
▪ First year audit transition.
Materiality
▪ Overall Group materiality of £3.1 million which
represents 5% of Group profit before tax adjusted for
certain non-recurring items.
An overview of the scope of the Parent Company and Group
audits
Of the eight components selected, we
performed an audit of the complete
financial information of seven
components (“full scope
components”) which were selected
based on their size or risk
characteristics. For the remaining one
component (“specific scope
component”), we performed audit
procedures on specific accounts
within that component that we
considered had the potential for the
greatest impact on the significant
accounts in the financial statements
either because of the size of these
accounts or their risk profile.
Tailoring the scope
Our assessment of audit risk, our
evaluation of materiality and our
allocation of performance materiality
determine our audit scope for each
Company within the Group. Taken
together, this enables us to form an
opinion on the consolidated financial
statements. We take into account size,
risk profile, the organisation of the
Group and effectiveness of Group-wide
controls, changes in the business
environment and other factors such as
recent Internal audit results when
assessing the level of work to be
performed at each Company.
In assessing the risk of material
misstatement to the Group financial
statements, and to ensure we had
adequate quantitative coverage of
significant accounts in the financial
statements, we selected eight
components covering entities within
United Kingdom, Isle of Man and
Australia.
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GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
The charts below illustrate the coverage obtained from the work performed by
our audit teams.
Profit before tax and
non-recurring items
Revenue
100%
Full scope
components
0%
Specific scope
components
100%
Full scope
components
0%
Specific scope
components
98%
Full scope
components
2%
Specific scope
components
Total assets
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the
type of work that needed to be undertaken at each of the components by us,
as the primary audit engagement team, or by component auditors from other
EY global network firms operating under our instruction.
Of the seven full scope components, audit procedures were performed on one
of these by both the primary audit team and component audit team based on
where the procedures were performed from a client perspective. For the
remaining six components all procedures were performed by the primary
team.
The primary team interacted regularly with the component team where
appropriate during various stages of the audit, reviewed relevant working
papers and were responsible for the scope and direction of the audit process.
This, together with the additional procedures performed at Group level, gave
us appropriate evidence for our opinion on the Group financial statements.
152 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
Climate change
Key audit matters
Key audit matters are those matters
that, in our professional judgment,
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. These
matters included 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 our
opinion thereon, and we do not
provide a separate opinion on these
matters.
There has been increasing interest
from stakeholders as to how climate
change will impact the Group. The
Group has considered the physical
and transition risks from climate
change and has identified this as an
emerging risk, but has concluded
that these do not currently pose a
material risk to the Group, as
described in note 1 to the financial
statements on page 172. Climate
change risk is further assessed on
pages 24 to 36 in the Task Force for
Climate related Financial Disclosures
and on page 66 in the principal risks
and uncertainties, which form part of
the “Other information,” rather than
the audited financial statements. Our
procedures on these disclosures
therefore consisted solely of
considering whether they are
materially inconsistent with the
financial statements or our
knowledge obtained in the course of
the audit or otherwise appear to be
materially misstated.
Our audit effort in considering
climate change was focused on
evaluating management’s
assessment of the impact of physical
and transition risk, and
management’s resulting conclusion
that there was no material impact
from climate change on the
recognition and measurement of the
assets and liabilities in these financial
statements as at 30 September 2022
and the adequacy of the Group’s
disclosures in the financial
statements which explains the
rationale. We also challenged the
Directors’ considerations of climate
change in their assessment of going
concern and viability and associated
disclosures.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 153
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT KEY OBSERVATIONS
COMMUNICATED TO THE
AUDIT AND RISK
COMMITTEE
Based on the procedures
performed, we have no
matters to report in
respect of revenue
recognition.
FINANCIAL REPORT continued
RISK
OUR RESPONSE TO THE RISK
Recognition of revenue
For all revenue streams, we have:
▪ confirmed and updated our understanding
of the procedures and controls in place
throughout the revenue process at the
Group through walkthrough procedures;
and
▪ performed enquiries of management and
performed journal entry testing in order to
address the risk of management override.
As we were unable to place reliance upon the
effectiveness of certain IT General Controls, (as
we set out in further detail in the First year audit
transition Key Audit Matters section below), we
performed additional tests of detail and tests
over information prepared by the entity in
respect of the functionality of the IAS system
and the accuracy of the inputs to the system.
Our testing of annual commissions, wrapper fee
income and buy commissions income was split
into two elements:
1. Testing to address the risk of failure or
manipulation within the calculation
▪ recalculated all revenue sub-categories using
the criteria and logic per the underlying
agreements with investors;
▪ performed a variance analysis between the
EY recalculated revenue balance per each
sub-category and the amounts per the
general ledger, investigating any material
differences;
▪ performed completeness checks between the
IAS reports and general ledger; and
▪ on a sample basis, reperformed calculations
that are automatically performed in IAS and
form part of the inputs into the revenue
calculations. For example, the daily average
value of the portfolio which forms part of the
annual commission calculation.
(£133.6 million, 2021: £123.7
million)
Accounting policies (pages 174-
175); and Note 5 of the
Consolidated Financial Statements
(page 193)
Revenue is material to the Group
and is a key focus of stakeholders.
As disclosed in note 5 of the
financial statements, the Group
categorise revenue into five
sub-categories:
▪ Annual commission income
(£115.8m, PY £107.7m) is
charged for the administration of
products on the Transact
platform.
▪ Wrapper fee income (£11.6m, PY
£10.6m) is charged for each of
the tax wrappers held by clients.
▪ Advisor back-office technology
(comprising license income and
consultancy income) (£4.0m, PY
£2.4m) is the rental charge for
use of access to T4A’s CRM
software and the charge for
consultancy services provided by
T4A.
▪ Other income (£2.2m, PY
£3.0m) are charges levied on
the acquisition of assets which
comprises buy commissions and
dealing charges.
Annual commission income, wrapper
fee income and other income
account for 97% of total fee income.
These revenues are automatically
calculated by the Integrated
Administration System (‘IAS’) IT
platform. There is a risk therefore
that revenue may be misstated due
to failure or manipulation of the
calculation methodology within IAS.
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GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
RISK
OUR RESPONSE TO THE RISK
KEY OBSERVATIONS
COMMUNICATED TO THE
AUDIT AND RISK
COMMITTEE
The principal data inputs into the
automated fee calculations include
the quantity and pricing of
underlying positions and
commission percentages. There is
therefore a risk that revenue may
be materially misstated due to
errors in the underlying data inputs
into IAS.
There is also the risk that
stakeholder expectations place
pressure on management to
manipulate the recognition of
revenue. This may result in an
overstatement of revenue to meet
targets and expectations.
In relation to License and
Consultancy Income there is a risk
that revenue is not recognised in
line with the terms of the underlying
contracts and agreements.
2. Testing to address the risk of data inputs
being incorrect. On a sample basis:
▪ agreed inputs to the underlying agreements
for onboarding clients onto the platform;
▪ agreed the fee terms used in the revenue
calculation to the published Transact
Commission and Charges Schedule;
▪ for annual commissions recalculated the
average portfolio value used within the fee
calculations based on the daily pricing per
IAS;
▪ for annual commissions, agreed the quantity
of positions per portfolio back to the
custodian statements;
▪ agreed fees paid back to bank statements.
For licence income, consultancy income and
other income, on a sample basis we have:
▪ agreed the fee terms used in the calculation
to agreements; and
▪ agreed the fees to underlying agreements
and invoices and vouched balances to the
bank statements.
Valuation of assets held for the
benefit of the policyholders to
cover unit-linked liabilities
(£22.2 billion, 2021: £21.8
billion)
Accounting policies (page 175 and
pages 179-180); and Note 3 of the
Consolidated Financial Statements
(pages 182-190)
Assets held for the benefit of the
policyholders to cover unit-linked
liabilities represent the most
material element of the Group’s
total assets, and as such, there is
an inherent risk that an error in
these assets may result in a
material misstatement.
We have performed the following procedures:
▪ confirmed and updated our understanding of
the procedures and controls in place
involving the assets held for the benefit of
the policyholders through walkthrough
procedures;
▪ using the EY valuation tool, we performed
independent valuation of level 1 and 2
investments covering 98% of the total
portfolio;
▪ obtained understanding of the fair value
hierarchy or levelling process of the Group.
We have validated the parameters used to
determine the level of investments and
challenged management on any inputs or
judgements applied as discussed below;
We concluded the valuation
of the assets held for the
benefit of the policyholders
as at 30 September 2022
is not materially misstated
and is in compliance with
the requirements of the
relevant accounting
standards.
We concluded that the
levelling of assets held for
the benefit of the
policyholders as at 30
September 2022 is not
materially misstated and is
in compliance with the
requirements of the
relevant accounting
standards.
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GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
RISK
OUR RESPONSE TO THE RISK
KEY OBSERVATIONS
COMMUNICATED TO THE
AUDIT AND RISK
COMMITTEE
Assets held for the benefit of the
policyholders comprise cash and
cash equivalents and investments,
which are accounted for at fair
value. The fair value is measured in
accordance with the methodology in
Note 3.
▪ we have assessed whether the various
considerations management observed (i.e.
active market, pricing frequency, price rate
threshold) in relation to assigning the levels
are appropriate and in compliance with the
requirements of the relevant accounting
standards;
The Group does not hold a material
amount of level 3 assets, and the
assets held in level 1 and 2 have a
lower estimation uncertainty. There
remains however a risk that errors
occur in the classification of assets
between levels 1, 2 and 3.
Impairment of goodwill and
intangibles in Group and
investments in subsidiaries in
Parent Company
In the Consolidated Statement of
Financial Position, £21.8 million,
(2021: £22.3 million) and in the
Parent Company Statement of
Financial Position £33.3 million
(2021 £31.6 million)
Accounting policies (pages 175-
177); Note 12 of the Consolidated
financial statements (pages 208-
210); and Note 15 of the
Consolidated financial statements
(pages 213-214).
The carrying value of goodwill and
intangibles, and in the Parent
Company financial statements,
investments in subsidiaries are
based on estimates of future
profitability which includes
significant management judgement
and the risk of management bias.
Goodwill was recognised on the
acquisition of IAD Pty in July 2016
and Time 4 Advice Limited (‘T4A’) in
January 2021. Acquired intangible
assets consist of contractual customer
relationships, software and brand.
▪ obtained bank confirmation letters directly from
the related depository institutions for all cash
held for the benefit of the policyholders; and
▪ tested on a sample basis the reconciliation
performed between the custodian statements and
the Group’s records in the IAS system, including
gaining an understanding of any discrepancies
identified and how it they were resolved.
We have:
▪ confirmed and updated our understanding of the
procedures and controls in place to assess the
Value in Use and therefore need for impairment
in Cash Generating Units or Subsidiaries;
▪ challenged management over the
appropriateness of the CGUs identified for
which a goodwill impairment assessment is
performed, by reviewing supporting evidence
to demonstrate the separately identifiable
assets and cash inflows for each CGU and by
considering the level at which management
monitor financial information;
▪ with the support of our valuation specialists,
reviewed the methodology, terminal growth
rate and discount rate used in the
assessment of impairment, for each CGU,
with reference to comparable companies and
observable market data. Using our
specialists’ own assumptions, we derived a
reasonable range for the recoverable value
for each CGU and compared this to
management’s value-in-use;
▪ reviewed the future cash flow forecasts
against budget and back testing the accuracy
of prior cash flow forecasting;
▪ performed sensitivity analysis by flexing the
key assumptions to establish the values that
would result in an impairment; and
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GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
KEY OBSERVATIONS
COMMUNICATED TO THE
AUDIT AND RISK
COMMITTEE
Based on the procedures
performed, we have no
matters to report in
respect of goodwill and
intangibles and
investments in
subsidiaries.
Where accounting policies
have been updated or
where restatements to the
comparative period have
been made as a result of
challenges made during
the first year audit, we are
satisfied these have been
appropriately disclosed.
RISK
OUR RESPONSE TO THE RISK
There is a risk that management
makes an inaccurate assumption when
determining the discount rate, growth
rate or forecast profit before tax used
for forecasting future profitability,
resulting in incorrectly identifying
whether an impairment is required.
First year audit transition
The Group approved the appointment
of Ernst & Young LLP as auditor for
the year ended 30 September 2022,
and our appointment took effect from
the Annual General Meeting in
February 2022.
In our first year as auditor, it has
been critical to gain an
understanding of the Group’s
specific risks, controls, policies and
processes in order to make audit
risk assessments and develop an
audit strategy.
In particular, we have considered
the design effectiveness of controls
over financial reporting, including IT
General Controls, in place at the
Group to determine our audit
strategy.
In accordance with ISA 510 (UK)
Initial Audit Engagements (‘ISA
510’), we are required to perform a
review of opening balances and
obtain appropriate audit evidence of
whether:
▪ opening balances contain
misstatements that materially
affect the current period’s financial
statements; and
▪ appropriate accounting policies
reflected in the opening balances
have been consistently applied in
the current period’s financial
statements, or changes there to
are appropriately accounted for
and adequately presented and
disclosed in accordance with IFRS.
▪ assessed the adequacy of management’s
accounting policies and disclosures in respect
of IAS 38 – Intangible Assets (‘IAS 38’) and
IAS 36 – Impairment of Assets (‘IAS 36’).
In preparation for our first year audit of the 30
September 2022 financial statements, we
prepared a detailed transition plan. Our audit
planning and transition commenced in September
2021 after we had confirmed our independence of
the Group to the Audit and Risk Committee. Our
transition activities included shadowing the
former auditor at key meetings with
management, and through attending meetings of
the Audit and Risk Committee. We reviewed the
predecessor auditor’s 2021 audit work papers and
gained an understanding of their risk assessment
and key accounting estimates and judgments.
We conducted walkthroughs to assess the design
effectiveness of controls over financial reporting,
including IT General Controls. We concluded we could
not rely on the operating effectiveness of IT General
Controls. We have reflected this in our audit strategy.
In order to assess whether opening balances
were appropriately stated, we:
▪ read the most recent financial statements, and
the predecessor auditor’s report thereon, for
information relevant to opening balances,
including disclosures; and
▪ obtained sufficient and appropriate audit
evidence about whether the opening balances
contain misstatements that materially affect
the current period’s financial statements by:
▪ determining that the prior-period’s closing
balances have been correctly bought forward to
the current period, or, when appropriate, have
been restated;
▪ determining whether the opening balances
reflect the application of appropriate accounting
policies; and
▪ reviewing the predecessor auditor’s working
papers to obtain evidence regarding the
opening balances.
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GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
RISK
OUR RESPONSE TO THE RISK
KEY OBSERVATIONS
COMMUNICATED TO THE
AUDIT AND RISK
COMMITTEE
In order to obtain an understanding of the
Group’s accounting policies and historic
accounting judgments, we reviewed
accounting policy manuals and technical
documentation on specific accounting topics
including assessing the appropriateness of the
levelling applied to financial instruments under
IFRS 13.
Reporting threshold
An amount below which identified
misstatements are considered as
being clearly trivial.
We agreed with the Audit and Risk
Committee that we would report to
them all uncorrected audit
differences in excess of £0.15 million,
which is set at 5% of planning
materiality, as well as differences
below that threshold that, in our
view, warranted reporting on
qualitative grounds.
We evaluate any uncorrected
misstatements against both the
quantitative measures of materiality
discussed above and in light of other
relevant qualitative considerations in
forming our opinion.
We determined materiality for the
Parent Company to be £0.63 million,
which is 1% of net assets. The Parent
Company primarily holds the
investments in Group entities and,
therefore, net assets is considered to
be the key focus for users of the
financial statements.
During the course of our audit, we
reassessed initial materiality based
on 30 September 2022 financial
statement amounts and adjusted our
audit procedures accordingly.
Performance materiality
The application of materiality at the
individual account or balance level. It
is set at an amount to reduce to an
appropriately low level the probability
that the aggregate of uncorrected
and undetected misstatements
exceeds materiality.
On the basis of our risk assessments,
together with our assessment of the
Group’s overall control environment,
our judgement was that performance
materiality was 50% of our planning
materiality, namely £1.5 million; this
percentage is our normal practice for
a first year audit. We have set
performance materiality at this
percentage due to our assessment of
the risk of misstatement.
In the prior year, the BDO LLP
auditor’s report identified
‘Completeness, existence, and
accuracy of revenue’ to be the only
key audit matter. This area of the
audit is covered by the key audit
matters identified ‘Recognition of
revenue’ above for the 2022 audit.
We have identified ‘Valuation of
assets held for the benefit of the
policyholders to cover unit-linked
liabilities’, ‘Impairment of goodwill
and intangibles in Group and
investments in subsidiaries in Parent
Company’ and ‘First year audit
transition’ as new key audit matters
in the current year.
Our application of materiality
We apply the concept of materiality
in planning and performing the audit,
in evaluating the effect of identified
misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or
misstatement that, individually or in
the aggregate, could reasonably be
expected to influence the economic
decisions of the users of the financial
statements. Materiality provides a
basis for determining the nature and
extent of our audit procedures.
We determined materiality for the
Group to be £3.1 million, which is 5%
of profit before tax adjusted for
certain non-recurring items, being
the one off impact of the backdated
VAT expensed in the financial year.
We believe that profit before tax and
non-recurring items is the most
relevant performance measure to the
stakeholders of the entity.
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GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
Other information
▪ 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.
Matters on which we are required
to report by exception
In light of the knowledge and
understanding of the Group and the
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.
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.
The other information comprises the
information included in the Annual
Report, including Strategic Report,
Governance Report and Other
Information sections, other than the
financial statements and our auditor’s
report thereon. The Directors are
responsible for the other information
contained within the annual report.
Our opinion on the financial
statements does not cover the other
information and, except to the extent
otherwise explicitly stated in this
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 the other
information, we are required to
report that fact.
We have nothing to report in this
regard.
Opinions on other matters
prescribed by the Companies Act
2006
In our opinion, the part of the
Directors’ Remuneration Report to be
audited has been properly prepared
in accordance with the Companies
Act 2006.
In our opinion, based on the work
undertaken in the course of the
audit:
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 159
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
Corporate Governance Statement
Responsibilities of Directors
We have reviewed the Directors’
Statement in relation to going
concern, longer-term viability and
that part of the Corporate
Governance Statement relating to the
Group and Company compliance with
the provisions of the UK Corporate
Governance Code specified for our
review by the Listing Rules.
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:
▪ Directors’ Statement with regards
to the appropriateness of adopting
the going concern basis of
accounting and any material
uncertainties identified set out on
page 67;
▪ Directors’ explanation as to its
assessment of the Company’s
prospects, the period this
assessment covers and why the
period is appropriate set out on
page 67;
▪ Director’s statement on whether it
has a reasonable expectation that
the Group will be able to continue in
operation and meets its liabilities
set out on page 67;
▪ Directors’ statement on fair,
balanced and understandable set
out on page 147;
▪ Board’s confirmation that it has
carried out a robust assessment of
the emerging and principal risks set
out on pages 65 to 66.
▪ The section of the annual report
that describes the review of
effectiveness of risk management
and internal control systems set out
on page 53; and
▪ The section describing the work of
the Audit and Risk Committee set
out on page 96.
As explained more fully in the
Statement of Directors’
Responsibilities set out on pages
146-147, 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 and 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.
160 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
Explanation as to what extent the
audit was considered 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 previously,
to detect irregularities, including
fraud. 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 or
intentional misrepresentations, or
through collusion. The extent to
which our procedures are capable of
detecting irregularities, including
fraud is detailed below.
However, the primary responsibility
for the prevention and detection of
fraud rests with both those charged
with governance of the Company and
management.
▪ We obtained an understanding of
the legal and regulatory frameworks
that are applicable to the Group and
determined that the most significant
are those that relate to the
reporting framework (UK-adopted
international accounting standards,
the Companies Act 2006 and UK
Corporate Governance Code) and
relevant tax compliance regulations.
In addition, we concluded that there
are certain significant laws and
regulations which may have an
effect on the determination of the
amounts and disclosures in the
financial statements being the
Listing Rules and relevant Prudential
Regulation Authority (‘PRA’) and
Financial Conduct Authority (‘FCA’)
rules and regulations.
▪ We understood how IntegraFin
Holdings plc is complying with those
frameworks by making enquiries of
management, internal audit, those
responsible for legal and compliance
matters and those charged with
Governance. We also reviewed
correspondences between the
Company and UK regulatory bodies;
reviewed minutes of the board, and
the Audit and Risk Committee; and
gained understanding of the
Company’s approach to governance
framework.
have been established to prevent
non-compliance with laws and
regulations by officer and
employees and the Company’s
methods of enforcing and
monitoring compliance with such
policies. We inspected significant
correspondence with the PRA and
FCA.
A further description of our
responsibilities for the audit of the
financial statements is located on the
Financial Reporting Council’s website
at www.frc.org.uk/
auditorsresponsibilities. This
description forms part of our
auditor’s report.
Other matters we are required to
address
Following the recommendation from
the Audit and Risk Committee we
were appointed by the Company on
24 February 2022 to audit the
financial statements for the year
ending 30 September 2022 and
subsequent financial periods. The
period of total uninterrupted
engagement including previous
renewals and reappointments is one
year, covering the year ending 30
September 2022. The audit opinion is
consistent with the additional report
to the Audit and Risk Committee.
▪ We assessed the susceptibility of
the Group’s financial statements to
material misstatement, including
how fraud might occur by meeting
with management to understand
where they considered there was
susceptibility to fraud. We have
considered performance targets and
their potential influence on efforts
made by management to manage
or influence the perceptions of
analysts. We considered the
controls that the Group has
established to address risks
identified, or that otherwise
prevent, deter and detect fraud,
including in a remote-working
environment and how senior
management monitors these
controls. We also considered areas
of significant judgements, complex
transactions and economic or
external pressures and the impact
these have on the control
environment. Where the risk was
considered to be higher, we
performed audit procedures to
address each identified fraud risk.
▪ Based on this understanding we
designed our audit procedures to
identify non-compliance with such
laws and regulations. Our
procedures involved journal entry
testing, with a focus on manual
journals and journals indicating
large or unusual transactions based
on our understanding of the
business; enquiries of senior
management, including those at full
and specific scope; and focused
testing, as referred to in the key
audit matters section. We also
enquired about the policies that
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 161
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
Use of our report
This report is made solely to the
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 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 Company and the
Company’s members as a body, for
our audit work, for this report, or for
the opinions we have formed.
Mike Gaylor (Senior statutory
auditor)
for and on behalf of Ernst &
Young LLP, Statutory Auditor
London
13 December 2022
162 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Revenue
Fee income
Cost of sales
Gross profit
Expenses
Administrative expenses
Credit loss allowance on financial assets
Operating profit
Interest expense
Interest income
Net policyholder returns¹
Net income/(loss) attributable to policyholder returns
Change in investment contract liabilities
Fee and commission expenses
Policyholder investment returns
Net policyholder returns
Note
5
8
22
25
9
18
10
Profit on ordinary activities before taxation attributable to
policyholders and shareholders
Policyholder tax credit/(charge)
Profit on ordinary activities before taxation attributable to
shareholders
Total tax attributable to shareholder and policyholder returns
11
Less: tax attributable to policyholder returns
Shareholder tax on profit on ordinary activities
2022
£’m
133.6
(2.1)
131.5
2021
£’m
123.7
(1.5)
122.2
(77.7)
(58.8)
(0.2)
53.6
(0.1)
0.8
(38.5)
2,770.3
(192.6)
(2,577.7)
(38.5)
15.8
38.5
54.3
28.2
(38.5)
(10.3)
(0.2)
63.2
(0.2)
0.1
31.5
(2,736.1)
(204.1)
2,940.2
31.5
94.6
(31.0)
63.6
(43.5)
31.0
(12.5)
Profit for the financial year
44.0
51.1
Other comprehensive (loss)/income
Exchange (losses)/gains arising on translation of foreign operations
Total other comprehensive (losses)/income for the financial year
Total comprehensive income for the financial year
Earnings per share
0.1
0.1
44.1
(0.1)
(0.1)
51.0
Earnings per share – basic and diluted
7
13.3p
15.4p
1 See note 1 for details on the presentational changes to policyholder balances.
All activities of the Group are classed as continuing.
Notes 1 to 35 form part of these Financial Statements.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 163
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Non-current assets
Loans
Intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax asset
Current assets
Financial assets at fair value through profit or loss
Other prepayments and accrued income
Trade and other receivables
Cash and cash equivalents
Current tax asset
Current liabilities
Trade and other payables
Provisions
Lease liabilities
Non-current liabilities
Provisions
Contingent consideration
Lease liabilities
Deferred tax liabilities
Policyholder assets and liabilities¹
Cash held for the benefit of policyholders
Investments held for the benefit of policyholders
Liabilities for linked investment contracts
Net assets
1 See note 1 for details on the presentational changes to policyholder balances.
164 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
Note
16
12
13
14
26
21
22
23
19
24
28
25
28
29
25
26
20
17
18
2022
£’m
5.5
21.8
1.2
2.1
6.0
36.6
3.1
17.2
2.0
183.0
15.0
220.3
21.5
10.7
1.9
34.1
46.1
1.7
0.9
0.9
49.6
2021
£’m
3.4
22.3
1.8
3.6
0.7
31.8
5.1
16.0
3.7
176.1
1.1
202.0
17.4
11.6
2.3
31.3
6.2
0.8
2.7
29.5
39.2
1,458.6
1,266.3
20,715.8
21,787.1
(22,174.4)
(23,053.4)
-
-
173.2
163.3
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
Equity
Called up equity share capital
Share-based payment reserve
Employee Benefit Trust reserve
Foreign exchange reserve
Non-distributable reserves
Non-distributable insurance reserves
Retained earnings
Total equity
Note
2022
£’m
2021
£’m
30
31
32
32
32
3.3
2.6
(2.4)
-
5.7
-
164.0
173.2
3.3
2.4
(2.1)
(0.1)
5.7
0.5
153.6
163.3
These Financial Statements were approved by the board of Directors on 13 December 2022 and are signed on their
behalf by:
Alexander Scott
Director
Company Registration Number: 08860879
Notes 1 to 35 form part of these Financial Statements.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 165
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
FINANCIAL REPORT continued
FINANCIAL REPORT continued
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
Equity
Called up equity share capital
Share-based payment reserve
Employee Benefit Trust reserve
Profit or loss account
Brought forward retained earnings
Profit for the year
Dividends paid in the year
Profit or loss account
Total equity
Note
15
16
22
23
24
16
29
16
30
31
2022
£’m
33.3
5.5
38.8
0.1
0.2
33.1
33.4
2.4
1.0
3.4
1.7
7.0
8.7
2021
£’m
31.6
3.4
35.0
-
0.1
31.0
31.1
2.4
1.0
3.4
0.8
8.0
8.8
60.1
53.9
3.3
2.2
(2.1)
50.7
39.8
(33.8)
56.7
60.1
3.3
1.7
(1.8)
42.0
37.2
(28.5)
50.7
53.9
The Company has taken advantage of the exemption in section 408 (3) of the Companies Act 2006 not to present its
own income statement in these financial statements.
These Financial Statements were approved by the board of Directors on 13 December 2022 and are signed on their behalf by:
Alexander Scott
Director
Company Registration Number: 08860879
Notes 1 to 35 form part of these Financial Statements.
166 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
FINANCIAL REPORT continued
FINANCIAL REPORT continued
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Profit on ordinary activities before taxation
Adjustments for income statement non-cash movements:
Amortisation and depreciation
Share-based payment charge
Release of actuarial provision
Adjustments for cash effecting investing activities:
Interest on cash and loans
Interest charged on lease
Decrease/(increase) in current asset investments
Adjustments for statement of financial position movements:
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in contingent consideration
Decrease in share-based payment reserve
Increase/(decrease) in provisions
Adjustments for policyholder balances:
(Decrease)/increase in investments held for the benefit of policyholders
Increase in liabilities for linked investment contracts
(Decrease)/increase in policyholder tax recoverable
Cash generated (used in)/generated from operations
Income taxes paid
Interest paid on lease liabilities
Net cash flows (used in)/generated from operating activities
Investing activities
Acquisition of tangible assets
Acquisition of subsidiary, net of cash acquired
Increase in loans
Interest on cash held
Net cash used in investing activities
2022
£’m
2021
£’m
54.3
63.6
3.0
2.0
(0.5)
(0.8)
0.1
2.0
0.5
4.0
0.9
(1.3)
39.0
1,071.3
(879.0)
(44.5)
251.0
(13.5)
(0.1)
237.5
(0.4)
-
(2.1)
0.8
(1.7)
3.1
1.9
-
(0.1)
0.2
(0.1)
(1.3)
(2.1)
0.7
(1.2)
(7.4)
(5,059.9)
4,940.5
19.4
(42.7)
(13.3)
(0.2)
(56.2)
(0.7)
(7.9)
(0.8)
0.1
(9.3)
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 167
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
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 (losses)/gains on cash and cash equivalents
Cash and cash equivalents at end of year
Cash and cash equivalents consist of:
Cash and cash equivalents
Cash held for the benefit of policyholders
Cash and cash equivalents
Notes 1 to 35 form part of these Financial Statements.
2022
£’m
(0.5)
(33.7)
(2.4)
(36.6)
199.2
2021
£’m
(1.0)
(28.5)
(2.3)
(31.8)
(97.3)
1,442.4
1,539.8
-
(0.1)
1,641.6
1,442.4
183.0
1,458.6
1,641.6
176.1
1,266.3
1,442.4
168 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
COMPANY STATEMENT OF CASH FLOWS
Cash flows from operating activities
Loss before interest and dividends
Adjustment for statement of financial position movements:
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 operating activities
Investing activities
Acquisition of subsidiary
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
Increase in loans payable
Repayment of loans
Interest expense on loans
Equity dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes 1 to 35 form part of these Financial Statements.
2022
£’000
2021
£’000
(4.9)
(4.8)
(0.2)
-
0.9
(1.3)
(5.5)
-
-
45.0
0.2
(2.0)
43.3
(0.5)
-
(1.0)
(0.2)
0.2
1.7
0.7
(1.1)
(3.3)
(8.6)
(4.0)
42.1
0.1
(0.8)
28.8
(0.9)
10.0
(1.0)
(0.2)
(33.8)
(35.5)
(28.5)
(20.6)
2.2
31.0
33.2
4.9
26.1
31.0
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 169
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
distributable
insurance
and other
reserves
Share-
based
payment
reserve
Employee
Benefit
Trust
Retained
earnings
Total
equity
£’m
6.2
-
(0.1)
(0.1)
-
-
-
-
-
-
£m
1.7
£’m
(1.1)
£’m
£’m
130.8
140.9
-
-
-
1.9
(1.2)
-
0.1
(0.1)
-
-
-
-
-
-
(1.0)
-
-
-
51.1
-
51.1
(0.1)
51.1
51.0
-
-
-
-
0.1
1.9
(1.2)
(1.0)
0.1
-
(28.5)
(28.5)
Share
capital
£’m
3.3
-
-
-
-
-
-
-
-
-
Balance at 1 October 2020
Comprehensive income for the year:
Profit for the year
Movement in currency translation
Total comprehensive income for
the year
Share-based payment expense
Settlement of share based payment
Purchase of own shares in EBT
Excess tax relief charged to equity
Other movement
Distributions to owners -
Dividends paid
Balance at 30 September 2021
3.3
6.2
2.4
(2.1)
153.5
163.3
Balance at 1 October 2021
Comprehensive income for the
year:
Profit for the year
Movement in currency translation
Total comprehensive income for
the year
Share-based payment expense
Settlement of share based payment
Purchase of own shares in EBT
Excess tax relief charged to equity
Exercised share options
Release of actuarial reserve
Other movement
Distributions to owners -
Dividends paid
-
-
-
-
-
-
-
-
-
-
-
-
0.1
0.1
-
-
-
-
-
(0.5)
-
-
-
-
-
2.0
(1.5)
-
(0.3)
-
-
-
-
-
-
-
-
(0.5)
-
0.2
-
-
-
44.0
-
44.0
-
-
-
-
(0.2)
0.5
-
44.0
0.1
44.1
2.0
(1.5)
(0.5)
(0.3)
-
-
-
(33.9)
(33.9)
Balance at 30 September 2022
3.3
5.7
2.6
(2.4)
164.0
173.2
Notes 1 to 35 form part of these Financial Statements.
170 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
COMPANY STATEMENT OF CHANGES IN EQUITY
Balance at 1 October 2020
Comprehensive income for the year:
Profit for the year
Total comprehensive income for the year
Settlement of share-based payments
Purchase of own shares in EBT
Distributions to owners - dividends
Share-
based
payment
reserve
Employee
Benefit
Trust
Retained
earnings
Total
equity
£m
1.1
-
-
0.6
-
-
£’m
£’m
£’m
(0.9)
42.0
45.5
-
-
-
(0.9)
37.2
37.2
-
-
37.2
37.2
0.6
(0.9)
-
(28.5)
(28.5)
Share
capital
£’m
3.3
-
-
-
-
-
Balance at 30 September 2021
3.3
1.7
(1.8)
50.7
53.9
Comprehensive income for the year:
Profit for the year
Total comprehensive income for the year
Settlement of share-based payments
Purchase of own shares in EBT
Distributions to owners - dividends
-
-
-
-
-
-
-
0.5
-
-
-
-
-
(0.5)
40.0
40.0
-
-
40.0
40.0
0.5
(0.5)
-
(33.8)
(33.8)
Balance at 30 September 2022
3.3
2.2
(2.3)
56.9
60.1
Notes 1 to 35 form part of these Financial Statements.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 171
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT 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 range of services which are designed to help
financial advisers and their clients to manage financial plans in a simple, effective and tax efficient way.
The registered office address, and principle place of business, is 29 Clement’s Lane, London, EC4N 7AE.
a) Basis of preparation
The consolidated Financial Statements have been prepared and approved by the directors in accordance with UK-
adopted International Accounting Standards.
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 hundred thousand.
Climate risks have been considered where appropriate in the preparation of these Financial Statements, with particular
consideration given to the impact of climate risk on the fair value calculations and impairment assessments. This has
concluded that the impact of climate risk on the financial statements is not material.
The effects of the Ukraine/Russia war has been considered in the preparation of these Financial Statements, and the
impact is not material.
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, liquidity and capital 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 2022, the Group had £183.0 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.
When making this assessment, the board has taken into consideration both the Group’s current performance and the
future outlook, including the impact of events in Ukraine and rising inflation rates. Market volatility and uncertainty is
expected to continue for some time, due to these evolving world events 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 69), 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 pandemic.
Having conducted detailed cash flow and working capital projections, and stress-tested liquidity, profitability and
regulatory capital, 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).
172 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
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.
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 presumed to exist
where the Group owns the majority of the voting rights of an entity. 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 on consolidation.
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.
Presentational changes to Policyholder items
Presentational changes have been made to the consolidated statement of comprehensive income and the consolidated
statement of financial position in order to provide information that is more relevant to users of the financial
statements, by splitting out the policyholder and shareholder values. This revised structure is likely to continue going
forward and prior year comparative information has also been reclassified.
Changes in accounting policies
i) There have been no new standards, amendments to standards or interpretations adopted during the financial year
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 January 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 an assessment regarding the impact of IFRS 17 on the Financial Statements and, while the
insurance companies in the Group do administer insurance business and hold capital relating to the risks associated
with this, the vast majority of contracts written by the insurance companies are investment contracts under IFRS 9,
and the impact of IFRS 17 will therefore be negligible.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 173
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
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 has assessed the impact of this amendment and does not note any significant impact.
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 has assessed the impact of this amendment and does not note any significant impact.
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 has assessed the impact of this amendment and does not note any significant impact.
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 has assessed the impact of this amendment and does not note 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 on an
accruals basis and 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.
174 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
Licence income
Licence income is the rental charge for use of access to T4A’s CRM software. The rental charge is billed monthly in
advance, based on the number of users. Revenue is recognised in line with the provision of the service.
Consultancy income
Consultancy income relates to consultancy services provided by T4A on an as-needs basis. Revenue is recognised
when the services are provided.
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.
Investment income
Interest on shareholder cash, policyholder cash and coupon on shareholder gilts are the three sources of investment
income received. These are recognised in the Consolidated Statement of Comprehensive Income in interest income
and within policy holder returns. Interest income is recognised using the effective interest method.
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 held for the benefit of policy holders are comprised of unit-linked contracts. Investments held for
the benefit of policyholders are stated at fair value and reported on a separate line in the statement of financial
position, see accounting policy on financial instruments for fair value determination. 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. 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
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.
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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 175
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
Dividends
Dividends are usually announced with the Group’s interim and annual results. Equity dividends paid are recognised in
the accounting period in which the dividends are declared and approved. The reduction in equity in the year therefore
comprises the prior year final dividend and the current year interim dividend.
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.
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
Motor vehicles
Straight line over 3 to 10 years
Reducing balance over 3 to 10 years
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.
176 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
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 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 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 in the consolidated statement of comprehensive income within administration expenses 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
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 177
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
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 12.
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 yearend closing
rate. 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 retranslated 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
HMRC requires ILUK to charge basic rate income tax on its life insurance policies (FA 2012, s102). ILUK collects this
tax quarterly, by charging 20% tax (2021: 20%) on gains from assets held in the policies, based on the policyholder’s
acquisition costs and market value at each quarter end. Additional charges are applied on any increases in the
previously charged gain. The charge is adjusted by the fourth financial year quarter so that the total charge for the
year is based on the gain at the end of the financial year. When assets are sold at a loss, or reduce in market value by
the financial year end, a refund of the charges may be applied. 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 IAS 12).
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.
178 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
For the year ended 30 September 2022, the business of ILUK and ILInt was the direct insurance of investment linked
pensions business written by single premium in the United Kingdom, and single premium life assurance linked bonds
and linked qualifying investment plans written in the United Kingdom and Isle of Man. Insurance risk is minimal as all
contracts have been classed as investment contracts.
Client assets and client monies
Integrated Financial Arrangements Ltd (IFAL) client assets and client monies are not recognised in the parent and
consolidated statements of financial position (see note 27) as they are owned by the clients of IFAL.
Lease assets and lease liabilities
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 IAS 16: Property, Plant and Equipment. Right-of-use assets are depreciated
over the lease term. See note 13 and 14.
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 25.
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.
Financial instruments in this category are recognised on the trade date, and subsequently measured 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
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 179
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
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
These assets 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 the element of the loan payable to
subsidiary which is to be settled after 12 months, which is included in non-current assets.
Financial assets are measured at amortised cost when they are held within the business model whose objective is
to hold assets to collect contractual cash flows and their contractual cash flows represent solely payments of
principal and interest.
The carrying value of assets held at amortised cost are adjusted for impairment arising from expected credit losses.
(iii) Financial liabilities at amortised cost
Financial liabilities at amortised cost comprise trade and other payables and loans payable. 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, where the simplified approach is applied to assets that do not contain a significant financing component.
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.
180 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
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FINANCIAL REPORT continued
1. Basis of preparation and significant accounting policies (continued)
The ILUK policyholder reserves, which are 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.
Balances due to HMRC are considered under IAS 12 Income Taxes, whereas balances due to policyholders are
considered under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
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) Share Incentive Plan (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) Performance share plan (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. 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.
Judgements which do not involve estimates
The assessment to recognise the ILUK policyholder provision comes from an evaluation of the likelihood of a constructive
or legal obligation, and whether that obligation can be estimated reliably. The provision required has been calculated
based on an assessment of tax payable to HM Revenue & Customs (HMRC) and refunds payable back to policyholders.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 181
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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
▪ Investments in quoted debt instruments
▪ Listed shares and securities
▪ Trade and other payables
▪ Loans
(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:
Fair value through profit or loss
Amortised cost
Cash and cash equivalents
Cash and cash equivalents policyholder
Listed shares and securities
Loans
Investments in quoted debt instruments
Accrued income
Trade and other receivables
2022
£’m
-
-
0.1
-
3.0
-
-
2021
£’m
-
-
0.1
-
5.0
-
-
Investments held for the policyholders
Total financial assets
20,715.8
20,718.9
21,787.1
21,792.2
Financial liabilities:
2022
£’m
183.0
2021
£’m
176.1
1,458.6
1,266.3
-
5.5
-
12.1
0.6
-
-
3.4
-
12.0
0.9
-
1,659.8
1,458.7
Trade and other payables
Accruals
Lease liabilities
Deferred consideration
Contingent consideration
Liabilities for linked investments
contracts
Fair value through profit or loss
Amortised cost
2022
£’m
-
-
-
-
2021
£’m
-
-
-
-
1.7
0.8
22,174.4
23,053.4
2022
£’m
7.4
3.0
2.8
1.7
-
-
2021
£’m
7.1
7.9
5.0
1.7
-
-
Total financial liabilities
22,176.1
23,054.2
14.9
21.7
182 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
3. Financial instruments (continued)
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
Trade and other receivables
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
2022
£’m
-
-
-
-
2021
£’m
-
-
-
-
2022
£’m
33.1
0.2
5.5
38.8
Fair value through profit or loss
Amortised cost
2022
£’m
-
-
-
1.7
-
1.7
2021
£’m
-
-
-
0.8
-
0.8
2022
£’m
0.4
8.0
1.7
-
0.2
10.3
11.9
2021
£’m
31.0
-
3.4
34.4
2021
£’m
-
9.0
2.5
-
0.4
(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 following table 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 recorded at fair value through the profit or loss and reported on
a separate line in the statement of financial position.
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 2022 183
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
3. Financial instruments (continued)
The following table shows the three levels of the fair value hierarchy:
FAIR VALUE
HIERARCHY
DESCRIPTION OF HIERARCHY
Quoted prices (unadjusted) in active
markets for identical assets.
Level 1
Level 2
Level 3
TYPES OF INVESTMENTS CLASSIFIED
AT EACH LEVEL
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.
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:
2022
Level 1
Level 2
Level 3
£’m
£’m
£’m
Investments and assets held for the benefit of policyholders
Term deposit
Investments and securities
Bonds and other fixed-income securities
Holdings in collective investment schemes
63.9
631.9
10.9
19,730.4
20,437.1
-
137.9
1.2
137.7
276.8
Other investments
Total
2021
3.0
-
-
3.0
20,440.1
276.8
1.9 20,718.8
Level 1
Level 2
Level 3
£’m
£’m
£’m
Investments and assets held for the benefit of policyholders
Investments and securities
Bonds and other fixed-income securities
Holdings in collective investment schemes
633.6
14.8
20,859.0
21,507.4
163.9
0.6
113.3
277.8
Other investments
Total
5.0
-
-
5.0
21,512.4
277.8
1.9 21,792.1
The Group regularly reviews whether a market is active or not, based on available market data and the specific
circumstances of each market.
184 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
Total
£’m
63.9
770.1
12.1
-
0.3
-
1.6
19,869.7
1.9
20,715.8
Total
£’m
797.9
15.4
0.4
-
1.5
20,973.8
1.9
21,787.1
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
FINANCIAL REPORT continued
FINANCIAL REPORT continued
3. Financial instruments (continued)
Level 1 valuation methodology
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.
Level 2 and Level 3 valuation methodology
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 assets have unobservable inputs as the 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.
Level 3 sensitivity to changes in unobservable measurements
For financial assets assessed as Level 3, based on its review of the prices used, the Group 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 and whether
a market is now active or not.
Transfers between Levels between 01 October 2021 and 30 September 2022 are presented in the table below at their
valuation at 30 September 2022:
Transfers from
Transfers to
Level 1
Level 2
Level 2
Level 1
£’m
18.8
1.3
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 185
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
3. Financial instruments (continued)
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 2022
Transfers in to Level 3 at 30 September 2022 valuation
Transfers out of Level 3 at 30 September 2022 valuation
Closing balance
2022
£’m
1.9
(0.4)
0.4
-
1.9
2021
£’m
1.7
(0.2)
1.1
(0.7)
1.9
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 Fair Value Hierarchy (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 the Group are subject to capital requirements imposed by the relevant regulators as
detailed below:
Legal entity
Regulatory regime
IFAL
ILUK
ILInt
IFRP
Solvency II
Isle of Man risk based capital regime
Group capital requirements for 2022 are driven by the regulated entities, whose capital resources and requirements as
detailed below:
IFAL
30 September
ILUK
30 September
ILInt
30 September
2022
£’m
39.7
2021
£’m
37.2
2022
£’m
244.0
2021
£’m
268.7
2022
£’m
42.0
2021
£’m
43.4
32.6
25.4
186.9
214.1
23.7
23.9
122%
147%
131%
125%
177%
181%
Capital
resource
Capital
requirement
Coverage
ratio
186 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
3. Financial instruments (continued)
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. Further information
is detailed in the risk and risk management section of this report on pages 57 to 58 and in the financial review on
pages 50 to 51.
4. Risk and risk management
This note supplements the details provided in the Risk and Risk Management section of this report on pages 52 to 58.
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
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 subsidiaries, IFAL, ILUK and ILInt, 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. These are recorded in note 5 as wrapper fee
income and annual commission income, respectively. 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.
10% increase in asset values
10% decrease in asset values
2022
£’m
8.5
(8.5)
Impact on profit for the year
2021
£’m
7.9
(7.9)
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 187
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
4. Risk and risk management (continued)
Market risk from direct asset holdings
The Group and the Company have limited exposure to primary market risk as capital is invested in high quality, highly
liquid, short-dated investments.
Market risk from unit-linked assets
The Group and the Company have limited exposure to primary market risk from the value of unit-linked assets as
fluctuations are borne by the policyholders.
(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.
(c) Currency risk
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
2022
£’m
22,021.1
127.0
16.4
9.8
2022
%
99.3
0.6
0.1
0.0
2021
£’m
22,914.6
111.0
18.1
9.7
2021
%
99.4
0.5
0.1
0.0
22,174.3
100.0
23,053.4
100.0
99.3% 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. However, it is
recognised that the majority of investments held for the benefit of policyholders are in collective investment schemes
and some of their underlying assets are denominated in currencies other than GBP, which increases the funds under
direction currency risk exposure. A significant rise or fall in sterling exchange rates would not have a significant first
order impact on the Group’s 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, while for the Group this risk also arises from fees owed by clients.
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, but 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.
188 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
4. Risk and risk management (continued)
Details of the ECLs recognised in relation to accrued income can be seen in note 22.
(b) Loans
Loans subject to the 12 month ECL are £5.5m (2021: £3.6m). 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 significant 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 £5.6m in undrawn loans.
Details of the ECLs recognised in relation to loans can be seen in note 16. No ECLs have been recognised on the
undrawn loan commitments, as any ECLs would not be considered to be material.
(c) Cash and equivalents
The Group has a low risk appetite for credit risk, which is mainly 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 £5.5m (2021: £3.4m). 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 £160k (2021: £130k) 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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 189
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
4. Risk and risk management (continued)
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.
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 £11.8m (2021: £12.0m) from 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.
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 three 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 entities to ensure the level of affordability of the
future dividends.
190 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
4. Risk and risk management (continued)
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 four equal annual instalments 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.
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 table shows an analysis of the financial assets and financial liabilities by remaining expected maturities
as at 30 September 2022 and 30 September 2021.
In addition to the financial assets and financial liabilities shown in the tables below, the Company committed a further
£5.6m in undrawn loans. These are available to be drawn down immediately.
Financial assets:
2022
Up to 3
months
3-12
months
1-5
years
£'m
£'m
Investments held for the policyholders
20,715.8
Investments
Accruals and deferred income
Trade and other receivables
Loans
Cash and cash equivalents
Cash held for the benefit of policyholders
124.2
12.1
2.0
-
183.0
1,458.6
-
-
-
0.2
-
-
-
Total
2021
22,495.7
0.2
£'m
-
3.1
-
-
5.5
-
-
8.6
Up to 3
months
3-12
months
1-5
years
£'m
£'m
Investments held for the policyholders
21,787.1
Investments
Accruals and deferred income
Trade and other receivables
Loans
Cash and cash equivalents
Cash held for the benefit of policyholders
0.2
12.0
0.8
-
176.1
1,266.3
-
-
-
0.2
-
-
-
Total
23,242.5
0.2
£'m
-
5.0
-
-
3.4
-
-
8.4
Over 5
years
£'m
-
-
-
-
-
-
-
-
Over 5
years
£'m
-
-
-
-
-
-
-
-
Total
£'m
20,715.8
127.3
12.1
2.2
5.5
183.0
1,458.6
22,504.5
Total
£'m
21,787.1
5.2
12.0
1.0
3.4
176.1
1,266.3
23,251.1
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 191
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
4. Risk and risk management (continued)
Financial liabilities:
2022
Liabilities for linked investment contracts
22,174.4
Up to 3
months
£'m
Trade and other payables
Lease liabilities
Deferred consideration
Contingent consideration
Total
2021
11.8
0.6
-
-
22,186.8
Up to 3
months
£'m
Liabilities for linked investment contracts
23,053.4
Trade and other payables
Lease liabilities
Deferred consideration
Contingent consideration
Total
(4) Outflow risk
9.9
0.6
-
-
23,063.9
3-12
months
£'m
-
3.7
1.3
1.5
-
6.5
3-12
months
£'m
-
5.1
1.9
1.6
-
8.6
1-5
years
£'m
Over 5
years
£'m
-
-
0.9
0.2
1.7
2.8
-
-
-
-
-
-
1-5
years
£'m
Over 5
years
£'m
-
-
2.8
0.2
0.8
3.8
-
-
-
-
-
-
Total
£'m
22,174.4
15.5
2.8
1.7
1.7
22,196.1
Total
£'m
23,053.4
15.0
5.3
1.8
0.8
23,076.3
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.
192 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
5. Disaggregation of revenue
The Group has the following categories of revenue:
▪ Annual commission - based on a fixed percentage applied to the value of the client's portfolio each month.
▪ Wrapper fee income - based on a fixed quarterly charge per wrapper.
▪ Other income – buy commission is based on a set percentage charge applied to each transaction. Dealing charges are
charged based on a fixed fee for each type of transaction.
▪ Adviser back-office technology – licence income based on a fixed monthly charge per number of users. Consultancy
income is charged based on the services provided.
For the financial year ended 30 September
Annual commission income
Wrapper fee income
Other income
Adviser back-office technology
Total fee income
6. Segmental reporting
2022
£’m
115.8
11.6
2.2
4.0
133.6
2021
£’m
107.7
10.6
3.0
2.4
123.7
The revenue and profit before tax are attributable to activities carried out in the UK and the Isle of Man.
The Group has three classes of business, which have been organised primarily based on the products they offer, as
detailed below:
▪ Investment administration services – this relates to services performed by IFAL, which is the provider of the
Transact wrap service. It is the provider of the General Investment Account (GIA), is a Self-Invested Personal Pension
(SIPP) operator, an ISA manager and is the custodian for all assets held on the platform (except for those held by
third party custodians).
▪ Insurance and life assurance business – this relates to ILUK and ILInt, insurance companies which provide the
Transact Personal Pension, Executive Pension, Section 32 Buy-Out Bond, Transact Onshore and Offshore Bonds, and
Qualifying Savings Plan on the Transact platform.
▪ Adviser back-office technology - this relates to T4A, provider of financial planning technology to adviser and
wealth management firms via the CURO adviser support system. T4A was acquired during the financial period ending
30 September 2021.
Other Group entities relates to the rest of the Group, which provide services to support the Group’s core operating
segments.
Analysis by class of business is given on the following page.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 193
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued)
Statement of comprehensive income – segmental information for the year ended 30 September 2022
Investment
Insurance and
Adviser
Other
Consolidation
Total
administration
life assurance
back-office
Group
adjustments
services
business
technology
entities
£m
£m
£m
£m
£m
£m
Revenue
Annual commission income
Wrapper fee income
Adviser back-office technology
Other income
Fee income
Cost of sales
Expenses
Admin expenses
Credit loss allowance on
financial assets
Operating profit/(loss)
Interest expense
Interest income
Net policyholder returns
Net income/(loss) attributable
to policyholder returns
Change in investment contract
liabilities
Fee and commission expenses
Policyholder investment returns
Net policyholder returns
Profit on ordinary activities
before taxation attributable
to policyholders and
shareholders
Policyholder tax credit/(charge)
Profit on ordinary activities
before taxation attributable
to shareholders
63.4
2.8
-
1.3
67.5
52.6
8.7
-
0.9
62.2
-
-
3.9
-
3.9
-
-
-
64.4
64.4
-
-
-
(64.4)
116.0
11.5
3.9
2.2
(64.4)
133.6
(0.7)
(0.4)
(0.5)
(0.5)
-
(2.1)
(43.0)
(28.8)
(5.3)
(64.6)
64.0
(77.7)
-
-
(0.1)
-
33.0
(1.9)
(0.8)
(0.4)
(0.2)
53.6
(0.1)
23.7
-
0.1
-
1.0
(38.5)
2,770.3
(192.6)
(2,577.7)
(38.5)
-
-
-
-
-
-
-
-
-
-
-
(0.4)
0.3
(0.1)
-
-
-
-
-
-
(0.3)
0.8
-
-
-
(38.5)
2,770.3
(192.6)
- (2,577.7)
-
(38.5)
23.8
-
(4.5)
38.5
(1.9)
(1.2)
(0.4)
-
-
-
15.8
38.5
23.8
34.0
(1.9)
(1.2)
(0.4)
54.3
194 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued):
Investment
Insurance and
Adviser
Other
Consolidation
Total
administration
life assurance
back-office
Group
adjustments
services
business
technology
entities
£m
£m
£m
£m
£m
£m
Total tax attributable to
shareholder and policyholder
returns
Less: tax attributable to
policyholder returns
Shareholder tax on profit on
ordinary activities
Profit/(loss) for the
financial year
(4.4)
32.6
0.3
(0.4)
0.1
28.2
-
(38.5)
-
-
-
(38.5)
(4.4)
(5.9)
0.3
(0.4)
0.1
(10.3)
19.4
28.1
(1.6)
(1.6)
(0.3)
44.0
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 195
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued)
Statement of comprehensive income - segmental information for the year ended 30 September 2021:
Investment
Insurance and
Adviser
administration
life assurance
back-office
Other
Group
services
business
technology
entities
Consolidation
adjustments
Total
£m
£m
£m
£m
£m
£m
Revenue
Annual commission income
Wrapper fee income
Adviser back-office technology
Other income
Fee income
Cost of sales
Expenses
Admin expenses
Credit loss allowance on
financial assets
Operating profit/(loss)
Interest expense
Interest income
Net policyholder returns
Net income/(loss) attributable
to policyholder returns
Change in investment contract
liabilities
Fee and commission expenses
Policyholder investment returns
Net policyholder returns
Profit on ordinary activities
before taxation attributable
to policyholders and
shareholders
Policyholder tax credit/(charge)
Profit on ordinary activities
before taxation attributable
to shareholders
58.9
2.6
-
1.8
63.3
45.3
8.1
-
4.6
58.0
-
-
2.4
-
2.4
-
-
-
60.4
60.4
-
-
-
(60.4)
104.2
10.7
2.4
6.4
(60.4)
123.7
(0.6)
(0.4)
(0.3)
(0.2)
-
(1.5)
(34.5)
(21.8)
(3.4)
(59.2)
60.2
(58.8)
(0.2)
28.0
-
-
-
-
-
-
-
35.8
-
0.2
31.5
(2,736.1)
(204.1)
2,940.2
31.5
-
-
(1.3)
0.9
-
(0.2)
(0.2)
63.2
-
-
-
-
-
-
-
(0.4)
0.1
0.2
(0.2)
(0.2)
0.1
-
-
-
-
-
-
31.5
- (2,736.1)
-
-
-
(204.1)
2,940.2
0.5
28.0
-
36.5
(31.0)
(1.3)
-
0.6
-
(0.2)
63.6
-
(31.0)
28.0
36.5
(1.3)
0.6
(0.2)
63.6
196 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued):
Investment
Insurance and
Adviser
administration
life assurance
back-office
Other
Group
services
business
technology
entities
Consolidation
adjustments
Total
£m
£m
£m
£m
£m
£m
Total tax attributable to
shareholder and policyholder
returns
Less: tax attributable to
policyholder returns
Shareholder tax on profit on
ordinary activities
Profit/(loss) for the
financial year
(5.3)
(37.6)
0.3
(0.7)
(0.2)
(43.5)
-
31.0
-
-
-
31.0
(5.3)
(6.6)
0.3
(0.7)
(0.2)
(12.5)
22.7
29.9
(1.0)
(0.1)
(0.4)
51.1
The comparative table has been restated to correct arithmetic errors and to include the ‘Other Operating Entities’
segment. These errors related only to the segmental reporting table and did not impact any financial statement line
items. See further details on the following page.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 197
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued)
Line in
current year
Line in prior
year
Segment
Amount in CY
(£m)
Amount in
PY (£m)
Change
(£m)
Explanation of
change
Annual
Commission
Income
Annual
Commission
Income
Insurance
45.3
48.7
(3.4)
Other Income Other Income
Insurance
4.6
1.2
3.4
Other Income
Other Income
Total fee
income
Total fee
income
Other Group
Entities
60.4
Other Income
Other Income
Total fee
income
Total fee
income
Consolidated
adjustments
(60.4)
-
-
60.4
(60.4)
Admin
expenses
Admin
expense
Investment
administration
services (IAS)
(34.5)
(64.8)
(30.3)
Admin
expenses
Admin
expense
Insurance
(21.8)
(49.6)
(27.8)
Admin
expenses
Admin
expense
Other Group
Entities
(59.2)
-
59.2
Reclass amount of
3.4m from Annual
commissions to other
income
Reclass amount of
3.4m from Annual
commissions to other
income
Recharged services of
£60.4m to ISL that are
eliminated on
consolidation that
hadn’t been included in
PY disclosure
Recharged services of
£60.4m to ISL that are
eliminated on
consolidation not
included in PY
disclosure
Reclass the amount of
admin expense that
should be included in
other group entities of
total 59.2m from IAS
(30.3m), Insurance
(27.8m) and T4A
(1.1m)
Reclass the amount of
admin expense that
should be included in
other group entities of
total 59.2m from IAS
(30.3m), Insurance
(27.8m) and T4A
(1.1m)
Reclass the amount of
admin expense that
should be included in
other group entities of
total 59.2m from IAS
(30.3m), Insurance
(27.8m) and T4A
(1.1m)
198 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued)
Line in
current year
Line in prior
year
Segment
Amount in CY
(£m)
Amount in
PY (£m)
Change
(£m)
Explanation of
change
Profit/(loss)
before tax
Profit/(loss)
before tax
IAS
28.0
3.2
24.8
Profit/(loss)
before tax
Profit/(loss)
before tax
Insurance
36.5
39.0
(2.5)
Profit/(loss)
before tax
Profit/(loss)
before tax
Consolidation
adjustments
(0.2)
60.2
(60.4)
Profit for the
financial year
Profit for the
financial year
IAS
22.7
44.1
(21.4)
Profit for the
financial year
Profit for the
financial year
Insurance
29.9
49.6
(19.7)
Profit for the
financial year
Profit for the
financial year
Other Group
Entities
(0.1)
-
(0.1)
Profit for the
financial year
Profit for the
financial year
Consolidation
adjustments
(0.4)
(42.4)
42.0
Number changed to
correctly sum the
revenue – expenses for
the segment
Number changed to
correctly sum the
revenue – expenses for
the segment
Number changed to
correctly sum the
revenue – expenses for
the segment
Correctly casting the
segmental column
Correctly casting the
segmental column
Correctly casting the
segmental column
Correctly casting the
segmental column
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 199
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued)
Statement of financial position – segmental information for the year ended 30 September 2022:
Investment
administration
services
£’m
Insurance and
life assurance
business
£’m
Adviser back-
office technology
£’m
Assets
Non-current assets
Current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Policyholder assets and liabilities
Cash held for the benefit of
policyholder
Investments held for the benefit of
policyholders
Liabilities for linked investment
contracts
Total policyholder assets and
liabilities
Net assets
Non-current asset additions
10.4
71.8
82.2
10.5
1.9
12.4
-
-
-
-
69.8
0.2
30.6
144.7
175.3
22.5
52.8
75.3
1,458.6
20,715.8
(22,174.4)
-
100.0
0.1
0.8
3.8
4.6
1.1
0.1
1.2
-
-
-
-
3.4
0.0
Total
£’m
41.8
220.3
262.1
34.1
54.8
88.9
1,458.6
20,715.8
(22,174.4)
-
173.2
0.3
200 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued)
Statement of financial position – segmental information for the year ended 30 September 2021:
Investment
administration
services
£’m
Insurance and
life assurance
business
£’m
Adviser back-
office technology
£’m
Assets
Non-current assets
Current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Policyholder assets and liabilities
Cash held for the benefit of
policyholder
Investments held for the benefit of
policyholders
Liabilities for linked investment
contracts
Total policyholder assets and
liabilities
Net assets
Non-current asset additions
11.8
67.3
79.1
8.1
2.6
10.7
-
-
-
-
68.4
0.3
Segmental information: Split by geographical location
Revenue
United Kingdom
Isle of Man
Total
20.0
130.8
150.8
22.5
36.6
59.1
1,266.3
21,787.1
(23,053.4)
-
91.7
0.3
2022
£’m
128.3
5.3
133.6
-
3.9
3.9
0.7
-
0.7
-
-
-
-
3.2
-
Total
£’m
31.8
202.0
233.8
31.3
39.2
70.5
1,266.3
21,787.1
(23,053.4)
-
163.3
0.6
2021
£’m
118.9
4.8
123.7
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 201
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
6. Segmental reporting (continued)
Non-current assets
United Kingdom
Isle of Man
Total
7. Earnings per share
Profit
2022
£’m
25.1
-
25.1
2021
£’m
26.8
0.1
26.9
2022
2021
Profit for the year and earnings used in basic and diluted earnings per
share
£44.0m
£51.1m
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
Basic and diluted
331.3m
(0.4m)
331.3m
(0.3m)
330.9m
331.0m
0.4m
331.3m
0.3m
331.3m
13.3p
15.4p
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.
202 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
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
- Non-underlying expenses - backdated VAT
- Non-underlying expenses - interest on backdated VAT
- Other non-underlying expenses
Short-term lease payments:
- land and buildings
Other occupancy costs
Other costs
Other income – tax relief due to shareholders
Total administrative expenses
2022
£’m
2.6
0.4
46.1
1.0
0.1
0.4
0.3
-
-
4.7
4.2
8.0
0.8
2.7
0.1
2.3
6.4
(2.4)
77.7
2021
£’m
2.8
0.3
41.0
0.6
0.2
0.2
0.1
0.2
0.1
3.5
3.5
-
-
3.3
0.1
1.2
3.9
(2.2)
58.8
“Other income – tax relief due to shareholders” relates to the release of policyholder reserves to the statement of
comprehensive income.
Non-underlying expenses relate to back dated VAT and interest being due to HMRC after their review concluded that
the inclusion of IAD in our VAT group was terminated with effect from July 2016, and reverse charge VAT is therefore
payable on services provided by IAD since that date. We have been unsuccessful in two stages of appealing the
decision, which resulted in non-underlying expenses of backdated VAT of £8.0 million for the period to September
2021 and non-recurring interest on the VAT due of £0.8m. For further details see financial review, page 47.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 203
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
8. Expenses by nature (continued)
Other non-underlying expenses relate professional fees and stamp duty in relation to acquisitions, and post-
combination remuneration. The post-combination remuneration payment to the original shareholders of T4A 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.
Company
Wages and employee benefits expense
Non underlying expenses:
- Remuneration
Auditor’s remuneration:
- auditing of the Financial Statements of the Company pursuant to
the legislation
Other professional fees
Other costs
Total administrative expenses
Wages and employee benefits expense
2022
£’m
0.6
3.0
0.2
0.8
0.2
4.8
2021
£’m
0.4
2.2
0.3
1.2
0.6
4.7
The average number of staff (including executive directors) employed by the Group during the financial year
amounted to:
2022
2021
No.
2
223
69
38
64
131
67
594
No.
2
231
61
33
45
122
49
543
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 (2021: nil).
204 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
8. Expenses by nature (continued)
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
2022
£’m
36.3
4.2
3.6
2.0
46.1
2021
£’m
32.9
3.4
2.8
1.9
41.0
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
Social security costs
Highest paid director:
Short-term employee benefits*
Other benefits
Number of directors for whom pension contributions are paid
*Short-term employee benefits comprise salary and cash bonus.
9. Interest income
Interest income on
bank deposits
Interest income on
loans
Group
2022
£’m
0.6
0.2
0.8
Company
2022
£’m
-
0.2
0.2
2022
£’m
2.9
0.2
0.4
0.4
4.1
0.6
0.2
No.
8
Group
2021
£’m
-
0.1
0.1
2021
£’m
2.9
0.1
0.4
0.4
3.8
0.6
0.1
No.
8
Company
2021
£’m
-
0.1
0.1
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 205
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
10. Policyholder investment returns
Change in fair value of underlying assets
Investment income
Total investment returns
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
Change in deferred tax charge/(credit) as a result of higher tax rate
Total shareholder tax charge for the year
Policyholder taxation
UK policyholder tax at 20% (2021: 20%)
Deferred tax at 20% (2021: 20%)
Prior year adjustments
Tax deducted on overseas dividends
Total policyholder taxation
2022
£’m
(2,729.2)
151.5
(2,577.7)
2021
£’m
2,810.1
130.1
2,940.2
2022
£’m
10.0
0.7
10.7
(0.4)
-
10.3
-
(33.8)
(4.9)
0.2
(38.5)
2021
£’m
12.2
0.4
12.6
(0.2)
0.1
12.5
11.5
19.6
(0.3)
0.2
31.0
43.5
Total tax attributable to shareholder and policyholder returns
(28.2)
206 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
11. Tax on profit on ordinary activities (continued)
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:
Profit on ordinary activities before taxation attributable to
shareholders
Profit on ordinary activities multiplied by effective rate of
Corporation Tax 19% (2021: 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
Effect of lower tax rate jurisdiction
Other adjustments
Add policyholder tax
Company
a) Analysis of charge in year
Deferred tax charge/(credit) (see note 26)
Total
2022
£’m
54.3
10.3
-
(0.2)
0.7
-
(0.5)
-
10.3
(38.5)
(28.2)
2022
£’m
-
-
2021
£’m
63.6
12.1
(0.1)
0.7
(0.1)
0.1
-
(0.2)
12.5
31.0
43.5
2021
£’m
-
-
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 207
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
11. Tax on profit on ordinary activities (continued)
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% (2021: 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
2022
£’m
39.9
7.6
(8.5)
0.6
0.3
-
2021
£’m
37.2
7.1
(8.0)
0.6
0.3
-
Software and
IP rights
Goodwill
Customer
relationships
Software
Brand
Total
12. Intangible assets – Group
Cost
At 1 October 2021
At 30 September 2022
Amortisation
At 1 October 2021
Charge for the year
At 30 September 2022
Net Book Value
At 30 September 2021
At 30 September 2022
Cost
At 1 October 2020
Acquisitions through business
combinations
£’m
12.5
12.5
12.5
-
12.5
-
-
12.5
-
£’m
18.3
18.3
-
-
-
18.3
18.3
13.0
5.3
At 30 September 2021
12.5
18.3
Amortisation
At 1 October 2020
Charge for the year
At 30 September 2021
Net Book Value
At 30 September 2020
At 30 September 2021
12.5
-
12.5
-
-
-
-
-
13.0
18.3
208 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
£’m
2.1
2.1
0.1
0.2
0.3
2.0
1.7
-
2.1
2.1
-
0.1
0.1
-
2.0
£’m
2.0
2.0
0.2
0.3
0.5
1.8
1.5
-
2.0
£’m
0.3
0.3
0.1
-
0.1
0.2
0.2
-
0.3
£’m
35.2
35.2
12.9
0.5
13.4
22.3
21.8
25.5
9.7
2.0
0.3
35.2
-
0.2
0.2
-
1.8
-
0.1
0.1
-
0.2
12.5
0.4
12.9
13.0
22.3
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
12. Intangible assets - Group (continued)
All intangible assets are externally generated.
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 the IAD Pty goodwill is allocated to the two cash generating units (“CGUs”) that relate to the
Transact platform, as these are benefitting from the IAD PTY acquisition. The carrying amount of the goodwill for T4A
is allocated to the CGU that relates to the CURO software as this is the source of revenue for T4A
IAD Pty
Investment administration services
Insurance and life assurance business
Total
The carrying amount of the T4A goodwill is all allocated to the below CGU:
T4A
Adviser back-office technology
Other assumptions are as follows:
Discount rate
Period on which detailed forecasts are based
Long-term growth rate
2022
£’m
7.2
5.7
12.9
2022
£’m
5.3
2022
11.6%
5 years
2.0%
2021
£’m
7.2
5.7
12.9
2021
£’m
5.3
2021
10.0%
5 years
1.0%
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 209
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
12. Intangible assets - Group (continued)
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 2027. 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 2.0%. The discount rate is assessed on an annual basis and has been calculated using the
weighted average cost of capital.
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.
Projected cash flows are impacted by movements in underlying assumptions, including equity market levels, number of
CURO users, employee numbers and cost inflation. The Group considers that projected cash flows of the investment
administration services and insurance and life assurance business CGUs are most sensitive to movements in equity
markets, because they have a direct impact on the level of the Group’s fee income, while the adviser back-office
technology CGU is most sensitive to the number of CURO users, as this forms the basis of its licence income.
A sensitivity analysis has been performed, with key assumptions being revised adversely to reflect the potential for
future performance being below expected levels. This estimated that a fall in equity markets of approximately 45%, or
a reduction of CURO users of 25% compared to expectations, would be required before the carrying value of any CGU
would exceed the recoverable amount.
210 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
13. Property, plant and equipment – Group
Leasehold
improvements
Equipment
Fixtures and
Fittings
Motor Vehicles
Total
Cost
At 1 October 2021
Additions
Disposals
Foreign exchange
At 30 September 2022
Depreciation
At 1 October 2021
Charge in the year
Disposals
Foreign exchange
At 30 September 2022
Net Book Value
At 30 September 2021
At 30 September 2022
Cost
At 1 October 2020
Additions
Disposals
At 30 September 2021
Depreciation
At 1 October 2020
Charge in the year
Disposals
At 30 September 2021
Net Book Value
At 30 September 2020
At 30 September 2021
£’m
1.7
-
-
-
1.7
1.3
0.1
-
-
1.4
0.4
0.3
1.7
-
-
1.7
1.2
0.1
-
1.3
0.6
0.4
£’m
3.6
0.3
(0.2)
-
3.7
2.3
0.8
(0.2)
-
2.9
1.3
0.8
3.3
0.6
(0.3)
3.6
1.6
1.0
(0.3)
2.3
1.7
1.3
£’m
0.2
-
-
-
0.2
0.1
-
-
-
0.1
0.1
0.1
0.2
-
-
0.2
0.1
-
-
0.1
-
0.1
£’m
£’m
-
-
-
-
-
-
-
-
-
-
-
-
0.1
-
(0.1)
-
0.1
(0.1)
-
-
-
5.5
0.3
(0.2)
-
5.6
3.7
0.9
(0.2)
-
4.4
1.8
1.2
5.3
0.6
(0.4)
5.5
3.0
1.1
(0.4)
3.7
2.3
1.8
The Company holds no property, plant and equipment.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 211
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
14. Right-of-use assets – Property – Group
Cost
At 1 October 2021
Additions
Disposals
Foreign exchange
At 30 September 2022
Depreciation
At 1 October 2021
Charge in the year
Disposals
Foreign exchange
At 30 September 2022
Net Book Value
At 30 September 2021
At 30 September 2022
Cost
At 1 October 2020
Additions
Disposals
At 30 September 2021
Depreciation
At 1 October 2020
Charge in the year
Disposals
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.
212 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
£’m
6.5
-
-
0.1
6.6
2.8
1.7
-
-
4.5
3.6
2.1
5.6
1.3
(0.4)
6.5
1.6
1.6
(0.4)
2.8
4.0
3.6
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
15. Investment in subsidiaries
Carrying value at 1 October
Additions
Share-based payments
Carrying value at 30 September
2022
£'m
31.6
-
1.7
33.3
2021
£’m
16.8
13.0
1.8
31.6
The Company has investments in the ordinary share capital of the following subsidiaries at 30 September 2022:
Name of Company
Holding
% Held
Incorporation and
significant place of
business
Business
Direct holdings
Integrated Financial
Arrangements Ltd
IntegraFin Services
Limited
Ordinary Shares
100%
United Kingdom
Investment
Administration
Ordinary Shares
100%
United Kingdom
Services Company
Transact IP Limited
Ordinary Shares
100%
United Kingdom
Software provision &
development
Integrated Application
Development Pty Ltd
Transact Nominees
Limited
Ordinary Shares
100%
Australia
Software maintenance
Ordinary Shares
100%
United Kingdom
Non-trading
IntegraLife UK Limited
Ordinary Shares
100%
United Kingdom
Life Insurance
IntegraLife International
Limited
Ordinary Shares
100%
Isle of Man
Life Assurance
Transact Trustees Limited Ordinary Shares
100%
United Kingdom
Non-trading
Objective Funds Limited
Ordinary Shares
100%
United Kingdom
Dormant
Objective Wealth
Management Limited
Ordinary Shares
100%
United Kingdom
Dormant
Time For Advice Limited
Ordinary Shares
100%
United Kingdom
Financial planning
software
Indirect holdings
IntegraFin Limited
Ordinary Shares
100%
United Kingdom
Non-trading
ObjectMastery (UK)
Limited
IntegraFin (Australia) Pty
Limited
Ordinary Shares
100%
United Kingdom
Dormant
Ordinary Shares
100%
Australia
Non-trading
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 213
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
15. Investment in subsidiaries (continued)
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.
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.
Group restructure
On 1 July 2022 IFAL transferred the entire issued share capital of six subsidiaries to the Company. These transfers
were made for nil consideration, and each of the transfers constituted a distribution in kind by IFAL. The amount of
each distribution was taken to be the book value of the relevant shares, being:
▪ £1.7m for ILUK
▪ £1.0m for ILInt
▪ £1 for each of Transact Nominees Limited, Transact Trustees Limited TTL, Objective Funds Limited and Objective
Wealth Management Limited.
The investments in the Company accounts are valued at cost, which in this case is nil.
214 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
16. Loans
This note analyses the loans payable by and receivable to the Company. The carrying amounts of loans are as follows:
Loans receivable
Loans receivable from third parties
Interest receivable on loans
Total gross loans
Credit loss allowance
Total net loans
2022
£’m
5.7
-
5.7
(0.2)
5.5
2021
£’m
3.5
0.1
3.6
(0.2)
3.4
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 22.
Loans payable
Loan payable to subsidiary
To be settled within 12 months
To be settled after 12 months
Total loan payable
2022
£’m
8.0
1.0
7.0
8.0
2021
£’m
9.0
1.0
8.0
9.0
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 8 years.
17. Investments held for the benefit of policyholders
ILInt
Investments held for the benefit of
policyholders
ILUK
Investments held for the benefit of
policyholders
2022
Cost
£’m
1,988.9
2022
Fair value
£’m
2,057.2
2021
Cost
£’m
1,737.5
2021
Fair value
£’m
2,102.2
1,998.9
2,057.2
1,737.5
2,102.2
19,215.4
18,658.6
16,146.4
19,684.9
19,215.4
18,658.6
16,146.4
19,684.9
Total
21,214.3
20,715.8
17,883.9
21,787.1
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 215
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
FINANCIAL REPORT continued
FINANCIAL REPORT continued
17. Investments held for the benefit of policyholders (continued)
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
18. Liabilities for linked investment contracts
2022
2021
Fair value
Fair value
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
£’m
2,201.4
2,201.4
19,973.0
19,973.0
22,174.4
2022
£’m
23,053.4
3,113.9
(1,163.1)
-
2,729.0
151.5
(59.7)
(192.6)
£’m
2,199.7
2,199.7
20,853.7
20,853.7
23,053.4
2021
£’m
18,112.9
3,391.3
(1,130.5)
0.2
2,940.2
-
(56.6)
(204.1)
22,174.4
23,053.4
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.
216 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
FINANCIAL REPORT continued
FINANCIAL REPORT continued
19. Cash and cash equivalents
Bank balances – instant access
Bank balances – notice accounts
Total
2022
£’m
173.5
9.5
183.0
2021
£’m
169.6
6.5
176.1
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.
20. Cash held for the benefit of policyholders
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
2022
£’m
2021
£’m
1,314.3
1,131.6
-
144.2
-
37.2
96.5
1.0
Total
1,458.5
1,266.3
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.
21.
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
2022
£’m
0.1
3.0
3.1
Group
2020
£’m
0.1
5.0
5.1
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 217
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
22. Other prepayments and accrued income
Accrued income
Less: credit loss allowance
Accrued income - net
Prepayments
Total
Group
2022
£’m
13.1
(1.0)
12.1
5.1
17.2
Company
2022
£’m
-
-
-
0.1
0.1
Group
2021
£’m
12.8
(0.8)
12.0
4.0
16.0
Company
2021
£’m
-
-
-
-
-
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
Decrease/(Increase) during the year
Balance at 30 September
23. 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
Group
2022
£’m
2.1
(0.1)
2.0
-
-
-
2.0
Company
2022
£’m
-
-
-
0.2
-
-
0.2
2022
£’m
(0.8)
-
(0.2)
(1.0)
Group
2021
£’m
0.9
(0.1)
0.8
-
1.8
1.1
3.7
2021
£’m
(0.6)
-
(0.2)
(0.8)
Company
2021
£’m
-
-
-
0.1
-
-
0.1
Amount due from HMRC is in respect of tax claimed on behalf of policyholders for tax deducted at source.
218 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
24. Trade and other payables
Trade payables
PAYE and other taxation
Other payables
Accruals and deferred income
Deferred consideration
Total
Group
2022
£’m
1.6
2.2
7.7
8.3
1.7
21.5
Company
2022
£’m
-
0.1
0.3
0.3
1.7
2.4
Group
2021
£’m
0.4
1.7
5.5
8.1
1.7
17.4
Company
2021
£’m
-
0.1
0.2
0.4
1.7
2.4
Other payables mainly comprises £4.8 million (2021: £4.2 million) in relation to bonds awaiting approval.
25. Lease liabilities
Lease liabilities – Property:
Opening balance
Additions
Lease payments
Interest expense
Balance at 30 September
Amounts falling due within one year
Amounts falling due after one year
2022
£’m
5.1
-
(2.4)
0.1
2.8
1.9
0.9
2021
£’m
6.1
1.3
(2.5)
0.2
5.1
2.4
2.7
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.
26. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 20% (2021:
20%) on policyholder assets and liabilities and 25% (2021: 25%) on non-policyholder items. The increase in the UK
corporation tax rate from the current rate of 19% 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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 219
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
26. Deferred tax (continued)
Deferred
Tax Asset
Accelerated
Capital
Allowances
Share
based
payments
Policyholder
Unrealised
losses/
(unrealised
gains)
Policyholder
Excess
management
expenses and
deferred
acquisition
costs
Total
Policyholder
Unrealised
losses on
investment
trusts
Other
deductible
temporary
differences
£’m
£’m
£’m
-
-
-
-
8.1
(5.2)
-
-
-
-
-
-
-
-
£'m
0.1
£'m
0.5
-
0.2
0.1
0.7
-
(0.3)
2.2
0.2
-
10.8
(5.2)
Accelerated
capital
allowances
Policyholder
tax on
unrealised
gains
Other
taxable
differences
£’m
0.1
-
-
0.1
(0.1)
-
£’m
8.8
19.6
-
28.4
(23.2)
(5.2)
-
£’m
-
0.2
0.8
1.0
(0.1)
0.9
Total
£’m
8.9
19.8
0.8
29.5
(23.4)
(5.2)
0.9
£'m
-
-
-
-
£'m
0.4
0.2
0.6
(0.3)
0.1
0.2
At 1 October
2020
Charge to
income
At 30
September
2021
Excess tax
relief
charged to
equity
Charge to
income
Offset
Deferred Tax
Liability
At 30
September
2022
Deferred Tax Liability
At 1 October 2020
Charge to income
Deferred tax acquired through business combination
At 30 September 2021
Charge to income
Offset against Deferred Tax asset
At 30 September 2022
220 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
0.1
0.5
2.9
2.2
0.2
0.1
6.0
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
26. Deferred tax (continued)
The Company has no deferred tax assets or liabilities.
The deferred tax movement in 2022 arises due to significant falls in the value of equity and bond markets resulting in
losses on investments held for the benefit of policyholders (£184.4m), as well as excess management charges
(£3.7m). To support the recognition of the policyholder net deferred tax asset of £5.4m, modelling has been carried
out to review the likely recovery period for the deferred tax asset. The modelling is based on management forecasts
and concludes that the deferred tax asset on losses is expected to be recovered by financial year 2024. An extreme
downside case was also modelled based on PRA Solvency II guidance to include a fall in type 1 equity stock markets,
and a mass lapse of life insurance products, neither of which impacted the anticipated recovery.
27. Client monies and client assets
2022
Client monies
Client assets
2021
Client monies
Client assets
£’m
3,346.8
Amounts due to clients
46,723.7
Corresponding liability
£’m
2,901.5
Amounts due to clients
49,210.1
Corresponding liability
£’m
3,346.8
46,723.7
£’m
2,901.5
49,210.1
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.
28. Provisions - Group
Balance brought forward
(Decrease)/increase in dilapidations provision
Decrease in ILInt non-linked unit provision
(Decrease)/increase in ILUK policyholder reserves
Decrease in other provisions
Balance carried forward
Amounts falling due within one year
Amounts falling due after one year
Dilapidations provisions
ILInt non-linked unit provision
Current ILUK policyholder reserves
Non-current ILUK policyholder reserves
Total
2022
£’m
17.8
(0.3)
(0.1)
45.0
(5.6)
56.8
10.7
46.1
0.2
-
56.6
-
56.8
2021
£’m
25.2
0.1
-
(7.5)
-
17.8
11.6
6.2
0.5
0.1
11.6
5.6
17.8
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 221
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
28. Provisions - Group (continued)
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 policyholder reserve 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.
29. Contingent consideration – Group and Company
Contingent consideration
2022
£’m
1.7
2021
£’m
0.8
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.
The fair value of the contingent consideration is remeasured at each reporting date. Management have estimated the
fair value at 30 September 2022 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 2022
30. Share-based payments
Group
2022
£’m
2.4
0.2
2.6
Company
2022
£’m
1.7
0.5
2.2
Group
2021
£’m
1.7
0.7
2.4
Company
2021
£’m
1.1
0.6
1.7
Balance brought forward
Movement in the year
Balance carried forward
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 2022 was £nil (2021: £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 30.
222 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
30. Share-based payments (continued)
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 2022 was £0.6m (2021: £0.7m).
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 2022 was £0.5m (2021: £0.5m).
(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 2022 was £0.8m (2021: £0.7m). 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.
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
Details of the movements in the share scheme during the year are as follows:
2022
Shares
2021
Shares
(number)
(number)
692,683
292,318
(130,754)
854,247
314,161
473,683
295,210
(76,210)
692,683
148,543
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 223
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
30. Share-based payments (continued)
SIP 2005
Outstanding at start of the year
Shares withdrawn from the plan
Shares in the plan at end of year
Available to withdraw from the plan at
end of year
Group
Company
Group
Company
Weighted
average
exercise price
Shares
Weighted
average
exercise price
Shares
(pence)
(number)
(pence)
(number)
0.00
0.00
0.00
0.00
872,709
(67,200)
805,509
805,509
0.00
0.00
0.00
0.00
1,201,223
(328,514)
872,709
872,709
The weighted average share price at the date of withdrawal for shares withdrawn from the plan during the year was
425.47 pence (2021: 507.35 pence).
At 30 September 2022 the exercise price was £nil as they were all nil cost options.
2022
2022
2021
2021
Weighted
average
exercise price
Share options
Weighted
average
exercise price
Share options
(pence)
(number)
(pence)
(number)
0.00
0.00
0.00
0.00
0.00
0.00
576,088
184,772
-
(85,553)
675,307
183,958
0.00
0.00
0.00
0.00
0.00
434,643
141,445
-
576,088
-
PSP
Outstanding at start of the year
Granted
Forfeited
Exercised
Outstanding at end of year
Exercisable at end of year
224 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT FINANCIAL REPORT continued
FINANCIAL REPORT continued
30. Share-based payments (continued)
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:
2022
2021
PSP
Share price at date of grant
Exercise price
Expected life
Risk free rate
Dividend yield
Weighted average fair value per option
31. 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
522.5p
Nil
3 years
0.69%
1.91%
493.3p
2022
£’m
(2.1)
(0.3)
(2.4)
2022
£’m
(1.8)
(0.3)
(2.1)
555.0p
Nil
3 years
0.00%
1.50%
530.7p
2021
£’m
(1.1)
(1.0)
(2.1)
2021
£’m
(0.9)
(0.9)
(1.8)
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 225
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT 31. Employee Benefit Trust reserve (continued)
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.
32. Other reserves – Group
Foreign exchange reserves
Non-distributable merger reserve
Non-distributable insurance reserves
2022
£’m
-
5.7
-
2021
£’m
(0.1)
5.7
0.5
Foreign exchange reserves are gains/losses arising on retranslating the net assets of IAD Pty into sterling.
Non-distributable reserves relate to the non-distributable merger reserve held by one of the Company’s subsidiaries,
IFAL, which is classified within other reserves on a Group level.
33. Related parties
During the year the Company did not render nor receive any services with related parties within the Group, and at the
year end the Company had the following intra-Group receivables:
Company
Integrated Financial Arrangements Ltd
Amounts owed by related parties
2022
£’m
0.1
2021
£’m
0.1
226 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT 33. Related parties (continued)
A loan of £10 million was issued to the Company by IntegraLife UK Limited in FY21. This is an arm’s length transaction
as interest is charged at a commercial rate. IHP is paying the loan off over ten years and made the second payment of
£1 million, plus accrued interest, during the year. The current loan balance is £8 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 2022 or 2021 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 £3.6million (2021: £3.3million) in dividends during the year and
benefitted from staff discounts for using the platform of £2k (2021: £2k). The number of IHP shares held at the end of
the year by key management personnel was 35,207,874, a increase of 1,123 from last year.
All of the above transactions are commercial transactions undertaken in the normal course of business.
34. Events after the reporting date
As per the Chair’s statement on page 3, a second interim dividend of 7.0 pence per share was declared on 13
December 2022. This dividend has not been accrued in the consolidated statement of financial position.
35. Dividends
During the year to 30 September 2022 the Company paid interim dividends of £33.8million (2021: £28.5million) to
shareholders. The Company received dividends from subsidiaries of £45.0million (2021: £42.1million).
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 227
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT OTHER
INFORMATION
228 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT 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
Luke Carrivick 020 7608 4900
Website
www.integrafin.co.uk
Company number
8860879
DIRECTORS, COMPANY DETAILS, ADVISERS
Executive Directors
Michael Howard
Alexander Scott
Jonathan Gunby
Non-Executive Directors
Richard Cranfield
Christopher Munro
Rita Dhut
Caroline Banszky
Victoria Cochrane
Robert Lister
Company Secretary
Helen Wakeford
Independent Auditors
Ernst & Young LLP,
25 Churchill Place,
Canary Wharf,
London, E14 5EY
Solicitors
Eversheds Sutherland,
One Wood Street,
London, EC2V 7WS
Corporate Advisers
Peel Hunt LLP,
7th Floor 100 Liverpool Street,
London,
England,
EC2M 2AT
Barclays Bank PLC,
5 The North Colonnade,
Canary Wharf,
London,
E14 4BB
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 229
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT OTHER INFORMATION
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
230 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT
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.
Year end
Cash
Assets
FUD
% change on the previous year
Average daily FUD
Cash
Assets
FUD
% change on the previous year
2022
£’bn
3.51
46.56
50.07
-4%
2022
£’bn
3.23
49.27
52.50
11%
2021
£’bn
2.91
49.20
52.11
27%
2021
£’bn
2.91
44.33
47.24
22%
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.
2022
£’bn
2021
£’bn
Gross inflows
Outflows
Net inflows
4.73
2.53
2.19
% change on the previous year
-56%
7.70
2.74
4.95
38%
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.
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 231
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT 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.
T4A licence users calculated as the total number of core licence users
active on the CURO platform.
Advisers
% increase
Clients
% increase
T4A licence users
% increase
2022
£’000
2021
£’000
6.9
5%
6.5
5%
224.7
208.6
8%
2.2
44%
9%
1.5
This measurement is an indicator of our presence in the market.
These values are not reported within the financial statements or the
accompanying notes
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
2022
97%
2021
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.
Client retention Data sourced internally
Income statement measures
Non-underlying
expenses
Consolidated statement
of comprehensive income
Calculated as costs which have been incurred outside of the ordinary
course of the business.
Page 163
Non-underlying expenses
Backdated VAT
Interest on backdated VAT
Other
Non-underlying expenses
2022
£’m
2021
£’m
8.0
0.8
2.7
11.5
-
-
3.3
3.3
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.
232 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT 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.
Non-underlying expenses relate to back dated VAT and interest being
due to HMRC after their review concluded that the inclusion of IAD in
our VAT group was terminated with effect from July 2016, and reverse
charge VAT is therefore payable on services provided by IAD since that
date. We have been unsuccessful in two stages of appealing the
decision, which resulted in non-underlying expenses of backdated VAT
of £8.0 million for the period to September 2021 and non-recurring
interest on the VAT due of £0.8m. For further details see financial
review, page 47.
Other costs consist of professional fees and stamp duty in relation to
acquisitions (FY21 only), and post-combination remuneration. 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.
Other costs in FY22 also include a credit of £0.3 million in relation to
the dilapidations provision on the Group’s Clement’s Lane office, as it
has been established that this is no longer required.
Underlying
earnings per
share
Financial review
Page 45
Calculated as profit after tax net of non-underlying expenses, divided
by called up equity share capital.
Profit after tax
Non-underlying expenses
Tax allowable element of costs
Underlying profit after tax
Divide by: Called up equity
share capital
2022
£’m
2021
£’m
44.0
11.5
(1.4)
54.1
3.3
51.1
1.6*
0.3
53.0
3.3
Underlying earnings per share
16.3p
16.0p
* Includes VAT on IAD costs of £1.7 million for FY21, though the actual costs were recorded in
FY22
INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022 233
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT Underlying
profit before
tax
Financial review
Calculated as profit before tax net of non-underlying expenses.
Page 45
Profit before tax
Add: Non-underlying expenses
Underlying profit before tax
2022
£’m
2021
£’m
54.3
11.5
65.8
63.6
1.6*
65.2
* Includes VAT on IAD costs of £1.7 million for FY21, though the actual costs were recorded in
FY22
Shareholder
returns
Consolidated statement
of comprehensive income
Calculated as dividend per share paid to shareholders, which relate to
the respective financial years.
Page 163
Dividend policy Consolidated statement
of comprehensive income
Page 163
2022
2021
1st interim dividend
3.0 pence
2nd interim dividend
7.0 pence
7.0 pence
Shareholder returns
10.2 pence 10.0 pence
% increase on previous
financial year
2.0%
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.
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
2022
£’m
2021
£’m
33.8
44.0
77%
33.1
51.1
65%
Our policy is to pay 60% to 65% of full year profit after tax as two
interim dividends. For FY22 the total dividend is 77% of IFRS reported
profit for the financial year, but is 62% after excluding non-underlying
expenses.
Delivery on dividend policy is a measurement of our performance
against the policy and the businesses ability to generate distributable
profits.
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: 8860879)
The holding Company of the Integrated Financial Arrangements Ltd Group of companies.
234 INTEGRAFIN ANNUAL REPORT YEAR ENDED 30 SEPTEMBER 2022
GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATIONSTRATEGIC REPORT M137 September 2022
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.