In a pre-close trading update for the six months ended 30 June 2021, Fintel (FNTL ) said revenue saw a 10% year-on-year increase in line with the Board's overall expectations.
The Group, which provides fintech and support services to the UK retail financial services sector, said revenue for 1H21 was up 10% to £31.7 million from £28.9 million in 1H20.
Adjusted earnings before interest, taxes, depreciation and amortization rose 12% to £8.3m, while the firm’s adjusted Ebitda margin is expected to rise to 26.1%, from 25.5% in 1H20.
Fintel said cash conversion continues to be an inherent strength for the business, with in excess of 70% conversion expected to be achieved in the period compared to 65% in 1H20.
Fintel said its core membership business has been ‘robust’ and that the recovery in the housing market and housing related transactions have contributed to overall growth.
Fintel also announced that it has agreed to dispose of its subsidiary Zest Technology to FPE Capital for an initial consideration of £10m, a disposal multiple of 22 times trailing EBITDA. It said the disposal proceeds may rise by up to a further £1.5m based on FY21 revenue.
Fintel, formerly SimplyBiz Group, said the disposal of Zest, which provides software for the employee benefits market, represents “excellent value for shareholders for a non-core asset”.
Shares in Fintel have increased by over 30% in value since the beginning of 2021. The stock was trading 2.73% higher this morning at 230.5p following the announcement.
Alongside the net proceeds of the disposal, the firm’s pro forma net debt to last 12 months Adjusted EBITDA*1 ratio would have been reduced to c.0.3 times as at 30 June 2021, it said.
Fintel said ‘solid progress’ has been made on the transition towards its new digital operating model, in particular with respect to distribution revenues. Taking into account the disposal of Zest, the Board said it remains confident of its full year expectations for the business.
Fintel highlighted to shareholders that the Company’s plans to digitise these services are ‘significantly ahead of initial projections’, and that a further update on overall digital progress will be provided along with the interim results release scheduled for September 2021.
Matt Timmins, Joint CEO of the firm, said, "We are delighted to report significant strategic progress and strong trading across the first six months of the year. We have successfully sold Zest Technology for an excellent price, allowing us to streamline the business in line with our strategy to focus on our core, and create funding headroom to support our future growth.”
He added, “Our ongoing and rapid digital acceleration means Fintel continues to grow with real momentum. We're now in an even stronger financial position and developing the business with focus, pace and agility. These are exciting times. We are Fintel.”
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