Fintel hikes dividend by 8% as regulatory compliance boosts growth #
Fintech firm Fintel has raised its dividend by 8%, driven by the demand for financial intermediaries to comply with stricter regulations.
Fintel provides compliance, business, and technology services to these intermediaries and has seen strong progress across all its core businesses. Its acquisition of Defaqto for £74.2m in 2019 has doubled its profit contribution and led to a repayment of all borrowings. Fintel’s impressive cash flow performance also saw the conversion of £19.3m (118%) of adjusted operating profit into underlying cash flow, producing free cash flow of £13.8m.
Fintel’s expansion of its strategic distribution partnership with Schroders has seen it join Fintel’s Risk Controlled investment solution. This follows distribution agreements with Fidelity and Aviva, which have also aligned their distribution strategies to partner with Fintel. Around 70% of Fintel’s distribution partner revenue has been converted to multi-year subscription agreements, improving both visibility and quality of the group’s income stream.
The joint house broker, Zeus Capital, expects Fintel to see another year of growth, with 7% higher cash profit of £20.8m and a near-doubling of net cash to £23.8m. Although the increase in the UK corporation tax rate will subdue growth in adjusted EPS to 12.4p, there is still a prospective dividend yield of 1.8% on offer. Fintel’s shares have only made modest headway since its interim results, but the company’s fundamental drivers of business remain robust and continue to support a higher rating.