Allfunds Group announce full year results for the period ended 31st December 2021

Financial highlights

The financial year 2021 was defined by strong client activity which translated into further growth and a record financial performance for the Company.

The Company has delivered an excellent financial performance, with net revenues up 37%, from 2020 Pro-Forma[5] €370m to €506m, and high profitability with Adjusted EBITDA increasing by 40%, from 2020 Pro-Forma⁵ €263m to €367m, implying an Adjusted EBITDA margin of 71% and 73% respectively. The strong performance was primarily due to an exceptional growth of AuA, positive net platform revenue margin evolution partially supported by the contribution from transaction revenues, and variable costs under control despite higher level of activity.

Net platform revenues for the period were up 36% to €485m (2020 PF: €356m). These net platform revenues which are recurring fees represented 96% of total net revenues and the net subscription and other revenues accounted for 4% of total net revenues. The net platform revenues are split into commission revenue and transaction revenue. The commission revenue has experienced an increase of 37% driven by a higher volume of AuA. As a result, net platform revenue margin stood at 3.6 bps up from 3.0 bps in 2020. This margin expansion can be explained by several positive factors: i) positive mix effects as a result of the faster growth of Allfunds Traditional platform service´s AuA perimeter, ii) strong transaction related revenues in the year and iii) fund house harmonization programme. These were partially compensated by the onboarding of new clients in new regions at lower platform margins and the incorporation of AuA coming from BNPP assets transfer at lower margin.

Net subscription revenues increased by 45% to €20m (2020 PF: €14m) thanks to the effort in selling membership fees and add-on services, in line with expectations.

Total Adjusted Expenses increased by 30% to €145m (2020 PF: €112m), showing we have invested meaningfully in the future growth of the company. Most of this increase is related to the additional hiring in senior roles, combined with increases seniority in key roles. We have also the impact of the BNPP transaction, the higher bonus pool and the set-up of the Long-Term Incentive plan for key employees as anticipated. Total headcount[6] grew from 884 employees as of December 2020 to 907 employees as of December 2021.

Adjusted EBITDA rose to €367m (2020 PF: €263m), an increase of 40% compared with Pro-Forma numbers of the prior period, and their Adjusted EBITDA margin increased to 73% (2020 PF: 71%).

In 2021, Allfunds decided to opt for a tax-step up regime in Italy as a result of the acquisition of BNPP Banca Corrispondente business by which, in exchange for a substitute tax (paid as an up-front amount), Allfunds is entitled to amortise the relevant stepped-asset for tax purposes. On 7 June 2021, the Italian tax authorities confirmed Allfunds Bank Milan Branch ’s entitlement to apply for the step-up rules in a positive answer to a ruling application filed in March 2021.

Adjusted Profit after tax, including the impact of the above-mentioned tax step-up, stood at €192m (2020: €169m), an increase of 14% compared with the prior period.

In terms of underlying capital expenditures, the Company has increased to €27m in 2021, up from €19m in 2020, reflecting it has invested meaningfully in the future growth of the company strengthening its digital proposition and IT requirements.

Non-financial highlights

Figures in € billion	2021	2020	ChangeY-o-Y (%)	2H 2021	1H 2021	ChangeH-o-H (%)
AuA EoP	1,494	1,159	29%	1,494	1,348	11%
Average AuA	1,351	994	36%	1,431	1,269	13%
Net flows as a % of BoP AuA ⁽¹⁾	20.2%	11.6%	8.6 p.p.	7.0%	11.5%	(4.5) p.p.
Market performance as a % of BoP AuA ⁽²⁾	10.4%	4.4%	6.0 p.p.	3.1%	6.6%	(3.5) p.p.

Note: 2021 financial data unaudited. AuA refer to Assets under administration at End of Period (“EoP”) 31 December

(1) Calculated as the sum of flows from existing clients and flows from new clients over Allfunds traditional AuA only as of beginning of period amounting to €746bn, excluding acquired AuA coming from BNPP Other portfolio

(2) Volumes of AuA from movements in the financial markets in any given year as a percentage of Allfunds traditional AuA only as of beginning of period amounting to €746bn, excluding acquired AuA coming from BNPP Other portfolio

Figures in € million, unless otherwise stated	2021	2020 PF	ChangeY-o-Y (%)	2H 2021	1H 2021⁽³⁾	ChangeH-o-H (%)
Net revenue	505.7	370.4	37%	258.5	247.2	5%
of which: Net platform revenue	485.4	356.4	36%	247.4	238.0	4%
Net platform revenue (% of total)	96.0%	96.2%	(0.2) p.p.	95.7%	96.3%	0.6 p.p.
Net platform revenue margin (bps)	3.6	3.0	0.6	3.4	3.8	(0.4)
of which: Net subscription and other revenues	20.3	14.0	45%	11.1	9.2	20%
Net subscription and other revenues (% of total)	4.0%	3.8%	0.2 p.p.	4.3%	3.7%	0.6 p.p.

Separately disclosed items ⁽⁴⁾	113.6	63.3	80%	36.6	77.0	(52)%

Adjusted EBITDA	367.2	262.7	40%	186.1	181.1	3%
Adjusted EBITDA margin	72.6%	70.9%	1.7 p.p.	72.0%	73.3%	(1.3) p.p.
Adjusted profit before tax	328.5	240.4	37%	166.5	161.3	4%
Adjusted Cash tax expense ⁽⁵⁾	(136.3)	(71.7)	90%	(69.1)	(66.9)	4%
Adjusted profit after tax	192.2	168.6	14%	97.4	94.4	4%
Illustrative free cash flow ⁽⁶⁾	188.8	170.8	11%	92.7	95.7	(3)%
Underlying capital expenditures	26.6	19.4	37%	16.2	10.4	56%

Figures with normalised cash tax expense (excluding impact of tax step-up)
Adjusted Cash tax expense (at 29.5% tax rate)	(96.9)	(71.7)	35%	(49.3)	(47.6)	4%
Adjusted profit after tax (at 29.5% tax rate)	231.6	169.2	37%	117.8	113.7	4%
Illustrative Normalised free cash flow ⁽⁷⁾	228.2	170.8	33%	113.1	115.1	(2)%

(3) Re-stated figures to include provisions as part of Adjusted PBT and excluding Revolving Credit Facility interests from

(4) One-off items affecting Adjusted EBITDA include mainly the consultancy costs including the IPO costs amounting to around €24m, as well as the Transitional Service Agreement costs from recent deals with BNP Paribas

(5) Tax expense in 2021 based on 41.4% cash tax rate over Adjusted PBT (including tax step-up)

(6) Calculated as Adjusted EBITDA excluding underlying capex, recurring net interest income, Adj. cash tax expense (assuming a 41.4% as a result of the inclusion of the tax step-up) and excluding also rental expenses (not through P&L)

(7) Free cash flow assuming a 29.5% effective cash tax

Outlook

As data analytics and digital solutions have become more deeply woven into the fabric of financial services, companies have faced significant pressures to meet the evolving needs of clients, shareholders and other stakeholders, whose expectations are aligned to these tech-driven services. Companies have had to adopt enhanced technology frameworks to keep pace with the rest of the industry. For many, harnessing the power of new digital tools has presented challenges.

Allfunds is uniquely positioned to support companies’ transition in the digital age. With a suite of best-in-class tools to facilitate improved market intelligence, portfolio modelling, and efficiencies embedded in blockchain technology, Allfunds empowers companies to compete in an increasingly complex marketplace and capture growth opportunities in line with new industry standards.

The Company continues to capitalise on these secular market growth trends from open-architecture penetration and outsourcing penetration, and to deliver strong operational performance aligned with the principles set out at the IPO.

At the macro-level, the now ever-present Russia-Ukraine conflict and inflation becoming much more conspicuous are impacting meaningfully the markets in these first months of the year. The Company revenue model provides resilience during times of market volatility. The Company remains very positive on the evolution of the business. Allfunds has a robust and very profitable business model, with a track record of delivering strong organic growth and increasing market share.