4 September 2024
Alpha Group International
plc
("Alpha" or the
"Group")
Half Year
Results
for the six months ended 30
June 2024
Alpha Group International plc
(LON: ALPH), a global provider of financial solutions, dedicated to
corporates and institutions, is pleased to present its Unaudited
Interim Results for the six months ended 30 June 2024.
Group
Highlights
Financial Highlights
- Group revenue increased by 16% to over £64m (H1 2023:
£55m)
- Corporate division revenue increased by 12% to £30m (H1 2023:
£27m)
- Institutional division revenue increased by 15% to £33m (H1
2023: £29m)
- Cobase revenue increased by 80% to £1m, compared to H1 2023
pre-acquisition
- Underlying1 profit before tax up 14% to £22.3m,
and on an organic basis (excluding Cobase) grew 21% to £23.7m (H1
2023: £19.6m)
- Organic underlying profit before tax margin of 38%, and
including Cobase was 35% (H1 2023: 35%)
- Average client balances increased by 11% to £2.1bn (H1 2023:
£1.9bn)
- Net
treasury income (client and own) of £42m (H1 2023: £34m),
increasing Total Income by 19% to £107m (H1 2023: £90m)
- Profit before tax increased 18% to £60.8m (H12
2023: £51.4m)
- Basic earnings per share up 13% to 104.3p (H1
20232: 92.4p) and on an underlying basis increased by 8%
to 37.1p (H1 20232: 34.5p)
- Strong cash and liquidity position, with adjusted net
cash3 of £180m (31 December 2023: £179m)
- Completed £20m share buyback in June 2024, with a further
share buyback of up to £20m initiated in June
- Proposed interim dividend of 4.2 pence per share (H1 2023:
3.7 pence)
Business Highlights
- Corporate FXRM client numbers increased by 9% to 941 (H1
2023: 862)
- Institutional FXRM client numbers increased by 19% to 271 (H1
2023: 227)
- Institutional alternative banking account numbers increased
by 31% to 7,030 (H1 2023: 5,350)
- Cobase client numbers increased by 55% to 169, compared to H1
2023 pre-acquisition
- Business well-positioned to deliver higher levels of
operational gearing, as previous investments in people and
technology begin to mature
- Group Front Office headcount increased by 11% to 157 (FY
2023: 142)
- Inclusion in the FTSE 250 in June, following a successful
listing on the Premium Segment of the Main Market in May
- Appointment of Dame Jayne-Anne Gadhia to the Board as Chair
Designate in May 2024
1 Underlying excludes the impact
of non-cash shared-based payments, net treasury income on client
balances, one-off listing-related and M&A costs, and
amortisation of purchased intangibles.
2 The prior period restatement is
detailed further in Note 3 of the financial statements.
3 Excluding collateral received
from clients, collateral paid to banking counterparties, early
settlement of trades and the unrealised mark to market profit or
loss from client swaps and rolls.
Outlook
Whilst macro headwinds remain,
particularly within the alternative investment market served by our
Institutional division, we have moved beyond the peak levels of
uncertainty we saw in H2 2023. At the same time, our performance in
H1 2024 has shown that we are able to continue growing strongly,
even in less favourable market conditions. Moving into H2, we
expect macro conditions to remain challenging, however, have
continued to deliver strong results in July and August. We
therefore have reasonable confidence that we are on track to
deliver full-year results in line with expectations.
Morgan Tillbrook, CEO of Alpha Group International
said:
"Our teams have continued to deliver a strong performance
with double-digit growth across our corporate and institutional
divisions, despite the challenging market backdrop, reflecting the
strength of our diversified model and the rewards of our
investments to date. Additionally, the current interest rate
environment continues to produce a NTI tailwind, contributing
further to our balance sheet strength, whilst also enabling us to
announce this year up to £40m in share buybacks.
With the foundations established for long-term and
sustainable growth through investment in our talent, product, and
network of overseas offices, we enter the next chapter of our
growth primed to 'expand' across our chosen verticals, retaining
the same ambition and determination that has taken us from a single
office in Berkshire to a FTSE 250-listed global operation in just
15 years.
Our overseas offices are closely following the successful
blueprint established in the UK, providing a sense of the huge
opportunity in front of us as we scale. At the same time, our
strong cash position enables us to remain flexible to invest in
those areas we feel would benefit from further
capital.
It would be remiss of me not to recognise the hard work
across the Group that has taken us to this point and will continue
to drive us in the future. Our team members remain our greatest
strength, and I would like to thank all for their essential
contribution to our performance."
Enquiries:
Alpha Group International plc
Morgan Tillbrook, Founder and
CEO
Tim Powell, CFO
|
Via Alma Strategic
Communications
|
Alma Strategic Communications
(Financial Public Relations)
Josh Royston
Andy Bryant
Kieran Breheny
|
+44 (0) 20 3405 0205
|
Notes to editors
Alpha is a high-tech, high-touch
provider of financial solutions dedicated to corporates and
institutions. Working with clients across 50+ countries,
we blend intelligent human capabilities with new technologies
to provide an enhanced alternative to traditional banking services,
with solutions covering: FX risk management, global accounts, mass
payments, fund finance, and cash management.
Key to our success is our team of
nearly 500 people based across eleven global offices, brought
together by a high-performance culture and a partnership structure
that empowers them to act as owners of our business.
Despite being an established
business listed on the London Stock Exchange, we remain
relentlessly focused on maintaining the same level of operational
agility and client focus we had when we first started in 2009. This
dynamic, combined with the passion of our people, has enabled us to
make a substantial and enduring difference to our clients, and
deliver a growth story to match.
Overview
Introduction
The first half of this year was
marked by an exciting new chapter in Alpha's growth story. In May,
we celebrated Alpha's listing on the Main Market of the London
Stock Exchange and, less than a month later, its inclusion in the
FTSE 250 index. It is an incredible milestone for a company that a
little over seven years ago was just starting life on AIM. During
this time, our business has grown and evolved significantly: what
began as a small team based in Berkshire providing FX risk
management services to UK corporates, has evolved to become a team
of nearly 500 people across eleven global offices, providing
industry-leading financial solutions to corporate and institutional
clients in over 50 countries. It's fair to say that a lot has
changed, and we are forever grateful to our clients, staff,
counterparties and investors for supporting us as we progressed
along this journey.
Reporting
The significant business
diversification, innovation and expansion achieved over recent
years has augmented a required evolution of our organisational
structure, moving from a product-centric focus (FX risk management
and alternative banking) to a client-centric focus (corporates and
institutions). We are keen to ensure that our reporting aligns with
our revised organisational structure so that our investors
understand our business in a way that is consistent with how we
operate and analyse it. We therefore now report through the lens of
our two key markets: the corporate market and the institutional
market.
We will continue to analyse the
contributions to each of our Corporate and Institutional division's
performance generated from our main service offerings, namely: FX
risk management ("FXRM"), alternative banking, fund finance and
bank connectivity (Cobase).
The table below explains how we
will segment our reporting moving forward. We hope these changes will make it
easier to understand our business model, strategy, and main growth
drivers.
Listed Entity
|
|
Alpha
Group International plc
|
Division
|
|
Corporate
|
Institutional
|
Offices
|
|
UK
(HQ), Netherlands, Canada, Malta, Italy, Australia, Spain,
Germany
|
UK
(HQ), Luxembourg, Malta
|
Solution
|
|
FXRM
|
Cobase
|
FXRM
|
Alternative Banking
|
Fund
finance
|
Cobase
|
Product / Monetisation
|
|
Spot
Forward
Options
Payments
NTI -
own1
|
SaaS
& transaction fees
|
Spot
Forward
Options
NTI-own1
|
Payments, accounts and advisory fees
Platform fees
NTI -
client1
|
Platform and advisory fees
|
SaaS
& transaction fees
|
1 NTI-own, refers to the net treasury income Alpha receives
from interest earned on its own balances, whilst NTI-client refers
to the interest earned on its client balances.
Performance
The table below utilises the new
reporting framework to highlight the strong performances achieved
by both our Corporate and Institutional divisions, despite the
latter continuing to face a heavily suppressed market. More
detailed breakdowns on the performances of these divisions are
shown further along in this statement, but together they have
served to deliver some strong group numbers: revenue grew 16% to
over £64m, underlying profit before tax grew 14% to £22.3m, and net
treasury income increased to over £42m. This resulted in profit
before tax growing 18% to £60.8m, contributing to adjusted net cash
of £180m.
|
Group
|
Corporate
|
Institutional
|
Cobase1
|
Revenue
|
£64.3m (+ 16%)
|
£29.8m (+ 12%)
|
£33.3m (+ 15%)
|
£1.3m (+ 80%)
|
Profit/(loss) before tax
|
£60.8m (+ 18%)
|
£13.1m (+ 16%)
|
£49.2m (+ 23%)
|
(£1.4m)
|
Underlying Profit/(loss) before tax
|
£22.3m (+ 14%)
|
£14.3m (+ 51%)
|
£9.4m (- 7%)
|
(£1.4m)
|
FXRM Client numbers
|
1,212 (+ 11%)
|
941 (+ 9%)
|
271 (+ 19%)
|
N/A
|
Average revenue per FXRM client
|
£72k (1%)
|
£63k (+ 2%)
|
£105k (- 5%)
|
N/A
|
Total Headcount2
|
4963 (+ 2%)
|
169 (+ 0%)
|
264 (+ 4%)
|
19 (- 10%)
|
Front Office Headcount
|
157 (+ 11%)
|
107 (+ 7%)
|
45 (+ 25%)
|
5 (- 17%)
|
NB - Percentage differences based
on H1 2024 vs H1 2023 comparison, unless stated otherwise. Rounding
differences are not adjusted in the table.
1 Cobase was acquired in December 2023, and we have separated
its performance from our Corporate and Institutional divisions to
provide greater clarity over its contributions at this early
stage.
2 Percentage increases for headcount are vs Dec 23
3 Includes 44 people in Central Services, who support all
divisions.
Strategy: from land to expand
Our 'land and expand' model has
remained a consistent feature of Alpha's growth strategy since our
first overseas office opened in 2018. Over the last few years, much
of our focus has been on landing in new geographies and product
verticals, and ensuring that when we do, we are establishing
foundations for long-term, sustainable growth. Our focus over the
next few years however will be to double down on expanding within
the locations and verticals we've already landed, to capitalise on
the significant growth opportunities in each. As we move into the
'expansion' phase of our growth plan, we are looking forward to our
new ventures beginning to find their stride and the benefits this
will have for revenue growth, operational gearing and thus,
profitability.
Corporate Division
Corporate Highlights
- Revenue growth of 12% to £30m (H1 2023: £27m)
- Client numbers increased 9% to 941 (H1 2023: 862)
- Average revenue per client increased to £63k (H1 2023:
£62k)
- Front Office headcount increased 7% to 107 (FY 2023:
100)
- Underlying profit before tax margin of 48% (H1 2023:
36%)
About
Our corporate division operates
from its own UK HQ (consisting of sales and operations), and six
additional international sales offices in the Netherlands, Spain,
Italy, Germany, Australia and Canada. Revenues are derived from the
provision of FX risk management services to corporates across more
than 50 countries.
Business Environment
Whilst we have moved beyond the
peak levels of uncertainty (around interest rates and inflation)
that we saw in Q3 2023, the corporate business environment remained
challenging in H1. Interest rates remain high, and with many
corporates debt-funded, this continues to put pressure on cash.
Faced with these macro challenges, companies are continuing to
adopt a more conservative approach to their forecasting and thus
hedging. The increased cost of debt (or inability to obtain it
altogether) for many businesses operating in our marketplace, is
leading to higher levels of defaults than we have seen in previous
years. Alpha is not immune to this tougher operating environment,
however, it is one that we foresaw and continue to manage
judiciously, incurring reasonably low levels of defaults in H1
2024.
Performance
As demonstrated by the highlights
provided above, a difficult business environment hasn't prevented
our teams from delivering good growth overall. Collectively,
corporate revenues grew by 12% to £30m (H1 2023: £27m), client
numbers increased by 9% to 941 (H1 2023: 862), and average revenue
per client increased to £63k (H1 2023: £62k). This increase in
client numbers is pleasing when considering that we had additional
ground to make up following a temporary decrease in our client
numbers in H2 2023, due to a reduction in our credit appetite. This
reduction prevented us from working with some existing clients and
reduced the pool of new clients we were willing to work
with.
Our underlying profit before tax
margin increased to 48% (H1 2023: 36%), reflecting the increased
levels of operational gearing we are experiencing as we move from
the 'land' phase of our international rollout strategy, to the
'expand' phase. In this phase, the initial set-up costs start to
fall away, and we also begin to benefit from increasing levels of
sales productivity as our teams expand and start to find their
stride. The Corporate Front Office productivity chart below
illustrates this and also reflects the acceleration in the learning
curve of our salespeople: each year our salespeople are getting
better, and we believe this stems from the compounding improvements
in our training, capabilities and reputation.
Growth in front office headcount
has also continued across our global corporate offices, increasing
in the half by 7% to 107 (FY 2023: 100).
Front
Office Productivity | Corporate FXRM*
* Front Office productivity
compares the total cumulative tenure of our Front Office, compared
to our revenues. The graph shows that we have been able to maintain
productivity despite both the market headwinds and experienced
salespeople moving into roles focused on leading international
expansion and/or the growth and development of our Front Office
teams. When we take into account new joiners, whose contribution in
their first year is naturally lower than more experienced
colleagues, this is even more pronounced.
Breaking the performance down, six
out of our seven offices grew revenues against H1 2023, and whilst
our Toronto office is taking time to return to where we would
expect it to be, we remain confident that all are moving in the
right direction and have the foundations in place to deliver
long-term sustainable growth.
After a difficult H2 in 2023 in
the UK, we have been pleased to see the team quickly regain their
stride in H1 2024, with revenues of £17.5m not only up against H2
2023, but also slightly up on the H1 2023 performance of £17.3m.
Existing shareholders may recall that our UK office has long served
as an incubator for exporting talent overseas to launch our
international offices. This has however drained talent from our UK
office, adversely impacting its performance. The team felt this
particularly in 2023 when market conditions were at their most
challenging. Encouragingly, with our international roll-out largely
complete for the time being, the talent within the UK is once again
able to fully compound, and we feel we are already starting to see
the benefits of this in the team's quick return to form, which has
continued into July and August.
Whilst all of our offices are on
their own growth journeys, the paths ahead of each of them are very
exciting. Our Netherlands office (established in 2020) is now our
largest new office in revenue terms. Only four years on from its
original launch it is not far short of reaching the revenue levels
that we achieved when we first became a public company in 2017.
Germany (established December 2024) meanwhile is our most recent
office launch and has now had the fastest start of any subsidiary
in revenue terms.
Institutional Division
Highlights
- Revenue growth of 15% to £33m (H1 2023: £29m)
- FX
risk management client numbers increased by 19% to 271 (H1 2023:
227)
- Alternative banking account numbers increased 31% to 7,030
(H1 2023: 5,350)
- Fund
finance completed on 16 mandates
- Average revenue per FXRM client decreased by 5%
- Front Office headcount increased 25% to 45 (FY 2023:
36)
- Underlying profit before tax margin of 28% (H1 2023:
35%)
About
Our institutional division
operates from its own UK HQ (consisting of sales and operations)
and two additional operations offices in Luxembourg and Malta.
Revenues are derived from the provision of FX risk management,
alternative banking and fund finance services to alternative
investment managers. These managers are principally involved in six
main asset classes: private equity, private credit, venture
capital, real estate, infrastructure, and fund of funds. These
managers then often outsource their back office functions to large,
global fund administrators and service providers, many of whom work
with Alpha on behalf of their clients as channel sales
partners.
Business Environment
Our institutional business
environment remains challenging. Analysis provided by Preqin shows
deal volume and deal flow remaining subdued across all of the key
asset classes we service. Put simply, clients open bank accounts
and transact currency when they have a commercial reason to do so.
A reduction in their investment activity reduces their trading
activity with us too. Whilst the Preqin data shows deal flow has
risen between Q1 and Q2, deal volumes in H1 2024 continued to
decline. Lower deal volumes mean there are less opportunities for
us to pursue.
In response to the reduction in
deal activity seen this year, we widened our focus to capture the
larger end of the market. Whilst it is early days, our recently
enhanced balance sheet and reputation as a FTSE 250 company, has
contributed to early signs of success here.
Performance
Whilst the environment has been
challenging, this hasn't prevented the team from delivering a
strong performance, with revenues growing by 15% to £33m (H1 2023:
£29m). Margins were down at 28% (H1 2023: 35%). Whilst this margin
performance is lower than we are targeting in the long-term, it
largely reflects the fact that our Institutional division has
invested significantly in its new offerings and operational
scalability during a period where the market has been relatively
suppressed.
To better understand the
institutional division's performance, we provide below an analysis
across each of its product lines: FX risk management, alternative
banking, and fund finance.
FX
Risk Management
Our Institutional FXRM team has
continued to deliver a good performance. Revenue increased 8% in
the period to £15.9m (H1 2023: £14.7m), with client numbers
increasing 19% to 271 (H1 2023: 227). This performance is
particularly pleasing given the challenging backdrop and reflects
five key drivers: the growth of our sales team, the increase in
their productivity (see chart), our growing reputation, the
expansion of our product offerings, and increased levels of
cross-selling between these offerings.
Front
Office Productivity | Institutional FXRM
Average revenues per client have
fallen by 5% from £111k to £105k, however, this was not surprising
given the record numbers of new clients we have onboarded, many of
which are in the earlier stages of us growing wallet share, coupled
with the reduced transaction activity that is currently being
experienced across the industry.
Alternative Banking
Alternative banking revenues
increased by 23% to £17.4m (H1 2023: £14.2m) and account numbers
increased by 31% to 7,030 (H1 2023 5,350). Although this represents
attractive growth, it is still below expectations. These numbers
are largely reflective of the environment described above, namely a
reduction in deal activity having a knock-on effect on the need for
accounts.
Importantly, this same interest
rate environment which has a dampening effect on deal activity also
enabled us to generate an additional £42m in net treasury income
(H1 2023: £33m) from client balances, as the table below shows.
Given that interest rates are a variable that we cannot control, we
will continue to separate this income stream from our underlying
revenues. Nonetheless, as long as interest rates remain relatively
high, this provides a significant income stream that we will
continue to benefit from, particularly as the aggregate balances we
hold for our clients are continuing to increase as the number of
accounts grows.
Quarter
|
Blended average client balance, Alternative
Banking
|
Blended average interest rate
|
Q2 2024
|
£2.1bn
|
3.9%
|
Q1 2024
|
£2.0bn
|
4.0%
|
Q4 2023
|
£2.1bn
|
3.8%
|
Q3 2023
|
£1.9bn
|
3.8%
|
Q2 2023
|
£1.9bn
|
3.8%
|
Q1 2023
|
£1.6bn
|
2.8%
|
The interest earnt on client
balances provides our alternative banking offering with what
equates to an income hedge. When rates increase, our interest
income naturally increases too. At the same time however, debt
becomes more expensive, and so our clients' investment activity
decreases and subsequently their demand for accounts. Our
expectation therefore is that, as rates decrease, the reverse will
be true: our clients' investment activity will in time increase,
and with this, their demand for new accounts.
Whilst it is encouraging that we
have been able to deliver good growth in a tough environment, we
have also never been a business to sit around and wait for the wind
to change. Behind the scenes, we have used this period to fortify
our strategy and invest in areas that we feel will accelerate sales
and boost our prospects in the long term. Our logic here is that if
these investments can enhance our prospects in a tough market, the
benefits should be even greater when the market
improves.
So, what are these investments?
The first has been to increase the size of our sales team and build
out a dedicated sales strategy in alternative banking. Since
launching our offering in 2020, growth in alternative banking has
primarily been reliant on our FX risk management salespeople
cross-selling the product, and a small team focused on developing
our channel sales partnerships with fund administrators and
corporate service providers. In the first half of this year we have
made significant progress in bringing our enhanced sales strategy
to life, with front office headcount for our alternative banking
offering growing from 8 (H1 2023) to 21 in H1 2024.
The second area of investment
involves our processes and technology: we wanted the systems and
infrastructure in place to ensure we could continue to service
alternative investment funds not only more efficiently but also at
scale. Achieving this ensures we will have the opportunity to
enhance our operational margins moving forward, and also means we
can continue to provide a service that delights our customers and
wins their business. With significant investment already carried
out, we expect operational gearing to come through as demand starts
to increase, giving us confidence in our future margins.
Fund Finance
Our fund finance offering was
launched in May 2023, and not only represented a new product
vertical for Alpha, but also created a new product innovation for
the fund finance industry as a whole, in the form of its lender
screening platform, (read
here).
Despite starting life in a subdued
market, the fund finance team continues to make excellent
operational progress, and grew revenues 16% against H2 2023. We
continue to see strong interest in our service and are winning
increasingly larger value mandates, focused on the structuring
phase of our offering. Such mandates are structured around key
transaction milestones for the fund and therefore typically take
longer to complete. When they do however, the revenues we realise
are significantly larger than in the platform screening phase,
where revenues are more immediate but lower value in
nature.
Having tested the product last
year, 2024 is about getting the right foundations in place, and we
have already made good operational progress in this regard. We now
have dedicated origination teams on both borrower and lender side,
and have relaunched our platform with a brand-new interface,
identity and marketing campaign, all of which have been very well
received.
Importantly, whilst our fund
finance offering is able to continue winning clients and revenues
within its own right, it is also yet another example of our
expanding product offering and growing ability to cross-sell in
this space. To this end, many foreign exchange and banking
conversations are continuing after conversations around fund
finance, and vice versa.
Cobase
About
Cobase is a treasury-focused
technology platform acquired by the Group in December 2023. Based
in Amsterdam, the company provides bank connectivity technologies
that enable corporates and institutions to manage their banking
relationships, accounts and transaction activity all in one place.
Revenues are derived from platform usage and annual subscription
fees.
Performance
Following the completion of its
acquisition in December of last year, Cobase has had a strong start
to life in its first six months as part of the Group. Revenues were
£1.3m with client numbers increasing to 169, representing growth on
their pre-acquisition figures of 80% and 55%
respectively.
Given the macro-economic downturn,
and the inevitable distraction that comes with an acquisition, we
have been very pleased with this performance. Such results are
ultimately a testament to the team but also reflect the fact that,
in a time when many companies are coming under more cost pressures,
finding ways to increase efficiencies remains valuable.
Cobase continues to operate from
its offices in Amsterdam under its own brand and with its own team
of people. The majority of its clients derive from its own sales
and marketing activities. We originally acquired Cobase to support
our existing corporate client base and help us win new corporate
customers. However, in H1 we have also onboarded a number of
institutional clients, proving the value of this offering across
both business segments. We are subsequently building out our sales
capabilities across both divisions and expect them to have an
increasing contribution to Cobase's pipeline.
Given the growth phase of the
business, Cobase is currently loss-making (PBT: - £1.4m). However,
this is largely driven by the depreciation and amortisation of the
legacy technology acquired. At an EBITDA level, the business made a
loss of only £200k and we look forward to it breaking even in H2 of
this year.
Capital
Allocation & Share Buybacks
Buybacks
The Group's priorities for capital
allocation remain focused on ensuring we can capitalise on
high-confidence, organic growth opportunities as we continue to
expand our reach, products and client base. The Group also has an
appetite to explore potential M&A that may amplify or
accelerate our offering. Whilst our firm intention is to remain an
organic growth business, we recognise that there are opportunities
to accelerate our product development and expand our offerings
through the acquisition of high-quality technology companies, such
as the recent acquisition of Cobase.
In addition to this, we recognise
that with the NTI, there is significant cash inflows, which is why
we have allocated up to £40m in share buybacks this year. This is
being executed through two separate £20m share buyback programmes -
the first of which completed in full on the 27th June
2024, with the second commencing on the 28th June 2024
and expected to run into 2025.
Capital Allocation
We think about capital allocation
across our two existing business divisions in the following
ways:
Corporate Capital Allocation
Our Corporate division has a
fifteen-year track record of trading and therefore the appropriate
levels of investment required to grow are more forecastable and
largely weighted towards increasing the size of our front office
teams. In addition, as our client base grows and these clients
become larger in nature, additional capital will naturally be
required to provide a greater volume of hedging facilities and
write larger credit lines.
Institutional Capital Allocation
Our Institutional division remains
in a far more nascent stage, launching as an FX risk management
provider in 2018, before following up with alternative banking and
fund finance offerings in 2021 and 2023 respectively. Nascent
offerings naturally require greater investment in their earlier
stages, but more significantly, we expect client demand to increase
steeply as the alternative investment market unwinds, cross-selling
becomes more frequent across our growing client base, and our new
product lines become more established. To support this demand, we
will likely be: investing more in our front office teams and
infrastructure; have more capital tied up in hedging facilities;
and also want to have sufficient cash set aside to invest in
further organic opportunities in this market, through, for example,
expansion into new products like fund finance.
Overall, given our Institutional
division has performed strongly in a market that has significantly
contracted, when deal activity picks up again, this could further
compound our growth potential and demand on our capital. We
therefore believe it is prudent to ensure we have sufficient cash
kept aside to ensure we can capitalise not only on the
opportunities we have now, but also have the ability to accelerate
investment in the future when there is scope for greater
upside.
As well as providing cash for
investment, a strong balance sheet is also important to our
counterparties, as a healthy cash profile is required as collateral
for hedging facilities, regulatory capital, and also provides our
clients with confidence.
Summary
Alongside allocating capital to
grow the business and our previously announced buyback programme,
the Group intends to continue with its progressive dividend policy.
When taking all of the above into consideration, we believe the
Group's current cash position creates significant return-enhancing
opportunities. We will of course review our cash position on a
regular basis, and if we feel it becomes excessive, will look to
adjust.
Financial
Review
In the six months to 30 June 2024
revenue increased by 16% over the prior period to £64.3m. Corporate
revenue grew by 12% to £29.8m, with client numbers increasing by 9%
from 862 to 941 in the period. Institutional revenues grew by 15%
to £33.3m. The number of Institutional FX risk management clients
increased by 19% from 227 to 271, and the number of client accounts
opened at the end of the period increased 31% to 7,030 (30 June
2023: 5,350, 31 December 2023: 6,500). Cobase revenue increased by
80% to £1.3m, compared to H1 2023 (pre acquisition).
Note: the £8.5m NTI client is the
increase from 2023 H1 (£33.3m) to 2024 H1 (£41.8m)
Underlying profit is presented in
the income statement to allow a better understanding of the Group's
financial performance on a comparable basis from year to year. The
underlying profit excludes the impact of Net Treasury Interest on
client funds, exceptional costs relating to the Main Market
listing, acquisition of Cobase, and share-based payments. On this
basis, the underlying profit before tax in the year increased by
14% to £22.3m (H1 2023: £19.6m). Statutory profit before tax
increased by 18% to £60.8m (H12 2023: £51.4m). On an
organic basis, excluding Cobase, revenues grew by 14% and
underlying PBT by 21%.
In the six months to 30 June 2024,
we have continued to grow our front office staff. A total of 10 new
team members were added in the period across the Front and Back
office primarily focused on business development, client services
and compliance, taking our total Group headcount to 496 (December
2023: 486, H1 2023: 430).
The underlying profit before tax
margin for the period remained in line
with prior year at 35% (H1 2023: 35%) reflecting Cobase, the continued investment in our
cost base, as well as the ongoing subdued market conditions. On an
organic basis, excluding Cobase, the underlying profit before
tax margin was 38% (H1 2023:
35%).
The effective tax for the period
of 26.6% (FY 2023 of 23%) has been impacted by the change to the UK
corporation tax rate increase in April 2023 and lower R&D tax
credits with Alpha now being designated a 'large
company'.
Underlying basic earnings per
share increased by 8% (2.6p) in the period to 37.1p (H1 2023:
34.5p), excluding Cobase underlying EPS would have been 40.0p, 16%
growth. Basic earnings per share were up 13% at 104.3p
(H12 2023: 92.4p).
2 The prior period restatement is detailed further in Note 3 of
the financial statements.
Cash flow
and Balance sheet
In the six months ended 30 June
2024, 59% of the revenue was derived from products, the revenue
from which is converted to cash within a few days of the trade date
(H1 2023: 60%). Including Net Treasury Income, cash conversion in
H1 2024 remained constant at 74% (H1 2023: 74%).
On a statutory basis, net cash and
cash equivalents decreased in the six months to 30 June 2024 by £8m
to £190m. The Group's statutory cash position can fluctuate
significantly from period to period due to the impact of changes in
the collateral received from clients, early settlement of trades,
or the unrealised mark to market profit or loss from client swaps,
resulting in an increase or decrease in cash with a corresponding
change in other payables and trade receivables. Therefore, in
addition to the statutory cash flow, the Group presents an adjusted
net cash summary below which excludes the above items.
In the six months to June 2024,
adjusted net cash on this basis has increased by £1m to £180m. This
represents the net impact of the cash conversion from the trading
in the period, less dividends and the original £20m share buyback
programme.
|
30 June
24
£m
|
30 June
23
£m
|
31 Dec
23
£m
|
Net cash & cash
equivalents
|
190
|
142
|
198
|
Variation margin paid to banking
counterparties
|
1
|
50
|
11
|
|
191
|
192
|
209
|
Margin received from
clients
|
(30)
|
(59)
|
(51)
|
Net MTM timing loss from client
drawdowns and extensions with trade receivables
|
19
|
9
|
21
|
|
|
|
|
Adjusted net cash**
|
180
|
142
|
179
|
* Included in 'other payables'
within 'trade and other payables'
** Excluding collateral received
from clients, early settlements and the unrealised mark to market
profit or loss from client swaps
As a result of the strong growth
in the period, total net assets increased from £223m at 31 December
2023 to £235m at 30 June 2024.
Dividend
The Board is pleased to declare an
interim dividend of 4.2 pence per share (2023: 3.7 pence). The
interim dividend will be payable on 11 October 2024 to shareholders
on the register at 13 September 2024. The ex-dividend date is 12
September 2024.
Consolidated Statement of Comprehensive
Income
|
|
Unaudited
six
months to
30 June
2024
|
Unaudited
six
months to
30 June
2023
Restated1
Re-presented1
|
Audited
year
ended
31 Dec
2023
|
|
Note
|
£'000
|
£'000
|
£'000
|
|
|
|
|
Revenue
|
4
|
64,325
|
55,459
|
110,442
|
Net treasury income - client
funds
|
|
41,781
|
33,338
|
73,676
|
Net treasury income - own
funds
|
|
664
|
922
|
1,843
|
Total net treasury income
|
|
42,445
|
34,260
|
75,519
|
Total income
|
|
106,770
|
89,719
|
185,961
|
Operating expenses
|
|
(48,331)
|
(39,763)
|
(73,809)
|
Operating profit
|
5
|
58,439
|
49,956
|
112,152
|
Underlying operating profit
Net treasury income - client
funds
|
5
|
19,927
41,781
|
18,162
33,338
|
39,205
73,676
|
Non-underlying items
|
(3,269)
|
(1,544)
|
(729)
|
Finance income
|
6
|
2,992
|
1,736
|
4,616
|
Finance expenses
|
6
|
(609)
|
(313)
|
(834)
|
Profit before taxation
|
|
60,822
|
51,379
|
115,934
|
Underlying profit before taxation
Net treasury income - client
funds
|
5
|
22,310
41,781
|
19,585
33,338
|
42,987
73,676
|
Non underlying items
|
(3,269)
|
(1,544)
|
(729)
|
Taxation
|
7
|
(16,176)
|
(11,813)
|
(27,142)
|
Profit for the period
|
|
44,646
|
39,566
|
88,792
|
Attributable to:
|
|
|
|
|
Equity holders of the
parent
|
|
44,840
|
39,566
|
88,825
|
Non-controlling interests
|
|
(194)
|
-
|
(33)
|
Profit for the period
|
|
44,646
|
39,566
|
88,792
|
Other comprehensive income/(loss):
|
|
|
|
|
Items that may be reclassified to the profit or
loss:
|
|
|
|
|
Exchange loss on translation of
foreign operations
|
|
(1,037)
|
(983)
|
(679)
|
(Loss)/gain recognised on hedging
instruments
|
|
(7,356)
|
(11,661)
|
3,193
|
Tax relating to items that may be
reclassified
|
|
1,839
|
2,915
|
(798)
|
Total comprehensive income for the period
|
|
38,092
|
29,837
|
90,508
|
Attributable to:
|
|
|
|
|
Equity owners of the
parent
|
|
38,286
|
29,837
|
90,541
|
Non-controlling interests
|
|
(194)
|
-
|
(33)
|
Total comprehensive income for the period
|
|
38,092
|
29,837
|
90,508
|
Earnings per share attributable to
equity owners of the parent (pence per share)
|
|
|
|
|
- basic
|
8
|
104.3p
|
92.4p
|
206.2p
|
- diluted
|
8
|
103.5p
|
91.3p
|
203.4p
|
-
underlying basic
|
8
|
37.1p
|
34.5p
|
76.7p
|
-
underlying diluted
|
8
|
36.8p
|
34.1p
|
75.6p
|
1 The prior period restatement and re-presentation are detailed
further in note 3.
Consolidated Statement of Financial
Position
|
|
Unaudited as at
|
Unaudited as at
|
Audited
at
|
|
|
30 June 2024
|
30 June 2023
|
31 Dec
2023
|
|
Note
|
£'000
|
Restated1
Re-presented1
£'000
|
Re-presented1
£'000
|
Non-current assets
|
|
|
|
|
Goodwill
|
|
4,642
|
-
|
4,707
|
Intangible assets
|
|
15,057
|
7,348
|
14,007
|
Property, plant and
equipment
|
|
8,092
|
5,724
|
8,800
|
Right-of-use assets
|
|
19,399
|
10,869
|
20,894
|
Derivative financial
assets
|
|
18,998
|
28,596
|
14,369
|
Deferred tax asset
|
7
|
-
|
667
|
-
|
Total non-current assets
|
|
66,188
|
53,204
|
62,777
|
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
11
|
190,076
|
142,633
|
197,941
|
Derivative financial
assets
|
|
92,952
|
101,156
|
90,966
|
Trade and other
receivables
|
10
|
11,997
|
11,091
|
12,033
|
Fixed collateral
|
11
|
10,350
|
9,572
|
8,810
|
Current tax asset
|
|
38
|
-
|
73
|
Total current assets
|
|
305,413
|
264,452
|
309,823
|
Total assets
|
|
371,601
|
317,656
|
372,600
|
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
13
|
87
|
87
|
87
|
Share premium account
|
|
52,566
|
52,566
|
52,566
|
Treasury shares
|
13
|
(15,819)
|
-
|
-
|
Capital redemption
reserve
|
|
4
|
4
|
4
|
Merger reserve
|
|
667
|
667
|
667
|
Redemption reserve
|
|
(1,884)
|
-
|
(1,884)
|
Retained earnings
|
|
199,755
|
114,292
|
170,939
|
Translation reserve
|
|
(456)
|
277
|
581
|
Equity attributable to equity holders of the
parent
|
|
234,920
|
167,893
|
222,960
|
Non-controlling interests
|
|
335
|
-
|
531
|
Total equity
|
|
235,255
|
167,893
|
223,491
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Derivative financial
liabilities
|
|
41,111
|
40,598
|
34,288
|
|
Other payables
|
12
|
40,169
|
66,682
|
59,750
|
|
Deferred income
|
|
8,300
|
6,982
|
7,072
|
|
Lease liability
|
|
1,016
|
1,549
|
1,028
|
|
Current tax liability
|
|
11,824
|
8,609
|
11,293
|
Total current liabilities
|
|
102,420
|
124,420
|
113,431
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Derivative financial
liabilities
|
|
6,978
|
14,255
|
5,922
|
Other payables
|
12
|
662
|
244
|
875
|
Redemption liability
|
|
1,858
|
-
|
1,884
|
Deferred tax liability
|
7
|
3,700
|
-
|
5,305
|
Lease liability
|
|
20,728
|
10,844
|
21,692
|
Total non-current liabilities
|
|
33,926
|
25,343
|
35,678
|
Total liabilities
|
|
136,346
|
149,763
|
149,109
|
Total equity and liabilities
|
|
371,601
|
317,656
|
372,600
|
|
|
|
|
|
|
|
1 The prior period restatement and re-presentation are detailed
further in note 3.
1 The prior period restatement is detailed further in note
3.
Notes to the Consolidated Financial
Statements
1. Corporate information
The Company, Alpha Group
International plc, is a public limited company having listed its
shares on the Main market of The London Stock Exchange, since 2 May
2024 (previously listed on AIM, since 7 April 2017). The Company is
incorporated and domiciled in the UK (registered number 07262416).
The consolidated financial statements incorporate the results of
the Company and its subsidiary undertakings.
2. Basis of preparation
The basis of preparation of this
financial information is consistent with the basis that will be
adopted for the full year accounts which will be prepared in
accordance with UK international accounting standards using the
measurement bases specified by UK IFRS for each asset, liability,
revenue or expense.
The financial information is
presented in Pounds Sterling ("£"), which is the Group's functional
currency, and all values are rounded ("£'000") to the nearest
thousand except where otherwise indicated.
Whilst the financial figures included in this half-yearly report
have been computed in accordance with IFRS applicable to interim
periods, this half-yearly report does not contain sufficient
information to constitute an interim financial report as that term
is defined in IAS 34.
This interim financial information
has not been audited and the financial information contained in
this report does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The year
to 31 December 2023 has been extracted
from the audited financial statements for that year.
The Group's financial statements
for the year ended 31 December 2023 have been reported on by
auditors, BDO LLP, and have been delivered to the Registrar of
Companies. The auditors report on those financial statements was
unqualified and did not contain statements under Section 498(2) or
Section 498(3) of the Companies Act 2006.
Accounting policies
New accounting policies
There are no new standards and
interpretations which became mandatorily effective for the current
reporting period which have had a material effect on the financial
statements of the Group.
3. Prior period adjustment
A number of Group employees
receive remuneration in the form of share-based payments, whereby
employees render services as consideration for equity instruments
(equity settled transactions). Typically, employees subscribe for
shares in a subsidiary. These shares are then exchangeable into
shares of the parent if the vesting conditions are met. The Group
recorded the amounts receivable from the employees as a debtor and
recorded non-controlling interests in respect of the shares and
options issued to employees. Some of these schemes also entitled
the employees to dividends over the vesting period. Where an
employee leaves prior to vesting, (and are not considered to be a
good leaver) the Group can require the employee to return the
shares in exchange for the lower of the subscription amounts paid
and the fair market value of the shares.
Historically, the Group has
recognised a share-based payment charge in the Consolidated
Statement of Comprehensive Income equivalent to the difference
between the subscription price paid by the employee and the fair
market value of that option over the life of the
scheme.
3. Prior period adjustment
(continued)
On vesting of the share options,
share premium was also recognised on issue of shares by the Parent
Company.
After reviewing the IFRS 2
Share-Based Payment standard and related guidance from the IFRIC,
the Group has concluded that share ownership schemes that grant
employees shares or options in subsidiaries, with conversion rights
to the holding company should be accounted for under IFRS 2
Share-Based Payment, rather than a non-controlling interest in a
subsidiary. As a result of this, the previous years'
non-controlling interest recognised over the annual profits of the
subsidiaries were overstated.
In addition, the previous years'
share-based payment charge to the Consolidated Statement of
Comprehensive Income was also found to be insufficient due to a
miscalculation. On vesting of some share options, share premium was
incorrectly recognised.
Accordingly, the Group has
restated its financial statements in accordance with IAS 8
'Accounting Policies, Changes in Accounting Estimates and Errors'.
Other receivables are to be reduced for the loan amounts recognised
as a debtor relating to the purchase of those shares and options,
conversely a creditor is recognised for any subscription amounts
paid up in advance of vesting due to the non-recourse nature of the
schemes. Any non-controlling interest recognised, including profit
attributed, in respect of these schemes has been
reversed.
The correction of these entries
results in an increase to profits attributed to shareholders of the
parent, an increase to retained earnings and an increase to
earnings per share. Dividends paid to non-controlling interest in
prior years have been included within retained earnings.
Separately, in the period to 30
June 2023, £922k of interest earned on client margin held by the
Corporate division previously presented within finance income has
been re-presented within Net treasury income - own funds (further
details can be found in note 4).
In the period to 30 June 2023,
derivative financial assets included £3,947k (year ended 31
December 2023: £4,237k) relating to invoices receivable which has
been re-presented within trade and other receivables to provide
greater transparency.
The effect of these adjustments is
shown by restating each of the prior year affected financial
statement line items as follows:
|
As
previously reported
30
June
2023
£'000
|
Restatement
Cumulative to
30
June
2023
£'000
|
Re-presentation
30
June
2023
£'000
|
Restated
and
Re-presented
30
June
2023
£'000
|
|
|
|
|
|
Total income
|
88,797
|
-
|
922
|
89,719
|
Operating expenses
|
(38,703)
|
(1,060)
|
-
|
(39,763)
|
Finance income
|
2,658
|
-
|
(922)
|
1,736
|
Profit attributable to
non-controlling interest
|
3,025
|
(3,025)
|
-
|
-
|
|
|
|
|
|
Non-controlling interest
|
(4,979)
|
4,979
|
-
|
-
|
Retained earnings
|
(105,082)
|
(9,210)
|
-
|
(114,292)
|
Translation reserve
|
(275)
|
(2)
|
-
|
(277)
|
Share premium account
|
(58,014)
|
5,448
|
-
|
(52,566)
|
Derivative financial assets
(current)
|
105,103
|
-
|
(3,947)
|
101,156
|
Trade and other
receivables
|
8,291
|
(1,147)
|
3,947
|
11,091
|
Other payables
|
(66,614)
|
(68)
|
-
|
(66,682)
|
3. Prior period adjustment
(continued)
|
Period
ended
30
June
2023
£'000
|
Effect on the Statement of Comprehensive
Income
|
|
Profit for the year (as previously
reported)
|
40,626
|
Increase in share-based payment
expense
|
(1,060)
|
Profit for the year (restated)
|
39,566
|
|
|
Attributable to Equity holders of
the parent (as previously reported)
|
37,601
|
Decrease in non-controlling interest
(as previously reported)
|
3,025
|
Increase in share-based payment
expense
|
(1,060)
|
Attributable to Equity holders of the parent
(restated)
|
39,566
|
|
Period
ended
30 June
2023
£'000
|
Effect on the Total comprehensive income
|
|
Other comprehensive income for the
year (as previously reported)
|
30,897
|
Share based payment expense
increase
|
(1,060)
|
Total comprehensive income for the year
(restated)
|
29,837
|
|
|
Attributable to Equity holders of
the parent (as previously reported)
|
27,872
|
Decrease in non-controlling interest
(as previously reported)
|
3,025
|
Share based payment expense
increase
|
(1,060)
|
Attributable to Equity holders (restated)
|
29,837
|
|
Period
ended
30 June
2023
|
Effect on earnings per share
|
|
Basic earnings per share (as
previously reported)
|
87.8p
|
Prior period adjustment
|
4.6p
|
Basic earnings per share for the year
(restated)
|
92.4p
|
|
|
Diluted earnings per share (as
previously reported)
|
86.8p
|
Prior period adjustment
|
4.5p
|
Diluted earnings per share for the year
(restated)
|
91.3p
|
|
|
Underlying Basic earnings per share
(as previously reported)
|
33.0p
|
Prior period adjustment
|
1.5p
|
Underlying Basic earnings per share for the year
(restated)
|
34.5p
|
|
|
Underlying diluted earnings per
share (as previously reported)
|
32.6p
|
Prior period adjustment
|
1.5p
|
Underlying diluted earnings per share for the year
(restated)
|
34.1p
|
These movements did not result in
any specific impact on cash however the Consolidated Statement of
Cash Flows has been restated as a consequence of the adjustments
detailed above.
4. Segmental reporting
During the period, the Group
generated revenue from the sale of forward currency contracts,
option contracts, foreign exchange spot transactions and fees
received from payments collections, cash accounts and fund finance
advisory fees.
The Group has six reportable
operating segments under the provisions of IFRS 8, based on the
individually reportable subsidiaries and divisions. These six
segments are:
· Corporate London represents revenue generated by Alpha FX
Limited's Corporate clients serviced from the UK.
· Institutional represents revenue from Alpha FX Institutional
Limited, which primarily services funds.
· Corporate Toronto represents revenue generated by Alpha
Foreign Exchange (Canada) Limited, serviced from Toronto,
Canada.
· Corporate Amsterdam represents revenue generated by Alpha FX
Netherlands Limited, which services corporate clients from
Amsterdam, The Netherlands.
· Alpha
Pay, a branch of Alpha FX Limited which services clients who
require international payments and accounts. The offering is
distributed via our European Corporate offices and Alpha FX
Institutional Limited, as well as Alpha Pay's own sales
team.
· Cobase,
a Dutch-based company that was acquired by the Group in December
2023. They are a cloud-based provider of bank connectivity
technology that enables corporates to manage their banking
relationships and transactions.
The chief operating decision
makers, being the Group's Chief Executive Officer and the Chief
Financial Officer, monitor the results of the operating segments
separately each month. Key measures used to evaluate performance
are revenue, and underlying profit before taxation. Management
believe that these measures are the most relevant in evaluating the
performance of the segment and for making resource allocation
decisions.
Historically the Group has
reported on its performance through the lens of its two core
service offerings: FX risk management and alternative banking.
However, as the Group has expanded into new markets and added more
products, continuing to report through these segments has
potentially made our business model more difficult to understand
than it needs to be. This is a view that has been shared by a
number of our investors, and therefore, after careful
consideration, we have chosen to change the way we present the
business to better reflect the current operating model.
These improvements will see us
reporting through the lens of the two key markets we operate in:
the corporate market and the alternative investment / institutional
market. Importantly, this also aligns with how our business is now
run operationally: our Corporate and Institutional divisions have
separate organisational structures, leadership teams and
offices.
Revenue in the table below is in
accordance with the methodology used for preparing the financial
information for management, for each operating segment. Although a
proportion of the revenue from EU clients is initially booked
through Alpha FX Europe Limited in Malta, revenue in the table
below has been reallocated to the relevant entity where the sales
team is located.
The Group has overseas offices in
Australia, Italy, Spain and Germany. All of these offices service
Corporate clients from their local offices. The results of these
offices are included within the Corporate London Segment. The
revenue of these offices in aggregate was £5.2m (£3.2m H1 2023) and
underlying profit before taxation in aggregate was £0.2m (loss
£0.4m H1 2023). There were costs associated with Alpha Europe
(based in Luxembourg), before it was dissolved, which have been
shown 50/50 within Institutional and Alpha Pay. Fund Finance, which
began trading in May 2023 is included within the Alpha Pay segment.
Under IFRS 8 these segments do not meet the quantitative reporting
thresholds.
Six
months ended June 2024
|
Corporate
London
|
Institutional
|
Corporate
Toronto
|
Corporate
Amsterdam
|
Alpha Pay
|
Cobase
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Corporate*
|
22,672
|
-
|
1,841
|
5,270
|
-
|
-
|
29,783
|
Institutional**
Cobase
|
-
-
|
15,916
-
|
-
-
|
-
-
|
17,363
-
|
-
1,263
|
33,279
1,263
|
Total revenue
|
22,672
|
15,916
|
1,841
|
5,270
|
17,363
|
1,263
|
64,325
|
Underlying operating profit
|
8,923
|
6,913
|
(86)
|
2,707
|
2,894
|
(1,424)
|
19,927
|
Finance income
|
2,991
|
-
|
1
|
-
|
-
|
-
|
2,992
|
Finance costs
|
(174)
|
(138)
|
(24)
|
(24)
|
(249)
|
-
|
(609)
|
Underlying profit before taxation
|
11,740
|
6,775
|
(109)
|
2,683
|
2,645
|
(1,424)
|
22,310
|
Non-underlying items
|
(2,880)
|
(6)
|
-
|
(335)
|
(48)
|
-
|
(3,269)
|
NTI- client funds
|
1,972
|
20,015
|
-
|
-
|
19,794
|
-
|
41,781
|
Profit before taxation
|
10,832
|
26,784
|
(109)
|
2,348
|
22,391
|
(1,424)
|
60,822
|
Six
months ended June 2023
|
Corporate
London
Restated1
Represented1
|
Institutional
|
Corporate
Toronto
|
Corporate
Amsterdam
|
Alpha Pay
|
Cobase
|
Total
Restated1
Represented1
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Corporate*
|
19,811
|
-
|
2,346
|
4,403
|
-
|
-
|
26,560
|
Institutional**
Cobase
|
-
-
|
14,726
-
|
-
-
|
-
-
|
14,173
-
|
-
-
|
28,899
-
|
Total revenue
|
19,811
|
14,726
|
2,346
|
4,403
|
14,173
|
-
|
55,459
|
Underlying operating profit1
|
5,148
|
5,091
|
287
|
2,499
|
5,137
|
-
|
18,162
|
Finance income1
|
1,734
|
-
|
(1)
|
3
|
-
|
-
|
1,736
|
Finance costs
|
(106)
|
(82)
|
(27)
|
(47)
|
(51)
|
-
|
(313)
|
Underlying profit before taxation
|
6,776
|
5,009
|
259
|
2,455
|
5,086
|
-
|
19,585
|
Non-underlying items
|
(1,534)
|
(10)
|
-
|
-
|
-
|
-
|
(1,544)
|
NTI- client funds
|
3,335
|
15,022
|
-
|
-
|
14,981
|
-
|
33,338
|
Profit before taxation
|
8,577
|
20,021
|
259
|
2,455
|
20,067
|
-
|
51,379
|
Year ended December 2023
|
Corporate
London
|
Institutional
|
Corporate
Toronto
|
Corporate
Amsterdam
|
Alpha Pay
|
Cobase
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Corporate*
|
39,884
|
-
|
4,228
|
8,699
|
-
|
-
|
52,811
|
Institutional**
Cobase
|
-
-
|
27,219
-
|
-
-
|
-
-
|
30,226
-
|
-
186
|
57,445
186
|
Total revenue
|
39,884
|
27,219
|
4,228
|
8,699
|
30,226
|
186
|
110,442
|
Underlying operating profit
|
15,621
|
8,506
|
408
|
4,566
|
10,352
|
(248)
|
39,205
|
Finance income
|
4,612
|
-
|
(1)
|
-
|
-
|
5
|
4,616
|
Finance costs
|
(254)
|
(200)
|
(58)
|
(87)
|
(235)
|
-
|
(834)
|
Underlying profit before taxation
|
19,979
|
8,306
|
349
|
4,479
|
10,117
|
(243)
|
42,987
|
Non-underlying items
|
(708)
|
(21)
|
-
|
-
|
-
|
-
|
(729)
|
NTI- client funds
|
5,534
|
34,071
|
-
|
-
|
34,071
|
-
|
73,676
|
Profit before taxation
|
24,805
|
42,356
|
349
|
4,479
|
44,188
|
(243)
|
115,934
|
1 The prior period restatement and re-presentation are detailed
further in note 3.
*Corporate represents revenue
derived from foreign exchange forward, spot, and option contracts
provided to corporate clients, primarily for the purpose of hedging
commercial foreign exchange exposures.
**Institutional represents
revenues derived foreign exchange forward, spot and option
contracts provided to institutional clients, primarily for the
purpose of hedging commercial foreign exchange exposures.
Additionally, from fees generated from the provision of cross
border payments, collections and annual account fees to
institutions, as well as advisory fees.
Revenue by product
|
Period
ended
30
June
2024
£'000
|
Period
ended
30
June
2023
£'000
|
Year
ended
31
December 2023
£'000
|
Foreign exchange forward
transactions
|
29,915
|
24,689
|
51,966
|
Foreign exchange spot
transactions
|
15,123
|
17,503
|
31,791
|
Option contracts
|
5,696
|
4,680
|
7,823
|
Payments, accounts and advisory
fees
Platform fees
|
12,328
1,263
|
8,587
-
|
18,676
186
|
Total
|
64,325
|
55,459
|
110,442
|
Net Treasury Income (NTI) - Client Funds
Interest is earned on overnight
deposits with several credit institutions all 'A' rated with the
leading rating agencies. The amount of interest earned is dependent
on several variables:
· The
absolute balance we hold, which can move significantly from
day-to-day
· The mix
of currency balances we hold, and;
· The
interest rate environment and rates that can be obtained from
credit worthy institutions.
Interest income is a natural
by-product of our accounts solution, and as such is an
uncontrollable income stream for the Group, which would be at least
partially transitory if we return to a low interest rate
environment. We have therefore chosen to recognise interest income
on client cash balances as 'Net Treasury Income- client funds',
(formally 'Other operating income'), not operating
revenue.
Material interest income was
earned on Institutional balances in the period to 30 June 2024. The
blended average client balances and interest rates to 30 June 2024
were:
Q1 24: £2.0bn and 4.0%
respectively
Q2 24: £2.1bn and 3.9%
respectively
FY 23: £1.9bn and 3.6%
respectively
Net Treasury Income (NTI) - Own Funds
'Net treasury income - own funds' relates to interest earned
on client margin held by the Corporate division, a direct
consequence of the operational business, shown in total
income.
5. Operating profit
Operating profit is stated after
charging/(crediting):
|
Six
months
|
Six
months
|
Year
|
|
ended
|
ended
|
ended
|
|
30 June
2024
|
30 June
2023
Restated1
|
31 Dec
2023
|
|
£'000
|
£'000
|
£'000
|
Staff costs1
|
23,991
|
21,021
|
37,665
|
Depreciation of owned property,
plant and equipment
|
923
|
542
|
1,325
|
Amortisation of internally generated
intangible assets
|
3,120
|
1,254
|
3,121
|
Depreciation of right-of-use
assets
|
1,369
|
784
|
1,939
|
Rental cost of short-term
leases
|
622
|
377
|
897
|
Property, plant and equipment
written off
|
(1)
|
1
|
8
|
Impairment of intangible
assets
|
-
|
-
|
26
|
Bad debt expense
|
487
|
-
|
135
|
Bad debt expense fully provided for
in previous years
|
-
|
-
|
858
|
Net foreign exchange
losses
|
90
|
669
|
372
|
|
|
|
|
The Group separately identifies
results before non-underlying items in the Consolidated Statement
of Comprehensive income (we refer to these results as
'underlying'). This is consistent with the way that financial
performance is measured by management and reported to the Executive
Committee and Board. These measures are not measures of performance
under IFRS and should be considered in addition to, and not as a
substitute for, IFRS measures of financial performance and
liquidity.
Non-underlying items in the year
are made up of the below charges/(credits), most of which have
arisen as a result of the admission to the premium
market.
|
Six
months
|
Six
months
|
Year
|
|
ended
|
ended
|
ended
|
|
30 June
2024
|
30 June
2023
Restated1
|
31 Dec
2023
|
Non-underlying items
|
£'000
|
£'000
|
£'000
|
Acquisition costs in relation to
business combinations
|
99
|
-
|
487
|
Other M&A related integration
and transaction costs
|
-
|
-
|
62
|
Costs associated with the Company's
move from AIM to Main market
|
2,720
|
-
|
248
|
Amortisation of purchased intangible
assets
|
43
|
-
|
(10)
|
Share-based payments
charge/(credit)
|
408
|
1,544
|
(58)
|
Total
|
3,269
|
1,544
|
729
|
1 The prior period restatement is detailed further in note
3.
6. Finance income and expenses
|
Six
months
|
Six
months
|
Year
|
|
ended
|
ended
|
ended
|
|
30 June
2024
|
30 June
2023
Re-presented1
|
31 Dec
2023
|
|
£'000
|
£'000
|
£'000
|
Finance income
|
|
|
|
Interest on bank
deposits1
|
2,927
|
1,669
|
4,491
|
Other interest receivable
|
65
|
67
|
125
|
Total
|
2,992
|
1,736
|
4,616
|
|
|
|
|
Finance costs
|
|
|
|
Finance expense on dilapidation
provision
|
(17)
|
(28)
|
(41)
|
Finance expense on lease
liabilities
|
(592)
|
(285)
|
(793)
|
Total
|
(609)
|
(313)
|
(834)
|
1 The prior period restatement and re-presentation are detailed
further in note 3.
7. Taxation
Tax charge
|
Six
months
|
Six
months
|
Year
|
|
ended
|
ended
|
ended
|
|
30 June
2024
|
30 June
2023
|
31 Dec
2023
|
|
£'000
|
£'000
|
£'000
|
Current tax:
|
|
|
|
UK Corporation tax on profit for
period
|
15,556
|
11,231
|
24,536
|
Adjustments relating to prior
years
|
1
|
-
|
(633)
|
Incremental Overseas Corporation tax
on the profit for the period
|
385
|
(279)
|
219
|
Total current tax
|
15,942
|
10,952
|
24,122
|
|
|
|
|
Deferred Tax
|
|
|
|
Origination and reversal of
temporary differences
|
234
|
861
|
3,020
|
Total deferred tax
|
234
|
861
|
3,020
|
Total tax expense
|
16,176
|
11,813
|
27,142
|
Deferred Tax
|
Six
months
|
Six
months
|
Year
|
|
ended
|
ended
|
ended
|
|
30 June
2024
|
30 June
2023
|
31 Dec
2023
|
|
£'000
|
£'000
|
£'000
|
Deferred tax:
|
|
|
|
At 1 January
|
(5,305)
|
(1,387)
|
(1,387)
|
UK tax charge relating to current
year from continuing operations
|
(297)
|
(861)
|
(1,960)
|
UK tax charge relating to acquired
operations
|
63
|
-
|
(1,060)
|
Tax charge relating to acquired
operations
|
-
|
-
|
(102)
|
Tax (credit) relating to foreign
exchange rate movements
|
-
|
-
|
2
|
Tax charge on other comprehensive
income
|
1,839
|
2,915
|
(798)
|
Total deferred tax (liability)/asset
|
(3,700)
|
667
|
(5,305)
|
The Group's effective tax rate at
30 June 2024 was 26.6% (30 June 2023: 23%). The increase is
predominately due to the increase in UK statutory rate,
additionally, the Company no longer qualifies for the enhanced
R&D tax relief for SME.
8. Earnings per share
Basic earnings per share is
calculated by dividing the profit for the year attributable to
equity holders of the parent, by the weighted average number of
ordinary shares during the year. Diluted earnings per share
additionally includes in the calculation, the weighted average
number of ordinary shares that would be issued on conversion of any
dilutive potential ordinary shares. The dilutive effect is
calculated on the full exercise of all potentially dilutive
Ordinary share options granted by the Group.
The Group additionally discloses
an underlying earnings per share calculation that excludes the
impact of any non-underlying items such as share-based payments,
net treasury income on client funds, non-underlying items and their
tax effect. This better enables comparison of financial performance
in the current year with comparative years.
|
Six
months
|
Six
months
|
Year
|
|
ended
|
ended
|
ended
|
|
30 June
2024
|
30 June
2023
Restated1
|
31 Dec
2023
|
Basic earnings per share
|
104.3p
|
92.4p
|
206.2p
|
Diluted earnings per
share
|
103.5p
|
91.3p
|
203.4p
|
Underlying - basic
|
37.1p
|
34.5p
|
76.7p
|
Underlying - diluted
|
36.8p
|
34.1p
|
75.6p
|
The calculation of basic and
diluted earnings per share is based on the following number of
shares:
|
Six
months
|
Six
months
|
Year
|
|
ended
|
ended
|
ended
|
|
30 June
2024
|
30 June
2023
|
31 Dec
2023
|
|
No.
|
No.
|
No.
|
Basic weighted average
shares
|
42,992,171
|
42,818,244
|
43,072,098
|
Contingently issuable
shares
|
322,642
|
510,747
|
593,955
|
Diluted weighted average
shares
|
43,314,813
|
43,328,991
|
43,666,053
|
The earnings used in the calculation of basic,
diluted and underlying earnings per share are set out
below:
|
Six
months
|
Six
months
|
Year
|
|
ended
|
Ended
|
ended
|
|
30 June
2024
|
30 June
2023
Restated1
|
31 Dec
2023
|
|
£'000
|
£'000
|
£'000
|
Profit after tax for the
period
|
44,646
|
39,566
|
88,792
|
Non-controlling interests
|
194
|
-
|
33
|
Earnings - basic and
diluted
|
44,840
|
39,566
|
88,825
|
Non-underlying items
|
3,269
|
1,544
|
729
|
Net treasury income - client
funds
|
(41,781)
|
(33,338)
|
(73,676)
|
Tax effect of above items
|
9,628
|
6,995
|
17,143
|
Earnings - underlying
|
15,956
|
14,767
|
33,021
|
1 The prior period restatement is detailed further in note
3.
9. Dividends
|
Six
months
|
Six
months
|
Year
|
|
ended
|
ended
|
ended
|
|
30 June
2024
|
30 June
2023
|
31 Dec
2023
|
|
£'000
|
£'000
|
£'000
|
Final plc dividend for the year
ended 31 December 2022 of 11.0p per share
|
-
|
4,765
|
4,765
|
Interim plc dividend for the year
ended 31 December 2023 of 3.7p per share
|
-
|
-
|
1,603
|
Final plc dividend for the year
ended 31 December 2023 of 12.3p per share
|
5,308
|
-
|
-
|
|
5,308
|
4,765
|
6,368
|
|
|
|
|
All dividends paid are in respect
of the ordinary shares of £0.002 each.
The Directors propose an interim
dividend in respect of the year ended 31 December 2024 of 4.2p per
share amounting to £1,786,891 payable on 11 October 2024 to
shareholders on the register at 13 September 2024.
10.
Trade and other receivables
|
30 June
2024
|
30 June
2023
Restated1
Re-presented1
|
31 Dec
2023
Re-presented1
|
Current:
|
£'000
|
£'000
|
£'000
|
Trade receivables
|
4,847
|
3,947
|
4,237
|
Other receivables
|
4,642
|
5,109
|
4,538
|
Prepayments
|
2,508
|
2,035
|
3,258
|
|
11,997
|
11,091
|
12,033
|
1 The prior period restatement and re-presentation are detailed
further in note 3.
11. Cash
Cash and cash equivalents comprise
cash balances and deposits held at call with banks for which the
Group has immediate access.
Fixed collateral comprises cash
held as collateral with banking counterparties for which the Group
does not have immediate access.
Cash balances included with
derivative financial assets relate to the variation margin called
by banking counterparties regarding out of the money trades
counterparties for which the Group does not have immediate
access.
|
30 June
2024
|
30 June
2023
|
31 Dec
2023
|
|
£'000
|
£'000
|
£'000
|
Cash and cash equivalents
|
190,076
|
142,633
|
197,941
|
Variation margin called by
counterparties
|
5,711
|
49,524
|
11,125
|
Fixed collateral
|
10,350
|
9,572
|
8,810
|
Total cash
|
206,137
|
201,729
|
217,876
|
12. Other payables
Other payables consist of margin
received from clients and client held funds. The carrying value of
trade and other payables classified as financial liabilities
measured at amortised cost, approximates fair value.
|
|
|
|
|
30 June
2024
|
30 June
2023
Restated1
|
31 Dec
2023
|
Current:
|
£'000
|
£'000
|
£'000
|
Other payables
|
31,200
|
58,763
|
51,243
|
Other taxation and social
security
|
1,469
|
1,184
|
1,455
|
Accruals
|
7,500
|
6,735
|
7,052
|
|
40,169
|
66,682
|
59,750
|
Non-current:
|
|
|
|
Provision
|
662
|
244
|
875
|
Total other payables
|
40,831
|
66,926
|
60,625
|
The
decrease in other payables is driven by a decrease in margin held
on behalf of clients.
1 The prior period restatement is detailed further in note
3.
13. Share capital
The following movements of share
capital occurred in the 6 months to 30 June 2024:
|
Ordinary
|
Share
|
Treasury
|
|
shares
|
capital
|
shares
|
|
No.
|
£'000
|
£'000
|
|
|
|
|
As at 1 January 2024 - shares of
£0.002 each
|
43,321,813
|
87
|
-
|
Acquisition of treasury
shares
|
(1,011,428)
|
-
|
(19,843)
|
Treasury shares issued on vesting of
share option scheme
|
234,627
|
-
|
4,024
|
As at 30 June 2024
|
42,545,012
|
87
|
(15,819)
|