20 June 2024
Alpha Financial Markets
Consulting plc
("Alpha", the "Company" or the "Group")
AUDITED RESULTS FOR THE YEAR
ENDED 31 MARCH 2024
Resilient performance in a more competitive market
environment
Alpha Financial Markets Consulting
plc (AIM:AFM), a leading global consultancy to the financial
services industry, is pleased to report
its audited results for the 12 months ended 31 March 2024 ("FY
24").
Financial highlights1
·
Revenue increased by 3.0% to £235.5m (FY 23:
£228.7m) and net fee income2 increased by 2.8% to
£233.6m (FY 23: £227.2m), mostly on an organic3 basis.
On a constant currency basis net fee income grew by 4.8%
·
Gross profit was £78.3m (FY 23: £80.4m) with a
33.5% margin2 (FY 23: 35.4%), reflecting lower average
consultant utilisation, particularly across the Q2 summer months,
and selective investment in growing the consultant team, alongside
consistent consultant day rates and active management of variable
costs
·
Adjusted2 EBITDA was £42.2m (FY 23:
£46.6m), with a 18.0% margin (FY 23: 20.5%)
·
Adjusted profit before tax was £38.5m (FY 23:
£44.0m) and adjusted earnings per share was 24.90p (FY 23:
29.27p)
·
On a statutory basis, profit before tax was
£22.6m (FY 23: £25.8m) and basic earnings per share was 13.85p (FY
23: 15.82p), after deducting reduced adjusting items
·
Adjusted cash generated from operations was
£23.6m (FY 23: £46.2m) reflecting the relative size of prior year
bonus payments compared to the Group's lower profitability and
bonus accruals in the year, alongside good underlying working
capital management
·
Robust balance sheet maintained with a net cash
balance of £29.4m (31 March 2023: £59.2m) and an undrawn £50.0m
revolving credit facility at 31 March 2024
·
Separately today, the Board announced the terms
of the recommended cash offer to acquire Alpha by Actium Bidco (UK)
Limited, a newly incorporated indirect subsidiary of certain funds
managed by Bridgepoint Advisers Limited
|
12 months
to
31 March
2024
|
12 months
to
31 March
2023
|
Change
|
Revenue
|
£235.5m
|
£228.7m
|
3.0%
|
Gross profit
|
£78.3m
|
£80.4m
|
(2.6%)
|
Adjusted EBITDA
|
£42.2m
|
£46.6m
|
(9.5%)
|
Adjusted profit before tax
|
£38.5m
|
£44.0m
|
(12.5%)
|
Profit before tax
|
£22.6m
|
£25.8m
|
(12.4%)
|
Adjusted EPS
|
24.90p
|
29.27p
|
(14.9%)
|
Basic EPS
|
13.85p
|
15.82p
|
(12.5%)
|
Operating highlights
·
Net fee income growth delivered by all geographic
regions on a constant currency basis, in a challenging market
environment
·
Continued growth of client relationships in all
global markets, with the Group adding 146 new clients and growing
market share in the year
·
The Group approached hiring selectively in FY 24,
investing for current demand and future growth:
consultant4 headcount reached 1,000 (FY 23:
994)
·
Addition of 15 new directors5 to
provide further expertise and reinforce the platform for growth,
including new directors in important practice and sector offerings:
Operations, Wealth and Alternatives
·
Alpha continued to make good progress in a number
of strategic growth areas: in North America, including the
alternative investments consulting business, which has traded well;
in launching an insurance consulting offering in North America,
with the hiring of two specialist directors to support the
development of the proposition locally; and in selective
acquisitions with the integration of Shoreline6 in the
first half of the year, which consolidates Alpha's APAC
presence
·
First standalone Sustainability Report published,
including Alpha's first public diversity
target
·
2023 marked 20 years since Alpha was first
established as a specialist consultancy to the financial services
industry
Outlook
·
Alpha has performed resiliently in a more
competitive and challenging environment resulting from overcapacity
in the global consulting market, with a longer sales cycle than
typical
·
This resilience is a testament to Alpha's
excellent reputation, robust business model, very strong talent
base, and a sector-focused proposition that continues to appeal to
a diverse range of clients in multiple geographies
·
We continue to invest in the business for future
growth, while actively managing the cost base carefully
·
Consultant utilisation incrementally ticked up
through the final quarter of FY 24, reaching close to target levels
by the end of the year overall, and maintaining this level into the
early part of FY 25, albeit with further improvement required in
certain areas of the business through the year
·
We have seen higher sales wins in recent months
and Alpha enters the new year with a strong and high quality
pipeline of new business opportunities
·
While there remains some uncertainty as the
supply and demand dynamics continue to rebalance, the long-term
structural drivers of growth will continue to drive demand for
Alpha's services
Commenting on the results, Luc Baqué, Chief Executive
Officer, said:
"The Group's trading this year has been resilient, despite a
more competitive and challenging market environment and a longer
sales cycle. While the supply and demand dynamics continue to
rebalance, the current market still faces certain challenges.
However, with our unique value proposition, unrivalled consulting
team and robust long-term structural growth drivers, we remain well
positioned for the future and focused on our ambition to double the
business again by 20287."
Enquiries:
Alpha Financial Markets Consulting plc
Luc Baqué (Chief Executive Officer)
John Paton (Chief Financial Officer)
Georgina Sharley (Company Secretary)
|
+44 (0)20 7796 9300
|
Investec Bank plc - Nominated Adviser, Joint
Corporate Broker
Patrick Robb
James Rudd
St John Hunter
|
+44 (0)20 7597 4000
|
Berenberg - Joint Corporate
Broker
Toby Flaux
James Thompson
Alix
Mecklenburg-Solodkoff
|
+44 (0)20 3207 7800
|
Camarco - Financial
PR
Ed Gascoigne-Pees
Phoebe Pugh
|
+44 (0)20 3757 4980
|
Analyst Presentation:
A presentation for analysts will
be held today at 10:30 a.m. For further information, please contact
Camarco at alphafmc@camarco.co.uk.
A
copy of the presentation slides will be available on the company
website (https://alphafmc.com/investors/reports-presentations/)
following the meeting.
About Alpha FMC:
Headquartered in the UK and quoted
on the Alternative Investment Market of the London Stock Exchange,
Alpha is a leading global consultancy to the financial services
industry.
Alpha combines highly specialist,
sector-focussed management consulting and technology expertise to
support the client transformation lifecycle. It has 1,000
consultants globally, operating from 17 client-facing
offices8 spanning the UK, North America, Europe and
APAC.
1 All financial and operating highlights relate to the
year ended 31 March 2024 ("FY 24") and the comparative year ended
31 March 2023 ("FY 23") unless otherwise specified. All rounding
and percentage change calculations are from the basis of the
financial statements in £'000s
2 The Group uses alternative performance measures
("APMs") to provide stakeholders further metrics to aid
understanding of the underlying trading performance of the Group.
Margins are expressed as a percentage of net fee income. Refer to
note 3 for further details
3 Organic net fee income growth excludes Shoreline,
acquired during the year. Refer to note 3 for further information
on the Group's APMs
4 "Consultants" and "headcount" refer to fee-earning
consultants at the year end: employed consultants plus utilised
contractors in client-facing roles
5 "Directors" refers to fee-generating directors at the year
end. All director increases are presented as net. Alpha is progressively updating the director title to
"partner" in some teams to better align to their roles in the
consulting markets
6 "Shoreline" refers to Shoreline Consulting Pty Ltd,
Shoreline Consolidated Pty Ltd and their subsidiaries acquired by
Alpha on 1 May 2023
7 The statement that the Alpha Group's growth plan has an
ambition to double the size of its business by 2028 is aspirational
only and should not be construed as a profit forecast within the
meaning of the Takeover Code. There can be no certainty that Alpha
will achieve its ambition, which is subject to various assumptions,
risks and uncertainties that could cause Alpha's growth to differ
materially from its expressed ambition
8 The Group uses "office" to refer to a client-facing office
location; that is, if there are multiple offices in one location,
they will be counted as one office
Chairman's report
Having consistently achieved
growth since AIM admission in 2017, the Group experienced increased
competition in the global consulting market and a lengthened sales
cycle in FY 24. Against this backdrop, Group net fee income
increased 2.8% and 4.8% on a constant currency basis. Client wins
and trading have incrementally improved in recent months with
consultant utilisation approaching near target levels by the end of
the year, and maintained at this level into the early part of FY
25. The Board views this as a resilient performance within the
broader market landscape, reflecting the Group's robust business
model, leading expertise and strong proposition.
Alpha's multi-boutique model, with
its cross-selling framework across regions and sectors, and
collaboration between management and technology consulting, is a
key part of Alpha's growth strategy. The Group continued to invest
selectively in the foundations that support this growth agenda and
made progress in a number of key areas in the year.
The Group broadened and deepened
its proposition, which will support the future scaling of the
business. This included selective hires or internal promotions in
all regions, key hires to further establish our insurance
consulting offering in North America, and completing the
acquisition of Shoreline to consolidate our offering in the APAC
region.
Scaling up and rolling out our
newer businesses, including alternatives and insurance consulting,
continues to be one of our growth pillars as we aim to meet our
20289 strategic target. Our alternatives business,
Lionpoint, saw increased demand across all regions, particularly in
North America, growing the client base with 55 new client wins.
North America remains a very exciting, strategic growth region for
the Group and we grew headcount by 15 overall.
We continue to enhance and
diversify our sector-specific offerings, in line with client demand
and needs. We are proud that the Alpha offering now embeds
technology consulting and a software business, in Aiviq, which adds
depth to our delivery and cross-sell opportunity. To capitalise on
the technology opportunities that we see in all our markets, both
for standalone technology services projects and as part of major
change programmes, we formalised a number of technology lead roles
in our asset & wealth management and insurance consulting
teams.
The Group ended the year well
positioned, with a healthy net cash position of £29.4m (FY 23:
£59.2m).
Since Alpha began over 20 years
ago, it has been our outstanding staff that has helped establish
and earn a global reputation for delivering challenging and complex
projects to the highest standards. This year has been no exception
and I want to take this opportunity to thank Alpha's people for
their unwavering focus and excellent contributions in a challenging
period. We believe that there are very exciting opportunities ahead
for Alpha, with such a strong group of consultants and a culture
that encourages and celebrates success for
everyone.
Governance and the Board
The Board is dedicated to
upholding the highest standards of corporate governance. We
consider business ethics, integrity, and strong governance
fundamental to reducing risk and securing long-term shareholder
value. In recognition of the crucial role the Board has in
overseeing and advancing the Group's ESG10 efforts, the
ESG Committee was formally established in the period, under the
guidance of Jill May as Chair.
The ESG Committee's role is to
maintain oversight of Alpha's ESG agenda, ensuring that the Group
complies with regulatory requirements, meets the expectations of
its stakeholders and positions the Group for long-term sustainable
success. The Board intends to stay
actively engaged with ESG across all relevant topics as they evolve
and, to this end, we commenced a schedule of Board training,
emphasising current and emerging areas of responsibility across all
ESG-related topics.
For the first time this year,
Alpha is publishing metrics and information under the Task Force on
Climate-related Financial Disclosures ("TCFD"). We have also
published our first dedicated Sustainability Report, which sets out
the Group's ESG progress to date, vision and roadmap. The report
covers our focus on diversity and social responsibility, strong
governance, and playing our part in protecting the environment. The
Board is fully supportive of Alpha's first public diversity target
and its ambition to identify and progress actions that foster
inclusion and increase diversity across the Group. The enhanced
disclosures and our ESG strategy provide us with the frameworks
necessary for long-term sustainable growth.
The Board is committed to engaging
with shareholders and understanding their expectations. To this
end, we were pleased to have completed a consultation with
investors regarding Alpha's FY 25 remuneration policy and have
incorporated their feedback accordingly.
Dividend
In view of the recommended cash
offer to acquire Alpha by Actium Bidco (UK) Limited ("Bidco"), a
newly incorporated indirect subsidiary of certain funds managed by
Bridgepoint Advisers Limited ("Bridgepoint"), the Board is not
recommending a final dividend. If the
acquisition does not complete, it is expected that the Board would
declare a final dividend in respect of FY 24 at a later
date.
Outlook
Although some challenges in the
market environment remain, the Group saw an uptick in client wins
and consultant utilisation in the last quarter of FY 24, with
utilisation levels maintained into the start of FY 25. Long-term
demand for our services remains robust and is underpinned by
ongoing structural drivers: growth in assets under management and
insurance policies, regulatory demand, cost pressures, client and
societal expectations and technology breakthroughs.
With a strong and high quality
sales pipeline, a compelling client proposition, market-leading
consultants and clear strategic objectives, the Board remains
confident in the Group's prospects.
Ken Fry
Chairman
20 June 2024
9 The statement that the Alpha Group's growth plan has an
ambition to double the size of its business by 2028 is aspirational
only and should not be construed as a profit forecast within the
meaning of the Takeover Code. There can be no certainty that Alpha
will achieve its ambition, which is subject to various assumptions,
risks and uncertainties that could cause Alpha's growth to differ
materially from its expressed ambition
10 ESG refers to environment, social and governance matters and
efforts
Chief Executive Officer's report
As previously reported, the Group
saw increased competition in FY 24 due to overcapacity in the
global consulting market. Alpha navigated this period well, ending
the year with consultant utilisation at close to target levels.
This resilient performance reflects the strength of our business
model and the expertise of our people in addressing clients' needs
and challenges, even during more uncertain periods.
While the sales cycle remains
longer as the supply and demand dynamics continue to rebalance, the
drivers for clients seeking Alpha's services remain prevalent,
which is evidenced by our healthy global sales pipeline.
Despite the more challenging
environment in FY 24, the strategic growth pillars that underpin
our ambition remain consistent: further expansion in North America,
the global scale-up and roll-out of Alpha's propositions, including
alternatives and insurance consulting, and selective
acquisitions.
The year in review
The Group achieved modest growth
in net fee income, reflecting the resilience of the business model
despite challenging market conditions. Throughout the year, the
Group actively managed its cost base alongside utilisation and day
rates, and continued to build its pipeline of new business
opportunities. Market demand levels were slower to recover than
first anticipated, and our actions to manage the business through
this environment included a limited number of redundancies to
support affected areas of the business. This was a very difficult
decision, however it was one that we felt was commensurate with the
levels of demand, and key to achieving more normal levels of
utilisation and profitability.
As market conditions continued to
rebalance, consultant utilisation rates improved through the final
quarter, ending the year at close to target levels albeit FY 24
margins remained lower than historical levels overall. Gross profit
was £78.3m (FY 23: £80.4m) reflecting lower average consultant
utilisation, while maintaining consistent day rates and actively
managing variable costs.
|
12 months
to
31 March
2024
|
12 months
to
31 March
2023
|
Change
|
Net fee income
|
|
|
|
UK
|
£91.2m
|
£87.1m
|
4.7%
|
North America
|
£90.5m
|
£91.1m
|
(0.6%)
|
Europe & APAC
|
£51.9m
|
£49.0m
|
6.1%
|
Year-end totals
|
£233.6m
|
£227.2m
|
2.8%
|
|
12 months
to
31 March
2024
|
12 months
to
31 March
2023
|
Change
|
Gross profit
|
|
|
|
UK
|
£33.0m
|
£35.0m
|
(5.8%)
|
North America
|
£28.3m
|
£30.0m
|
(5.6%)
|
Europe & APAC
|
£17.0m
|
£15.4m
|
10.6%
|
Year-end totals
|
£78.3m
|
£80.4m
|
(2.6%)
|
The UK region, which continues to
attract clients and maintains a leading reputation, generated 4.7%
organic net fee income growth to £91.2m (FY 23: £87.1m). The
reduced gross profit margin of 36.2% (FY 23: 40.2%) reflects lower
average consultant utilisation, partly offset by reduced variable
costs and consistent consultant day rates on the previous year.
During the year, we made selective hires as we invested for current
demand and future growth. In addition to maintaining our graduate
programme, which is a source of future talent, we were pleased to
make a number of key director appointments. These included adding
three experienced directors to support Alpha UK's wealth sector
proposition, where we are working with many of the UK's top tier
wealth managers and private banks.
Alpha's strategy includes rolling
out its proposition to new clients and locations. After the year
end, Alpha has launched a branch in Abu Dhabi, which is overseen by
and will initially form part of the UK business. Abu Dhabi is an
important financial centre, and this branch provides access to an
area that is growing and transforming rapidly. We are delighted
that our offering, including our Investments proposition and
technology services, is already resonating well and attracting
demand.
North America net fee income was
£90.5m (FY 23: £91.1m) and up 3.8% on a constant currency basis.
This resilient performance in a competitive market environment
follows more than 50% average annual organic growth in the previous
three years. A key pillar of our growth strategy, we continued to
invest in our services and people in this very sizeable market,
broadening and deepening our existing relationships and expanding
our client base. We added 58 new clients in the region in FY 24,
and at the year end the North America team had 357 consultants (FY
23: 342). We are pleased that our proposition there, which now
encompasses three sectors (asset and wealth management,
alternatives and insurance), is resonating so well and we are proud
that Alpha has again ranked in "America's Best Management
Consulting Firms" by Forbes and Statista. We remain confident in
the significant market opportunity of North America, which is over
eight11 times the size of the UK.
Europe & APAC delivered net
fee income growth of 6.1% to £51.9m (FY 23: £49.0m), of which 1.4%
was organic. In line with our acquisition strategy, we welcomed
Shoreline to the Group at the start of the year. With the
integration complete, this boutique asset and wealth management
consultancy reinforces our position in the APAC region. In Europe,
we now have offices in seven financial centres and we were
delighted to have been selected as a "#1 Consulting Firm" in asset
management in France by Décideurs Magazine in the year. Across
Europe & APAC, we continue to see a very strong opportunity for
Alpha's combined proposition of management and technology
consulting.
Alpha has continued to make
progress on its strategic growth objectives, further cementing its
position as a leading provider of specialist consulting services
within the financial services industry. We have grown our global
client base across the sectors that we service. Our global model,
expertise and the alignment of our practices to our clients'
sectors and core functions have again enabled us to deliver some of
the most complex, challenging and defining projects in the
industry.
Lionpoint, our alternatives
consulting business, experienced another year of steady growth as
our expertise and capabilities continue to resonate with private
equity, credit, infrastructure, real estate and fund of funds
clients. Traditional asset managers also continue to seek to expand
their books of alternative investments, which brings a need for
technology investment and operating model consolidation.
Joint-offer opportunities between Lionpoint and our asset &
wealth management consulting team therefore represent a significant
driver for future growth.
Insurance consulting remains a
strategic growth pillar for Alpha and we were delighted to complete
on a goal to launch in the US in FY 24, appointing two senior
directors to spearhead progress in that region. Both individuals
have extensive industry experience and established networks, which
we will leverage to establish the brand. In Europe, Alpha's
insurance consulting business added new clients, reinforced its
capabilities and expanded its team of deep sector
experts.
We have continued to develop and
align the Group's technology consulting capabilities and solutions
with our management consulting proposition for each sector: asset
and wealth management, alternatives and insurance. Our technology
solutions and delivery teams possess unrivalled knowledge and
expertise in the technology platforms and models utilised in those
sectors, and we are delivering important strategic outcomes for our
clients, focused on cost reduction, management insights, automation
and efficiency, and scale-up.
Acquisitions
We were pleased to complete the
acquisition of Shoreline in May 2023 to consolidate our offering in
the APAC region. Selective acquisitions remain a strategic growth
pillar for Alpha and we continue to review potential acquisition
opportunities. Outline heads of terms have been agreed recently
with two small bolt-on opportunities, which are currently subject
to ongoing due diligence.
Financial performance summary
Group net fee income increased
2.8% to £233.6m (FY 23: £227.2m), mainly organically, and 4.8% on a
constant currency basis.
Lower consultant utilisation and
rising costs across a larger team, partly offset by reduced
variable costs, resulted in reduced adjusted EBITDA on the previous
year of £42.2m (FY 23: £46.6m) at an adjusted EBITDA margin of
18.0% (FY 23: 20.5%). The Group delivered a slightly improved
margin in H2 compared to the first half as the market continues to
rebalance supply and demand dynamics.
Adjusted profit before tax was
£38.5m (FY 23: £44.0m), and adjusted earnings per share ("EPS") was
24.90p (FY 23: 29.27p).
On a statutory basis, revenue
increased 3.0% to £235.5m (FY 23: £228.7m), operating profit
decreased to £25.1m (FY 23: £28.6m) and profit before tax was
£22.6m (FY 23: £25.8m). Basic EPS was 13.85p (FY 23:
15.82p).
The Group ends the period with
increased sales wins and a strong pipeline of new business
opportunities. This resilient performance, in the context of the
competitive market conditions in FY 24, demonstrates the strength
of Alpha's business model and client proposition. The Chief
Financial Officer's report provides further information about the
financial performance of the last 12 months.
Our people
As Alpha celebrated its
20th anniversary this financial year, we take pride in
our team and our achievements. Alpha started life as a single
sector consultancy in the UK. The Group now includes 1,000
consultants, in addition to its business operations staff, with
offices in a number of locations across the globe.
In 20 years, one thing has
remained consistent about Alpha's success: our people.
Our clients recognise the quality
of our people and their exclusive sector-specific focus. It helps
to define our proposition, but what makes us stand out as a market
leading consulting firm is our global teams' unrelenting attention
to delivering projects to the very highest standards. This has
always been reflected in the high levels of repeat business and
growth of our client base, and was evidenced by over 90% of revenue
in the year being generated by existing clients. I am proud of
Alpha's people every year, but this year has been exceptional for
its challenges and I am particularly grateful for the focus on
solving clients' needs and delivery excellence shown in this
difficult market environment.
While we focus on identifying and
attracting the right people to Alpha, it is also important that we
can retain, nurture and develop the best consulting talent in the
market. We constantly strive to ensure that we foster an inclusive
and meritocratic culture that offers opportunities for progression
and success, aided by a robust support system. We were delighted to
have been nominated and to have won a place in the Top 10 Best
Large Companies to Work For and as a Top 5 Consultancy to Work For
by Best Companies, a leading employee engagement specialist in the
UK.
While in the last 12 months we
have approached hiring selectively, reflecting the wider market
environment, we are pleased to have grown our headcount of global
consultants to 1,000 (FY 23: 994). We made 15 director
appointments, including both strategic additions in all our regions
and internal promotions, underscoring our ongoing investment in
talent development and progression.
|
As at
31 March
2024
|
As at
31 March
2023
|
Change
|
Consultant headcount
|
|
|
|
UK
|
385
|
394
|
(2.3%)
|
North America
|
357
|
342
|
4.4%
|
Europe & APAC
|
258
|
258
|
-
|
Year-end totals
|
1,000
|
994
|
0.6%
|
Sustainable growth
At Alpha, we are focused on
building a platform for long-term success and delivering
outstanding outcomes for all our stakeholders. We nurture and
safeguard a strong sustainability culture, which for us means
commitments to diversity and inclusion, community impact work and
our actions to address climate change.
In the last year, we have
continued to develop our ESG frameworks and reporting disclosures.
We recently published our first dedicated Sustainability Report,
which explains Alpha's position and objectives, and the governance
we use to apply and monitor them. I encourage you to read it to
understand more about our focus on diversity and social
responsibility, strong governance, and the part we want to play in
the environment and combating climate change.
Diversity and inclusion is one of
the most important focus areas for Alpha, now and as we grow the
business. We can be a better employer and a better partner for our
clients through the diversity of perspectives that our people
bring, and we are on a journey to improving the diversity of our
teams globally. We were delighted to announce our first public
diversity target this year, for 25% of the global director team to
be women or nonbinary in five years' time.
We are also very excited about the
progress being made in the financial services sectors we operate
in. We are proud that ESG is at the heart of Alpha's service
offering and that we can support clients in adopting relevant and
meaningful approaches. We look forward to sharing more about our
developments and plans as they progress.
Current trading and outlook
Despite some uncertainty and
ongoing challenges as the supply and demand dynamics in the global
consulting market continue to rebalance, client demand remains
robust, and consultant utilisation has improved through the last
quarter of FY 24 and was maintained into the early part of FY 25.
While further improvement in utilisation is required in certain
areas of the business through FY 25, we enter the year with a
strong new business opportunity pipeline, higher sales win levels
and a healthy net cash position.
The long-term structural drivers
of demand including growth in assets and insurance policies,
regulatory demand, cost pressures, client and societal
expectations, and technology breakthroughs continue to present
significant growth opportunities for us.
We have continued to invest in our
people, recognising their importance in our future growth. The
trust and relationships that our people cultivate with our clients
provide significant cross- and joint-selling opportunities between
our sector-focused services. Our people and client relationships
are cornerstones of our business model and organic growth
ambitions.
We also continue to see and
respond to the strategic growth drivers of North America and
addressing the market opportunity in the newer sectors of insurance
and alternatives. Our selective investments in people, the service
proposition and our business model, make us well placed to
capitalise on improving market conditions.
With the structural drivers of
demand remaining in place, our market-leading consultants, and our
highly compelling client proposition, we are well positioned for
the future and remain focused on our ambition to double the
business again by 202812.
Luc Baqué
Chief Executive Officer
20 June 2024
11 Thinking Ahead Institute and Pensions & Investments, "The
world's largest 500 asset managers" (October 2023)
12 The statement that the Alpha Group's growth plan has an
ambition to double the size of its business by 2028 is aspirational
only and should not be construed as a profit forecast within the
meaning of the Takeover Code. There can be no certainty that Alpha
will achieve its ambition, which is subject to various assumptions,
risks and uncertainties that could cause Alpha's growth to differ
materially from its expressed ambition
Chief Financial Officer's report
Group results
Group performance has been
resilient this year, navigating a more challenging and competitive
market backdrop.
|
12 months to
31 March 2024
|
12 months to
31 March 2023
|
Change
|
Revenue
|
£235.5m
|
£228.7m
|
3.0%
|
Net fee income
|
£233.6m
|
£227.2m
|
2.8%
|
Gross profit
|
£78.3m
|
£80.4m
|
(2.6%)
|
Operating profit
|
£25.1m
|
£28.6m
|
(12.4%)
|
Adjusted EBITDA
|
£42.2m
|
£46.6m
|
(9.5%)
|
Adjusted EBITDA margin
|
18.0%
|
20.5%
|
(250
bps)
|
Adjusted profit before
tax
|
£38.5m
|
£44.0m
|
(12.5%)
|
Profit before tax
|
£22.6m
|
£25.8m
|
(12.4%)
|
Adjusted EPS
|
24.90p
|
29.27p
|
(14.9%)
|
Adjusted diluted EPS
|
23.34p
|
27.37p
|
(14.7%)
|
Basic EPS
|
13.85p
|
15.82p
|
(12.5%)
|
Revenue
In a more competitive market environment, the Group performed
resiliently this year with net fee income up by 2.8% compared to
the last financial year, and 4.8% on a constant currency basis,
mostly organically. Revenue also grew 3.0%, including increased
rechargeable expenses, compared to last year.
Overall, the Group's revenue and
net fee income growth reflects ongoing client demand across a
slightly larger global consulting team on average,
set against the more competitive environment and
longer sales cycles generally. We were
pleased to maintain consistent consultant day rates overall, albeit
at lower than target average consultant utilisation, particularly
during the first half summer months. All our geographic regions delivered net fee income growth on
a constant currency basis in the year, with an inorganic
contribution from the acquisition of Shoreline.
The Group's largest geographic
region, the UK, delivered good 4.7% organic net fee income growth
on last year. We continued to see robust client demand in our
established practices, retaining our market-leading reputation and
supporting some of the highest profile projects.
This included substantial contributions from our
asset and wealth management capabilities in Investments, Operations
and Client & Digital, and UK Alternatives Consulting also
delivering strongly, growing their headcount by over 20% to 78.
Our newer UK insurance consulting team
consolidated its position this year after strong growth in recent
years. The UK ended the year with total headcount of 385, down
9 in the year including a small recent restructuring process given
UK market conditions. Overall UK consultant utilisation ended the
year below target utilisation levels, firming closer to target
levels through the first quarter of FY
25.
Within the UK results, while
Alpha's data and product solutions business, Aiviq, delivered flat
revenue against last year, it also recently secured a major, new
top-ten global asset management client, underscoring the
market-leading Aiviq technology offering. We are delighted that
Aiviq's proposition has been endorsed in this way alongside
recognition from a FinTech Global Wealth Tech "Top 100" award in
the year.
In North America, after almost doubling its top line in the previous
year, FY 24 saw a flatter profile with net fee income growing 3.8%
on a constant currency basis and easing 0.6% on a reported basis.
Our alternative investments consulting business, Lionpoint,
continued to trade well enjoying strong client demand and adding 47
new clients in the region. The North
America business expanded its domestic client base, as well as
successfully capturing client demand through a number of
cross-selling opportunities with its existing clients, although it
experienced some fee rate compression during the year.
In line with the Group's selective approach to
hiring in FY 24, headcount in North America increased by 15
consultants overall, including investing in the launch of our
Insurance Consulting offering in North America with two senior team
hires. North America witnessed the tougher market conditions
earlier than the rest of the Group and has started FY 25 with the
team well deployed, growing consultant numbers and a strong
pipeline of interesting project opportunities.
Europe & APAC delivered the
strongest regional growth in FY 24, with net fee income
increasing by 6.9% on a constant currency basis and 6.1%
overall. Organic net fee income growth was 1.4%, with some
rates progression in Europe, plus the acquisition of Shoreline in
APAC. Europe & APAC headcount remained flat overall, in
line with the Group's selective hiring approach. The Europe
& APAC region has started FY 25 well, with good utilisation
being enjoyed across all teams.
Given the more challenging market
conditions prevalent this year, the Group adopted a selective
hiring approach, focused on growth areas, and the number of
consultants reached 1,000 by the year end (FY 23: 994). Despite a
selective approach to recruitment we remained committed to our
well-established graduate programme, the future talent of the
Group, welcoming a number of graduates through the year
globally.
Group profitability
Group gross profit was £78.3m,
£2.1m lower than the prior year (FY 23: £80.4m). Gross profit
margin was 33.5% (FY 23: 35.4%), and consistent with H1. This
primarily reflects reduced average consultant utilisation in the
competitive market environment, alongside consistent day rates on
average and increased costs from selective investment in growing
our team while maintaining a competitive remuneration package,
partly offset by active management of variable costs given
performance. Utilisation levels were most affected through the
second quarter's summer months, ticking up through H2, and reaching
close to target levels of 70% to 75% on average globally towards
the year end.
The UK business generated £2.0m
less gross profit than last year, at 36.2% gross margin (FY 23:
40.2%), reflecting lower consultant utilisation levels than target
and the previous year, particularly in the insurance consulting and
asset & wealth management teams, alongside consistent day
rates. North America's gross profit is also lower than last year by
£1.7m, generating 31.3% margin (FY 23: 32.9%) reflecting good
levels of average consultant utilisation, some day rate compression
in the region given the competitive market, and a higher cost base
accompanying North America team growth. This includes the
establishment of an insurance consulting team in the region during
the year. Europe & APAC grew gross profit to £17.0m (FY 23:
£15.4m), with an improved margin of 32.7% (FY 23: 31.4%) reflecting
good average consultant day rate progression in Europe, partly
offset by an easing in utilisation, particularly in
APAC. The North America gross margin saw the
greatest currency headwind in the Group. On a constant currency
basis, North America's gross margin would be broadly flat with the
prior year.
Adjusted administration expenses,
as detailed in note 3, increased by £2.3m to £36.1m in the year (FY
23: £33.8m). This increase mainly reflects investment in the
Group's central team in the second half of the prior year and
increased overall spend supporting the larger average consultant
headcount base including further office space and IT licences,
partially offset by lower recruitment spend in the year.
Including the adjusting items,
which decreased against the prior year, administration expenses
increased overall to £53.2m (FY 23: £51.7m) on a statutory basis.
The adjusting items, set out in note 3, decreased in the year to
£14.3m (FY 23: £15.8m), reflecting decreased earn-out and deferred
consideration charges, share-based payment charges and intangible
asset amortisation, partially offset by redundancy-related
restructuring costs in the year.
The lower earn-out and deferred
consideration charge of £1.1m (FY 23: £2.5m) reflects payments in
the year and last year's net fair value increase in acquisition
liabilities held. Further details on the earn-out and deferred
consideration charges are set out in note 5. The share-based
payment charge also reduced to £7.3m (FY 23: £8.0m), having updated
the input assumptions to reflect FY 24's lower performance, Alpha's
lower share price and share option vests in the period. Further
details of the share-based payment charge and sensitivity analysis
are set out in notes 3 and 10.
This year, the Group incurred
£0.9m of restructuring costs, relating to the exit fees and costs
involved in a small UK redundancy process. Acquisition and
integration costs were £0.3m (FY 23: £0.3m) as the Shoreline team
was successfully integrated into the Group during the first half.
The acquired intangibles amortisation charge decreased against the
prior year, reflecting some fully amortised intangibles, partly
offset by the newly acquired Shoreline intangibles. Further
detail of these adjusting items is set out in note
3.
The depreciation charge grew to
£2.8m (FY 23: £1.9m) reflecting increased depreciation on a higher
lease right-of-use asset. The amortisation of capitalised
development costs was nil (FY 23: £0.2m) as the asset became fully
amortised in the prior year.
Adjusted EBITDA was £42.2m (FY 23:
£46.6m) and adjusted EBITDA margin was 18.0% (FY 23: 20.5%),
reflecting both the lower gross profit and the higher adjusted
administration expenses. If no adjustment was made for the
share-based payment charge, adjusted EBITDA for the period would be
£34.8m (FY 23: £38.6m) and adjusted EBITDA margin would be 14.9%
(FY 23: 17.0%). Operating profit was £25.1m (FY 23: £28.6m)
after also charging increased depreciation.
Currency
Currency translation was a
headwind on net fee income and profits during the year,
particularly in North America. In the year, the pound sterling
averaged USD 1.26 (FY 23: USD 1.21) and CAD 1.69 (FY 23: CAD 1.59),
which, with some other smaller currency movements, resulted in an
unfavourable net currency effect on net fee income of £4.4m and on
gross profit of £1.3m. On a constant currency basis, North
America net fee income would have grown 3.8% and Europe & APAC
net fee income would have grown 6.9%.
Overall, the Group's net fee
income would have grown 4.8% to £238.0m on this constant currency
basis. Similarly, the Group's gross profit would have been £79.6m
and would have reduced 0.9% on a constant currency
basis.
Net finance expenses
Net finance expenses fell slightly
to £2.5m (FY 23: £2.9m), primarily reflecting reduced
non-underlying finance expenses relating to acquisition
consideration discount unwinding, which decreased given
acquisition-related payments in the period, as set out in note 5.
This reduction was partially offset by increased underlying
interest expenses reflecting refinancing fees on enlarging the
Group's revolving credit facility ("RCF") and interest on periodic
RCF drawings, plus additional lease costs.
Adjusted profit before tax was
£38.5m (FY 23: £44.0m) after charging increased depreciation and
net underlying finance expenses. Statutory pre-tax profit was
£22.6m (FY 23: £25.8m). The larger decrease in adjusted profits as
compared to statutory profits is driven by the lower level of
adjusting items and non-underlying finance costs.
Taxation
The Group's taxation charge for
the year was £6.7m (FY 23: £7.8m), reflecting the lower taxable
profits and the blended tax rate of the increasingly international
jurisdictions in which the Group operates. The Group's cash
tax payment in the year was £7.6m (FY 23: £13.3m), reflecting
increased prior year payments as the Group moved to a quarterly tax
payment cycle in North America that year.
Adjusted profit after tax is shown
after adjustments for the applicable tax on adjusting items as set
out in note 3.
Earnings per share
Adjusted earnings per share
("EPS") was 24.90p per share (FY 23: 29.27p) and adjusted diluted
EPS was 23.34p (FY 23: 27.37p), reflecting the adjusted profit
after tax and the increased number of weighted average shares,
which increased as a result of share option exercises in the
current and prior periods, partly offset by the Group's purchase of
shares into Alpha's employee benefit trust ("EBT"). After including
the adjusting items, basic earnings per share was 13.85p (FY 23:
15.82p), while diluted EPS was 12.98p (FY 23: 14.79p), after
including the dilutive effect of the share options awards
outstanding.
As at 31 March 2024, 11,227,844
share options (FY 23: 9,996,040) remained outstanding, with FY 24
grants partly offset by some share options exercised and forfeited
in the year. See note 10 for further detail.
Cash flow and net funds
Cash generated from operations was
£20.4m (FY 23: £43.9m) and, after adjusting for employment-linked
acquisition payments, acquisition, integration and restructuring
costs, was £23.6m (FY 23: £46.2m).
Underlying working capital remains
well managed, with debtor days within the typical range, albeit
higher than the previous year. The overall operating cash
generation in FY 24 primarily reflects profit share bonus payments
relating to prior years, and their relative size compared to the
Group's profitability this year. These bonus payments include both
the payment of FY 23 profit share and the second tranche of
deferred FY 22 bonus payments. These payments
alongside the lower performance-adjusted bonus accruals in FY 24
result in an increased movement in working capital in the year.
Adjusted cash conversion is similarly affected and was 60%
(FY 23: 104%). We refined the definitions of adjusted cash
generated from operations and adjusted cash conversion in FY 24 to
exclude tax paid in the year, to allow for consistency in the
calculation to exclude tax from both profits and operating cash
flows in line with comparable companies, as detailed in note 3.
Given the weightings and timings of bonus payments, we expect
adjusted cash generated from operations and adjusted cash
conversion to return to more normal levels in FY 25.
During FY 24, the Group made
payments of £17.0m relating to deferred and contingent acquisition
consideration principally as regards Lionpoint, including £1.8m of
employment-linked amounts. Please see note 5 for further
details.
The Group also provided £3.8m
funding to Alpha's employee benefit trust ("EBT") to purchase
1,035,154 shares at the prevailing market share price, to hold for
the satisfaction of future award vests. Alpha will likely fund the
EBT further in the future to build the shares held in the EBT for
the satisfaction of future share option exercises.
Net interest paid was £1.3m (FY
23: £0.5m), reflecting the higher cost of maintaining and
periodically drawing the Group's enlarged RCF to manage the Group's
ongoing currency requirements and RCF refinancing fees paid,
partially offset by interest income from cash balances
held.
The Group also capitalised
expenditure of £0.3m in relation to the development of enhancements
to Aiviq's client data and analytics software.
Dividends paid increased to £16.2m
(FY 23: £12.8m), reflecting the Group's dividend policy and a
consistent FY 24 interim dividend payment.
At the year end, the Group's cash
position was £29.4m (FY 23: £59.2m). During the year, the Group
refinanced and upscaled its RCF to a £50.0m facility to provide
additional liquidity, and alongside the net cash position, provides
Alpha further flexibility.
Statement of financial position
The Group's net assets at 31 March
2024 totalled £148.5m (FY 23: £149.3m). This movement principally
arises from the retained profits net of dividends and other
reserves movements including additional share-based payment
reserves, offset by foreign exchange losses on overseas assets. The
Group continues to maintain a strong financial
position.
The Group's non-current assets
movement principally results from ongoing amortisation and
depreciation charges on intangible assets and right-of-use assets
on leases, partly offset by goodwill and intangibles added as part
of the Shoreline acquisition.
Working capital remains well
managed. Trade and other receivables balances increased in FY 24
through the ongoing growth in the business. Debtor collections
continued to be strong, albeit with debtor days increasing on the
previous year's strong collections and closing balance.
Trade and other payables balances
decreased, principally representing lower performance-adjusted
bonus accruals and acquisition liabilities. The decrease in
acquisition-related deferred consideration and
earn-out liabilities reflects Lionpoint deferred and contingent
consideration payments, partially offset by employment-linked
consideration as well as the unwinding of discounting in the year,
as disclosed in note 5.
As at 31 March 2024, the Company
had 122,009,736 ordinary shares in issue (FY 23: 120,509,736), of
which no shares were held in treasury and 7,537,366 shares were
held in the Company's EBT to satisfy future option exercises (FY
23: 6,274,380).
Dividends
In view of the recommended cash
offer to acquire Alpha by Bidco, a newly incorporated indirect
subsidiary of certain funds managed by Bridgepoint, the Board is
not recommending a final dividend. If the acquisition does not
complete, it is expected that the Board would declare a final
dividend in respect of FY 24 at a later date.
Risk management and the year ahead
The Group's risk management
approach includes regular monitoring of macro-economic and
end-market conditions and assessing the potential impacts across
all business areas. In the risk management framework, which was
reviewed during the year, the senior leadership team, including the
Chief Executive Officer and me as Chief Financial Officer, has
primary responsibility for keeping abreast of developments that may
affect the implementation of the Group's strategy and financial
performance. This entails identifying and agreeing the appropriate
mitigating actions that should be taken and ensuring, as far as
possible, that those actions are then executed by the senior
management team. The Board as a whole oversees risk and, within
that framework, considers the material risks that the Group faces
and agrees on the principal risks and uncertainties. Alpha has a
set of core Company values, which are embedded globally, that
reflect the Group's ethical and responsible approach to operating
and managing the business.
Alpha has navigated well through
this more challenging year. While closely monitoring the ongoing
market rebalancing, Alpha continues to enjoy a strong pipeline of
new business opportunities and incrementally improving current
trading. The structural drivers in the sectors in which we operate,
which drive ongoing demand for Alpha's services, remain prevalent.
We are confident in the quality of our people, our excellent market
reputation, and business opportunities to extend the service
offering, and therefore the Board looks forward to further progress
ahead.
The Board has considered all of
the above factors in its review of going concern and has been able
to conclude the review positively. While cognisant of
potential macro-economic risks and the more competitive
environment, the Group's talented people, widening range of service
offerings and international footprint, together with the long-term
structural drivers, position the Group well.
Summary and current trading
In a more competitive market
environment with a longer sales cycle, the Group performed
resiliently in the year. The Group has grown net fee income, while
maintaining consistent consultant day rates.
While the global consulting market
continues to rebalance and present some challenges, a more positive
market sentiment is returning, with improving sales wins over
recent months. Utilisation rates ticked up in the final quarter of
FY 24, close to target levels overall, maintaining this level into
the early part of FY 25.
We are very confident in the
quality of our people, our excellent market reputation, and
business opportunities to extend the service offering for our
clients further. Accordingly, the Group remains well positioned for
the future.
John Paton
Chief Financial Officer
20 June 2024
Consolidated statement of comprehensive
income
For the year ended 31 March
2024
|
|
|
Year ended
31 March 2024
|
|
Year ended
31 March 2023
|
|
|
Note
|
£'000
|
|
£'000
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
2
|
235,471
|
|
228,717
|
|
|
|
|
|
|
Rechargeable expenses
|
|
2
|
(1,846)
|
|
(1,562)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net fee income13
|
|
2
|
233,625
|
|
227,155
|
|
|
|
|
|
|
Cost of sales
|
|
2
|
(155,328)
|
|
(146,796)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
2
|
78,297
|
|
80,359
|
|
|
|
|
|
|
Administration expenses
|
|
|
(53,219)
|
|
(51,723)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
|
|
|
25,078
|
|
28,636
|
|
|
|
|
|
|
Finance income
|
|
|
346
|
|
364
|
Finance expense
|
|
|
(2,854
|
|
(3,229)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax
|
|
|
22,570
|
|
25,771
|
|
|
|
|
|
|
Taxation
|
|
|
(6,723)
|
|
(7,810)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
|
15,847
|
|
17,961
|
|
|
|
|
|
|
Items that may be reclassified to profit or
loss:
|
|
|
|
|
|
Foreign exchange differences on
translation of foreign operations
|
|
|
(1,966)
|
|
3,510
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income for the
year
|
|
|
(1,966)
|
|
3,510
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
|
13,881
|
|
21,471
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
(p)
|
|
4
|
13.85
|
|
15.82
|
|
|
|
|
|
|
Diluted earnings per share
(p)
|
|
4
|
12.98
|
|
14.79
|
|
|
|
|
|
|
13 Net fee income, adjusted EBITDA and other alternative
performance measures are defined and reconciled in note
3
Consolidated statement of financial
position
As at 31 March 2024
|
|
As at
31 March 2024
|
|
As at
31 March 2023
|
|
Note
|
£'000
|
|
£'000
|
Assets
|
|
|
|
|
Non-current assets
|
|
|
|
|
Goodwill
|
|
105,179
|
|
103,676
|
Intangible fixed assets
|
|
25,073
|
|
27,588
|
Property, plant and
equipment
|
|
947
|
|
1,113
|
Right-of-use assets
|
|
2,333
|
|
4,008
|
Deferred tax assets
|
|
2,666
|
|
3,033
|
Capitalised contract fulfilment
costs
|
|
76
|
|
108
|
|
|
|
|
|
Total non-current assets
|
|
136,274
|
|
139,526
|
|
|
|
|
|
Current assets
|
|
|
|
|
Trade and other
receivables
|
6
|
42,185
|
|
34,128
|
Cash and cash
equivalents
|
|
29,392
|
|
59,215
|
|
|
|
|
|
Total current assets
|
|
71,577
|
|
93,343
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other
payables
|
7
|
(46,373)
|
|
(60,539)
|
Provisions
|
|
(3,308)
|
|
(3,326)
|
Corporation tax
|
|
(1,526)
|
|
(1,321)
|
Lease liabilities
|
|
(1,413)
|
|
(2,104)
|
|
|
|
|
|
Total current liabilities
|
|
(52,620)
|
|
(67,290)
|
Net current assets
|
|
18,957
|
|
26,053
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Deferred tax
liabilities
|
|
(2,442)
|
|
(2,783)
|
Other non-current
liabilities
|
8
|
(3,149)
|
|
(11,400)
|
Lease liabilities
|
|
(1,147)
|
|
(2,057)
|
|
|
|
|
|
Total non-current liabilities
|
|
(6,738)
|
|
(16,240)
|
Net assets
|
|
148,493
|
|
149,339
|
|
|
|
|
|
Equity
|
|
|
|
|
Issued share capital
|
9
|
92
|
|
90
|
Share premium
|
|
119,438
|
|
119,438
|
Foreign exchange
reserve
|
|
5,026
|
|
6,992
|
Other reserves
|
|
18,777
|
|
17,258
|
Retained earnings
|
|
5,160
|
|
5,561
|
|
|
|
|
|
Total shareholders' equity
|
|
148,493
|
|
149,339
|
Consolidated statement of cash flows
For the year ended 31 March
2024
|
|
Year ended
31 March
2024
|
|
Year ended
31 March
2023
|
|
Note
|
£'000
|
|
£'000
|
Cash flows from operating activities:
|
|
|
|
|
Profit for the year
|
|
15,847
|
|
17,961
|
Taxation
|
|
6,723
|
|
7,810
|
Finance income
|
|
(346)
|
|
(364)
|
Finance expenses
|
|
2,854
|
|
3,229
|
Loss/(profit) from exchange rate
movements on cash held
|
|
448
|
|
(2,364)
|
Depreciation charge
|
|
2,769
|
|
1,933
|
Profit on disposal of fixed
assets
|
|
(44)
|
|
(14)
|
Amortisation of intangible fixed
assets
|
|
4,325
|
|
4,762
|
Share-based payment
charge
|
10
|
6,663
|
|
7,023
|
Increase/(decrease) in
provisions
|
|
18
|
|
(19)
|
Working capital
adjustments:
|
|
|
|
|
Increase in trade and other
receivables
|
|
(7,679)
|
|
(3,834)
|
(Decrease)/increase in
trade and other payables
|
|
(11,170)
|
|
7,752
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
|
20,408
|
|
43,875
|
|
|
|
|
|
Tax paid
|
|
(7,633)
|
|
(13,285)
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from operating
activities
|
|
12,775
|
|
30,590
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Interest received
|
|
346
|
|
364
|
Acquisition consideration
payments, including deferred and contingent, net of cash
acquired
|
5
|
(16,981)
|
|
(20,829)
|
Purchase of intangible
assets
|
|
(311)
|
|
(319)
|
Purchase of property, plant and
equipment, net of disposals
|
|
(503)
|
|
(860)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
(17,449)
|
|
(21,644)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Net settlement of vested share
options
|
|
(457)
|
|
(343)
|
Purchase of own shares by the
EBT
|
|
(3,843)
|
|
(1,139)
|
Drawdown of revolving credit
facility
|
|
10,150
|
|
12,500
|
Repayment of revolving credit
facility
|
|
(10,150)
|
|
(12,500)
|
Interest and bank loan
fees
|
|
(1,254)
|
|
(482)
|
Principal lease liability
payments
|
|
(1,989)
|
|
(1,315)
|
Interest on lease
liabilities
|
|
(308)
|
|
(216)
|
Dividends paid
|
|
(16,246)
|
|
(12,774)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
(24,097)
|
|
(16,269)
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
(28,771)
|
|
(7,323)
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of the year
|
|
59,215
|
|
63,516
|
Effect of exchange rate movements
on cash held
|
|
(1,052)
|
|
3,022
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the
year
|
|
29,392
|
|
59,215
|
|
|
|
|
|
Consolidated statement of changes in equity
For the year ended 31 March
2024
|
Issued share
capital
£'000
|
Share
premium
£'000
|
Foreign exchange
reserve
£'000
|
Other
reserves
£'000
|
Retained
earnings
£'000
|
Total shareholders'
equity
£'000
|
|
|
|
|
|
|
|
As at 1 April 2022
|
89
|
119,438
|
3,482
|
9,361
|
375
|
132,745
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
17,961
|
17,961
|
Foreign exchange differences on
translation of foreign operations
|
-
|
-
|
3,510
|
-
|
-
|
3,510
|
|
|
|
|
|
|
|
Transactions with owners
|
|
|
|
|
|
|
Shares issued (equity)
|
1
|
-
|
-
|
-
|
(1)
|
-
|
Purchase of own shares by the
EBT
|
-
|
-
|
-
|
(1,139)
|
-
|
(1,139)
|
Share-based payment
charge
|
-
|
-
|
-
|
7,023
|
-
|
7,023
|
Net settlement of vested share
options
|
-
|
-
|
-
|
(343)
|
-
|
(343)
|
Current tax recognised in
equity
|
-
|
-
|
-
|
1,486
|
-
|
1,486
|
Deferred tax recognised in
equity
|
-
|
-
|
-
|
870
|
-
|
870
|
Dividends
|
-
|
-
|
-
|
-
|
(12,774)
|
(12,774)
|
As at 31 March 2023
|
90
|
119,438
|
6,992
|
17,258
|
5,561
|
149,339
|
Comprehensive income
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
-
|
15,847
|
15,847
|
Foreign exchange differences on
translation of foreign operations
|
-
|
-
|
(1,966)
|
-
|
-
|
(1,966)
|
|
|
|
|
|
|
|
Transactions with owners
|
|
|
|
|
|
|
Shares issued (equity)
|
2
|
-
|
-
|
-
|
(2)
|
-
|
Purchase of own shares by the
EBT
|
-
|
-
|
-
|
(3,843)
|
-
|
(3,843)
|
Share-based payment
charge
|
-
|
-
|
-
|
6,663
|
-
|
6,663
|
Net settlement of vested share
options
|
-
|
-
|
-
|
(457)
|
-
|
(457)
|
Current tax recognised in
equity
|
-
|
-
|
-
|
569
|
-
|
569
|
Deferred tax recognised in
equity
|
-
|
-
|
-
|
(1,413)
|
-
|
(1,413)
|
Dividends
|
-
|
-
|
-
|
-
|
(16,246)
|
(16,246)
|
As at 31 March 2024
|
92
|
119,438
|
5,026
|
18,777
|
5,160
|
148,493
|
|
|
|
|
|
|
|
Issued share capital
Issued share capital represents
the nominal value of share capital subscribed.
Share premium
The share premium account is used
to record the aggregate value of premiums paid when the Company's
shares are issued at a premium, net of associated share issuance
costs.
Foreign exchange reserve
The foreign exchange reserve
represents exchange differences that arise on consolidation from
the translation of the financial statements of foreign
subsidiaries, including goodwill.
Other reserves
The other reserves represent the
cumulative fair value of the IFRS 2 share-based payment charge
recognised each year, associated current tax, deferred tax and net
settlement of vested share options, equity-settled acquisition
consideration reserves, and purchases of the Company's own shares
by the employee benefit trust ("EBT").
Retained earnings
The retained earnings reserve
represents cumulative net profits and losses recognised in the
consolidated statement of comprehensive income less dividends
paid.
1. Basis of
preparation
The financial information set out
above does not constitute the Group's statutory accounts for the
years ended 31 March 2024 or 2023 but is derived from those
accounts. Statutory accounts for the year ended 31 March 2023 have
been delivered to the registrar of companies, and those for the
year ended 31 March 2024 will be delivered in due course. The
auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
These condensed preliminary
financial statements have been prepared in accordance with
UK-adopted international accounting standards, in line with the
Group's statutory accounts.
2. Segmental
information
Group management has determined
the operating segments by considering the segment information that
is reported internally to the chief operating decision maker, the
Board of Directors. For management purposes, the Group is currently
organised into three geographical operating divisions: UK, North
America and Europe & APAC, which allows the Board to evaluate
the nature and financial effects of the business activities of the
Group and the economic environments in which it
operates.
The Group's operations all consist
of one type: specialist consultancy and related services to the
financial services industry. Revenues associated with software
licensing arrangements were not significant in both the current and
prior years. Therefore, the Directors consider that disaggregating
revenue by operating segments is most relevant to depict how the
nature, amount, timing and uncertainty of revenue and cash flows
may be affected by economic factors.
FY 24
|
UK
|
North
America15
|
Europe &
APAC16
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Revenue
|
91,547
|
91,359
|
52,565
|
235,471
|
Rechargeable expenses
|
(353)
|
(813)
|
(680)
|
(1,846)
|
Net fee income
|
91,194
|
90,546
|
51,885
|
233,625
|
Cost of sales
|
(58,190)
|
(62,219)
|
(34,919)
|
(155,328)
|
Gross profit
|
33,004
|
28,327
|
16,966
|
78,297
|
Margin on net fee income14 (%)
|
36.2%
|
31.3%
|
32.7%
|
33.5%
|
|
|
|
|
|
FY 23
|
UK
|
North
America15
|
Europe &
APAC16
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Revenue
|
87,467
|
91,815
|
49,435
|
228,717
|
Rechargeable expenses
|
(327)
|
(717)
|
(518)
|
(1,562)
|
Net fee income
|
87,140
|
91,098
|
48,917
|
227,155
|
Cost of sales
|
(52,117)
|
(61,104)
|
(33,575)
|
(146,796)
|
Gross profit
|
35,023
|
29,994
|
15,342
|
80,359
|
Margin on net fee income14 (%)
|
40.2%
|
32.9%
|
31.4%
|
35.4%
|
|
|
|
|
|
During the year, the Group did not
have any customers that comprised more than 10% of the Group's
revenues (FY 23: nil).
14 Margin on net fee income is gross profit expressed as a
percentage of net fee income. Please refer to note 3 for further
detail on the Group's APMS
15 Within North America, the United States generated revenue of
£78.0m (FY 23: £77.1m) and Canada generated revenue of £13.4m (FY
23: £14.7m)
16 Within Europe & APAC, France is a material country and
generated revenue of £20.1m (FY 23: £18.7m)
3. Reconciliations to alternative performance
measures
Alpha uses alternative performance
measures ("APMs") that are not defined under the requirements of
IFRS. The APMs, including net fee income, margin on net fee income,
adjusted EBITDA, adjusted profit before tax, adjusted EPS, adjusted
cash generated from operations, adjusted cash conversion, organic
net fee income growth and constant currency growth, are provided to
allow stakeholders a further understanding of the underlying
trading performance of the Group and aid comparability between
accounting periods. These measures have been presented consistently
across reporting periods. They are not considered a substitute for,
or superior to, IFRS measures, and may not be comparable across
other companies. The exclusion of
adjusting items in the Group's APMs may result in adjusted
profitability being materially higher when compared with the
nearest equivalent statutory measures.
Net fee income
The Group disaggregates revenue
into net fee income and expenses recharged to clients. Net fee
income provides insight into the Group's productive output and is
used by the Board to set budgets and measure performance. This APM
is reconciled to revenue on the face of the consolidated statement
of comprehensive income and by segment in note 2.
Profit margins
Margin on net fee income and
adjusted EBITDA margin are calculated using gross profit and
adjusted EBITDA, expressed as a percentage of net fee income. These
represent the margin that the Group earns on its productive output,
excluding nil or negligible margin expense recharge to clients over
which the Group has limited control, and allows comparability of
business output between periods. Such adjusted margins are used by
senior management and the Board to assess the performance of the
Group.
Reconciliation of adjusted profit before tax, adjusted
operating profit and adjusted EBITDA
|
|
FY 24
|
|
FY 23
|
|
Note
|
£'000
|
|
£'000
|
|
|
|
|
|
Profit before tax
|
|
22,570
|
|
25,771
|
|
|
|
|
|
Amortisation of acquired
intangible assets
|
|
4,325
|
|
4,576
|
Profit on disposal of fixed
assets
|
|
(44)
|
|
(14)
|
Share-based payment
charge
|
10
|
7,337
|
|
7,950
|
Earn-out and deferred
consideration17
|
5
|
1,122
|
|
2,525
|
Acquisition and integration
costs
|
|
292
|
|
331
|
Restructuring costs
|
|
945
|
|
-
|
Foreign exchange losses
|
|
331
|
|
459
|
Adjusting items
|
|
14,308
|
|
15,827
|
Non-underlying finance
expenses
|
|
1,621
|
|
2,417
|
Adjusted profit before tax
|
|
38,499
|
|
44,015
|
Net underlying finance
expenses
|
|
887
|
|
448
|
Adjusted operating profit
|
|
39,386
|
|
44,463
|
Depreciation charge
|
|
2,769
|
|
1,933
|
Amortisation of capitalised
development costs
|
|
-
|
|
186
|
Adjusted EBITDA
|
|
42,155
|
|
46,582
|
Adjusted EBITDA margin (%)
|
|
18.0%
|
|
20.5%
|
17 The earn-out and deferred consideration charge in the year
comprises an employment-linked consideration charge of £1.1m, an
associated social security charge of £0.1m, offset by a £0.1m fair
value adjustment. Refer to note 5 for further details
Adjusting items
To assist in understanding the
underlying performance of the Group and aid comparability between
periods, management applies judgement to exclude certain expense
items from the Group's APMs, which are deemed to warrant separate
disclosure due to either their nature or size. Such adjusting items
as described below are generally non-cash, non-recurring by nature
or are acquisition related.
Amortisation of acquired
intangible assets and profit or loss on disposal of fixed assets
are treated as adjusting items to better reflect the underlying
performance of the business, as they are non-cash items,
principally relating to acquisitions.
The Group's share-based payment
charge and related social security taxes are excluded from adjusted
profit measures. This allows for better comparability between
periods given the complexity of the assumptions underlying the
calculation and the multi-year effect of mid-cycle changes to
certain assumptions being adjusted for on a cumulative basis,
sometimes resulting in material fluctuations in the charge between
periods that are not reflective of the underlying operational
performance of the business. The charge and related social security
taxes are also subject to external factors, such as the Group's
share price, over which the Directors have less day-to-day
influence compared to other more directly controllable factors.
This approach has been applied consistently across reporting
periods. Note 10 sets out further details of the employee
share-based payment charge calculation under IFRS 2.
The Group will continue to assess
the status of this charge as an adjusting item in the Group's
financial statements, considering the development of the charge,
the Group and its remuneration policies. If no adjustment was made
for the share-based payment charge, adjusted EBITDA for the period
would be £34.8m (FY 23: £38.6m) and adjusted EBITDA margin would be
14.9% (FY 23: 17.0%).
As per note 5, the acquisitions of
Shoreline in the year, and Lionpoint in FY 22, involved both
deferred and contingent payments. Some of these acquisition
payments are dependent on the ongoing employment of certain members
of the respective senior management teams, and this element is
expensed annually over several years until the date of payment.
These costs have been treated as adjusting items as they are
acquisition related, reflecting the acquisition terms rather than
the Group's trading performance. Additionally, where there is a
change to the expected future payments or discount rates, a fair
value adjustment to the liability is recorded in the income
statement. Whilst these acquisition-related costs will recur in the
short term through the earn-out periods, the adjustment allows
comparability of underlying productive output and operating
performance of the Group across reporting periods.
Other acquisition and integration
costs expensed in the year relate to the acquisition of Shoreline,
including due diligence, legal fees and integration costs. Whilst
further similar acquisition and integration costs could be incurred
in the future, these costs are not directly attributable to the
ongoing operational trading performance of the Group. The timing
and amount of such costs may vary and treating these as an
adjusting item allows comparability of the operating performance
across reporting periods.
Restructuring costs in FY 24
relate to a specific UK-focused redundancy programme, which aims to
support returning the business to more normal levels of utilisation
and profitability, given the more competitive market environment.
These costs are non-recurring and, therefore have been treated as
an adjusting item to allow comparability of the underlying
performance of the Group.
The impact of foreign currency
volatility in translating local working capital and cash balances
to their relevant functional currencies has been excluded from the
calculation of adjusted profit measures on the basis that such
exchange rate movements do not reflect the underlying trends or
operational performance of the Group. The foreign exchange
movements were immaterial in both the current and prior
years.
Non-underlying finance expenses
In calculating adjusted profit
before tax, unwinding of the discounted contingent and deferred
acquisition consideration within finance expenses is considered
non-underlying as these amounts relate to acquisition
consideration, rather than the Group's underlying trading
performance.
Adjusted profit before tax
Adjusted profit before tax is an
APM calculated as profit before tax stated before adjusting items,
including amortisation of acquired intangible assets, share-based
payment charge, acquisition-related payments and costs,
non-underlying finance expenses and other non-underlying expenses.
This measure allows comparability of the Group's underlying
performance, reflecting depreciation, amortisation of capitalised
development costs and underlying finance expenses.
Adjusted operating profit
Adjusted operating profit is an
APM defined by the Group as adjusted profit before tax before
charging underlying finance expenses, including fees on bank loans
and interest on lease liabilities. The Directors consider this
metric alongside statutory operating profit to allow further
understanding and comparability of the underlying operating
performance of the Group between periods. This measure has been
consistently used as the basis for adjusted cash
conversion.
Adjusted EBITDA
Adjusted EBITDA is a commonly used
operating measure, which is defined by the Group as adjusted
operating profit stated before non-cash items, including
amortisation of capitalised development costs and the depreciation
charge. Adjusted EBITDA is a measure that is used by management and
the Board to assess underlying trading performance across the
Group, and forms the basis of the performance measures for aspects
of remuneration, including consultant profit share and
bonuses.
Adjusted profit after tax
Adjusted profit after tax is
similarly used to allow a further understanding of the underlying
performance of the Group. Adjusted profit after tax is stated
before adjusting items and their associated tax effects. The
associated tax effects are calculated by applying the relevant
effective tax rate to the adjusting items. A nil effective tax rate
has been applied to earn-out and deferred consideration,
acquisition costs and non-underlying finance expenses totalling
£3.0m as these items are treated as capital in nature and are
therefore non-deductible for tax purposes. An overall effective tax
rate of 26.0% has been applied to all other adjusting items
totalling £12.9m, reflecting the tax rates in the geographical
locations to which the items relate.
|
|
FY 24
|
|
FY 23
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Adjusted profit before tax
|
|
38,499
|
|
44,015
|
Tax charge
|
|
(6,723)
|
|
(7,810)
|
Tax impact of adjusting
items
|
|
(3,289)
|
|
(2,976)
|
Adjusted profit after tax
|
|
28,487
|
|
33,229
|
Adjusted earnings per share
Adjusted earnings per share
("EPS") is calculated by dividing the
adjusted profit after tax for the year attributable to ordinary
shareholders by the weighted average number of ordinary shares
outstanding during the year. Adjusted diluted EPS is calculated by
dividing adjusted profit after tax by number of shares as above,
adjusted for the impact of potentially dilutive ordinary shares.
Potentially dilutive ordinary shares are only treated as dilutive
when their conversion to ordinary shares would decrease EPS (or
increase loss per share). Refer to note 4 for further
detail.
Adjusted EPS
|
|
FY 24
|
|
FY 23
|
|
|
|
|
|
Adjusted EPS (p)
|
|
24.90
|
|
29.27
|
Adjusted diluted EPS (p)
|
|
23.34
|
|
27.37
|
Reconciliation of adjusted administration
expenses
To express them on the same basis
as the APMs described above, adjusted administration expenses are
stated before adjusting items, depreciation and amortisation of
capitalised development costs and are used by the Board to monitor
the underlying administration expenses of the business in
calculating adjusted EBITDA.
|
|
FY 24
|
|
FY 23
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Administration expenses
|
|
53,219
|
|
51,723
|
Adjusting items
|
|
(14,308)
|
|
(15,827)
|
Depreciation charge
|
|
(2,769)
|
|
(1,933)
|
Amortisation of capitalised
development costs
|
|
-
|
|
(186)
|
Adjusted administration expenses
|
|
36,142
|
|
33,777
|
|
|
|
|
|
Adjusted cash generated from operations
Adjusted cash generated from
operations excludes the operating cash flow impact of adjusting
items, such as employment-linked acquisition payments and
associated social security taxes, other acquisition and integration
costs paid in the period, and restructuring costs. This is to
reflect the Group's underlying operating cash flows on a consistent
basis with adjusted profit measures.
|
|
FY 24
|
|
FY
2318
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Cash generated from operations
|
|
20,408
|
|
43,875
|
Employment-linked acquisition
payments19
|
|
1,923
|
|
1,981
|
Acquisition and integration
costs
|
|
292
|
|
331
|
Restructuring costs
|
|
945
|
|
-
|
Adjusted cash generated from operations
|
|
23,568
|
|
46,187
|
18 The Group has refined the definition of adjusted cash
generated from operations to exclude tax paid in the year. This
allows for greater consistency as adjusted operating profit, used
as the denominator in the calculation for adjusted cash conversion,
is before tax. Additionally, this approach is in line with
comparable companies and allows ease of comparison against these
companies. The FY 23 comparative has been restated on this new
basis to allow for comparability between years
19 Employment-linked acquisition payments of £1.9m comprises
£1.8m of acquisition consideration classified as employment-linked
and £0.1m of associated social security payments
Adjusted cash conversion
Cash conversion is stated as cash
generated from operations expressed as a percentage of operating
profit.
Adjusted cash conversion is stated
as adjusted cash generated from operations expressed as a
percentage of adjusted operating profit.
|
|
FY 24
|
|
FY
2320
|
Cash conversion
|
|
81%
|
|
153%
|
Adjusted cash
conversion
|
|
60%
|
|
104%
|
20 FY 23 cash conversion and adjusted cash conversion have been
restated to exclude tax paid in the year, reflecting the Group's
refined definition of adjusted cash generated from
operations
Organic net fee income growth
Organic net fee income growth
excludes net fee income from acquisitions in the 12 months
following acquisition. Net fee income from any acquisition made in
the period is excluded from organic growth. For acquisitions made
part way through the comparative period, the current period's net
fee income contribution is reduced to include only net fee income
for the period following the acquisition anniversary, in order to
compare organic growth on a like-for-like basis.
Organic net fee income growth of
1.8% (FY 23: 39.6%) for the current period represents FY 24 net fee
income less £2.3m of net fee income attributable to Shoreline,
treated as inorganic.
Constant currency growth
The Group operates in multiple
jurisdictions and generates revenues and profits in various
currencies. Results are translated on consolidation at the average
foreign exchange rates prevailing in that period. These exchange
rates vary from year to year, so the Group presents some of its
results on a "constant currency" basis. This means that the current
year's results have been retranslated using the average exchange
rates from the prior year to allow for comparison of year-on-year
results, eliminating the effects of changes in exchange
rates.
Currency translation had an impact
on both net fee income and gross profit in the year, primarily in
North America, as a result of a strengthening British pound
sterling through the year. In the year, British pound sterling
averaged USD 1.26 (FY 23: USD 1.21), and CAD 1.69 (FY 23: CAD
1.59), whilst it was flat against the euro
at an average of €1.16 (FY 23: €1.16).
On a constant currency basis,
Group net fee income would be £238.0m, which is growth of 4.8%
overall. Similarly, North America net fee income would be £94.5m
and Europe & APAC would be £52.3m which would be growth of 3.8%
and 6.9% respectively.
On a similar basis the Group's
gross profit would have been £79.6m representing a 0.9% decrease,
as opposed to a 2.6% decrease on a reported basis.
4. Earnings per share and adjusted earnings per
share
The Group presents basic and
diluted earnings per share ("EPS"), on both a statutory and
adjusted basis. Basic EPS is calculated by dividing the profit or
loss for the year attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the
year. In the calculation of diluted EPS the Group applies the
treasury share method to include the impact of potentially dilutive
shares arising from the Group's share option plans.
In order to reconcile to the
adjusted profit after tax, the same adjustments as set out in note
3 have been made to the Group's profit for the financial year. The
profits and weighted average number of shares used in the
calculations are set out below:
|
Note
|
FY 24
|
|
FY 23
|
Basic and diluted EPS
|
|
|
|
|
Profit for the financial year
(£'000)
|
|
15,847
|
|
17,961
|
Weighted average number of
ordinary shares in issue ('000)
|
|
114,398
|
|
113,531
|
Number of dilutive shares
('000)
|
|
7,658
|
|
7,883
|
Weighted average number of
ordinary shares, including dilutive shares ('000)
|
|
122,056
|
|
121,414
|
Basic EPS (p)
|
|
13.85
|
|
15.82
|
Diluted EPS (p)
|
|
12.98
|
|
14.79
|
Adjusted EPS and adjusted diluted EPS
|
|
|
|
|
Adjusted profit after tax
(£'000)
|
3
|
28,487
|
|
33,229
|
Weighted average number of ordinary
shares in issue ('000)
|
|
114,398
|
|
113,531
|
Number of dilutive shares
('000)
|
|
7,658
|
|
7,883
|
Weighted average number of
ordinary shares, including dilutive shares ('000)
|
|
122,056
|
|
121,414
|
Adjusted EPS (p)
|
|
24.90
|
|
29.27
|
Adjusted diluted EPS (p)
|
|
23.34
|
|
27.37
|
5. Acquisition of businesses
Acquisitions in the
year
Shoreline
On 1 May 2023, the Group reached
an agreement to acquire 100% of the issued share capital of
Shoreline Consulting Pty Ltd and Shoreline
Consolidated Pty Ltd and its subsidiaries (together, "Shoreline"),
a boutique consultancy that provides services to the asset and
wealth management sector in APAC, on a cash free, debt free basis.
The Directors consider that the acquisition enables Alpha to
reinforce our position and take advantage of opportunities in the
APAC region.
The maximum potential cash
consideration payable by the Group pursuant to the acquisition
agreement was AUD 13.0m (£6.8m), allocated between AUD 8.0m (£4.2m)
non-contingent cash consideration and a contingent earn-out
structure up to a maximum of AUD 5.0m (£2.6m), payable in several
instalments.
Subsequent to the acquisition
date, in light of market conditions and performance, an agreement
with the founders was reached to modify the terms of the earn-out
agreement. This agreement has reduced the maximum amount of
earn-out consideration available from AUD 5.0m (£2.6m) to AUD 3.1m
(£1.6m) with modified earn-out targets, payable in July 2026, 2027
and 2028.
The fair value of consideration
recognised on the date of acquisition, excluding employment linked
amounts, amounted to AUD 8.2m (£4.3m), of which AUD 4.5m (£2.4m)
relates to initial cash consideration paid, AUD 0.2m (£0.1m)
relates to additional amounts paid in the year in relation to
completion working capital, AUD 2.4m (£1.2m) relates to deferred
consideration, and AUD 1.1m (£0.6m) relates to discounted
contingent consideration.
Initial consideration was funded
from the Group's cash reserves, with any remaining deferred and
contingent consideration amounts expected to be settled in cash,
with the option to settle a portion of the deferred amounts in the
Group's ordinary shares.
A summary of the purchase
consideration, net assets acquired, identifiable intangible assets
and goodwill is set out below. These fair values are determined by
using established estimation techniques such as income-based
discounted cash flow models.
Shoreline
|
Book
values
|
|
Fair value
adjustments
|
|
Values on
acquisition
|
|
£'000
|
|
£'000
|
|
£'000
|
Acquiree's net assets at the
acquisition date:
|
|
|
|
|
|
Customer relationships
|
-
|
|
1,729
|
|
1,729
|
Trade and other
receivables
|
768
|
|
-
|
|
768
|
Cash and cash
equivalents
|
92
|
|
-
|
|
92
|
Trade and other
payables
|
(636)
|
|
-
|
|
(636)
|
Deferred tax
asset/(liability)
|
54
|
|
(432)
|
|
(378)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net identifiable assets acquired
|
278
|
|
1,297
|
|
1,575
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash consideration relating to
business combination
|
|
|
|
|
4,286
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill on acquisition
|
|
|
|
|
2,711
|
|
|
|
|
|
|
Of the total maximum potential
amounts payable, £0.9m was classified as employment-linked because
these payments are conditional on the continuing employment of
certain Shoreline employees. These employment-linked acquisition
payments are expensed through profit or loss proportionately until
the relevant payment date, based on the amounts expected to be
paid, taking into consideration expected performance against
earn-out targets. During the year, the Group has expensed £0.3m in
relation to these employment-linked payments through the
consolidated statement of comprehensive income, with £0.1m paid in
the year.
Deferred and contingent
consideration is discounted to fair value. Discount unwinding is
recognised as a finance expense proportionately across the periods
until final payment. During the year, £0.1m of discount unwinding
was expensed as a non-underlying finance cost in relation to the
Shoreline acquisition consideration.
A fair value adjustment of £0.1m
was recognised in the consolidated statement of comprehensive
income at 31 March 2024 to reflect the modified earn-out agreement
and revised payment timings described above.
As consideration for the
acquisition of Shoreline is payable in Australian dollars, foreign
exchange gains and losses are recognised at each reporting date in
relation to translating these liabilities into pound sterling. In the period, the Group
recognised a small foreign exchange gain through other
comprehensive income in relation to the re-translation of these
liabilities.
As at 31 March 2024, a £2.1m
liability is recorded, of which £0.9m is current and £1.2m is
non-current.
Shoreline contributed £2.3m to the
Group's revenue in the year and had an immaterial impact on the
Group's profit after tax for the year from the date of acquisition
to 31 March 2024. If the acquisition of Shoreline had been
completed on 1 April 2023, Group revenues for the year would have
been £235.7m with an immaterial impact on the Group profits after
tax, without adjustment to amortisation assumptions.
Acquisition and integration costs
of £0.3m related to the Shoreline acquisition are included within
administration expenses as detailed in note 3.
Acquisitions in previous years
Lionpoint
As at 31 March 2023, the Group
held a liability of £24.9m in relation to future deferred and
contingent consideration payable for this acquisition.
Employment-linked acquisition
payments are expensed through the income statement proportionately
until FY 26. During the year, the Group has expensed £0.8m in
relation to these employment-linked payments.
The deferred and contingent
consideration is discounted to fair value. Discount unwinding is
recognised as a finance cost proportionately across the periods
until final payment. During the year, £1.5m of discount unwinding
was expensed as a non-underlying finance cost in relation to the
Lionpoint acquisition consideration.
During the year, the Group made
deferred and contingent Lionpoint acquisition payments totalling
£16.3m. Of these payments, £1.7m relates to employment-linked
consideration, and is presented within cash from operating
activities, with the remaining £14.6m presented within cash used in
investing activities in the consolidated statement of cash
flows.
As consideration for the acquisition
of Lionpoint is payable in US dollars, foreign exchange differences
are recognised at each reporting date in relation to translating
these liabilities into pound sterling. In the year, the Group
recognised a foreign exchange profit of £0.5m in relation to the
re-translation of these liabilities.
As at 31 March 2024, a £10.4m
liability is recorded, of which £10.1m is current and £0.3m is
non-current.
The below table summarises the
movements in the deferred and contingent consideration liabilities
to 31 March 2024:
|
Shoreline
|
|
Lionpoint
|
|
Total
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Balance as at 1 April 2023
|
-
|
|
24,949
|
|
24,949
|
|
Additions
|
1,824
|
|
-
|
|
1,824
|
|
Employment-linked
consideration
|
318
|
|
817
|
|
1,135
|
|
Payments in the
year21
|
(57)
|
|
(16,328)
|
|
(16,385)
|
|
Unwinding of
discounting
|
127
|
|
1,494
|
|
1,621
|
|
Fair value adjustment
|
(72)
|
|
-
|
|
(72)
|
|
Foreign exchange gains
|
(36)
|
|
(522)
|
|
(558)
|
|
Balance as at 31 March 2024
|
2,104
|
|
10,410
|
|
12,514
|
|
|
|
|
|
|
|
Represented by:
|
|
|
|
|
|
|
Current
|
883
|
|
10,070
|
|
10,953
|
|
Non-current
|
1,221
|
|
340
|
|
1,561
|
|
Balance as at 31 March 2024
|
2,104
|
|
10,410
|
|
12,514
|
|
21 Deferred and contingent acquisition payments of £16.4m
includes £1.8m of employment-linked consideration, which is
reported in net cash generated from operating activities in the
consolidated statement of cash flows. Additionally, acquisition
payments reported within cash flows from investing activities in
the consolidated statement of cash flows includes £2.4m paid upon
completion of the acquisition of Shoreline, net of cash acquired,
which is not included in the table above
As at 31 March 2024, the Group
held a total liability of £12.5m in relation to future deferred and
contingent consideration payable for acquisitions. Of this
liability at the balance sheet date, £2.4m relates to deferred
consideration and the remaining £10.1m relates to contingent
consideration. Within these deferred and contingent consideration
liabilities, £1.9m relates to employment-linked amounts.
The fair value of acquisition
earn-outs is no longer considered to be an area of significant
estimation uncertainty given proximity to and more certainty around
the Lionpoint final earn-out payment. The fair value of the
earn-out liability held in relation of Shoreline is also not
considered to have a material level of estimation uncertainty to
the value of the liability held at 31 March 2024.
6. Trade and other receivables
|
|
FY 24
|
|
FY 23
|
|
|
£'000
|
|
£'000
|
Amounts due within one
year:
|
|
|
|
|
Trade receivables
|
|
34,190
|
|
26,781
|
Less: allowance for expected
credit losses
|
|
(685)
|
|
(657)
|
Trade receivables - net
|
|
33,505
|
|
26,124
|
Other receivables
|
|
1,080
|
|
1,194
|
Capitalised contract fulfilment
costs
|
|
753
|
|
1,101
|
Prepayments
|
|
2,478
|
|
1,999
|
Accrued income
|
|
4,369
|
|
3,710
|
Total amounts due within one year
|
|
42,185
|
|
34,128
|
Trade receivables are non-interest
bearing and generally have a 30- to 60-day term. Due to their short
maturities, the carrying amount of trade and other receivables is a
reasonable approximation of their fair value. Trade receivables
have increased in the year through the ongoing growth of the
business with higher debtor days at 53
days (FY 23: 43 days) against strong collections
in the prior year.
7. Trade and other payables
|
Note
|
FY 24
|
|
FY 23
|
|
|
£'000
|
|
£'000
|
Trade payables
|
|
4,400
|
|
5,156
|
Accruals
|
|
18,929
|
|
29,880
|
Deferred income
|
|
1,756
|
|
796
|
Social security tax on share
options
|
10
|
2,075
|
|
1,669
|
Taxation and social
security
|
|
5,731
|
|
4,734
|
Other payables
|
|
2,529
|
|
2,277
|
Earn-out and deferred
consideration
|
5
|
10,953
|
|
16,027
|
Total amounts owed within one year
|
|
46,373
|
|
60,539
|
Trade payables comprise amounts
outstanding for trade purchases and ongoing costs. The Directors
consider that the carrying amount of trade and other payables is a
reasonable approximation of their fair value. The Group's trade
payables payment policy is to provide payment within the agreed
terms, which is generally 30 days from the date of receipt of
invoice.
The decrease in accruals reflects
the payment in the year of both the FY 23 profit share and the
second tranche of deferred FY 22 payments, as well as a lower
performance-adjusted bonus accrual amounts for FY 24.
The earn-out and deferred
consideration liability comprises the amounts due within one year
relating to the Lionpoint and Shoreline acquisitions. Refer to note
5 for further detail.
8. Other non-current
liabilities
|
Note
|
FY 24
£'000
|
|
FY 23
£'000
|
Earn-out and deferred
consideration
|
5
|
1,561
|
|
8,922
|
Deferred income
|
|
156
|
|
213
|
Social security tax on share
options
|
10
|
1,432
|
|
1,640
|
Other non-current
liabilities
|
|
-
|
|
625
|
Total amounts owed after one year
|
|
3,149
|
|
11,400
|
Earn-out and deferred
consideration relates to future deferred and contingent earn-out
payments to be made for the acquisition of Lionpoint and Shoreline.
Given the passage of time, the third Lionpoint deferred and
contingent consideration payments now fall due within 12 months
from the balance sheet date. Refer to note 5 for further
detail.
Deferred income recognises
contract liabilities arising from the Group's revenue-generating
activities relating to payments received in advance of performance
delivered under a contract. Deferred income recognised as
non-current entirely relates to contracts held within the Aiviq
business, where revenue is sometimes recognised over a contractual
licence period of greater than one year.
Other non-current liabilities fell
to nil in the year as the remaining deferred element of FY 23
bonuses for certain directors and senior management globally now
falls due within 12 months from the reporting date.
9. Called up share capital
|
|
FY 24
|
|
FY 23
|
|
|
Number
|
|
Number
|
Allotted, called up and fully paid
|
|
122,009,736
|
|
120,509,736
|
Ordinary 0.075p shares (1 vote per
share)
|
|
|
|
|
|
|
|
|
|
FY 24
|
|
FY 23
|
|
|
£
|
|
£
|
Allotted, called up and fully paid
|
|
91,507
|
|
90,382
|
Ordinary 0.075p shares (1 vote per
share)
|
|
|
|
|
|
|
|
Movements in share capital during the year ended 31 March
2024:
|
|
|
|
£
|
|
|
|
|
|
Balance as at 1 April
2023
|
|
|
|
90,382
|
120,509,736 ordinary shares of
0.075p each
|
|
|
|
|
Issued shares
|
|
(i)
|
|
1,125
|
|
|
|
|
|
Balance as at 31 March 2024
122,009,736 ordinary shares of 0.075p each
|
|
|
|
91,507
|
|
|
|
|
|
|
|
(i) During the year, a total of
1,500,000 ordinary shares were issued by the Group, all of which
were issued to the employee benefit trust ("EBT") for future
satisfaction of share option awards.
Alpha employee benefit trust
The Group held 7,537,366 (FY 23:
6,274,380) shares in the EBT, comprising shares held to satisfy
share options granted under its joint share ownership plan ("JSOP")
or unallocated ordinary shares to satisfy share options granted
under the Group's other share option plans. The EBT has waived all
dividend and voting rights in respect of these shares. Therefore,
the number of shares with exercisable voting rights at 31 March
2024 was 114,472,370 (FY 23: 114,235,356).
During the year, 1,500,000
ordinary shares were transferred by the Company to the EBT for
potential future satisfaction of share incentive plans through the
issuance of new shares at nominal value. Further, the EBT purchased
a total of 1,035,154 shares from the market in the year for a total
of £3.8m, which was funded by the Group and is accounted for as a
deduction from other reserves.
In the year, 1,272,168 shares held
in the EBT were utilised for employee share option
exercises.
Treasury shares
The Group held nil (FY 23: nil)
shares in treasury.
10. Share-based payments
The Group has adopted a globally
consistent share incentive plan approach, which is implemented
using efficient jurisdiction specific plans, as
appropriate.
The management incentive plan
The Group has a management
incentive plan ("MIP") to retain and incentivise directors and
senior management. The MIP consists of four parts: part A of which
will enable the granting of enterprise management incentive and
non-tax advantaged options to acquire shares; part B of which will
enable the awarding of JSOPs; part C of which will enable the
awarding of restricted stock units ("RSUs") for participants in the
US; and part D of which will enable the awarding of RSUs in France
(together the "options").
In prior years, the majority of
options granted to certain directors and senior management of the
Group were subject to the fulfilment of three or more of the
following performance conditions: (a) the Group achieving adjusted
EPS growth of 15.0% or more to trigger a maximum award, or 10.0% to
trigger a 66% award, with a linear application of awards between
these levels; (b) the Group achieving a total shareholder return
("TSR") over three years in excess of the mean TSR delivered by a
peer group of comparable companies; (c) personal adherence to
corporate values and risk policy; and (d) specific business unit
EBITDA, or other personal targets and goals.
As disclosed last year, the
Remuneration Committee approved performance conditions for FY 23
awards, which further modified the adjusted EPS growth range set
out above to reflect the growth of the Group since AIM admission.
The criteria for these share incentive awards to certain directors
and senior management of the Group, depending on the individual and
their role, include: (a) the Group achieving adjusted EPS growth of
11.25% or more to trigger a maximum award, or 7.5% to trigger a 66%
award, with a linear application of awards between these levels;
(b) personal adherence to corporate values and risk policy; and (c)
specific business unit EBITDA, or other personal targets and goals.
These criteria were also applied to FY 24 awards granted in the
year.
Awards to senior management also
contain a market condition requiring the Group to achieve a TSR
over three years in excess of the mean TSR delivered by a peer
group of comparable companies.
MIP awards have either nominal or
minimal exercise price payable in order to acquire shares pursuant
to options. MIP awards have either three- or four-year vesting
periods from the date of grant and are usually equity
settled.
The employee incentive plan
In addition to the MIP, the Board
has previously put in place a medium-term employee incentive plan
("EIP"). Under the EIP, a broad base of the Group's employees has
been granted share options or share awards over a small number of
shares. The EIP is structured as is most appropriate under the
local tax, legal and regulatory rules in the key jurisdictions and
therefore varies between those jurisdictions. No EIP awards were
made in the current or prior years.
Movements in the year
During the year ended 31 March
2024, a total of 2,805,590 share option and award grants were made
to employees and senior management (FY 23: 3,153,014). The weighted
average of the estimated fair values of these options awarded in
the year is £3.23 per share (FY 23: £3.14).
During the year 3,231,673 MIP and
EIP awards vested following the satisfaction of performance
conditions. The performance conditions relating to EPS growth and
total shareholder return exceeding a basket of comparable companies
over three years to the vesting date were met in full and the
relevant local regional or individual budgetary performance
conditions were met in full or part, in their respective year of
grant. Of these vested awards, 1,148,787 have been exercised, with
a further 229,798 awards that vested in previous periods also
exercised in the year. Of these total 1,378,585 options exercised,
the Group settled 1,272,168 through shares transferred from the
Group's EBT, with a further 106,417 options retained for net tax
settlement. The weighted average share price at the date of these
exercises was £3.80.
During the year, 195,201 share
options were forfeited or as a result of leavers before
vesting.
Of the 2,129,394 share options
exercisable at the year end, 2,082,886 share options vested in the
year. The remaining vested award holders have a further six to
seven-year period, from the date of vesting, in which to exercise
their vested awards.
Details of the share option awards
made are as follows:
|
|
|
|
FY 24
Number of
share
options
|
|
|
|
|
|
Outstanding at the beginning of
the year
|
|
|
|
9,996,040
|
Granted during the year
|
|
|
|
2,805,590
|
Exercised during the
year
|
|
|
|
(1,378,585)
|
Forfeited during the
year
|
|
|
|
(195,201)
|
Expired during the year
|
|
|
|
-
|
Outstanding at the year end
|
|
|
|
11,227,844
|
Exercisable at the year end
|
|
|
|
2,129,394
|
The weighted average exercise
price for all options outstanding in both the current and prior
years was nominal. The options outstanding as at 31 March 2024 had
a weighted average remaining contractual life of 1.2 years (FY 23:
1.7 years).
During the year ended 31 March
2024, options were granted in July 2023 and January 2024 to certain
employees and senior management.
MIP share options with an external
market condition were valued at award using the Monte Carlo option
pricing model. The model simulates a variety of possible results,
across 10,000 iterations for each of the options, by substituting a
range of values for any factor that has inherent uncertainty over a
number of scenarios using a different set of random values from the
probability functions. The model takes any market-based performance
conditions into account and adjusts the fair value of the options
based on the likelihood of meeting the stated vesting
conditions.
MIP share options without external
market conditions and EIP share options were valued at award using
a Black-Scholes model.
The inputs to these models in the
period were as follows:
|
|
|
|
|
FY 24
|
|
|
|
|
|
|
Weighted average share price at
grant date
|
|
|
|
|
£3.98
|
Exercise price
|
|
|
|
|
Nominal
|
Volatility
|
|
|
|
|
26.42%
|
Weighted average share option
life
|
|
|
|
|
4
years
|
Risk free rate
|
|
|
|
|
4.93%
|
Expected dividend yield
|
|
|
|
|
3.00%
|
Volatility is calculated based on
the relative rate at which Alpha's share price moves up and down.
It is derived from calculating the annualised standard deviation of
the daily changes in share price. The expected expense calculated
in the model has been adjusted, based on management's best
estimate, for the effects of non-market-based performance
conditions and employee attrition.
The Group recognised a total
expense of £7.3m (FY 23: £8.0m) in the current year, comprising
£6.7m (FY 23: £7.0m) in relation to equity-settled share-based
payments, and £0.6m (FY 23: £1.0m) relating to relevant social
security taxes.
Given the more challenging market
environment and the Group's performance in FY 24, in April 2024,
the Remuneration Committee considered the vesting of FY 24 awards
to Executive Directors and senior management of the Group. It was
determined that the overall vesting levels of the FY 24 share
options awards would be significantly lower than FY 23. This has
been reflected in the calculation of the share-based payment charge
in the year as well as the associated social security
costs.
The combined carrying value of
current and non-current liabilities relating to social security tax
on share options as at 31 March 2024 is £3.5m (FY 23: £3.3m) of
which £2.1m was current and £1.4m was non-current. A £0.6m charge
was recognised in the consolidated statement of comprehensive
income in the year, offset by £0.4m of payments. Assumptions
associated with the calculation of the social security tax
liability due on vesting of share options include an estimation of
the forward-looking share price at the vesting date based on
analyst research and applicable future tax rates. For these
purposes, the share price is updated at each reporting period to
reflect historical trends, and is assumed to grow in line with the
estimated future performance of the business.
If the estimated future share
price assumption were to increase by 30%, the social security costs
in the period would increase by £0.4m. Were the share price
assumption to reduce by 30% the charge would reduce by
£0.4m.
If the estimated number of share
options expected to forfeit annually were to decrease by 3% for all
outstanding share options, the share-based payment charge in the
year would increase by £0.7m. If estimated annual forfeits were to
increase by 3%, the charge in the year would reduce by
£0.7m.
-ENDS-