TIDMAFM
RNS Number : 6529X
Alpha Fin Markets Consulting plc
28 November 2017
Alpha Financial Markets Consulting plc
Alpha Financial Markets Consulting plc ("Alpha"), a leading
global provider of specialist consultancy services to the Asset and
Wealth Management industry, reports interim results for the six
months ended 30 September 2017.
28 November 2017
STRONG PERFORMANCE IN H1 2017/18 AND A CONFIDENT OUTLOOK
Financial Highlights
-- Group revenue for H1 2017/18 increased by 50% to GBP28.7m compared to H1 2016/17
-- Group adjusted EBITDA for H1 2017/18 increased by 71% to GBP5.8m compared to H1 2016/17
-- Continued strong performance across all of the Group's business practices
-- Following a successful IPO in October 2017, net debt of
GBP84.7m as at 30 September 2017 has been entirely paid down
-- Interim dividend of 1.48 pence per share announced
Six months Six months
to 30-Sep-17 to 30-Sep-16 Change
---------------------- --------------- --------------- --------
Revenue GBP28.7m GBP19.1m 50%
Gross Profit GBP10.5m GBP6.6m 59%
Adjusted EBITDA GBP5.8m GBP3.4m 71%
Interim Dividend per 1.48p - -
share
---------------------- --------------- --------------- --------
Operating Highlights
-- Launch of the Alpha Switzerland office in Geneva
-- Launch of the Alpha Singapore office
-- Acquisition of Track Two GmbH
-- Promotion and hiring of four Directors to support the future growth of the business
-- Continued investment in people: number of consultants
including contractors grew by 33% compared to H1 2016/17, with full
benefit to revenues to be seen in H2 2017/18
-- Launch of the Alpha Digital practice
-- Larger office space secured in Luxembourg and Paris to support continued growth in Europe
Commenting on the results, Euan Fraser, Global Chief Executive
Officer said:
"We are delighted with the success of our recent Initial Public
Offering (IPO) and with our first two months of trading on the
London Stock Exchange's AIM market. For many years we have enjoyed
a collaborative consulting relationship with blue-chip Asset
Managers in each of the countries in which we operate, and to have
them as investors in our business now is a fabulous accolade for
the company and testament to the incredible quality of our
consulting team.
The IPO marks the start of a new chapter for our business. The
transaction has been greeted enthusiastically by investors, clients
and our team of consultants, and we all look forward to continuing
to successfully grow our business in the public markets. For the
past four years, we have been under Private Equity ownership, and
have enjoyed a strong partnership firstly with Baird Capital and
then Dunedin. Over that period, we invested significantly in both
our internal infrastructure and our global and sector expansion,
and the Board discipline we adopted with our Private Equity
investors will help us make a successful transition to the public
markets. The six-month period on which we are reporting was a
period fully under Private Equity ownership and the Balance Sheet
reflects a Private Equity leveraged ownership structure, with all
debt having now been fully repaid at the point of IPO.
We are pleased to be reflecting upon the most successful
six-month period in our history. Our business has performed well in
all markets, and we have performed ahead of expectations with
adjusted EBITDA having increased by 71% to GBP5.8m compared to H1
2016/17. We remain comfortable that the Group is on-track to meet
expectations for the full year. We are also delighted to announce
that we will pay an interim dividend of 1.48p per share, in line
with our policy of paying 50% of post-tax profits to shareholders
by way of a dividend each year, with the remaining two thirds of
the dividend to be declared at the time of our full year
results.
Looking ahead, we are confident of the long-term prospects for
our Group. Our clients continue to address a combination of
regulatory changes and fee pressure which leads to investment in
the front, middle and back office operating models which creates a
significant demand for our services. We will also continue to
invest in plans for both geographic expansion and product and
sector expansion. Our strong pipeline and market reputation make us
exceptionally well placed as we look to the future."
Enquiries:
Alpha Financial Markets Consulting plc +44 (0)20 7796
Euan Fraser, Global CEO / Maria Stricker, CFO 9300
+44 (0)77 9542
5580
Temple Bar Advisory (Financial Public Relations) +44 (0)78 2796
Alex Child-Villiers 0151
William Barker +44 (0)77 6965
Sam Livingstone 5437
Grant Thornton UK LLP (Nominated Adviser)
Philip Secrett / Richard Tonthat / Harrison +44 (0)20 7383
Clarke 5100
Berenberg (Broker) +44 (0)20 3207
Chris Bowman / Toby Flaux / Laure Fine 7800
Analyst presentation
A presentation for analysts will take place at 11.00am today at
Berenberg, 60 Threadneedle St, London EC2R 8HP.
UK FreeCall: 08006940257
Std International Dial-In: +44 (0) 1452 555566
Conference ID: 2693439
A copy of this announcement and the presentation slides will be
available on Alpha's website:
http://investors.alphafmc.com/reports-and-presentations/2017
Please contact alpha@templebaradvisory.com or call 0207 002 1080
if you would like to attend in person.
Disclaimer
This announcement contains certain statements that are, or may
be, forward looking statements with respect to the financial
condition, results of operations, business achievements and/or
investment strategy of the Company. Such forward looking statements
are based on the Board's expectations of external conditions and
events, current business strategy, plans and the other objectives
of management for future operations, and estimates and projections
of the Company's financial performance. Though the Board believes
these expectations to be reasonable at the date of this document
they may prove to be erroneous. Forward looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, achievements or performance of the Group,
or the industry in which the Group operates, to be materially
different from any future results, achievements or performance
expressed or implied by such forward looking statements.
Global Group Chief Executive's Report
As we noted in our recent Admission Document, the most
significant forces shaping the asset and wealth managers are
regulatory changes and fee pressure. This creates a compelling
demand within Asset and Wealth Managers to both defend margins and
to reduce the costs and complexity of operating models across the
business, enhance operational processes and work flows, and
optimise the capture of data for regulatory and compliance
purposes.
Alpha is well-placed to support asset and wealth managers to
meet this challenge. We are better positioned than any other
consulting firm to advise on the optimal operating model to help
deliver efficiencies and cost savings across the business,
including in Front Office (Trade Order Management, Portfolio
Management and Risk and Analytics), Distribution and Client
Relationship Management through to Operational Outsourcing.
The potent mixture of additional regulatory costs, fee pressures
and the anticipated benefits generated from economies of scale will
also continue to drive further consolidation in the asset and
wealth management sector. Alpha has enjoyed a strong track record
of helping deliver many of the defining projects in asset
management post-acquisition integration and we continue to work on
the largest and most interesting strategic projects in the
market.
Our service offering and consulting skill set is extremely well
positioned to continue to meet the demands from our clients.
Financial performance
We are pleased with our financial performance at the end of the
first six months of this financial year (2017/18). We have
performed well in our core markets of UK, Europe and the US with
both revenue and adjusted EBITDA having increased strongly compared
with the first six months of last financial year (2016/17):
Six months Six months
to 30-Sep-17 to 30-Sep-16 Change
----------------- --------------- --------------- --------
Revenue GBP28.7m GBP19.1m 50%
Gross Profit GBP10.5m GBP6.6m 59%
Adjusted EBITDA GBP5.8m GBP3.4m 71%
----------------- --------------- --------------- --------
Interim dividend
We are delighted to announce that we will pay an interim
dividend of 1.48p per share, in line with our policy of paying
approximately 50% of post-tax profits to shareholders by way of a
dividend each year. Our expectation is that we will pay the
remaining two thirds of the dividend on publication of our annual
accounts following our 31 March 2018 year end.
The Group is highly cash generative. The vast majority of our
projects are invoiced in full on a time-and-materials basis at the
end of each month, with little work in progress on our balance
sheet.
The Interim dividend of 1.48p per share will be paid to
shareholders on 22 December 2017 to those shareholders on the
register at the close of business on 8 December 2017.
Project overview
Our projects fall into four broad categories:
-- Strategy and advisory
-- Evaluation and selection
-- Implementation and execution
-- Benchmarking
Strategy and Advisory. The Group provides its clients with
insight into market trends, new products, the regulatory agenda and
competitive threats and opportunities. The advice that the Group
provides allows its clients to make decisions on managing their
business and connecting with the market. The Group's consultants
are industry specialists, and as part of a global team, are able to
provide an international perspective for their clients, giving
insight across the value chain.
Evaluation and Selection. The Group provides independent and
impartial advice to its clients on the choice of technology
solutions, outsourcing providers and other partners for their
businesses. Using its current knowledge of the market and
proprietary benchmarking data, the Group is able to provide an
up-to-date view of provider capabilities and the best solutions for
the specific needs of its clients. The Group's impartial position
also enables it to conduct commercial negotiations on behalf of
clients and build relationships between these clients and their
providers.
Implementation and Execution. For the implementation and
execution of complex projects, the Group provides clients with
professional teams who have specialist hands-on expertise in
delivering complex and time-critical projects. These projects span
the spectrum of front, middle and back office functions.
Benchmarking. Underpinning these first three project categories,
the Group has developed an extensive library of data and analysis
on the asset and wealth management industry, providing benchmarking
analysis on comparable costs, operational performance, Key
Performance Indicators and other metrics. This library of
benchmarking data is proprietary to the Group. Clients are able to
benchmark their operational capability and cost profile against
other asset managers; if the operational activity is outsourced,
they can compare capability and cost profiles against the services
provided by third party administrators to other outsourced asset
managers.
We deliver these four types of projects across the asset and
wealth management value chain, with a particular focus on a set of
specialisms where we have developed a market leading expertise:
Product Strategy & Advisory Evaluation & Selection Implementations
Categories & Execution
------------ -------------------------- ------------------------- ----------------
Benchmarking
------------ -----------------------------------------------------------------------
Specialisms M&A Integration CRM & Distribution
Operations & Outsourcing Digital
Front Office Client Servicing & Reporting
Investment Guidelines Regulatory Compliance
Data Product Development
------------ ---------------------------- -----------------------------------------
Segments Asset Managers Service Providers
Wealth Managers Platforms & Intermediaries
Asset Owners
------------ ---------------------------- -----------------------------------------
We have, for a number of years, enjoyed a reputation as the
go-to consulting firm for asset managers to turn to for support in
delivering challenging projects in the Front Office, Distribution,
Operational Outsourcing and Post Acquisition Integration space. We
are enormously proud to have built such a strong reputation and in
these parts of the market where there continues to be strong
demand. Front Office and Distribution in particular have continued
to drive much of our growth in the first half of Financial Year
2017/18. As the recognised market leader in these areas, we are
supporting a range of national and global asset managers with some
of the most interesting and challenging projects in the industry
many of which are multi-year or multi-jurisdiction assignments.
We are delighted to continue to support our clients with some of
the most high-profile post-acquisition and post-merger integration
projects in the industry, winning a number of new projects in the
last six months in the UK, Europe and the US.
In 2016, we launched the Regulatory and Compliance practice and
the Investment Guidelines practice. Both of these new practices
have enjoyed considerable success since the launch.
Regulatory and Compliance has of course been a hot topic in our
industry for some time and we have been very pleased to be able to
make significant progress in winning a range of new projects over
the last year. Although this part of the consulting market is well
served by a number of incumbent consulting firms, Alpha has been
highly successful in competing successfully for some of the most
important projects in the regulatory space, including leading MiFID
II projects for global asset managers.
We were also pleased with the immediate demand in the market
place for our Investment Guidelines practice. Since the launch, we
have won several large projects in the UK, Europe and the US
supporting our asset management clients to ensure that Investment
Agreements are accurately reflected in the compliance platforms. We
believe that the Investment Guidelines practice is well on its way
to being established as a market leading proposition.
Most recently, in September 2017, we launched Alpha's Digital
practice. We are delighted to have hired Kevin O'Shaughnessy to
lead that part of our business. We know that this is an important
topic for our clients and an area that is very much in demand.
These three new practices will help us continue to grow our
business and allow us to support our clients across the asset and
wealth management value chain.
Our clients
We work with a broad range of the leading global and national
asset managers. We have consulted to over 200 clients including 17
of the 20 largest global asset managers by AUM and 60% of the top
50 as at 31 March 2017. In addition to traditional asset managers,
we also advise insurance-backed and pension-based businesses, and
our clients cover the whole spectrum of institutional, intermediary
and retail asset managers.
As well as asset managers, we work with wealth managers
delivering private banking and wealth solutions, discretionary fund
management and family office services to end clients and a range of
third party administrators, organisations that provide outsourced
middle and back office services to the asset and wealth management
industry.
We are proud to have built such a loyal client base across the
global asset and wealth managers. We believe that asset managers
demand a blend of subject matter expertise and project management
and consultancy skills from their consultants; qualities that are
the hallmark of an Alpha consultant.
Country overview
We are pleased to have enjoyed strong client led demand across
all of our core locations of the UK, Europe and the US. Each of
those core businesses grew substantially compared to the first six
months of the previous financial year (2016/17):
Six months Six months
to 30-Sep-17 to 30-Sep-16 Change
--------- --------------- --------------- --------
Revenue
UK GBP17.8m GBP12.8m 39%
Europe GBP6.8m GBP4.4m 55%
US GBP3.8m GBP1.9m 100%
--------- --------------- --------------- --------
Asia GBP0.3m
--------- --------------- --------------- --------
GBP28.7m GBP19.1m 50%
--------------- ------------------------- --------
Six months Six months
to 30-Sep-17 to 30-Sep-16 Change
------------- -------------- -------------- --------
Consultants
UK 117 101 16%
Europe 70 47 49%
US 28 21 33%
------------- -------------- -------------- --------
Asia 3
------------- -------------- -------------- --------
218 169 29%
------------- -------------- -------------- --------
Excludes contractors
The UK today remains the largest geography within the Alpha
Group and we are delighted with the continued growth that we have
enjoyed this year.
Alpha Europe continues to give an impressive performance with
offices in France, Luxembourg, Netherlands and most recently
Switzerland. We were pleased to open an office in Geneva earlier
this year. We had worked with a number of the Swiss-based asset and
wealth managers over the years and have taken the opportunity to
create a local presence. We are excited at the prospects in the
Swiss market for Alpha, and are encouraged to have made such a
strong start with hiring and winning a broad range of new
clients.
Alpha US has also seen strong headcount and revenue growth. We
believe that the US market represents a major opportunity for
future growth. We do not see another consulting firm offering the
same blend of subject matter expertise, market leading consulting
and project management skills, and our proposition is resonating
powerfully with national and global clients in the US market.
We restructured the US leadership team during the course of the
last year, and have invested in creating a secondment programme
which has seen a number of our UK consultants re-locate to the US
over the last six months. The secondment programme is a great
opportunity for us to provide greater scale to the US team and to
help achieve a consistent global culture. We are delighted that the
programme has been so successful and that this combination of local
talent and secondees has helped to drive strong growth over the
last six months.
We are also proud to have opened our first office in Asia. Our
core team in Singapore is fully deployed and we will continue to
pursue a strategy of blending local hires and secondees from our
other global locations We see a number of opportunities in the
Asian market and expect to continue to expand our presence there
over the next couple of years both in Singapore and Hong Kong.
We see a similar demand profile from our clients across each of
the markets in which we operate. Whether the asset managers are
based in the UK, Europe, the US or Asia, the macro challenges are
broadly the same, which means that the Alpha propositions that we
have developed globally provide the perfect solution for our
clients no matter where they are located.
Acquisition activity
We were delighted to have acquired TrackTwo GmbH, a German based
consulting firm, in July 2017, to form the core of our new
division, Alpha Data Solutions. At the heart of the TrackTwo
business is a data solution, 360 SalesVista, which enables asset
managers to match client transactions and AUM to create a golden
source for client data. This enhanced visibility and accuracy of
customer flows can be used by asset managers to deliver improved
business outcomes across distribution, finance and compliance.
Our expectation is that TrackTwo will contribute c. EUR700,000
of Adjusted EBITDA for the full financial year with committed
revenue from a blue chip client base across continental Europe. We
are excited by the prospect of bringing the market leading 360
SalesVista proposition to a much wider client base. We are pleased
to welcome Stefan Maszynski, the Managing Director of TrackTwo, and
Alexandra Maszynski to the Alpha team.
We believe that we are uniquely well placed to identify
potential acquisitions of a bolt-on nature that can add significant
value to our service proposition and where we know from our client
relationships that the product or services is viewed as market
leading.
Delivery excellence
We remain whole-heartedly committed to the success of our
clients' projects. We help to deliver some of the most demanding
global change projects, and we would not be able to achieve such
impactful results for our clients if we did not have the most
talented and dedicated consulting team. We bring together deep
industry specific subject matter expertise, finely honed
methodologies, unique proprietary asset management data, and robust
consulting and project management skills, to deliver success for
our clients year after year.
Our focus on delivery excellence is best evidenced by our
clients coming back to us year after year, asking for our support
with their most challenging delivery or strategy projects.
We were delighted to have recently won the 'Funds Europe
Consultant of the Year 2017' award. This is the third consecutive
year that Alpha has been recognised as the leading consulting firm
in the asset and wealth management sector.
People and culture
Our people and our culture are the most critical factor in our
success. We pride ourselves on employing the best talent and we
have a fabulous track record in identifying the outstanding
performers both in the market and at graduate level.
Our objective is to make Alpha the best experience that any one
of our consultants has enjoyed at any point in their current or
future career. We constantly strive to ensure that we offer the
most supportive and progressive environment for our team to work
in. We deliver on the industry's most challenging change projects
and ensuring that we offer market leading pastoral care is
essential to us.
The success of our focus on culture is highlighted in our
industry leading unmanaged attrition rates, which, at less than 5%,
are a wonderful testament to the culture that we have created.
Having successfully identified and hired the best consulting
talent. It is critically important that we can retain, nurture and
develop everyone in our consulting team. During the last twelve
months since 30 September 2016, we were delighted to have increased
our headcount of global consultants by 29% to 218.
Our clients recognise that the quality of our people and our
exclusive focus on the asset and wealth management sector helps
define our proposition and makes us stand out as the market leading
consulting firm.
We were delighted to have been nominated and to have won a place
in the 'Sunday Times Top 100 Small Companies to Work For 2017'.
Growth strategy
We are excited by our potential for future growth. Although our
market share has grown over recent years, we are confident that
globally our market share is under 10%, leaving us significant
opportunity for further expansion.
We expect to see both strong organic growth and the continued
opportunity for strategic bolt-on acquisitions similar in size and
scale to TrackTwo.
We will deliver on both geographic expansion and on product and
sector expansion. We believe there is the potential for further
growth in all of our locations and in particular Europe, the US and
Asia. In Europe we have an office in four of the top five markets
for asset and wealth management, and we see strong growth potential
in that market over the next 18 months. We have strong momentum in
the US market with a broad range of clients and an excellent
variety of projects across Front Office, Distribution and
Operational change at both asset and wealth managers. The US market
is approximately ten times as large as the UK and represents our
most significant opportunity for expansion.
We have recently opened an office in Singapore, with a team
already fully deployed supporting a large Front Office project. The
Asian consulting market is evolving rapidly and we see demand for
our consulting services coming from both global asset and wealth
managers with a presence in the region and, also, from local
domestic players. We have typically seen Singapore as a stronger
centre for wealth management and Hong Kong for asset
management.
We also expect to continue to expand the range of sectors we
support and over time will add to the Alpha practices such that we
can ensure we have the best consulting solution to meet our global
clients' demands. In addition to ensuring that we can deploy the
full range of Alpha practices across our core locations we will
continue to invest in and to grow those practices most recently
launched, including Regulatory and Compliance, Investment
Guidelines and Digital. Our range of practices will always be
evolving as we adapt our service offering to a changing market
place.
Outlook
We are delighted to have delivered a strong financial
performance in the first half of the year. We can look ahead with
confidence to the second six months of the year. We expect our
industry to continue to seek to manage the impact of increasing
regulation and continued pressure on fees, which drives
consolidation and investment in technology, infrastructure and
processes to help retain margins. In the UK, Europe and the US we
are experiencing strong client demand in areas where we believe we
have a market leading consulting capability such as Post
Acquisition Integration, Distribution, Front Office, Operational
Outsourcing, Regulatory and Compliance and Investment
Guidelines.
We currently support our clients on a number of the largest
projects in the asset management industry, many of which are
multi-jurisdiction and many of which will be multi-year engagements
which give us good revenue visibility through to the end of the
financial year and beyond. Our strong pipeline and market
reputation we believe make us exceptionally well placed as we look
to the future and we remain confident in meeting market
expectations for the full financial year.
Interim condensed consolidated statement of comprehensive
income
For the six months ended 30 September 2017
Unaudited
Unaudited Six months
Six months ended
ended 30 Sep
30 Sep 2017 2016
Note GBP'000 GBP'000
Continuing operations
Revenue 28,746 19,066
Cost of sales (18,254) (12,505)
--------------- -----------
Gross profit 10,492 6,561
Administration expenses (7,495) (4,352)
Adjusted EBITDA* 5,838 3,400
Depreciation (143) (125)
Amortisation 3 (1,115) (1,066)
Exceptional items: costs directly attributable
to IPO (1,297) -
Exceptional items: restructuring costs (238)
Exceptional items: costs directly attributable
to the business combination (48) -
----------------------------------------------- ----- --------------- -----------
Operating profit 2,997 2,209
Finance income - 4
Finance expense (3,906) (3,729)
--------------- -----------
Profit/(loss) before income tax (909) (1,516)
Taxation (494) (347)
--------------- -----------
Loss for the period (1,403) (1,863)
--------------- -----------
Exchange differences on translation
of foreign operations - 48
Total comprehensive expense for the
period (1,403) (1,815)
Basic and diluted earnings/(losses)
per ordinary share (pounds) 2 (15.20) (24.20)
* Adjusted EBITDA is operating profit before interest, tax,
depreciation, amortisation and exceptional items such as costs
directly attributable to the business combination, costs directly
attributable to IPO, restructuring costs and TrackTwo earn-out.
Interim condensed consolidated statement of financial
position
As at 30 September 2017
Unaudited Unaudited
30 Sep 2017 30 Sep 2016
Note GBP'000 GBP'000
Assets
Non-current assets
Goodwill 3 51,529 51,529
Intangible assets 3 24,921 24,279
Property, plant and equipment 432 515
Total non-current assets 76,882 76,323
Current assets
Trade and other receivables 18,139 10,068
Cash and cash equivalents 4,508 5,900
------------ ------------
Total current assets 22,647 15,968
------------ ------------
Total assets 99,529 92,291
------------ ------------
Equity and liabilities
Equity
Issued share capital - -
Share premium 86 86
Retained earnings (5,812) (4,239)
Foreign exchange reserve (222) (99)
Total equity (5,948) (4,252)
------------ ------------
Liabilities
Non-current liabilities
Borrowings 4 89,236 85,412
Deferred tax provision 3,765 4,128
Deferred consideration 5 1,025 -
Total non-current liabilities 94,026 89,540
------------ ------------
Current liabilities
Trade and other payables 11,451 7,003
------------ ------------
Total current liabilities 11,451 7,003
------------ ------------
Total liabilities 105,477 96,543
------------ ------------
Total equity and liabilities 99,529 92,291
------------ ------------
Interim condensed consolidated statement of cash flows
For the six months ended 30 September 2017
Unaudited Unaudited
Six months Six months
ended ended
30 Sep 2017 30 Sep 2016
GBP'000 GBP'000
Cash flows from operating activities:
Profit/(Loss) before income tax (909) (1,516)
Depreciation of property, plant and
equipment 143 125
Amortisation of intangible fixed assets 3 1,115 1,066
Profit on disposal of property, plant
and equipment (2) 1
Finance income - (4)
Finance expense 3,906 3,729
------------ ------------
4,253 3,401
Working capital adjustments:
Increase in trade and other receivables (6,179) (654)
Increase / (decrease) in trade and other
payables 2,716 (1,528)
Tax paid (691) (458)
------------ ------------
Net cash generated from operating activities 99 761
Cash flows from investing activities:
Interest received - 4
Acquisition of subsidiary (2,049) -
Additions to property, plant and equipment (125) (99)
Net cash used in investing activities (2,174) (95)
Cash flows from financing activities:
Issue of ordinary share capital - 18
Repayment of borrowings (770) (841)
Interest paid (777) (707)
------------ ------------
Net cash used in financing activities (1,547) (1,530)
------------ ------------
Net decrease in cash and cash equivalents (3,622) (864)
------------ ------------
Cash and cash equivalents at beginning
of the period 8,023 6,705
Effect of exchange rate fluctuations
on cash held 107 59
------------ ------------
Cash and cash equivalents at end of
the period 4,508 5,900
------------ ------------
Interim condensed consolidated statement of changes in
equity
For the six months ended 30 September 2017
Share Share Foreign exchange Retained
Capital premium reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2016 - Unaudited - 68 (147) (2,376) (2,455)
Comprehensive income
Total comprehensive loss for the period - - - (1,863) (1,863)
Foreign exchange differences on translation of
foreign operations - - 48 - 48
Transactions with owners
Shares issued (equity) - 18 - - 18
As at 30 September 2016 - Unaudited - 86 (99) (4,239) 4,252
--------- -------- ----------------- --------- -------
As at 1 April 2017 - Unaudited - 86 (222) (4,409) (4,545)
Comprehensive income
Total comprehensive loss for the period - - - (1,403) (1,403)
Foreign exchange differences on translation of - - - - -
foreign operations
As at 30 September 2017 - Unaudited - 86 (222) (5,812) (5,948)
--------- -------- ----------------- --------- -------
Share capital
Share capital represents the nominal value of share capital
subscribed for.
Share premium
The share premium account is used to record the aggregate amount
or value of premiums paid when the company's shares are issued at a
premium, net of associated share issue costs.
Foreign exchange reserve
The foreign exchange reserve represents exchange differences
which arise on consolidation from the translation of the financial
statements of foreign subsidiaries.
Retained earnings
The retained earnings reserve represents cumulative net gains
and losses recognised in the consolidated statement of
comprehensive income.
Notes to the interim condensed consolidated financial
statements
1. Summary of significant accounting policies
General information
Alpha Financial Markets Consulting plc is incorporated in
England and Wales with registered number 09965297. The Company's
registered office is 60 Gresham Street, London, EC2V 7BB.
The principal activity of the Group is the provision of
consulting and related services to clients in the asset and wealth
management industries.
The interim condensed consolidated financial statements were
authorised for issue in accordance with a resolution of the
Directors on 27 November 2017.
Basis of preparation
The interim financial information in this report has been
prepared using accounting policies consistent with IFRS as adopted
by the European Union. IFRS is subject to amendment and
interpretation by the International Accounting Standards Board
(IASB) and the IFRS Interpretations Committee and there is an
on-going process of review and endorsement by the European
Commission. The financial information has been prepared on the
basis of IFRS that the Directors expect to be adopted by the
European Union and applicable as at 31 March 2018. The group has
chosen not to adopt IAS 34 "Interim Financial Statements" in
preparing the interim financial information.
Statutory accounts
Financial information contained in this document does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006 ("the Act"). The statutory accounts for the
year ended 31 March 2017 have been filed with the Registrar of
Companies. The report of the auditors on those statutory accounts
was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Act.
The financial information for the six months ended 30 September
2017 and 30 September 2016 is unaudited.
Principal accounting policies
The principal accounting policies adopted in the preparation of
these interim condensed consolidated financial statements are set
out below.
Significant judgements and estimates
The preparation of financial information in accordance with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and reported
amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The judgements and estimates that have a significant impact are
noted below:
Business combinations - valuation and asset lives of separately
identifiable intangible assets
In determining the fair value of intangible assets arising in a
business combination, management are required to make judgements
regarding the timing and amount of future cash flows applicable to
the intangible assets being acquired, discounted using an
appropriate discount rate. Such judgements are based on current
budgets and forecasts, extrapolated for an appropriate period
taking into account growth rates and expected changes to selling
prices and operating costs. Management estimates the appropriate
discount rate using post-tax rates that reflect current market
assessments of the time value of money and the risks specific to
the businesses being acquired.
Notes to the interim condensed consolidated financial statements
(continued)
1. Summary of significant accounting policies (continued)
Impairment reviews - goodwill and intangible assets
The Group performs impairment reviews at the reporting period
end to identify any goodwill or intangible assets that have a
carrying value that is in excess of its recoverable value.
Determining the recoverability of goodwill and intangible assets
requires judgement in both the methodology applied and the key
variables within that methodology. Where it is determined that an
asset is impaired, its carrying value will be reduced to its
recoverable value with the difference recorded as an impairment
charge in the income statement.
Going concern
The Group's forecasts and projections, taking into account
reasonably possible changes in trading performance, show that the
Group should be able to operate with its currently available
facilities. The Group has sufficient financial resources together
with assets that are expected to generate cash flow in the normal
course of business. As a consequence, the Directors have a
reasonable expectation that the Group are well placed to manage
their business risks and to continue in operational existence for
the foreseeable future. Accordingly, the Directors have adopted the
going concern basis in preparing these interim condensed
consolidated financial statements.
Basis of consolidation
The interim condensed consolidated financial statements
consolidate the financial statements of the Company and its
subsidiary undertakings as at 30 September.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using consistent
accounting policies.
All intra- group balances, income and expenses and unrealised
gains and losses resulting from intra-group transactions are
eliminated in full.
Revenue recognition
Revenue consists of the value of work executed for clients
during the year exclusive of VAT and is recognised as services are
performed in accordance with the terms of the contract which are
primarily on a time and materials basis. Revenue is wholly
attributable to the principal activities of the Group. Activity
performance in excess of invoices raised is included within accrued
income. Where amounts have been invoiced in excess of work
performed, the excess is included within deferred income.
Foreign exchange
Transactions in foreign currencies are translated to the Group
companies' functional currency at the foreign exchange rate ruling
at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are
retranslated to the functional currency at the foreign exchange
rate ruling at that date. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Foreign exchange differences arising on translation are recognised
in the consolidated statement of income.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are
translated to the Group's presentational currency, Pound Sterling,
at foreign exchange rates ruling at the balance sheet date. The
revenues and expenses of foreign operations are translated at an
average rate for the year where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions.
Foreign exchange differences arising on retranslation are
recognised in other comprehensive income.
Notes to the interim condensed consolidated financial statements
(continued)
1. Summary of significant accounting policies (continued)
Property, plant and equipment
All property, plant and equipment are stated at historical cost
(or deemed historical cost) less accumulated depreciation. Cost
includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for its
intended use.
Depreciation is provided on all property, plant and equipment at
rates calculated to write each asset down to its estimated residual
value on a straight line basis at the following annual rates:
Leasehold land and buildings - 3-10 years
Fixtures and fittings - 4 years
Computer equipment - 3-5 years
Useful economic lives and estimated residual values are reviewed
annually and adjusted as appropriate.
Business combinations and goodwill
Business combinations are accounted for using the acquisition
method as at the acquisition date, which is the date on which
control is transferred to the Group.
The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in the business combination are measured
initially at their fair values at the acquisition date.
The Group measures goodwill at the acquisition date as:
-- the fair value of the consideration transferred; plus
-- the net recognised amount of the identifiable assets acquired and liabilities assumed.
Costs related to acquisition, other than those associated with
the issue of debt or equity securities that the Group incurs in
connection with a business combination, are expensed as incurred.
If the contingent consideration is classified as equity, it is not
remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes to the fair value of the contingent
consideration are recognised in statement of comprehensive
income.
In accordance with IFRS 1, the Group has tested goodwill for
impairment at the date of balance sheet. No goodwill impairment was
deemed necessary at 30 September 2017.
Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where they
satisfy the definition of an intangible asset under IAS 38. Such
assets are only recognised if either:
- they are capable of being separated or divided from the
company and sold, transferred, licenced, rented or exchange, either
individually or together with a related contract, identifiable
asset or liability, regardless of whether the company intends to do
so; or
- they arise from contractual or other legal rights, regardless
of whether those rights are transferable or separable from the
entity or from other rights and obligations.
The cost of such intangible assets is their fair value at the
acquisition date. All intangible assets acquired through business
combination are amortised over their estimated useful lives. The
significant intangibles recognised by the Group; their useful
economic lives and the methods used to determine the cost of the
intangibles acquired in business combinations are as follows:
Intangible asset Useful economic life Valuation method
Customer relationships 12 years Multi-period excess
earnings method
Intellectual property 7 years Relief from royalty
method
Trade name 15 years Relief from royalty
method
Notes to the interim condensed consolidated financial statements
(continued)
1. Summary of significant accounting policies (continued)
Financial instruments
The Group uses financial instruments comprising cash and cash
equivalents, preference shares and other short-term instruments
such as trade payables which arise from its operations. The main
purpose of these financial instruments is to fund the Group's
business strategy and working capital requirements.
Accounting policies in respect of financial instruments are
outlined below.
Financial assets
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. After initial measurement, such financial assets are
subsequently measured at amortised cost using the effective
interest rate method (EIR), less impairment. Amortised cost is
calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included in finance income in the income
statement. The losses arising from impairment are recognised in the
income statement in finance costs. The Group has the following
loans and receivables:
Trade and other receivables
Trade and other receivables are recognised initially at fair
value, and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose only of the
cash flow statement.
The Group holds no available-for-sale or held-to-maturity
investments. The Group may from time to time recognise a financial
asset at fair value through profit or loss in the form of an
interest rate swap as described below.
Financial liabilities
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified as
held for trading if they are acquired for the purpose of selling in
the near term. This category includes derivative financial
instruments entered into by the Group that are not designated as
hedging instruments in hedge relationships as defined by IAS 39.
The Group has the following financial liabilities:
Loans and borrowings
After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortised cost using the effective
interest rate method. Gains and losses are recognised in the income
statement when the liabilities are derecognised as well as through
the effective interest rate method (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included in finance costs in
the income statement. The Group has the following loans and
borrowings:
Preference shares
Share capital is classified as a liability or equity (or a
combination of both) depending on the rights attaching to the
relevant share classes.
Notes to the interim condensed consolidated financial statements
(continued)
1. Summary of significant accounting policies (continued)
Current and deferred income tax
Income tax on the result for the period comprises current and
deferred income tax. Income tax is recognised in the consolidated
statement of comprehensive income except to the extent that it
relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income for the period, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous periods.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The amount of deferred
tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet
date.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax assets and
liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and
liabilities on a net basis.
Impairment
Financial assets (including trade and other debtors)
A financial asset not carried at fair value through profit or
loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the assets original effective interest rate. For
financial instruments measured at cost less impairment, impairment
is calculated as the difference between its carrying amount and the
best estimate of the amount that the Group would receive for the
asset if it were to be sold at the reporting date. Interest on the
impairment asset continues to be recognised through the unwinding
of the discount. Impairment losses are recognised in profit or
loss. When a subsequent event causes the amount of the impairment
to decrease, the decrease in impairment loss is reversed through
statement of comprehensive income.
Non-financial assets
The carrying amounts of the entity's non-financial assets, other
than deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the assets' recoverable amount is
estimated. The recoverable amount of an asset or cash-generating
unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For the
purposes of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets
('the cash-generating unit'). The goodwill acquired in a business
combination, for the purpose of impairment testing is allocated to
cash-generating units ('CGU') that are expected to benefit from the
synergies of the combination. For the purpose of goodwill
impairment testing, if goodwill cannot be allocated to individual
CGUs or groups of CGUs on a non-arbitrary basis, the impairment of
goodwill is determined using the recoverable amount of the acquired
entity it its entirety, or it has been integrated then the entire
group of entities into which it has been integrated. Goodwill is
tested annually for impairment in accordance with IFRS.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of other assets in the unit (or
group of units) on a pro rata basis.
Notes to the interim condensed consolidated financial statements
(continued)
1. Summary of significant accounting policies (continued)
Non-financial assets (continued)
An impairment loss is reversed if and only if the reasons for
the impairment have ceased to apply. An impairment loss recognised
for goodwill is not reversed.
Impairment losses recognised in prior periods are assessed at
each reporting date for any indication that the loss has decreased
or no longer exists. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Employee benefits - pension costs
A defined contribution plan is a post-employment benefit plan
under which the Group pays fixed contributions into a separate
entity and will have a legal or constructive obligation to pay
further amounts. Contributions to defined contribution schemes are
charged to the statement of comprehensive income as they become
payable in accordance with the rules of the scheme. Differences
between contributions payable in the year and contributions
actually paid are shown as either accruals or prepayments in the
statement of financial position.
Leasing
Rentals paid under operating leases are charged to the
consolidated statement of comprehensive income on a straight line
basis over the period of the lease.
Benefits received and receivable as an incentive to sign an
operating lease are recognised on a straight line basis over the
period of the lease.
The Group does not currently hold any assets under finance
leases.
Segmental reporting
An operating segment is a component of the group that engages in
business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions
with other components of the same entity) and whose operating
results are regularly reviewed by the board of directors in order
to make decisions about resources to be allocated to that component
and assess its performance, and for which discrete financial
information is available.
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
as required by IFRS 8 "Operating Segments". The chief operating
decision-maker responsible for allocating resources and assessing
performance of the operating segments has been identified as the
Board of Directors.
The accounting policies of the reportable segments are
consistent with the accounting policies of the group as a whole.
Segment profit represents the profit earned by each segment without
allocation of depreciation, amortisation, foreign exchange gains or
losses, gains or losses on the disposal of available-for-sale
investments, investment income, interest payable and tax. This is
the measure of profit that is reported to the Board of Directors
for the purpose of resource allocation and the assessment of
segment performance.
The directors consider the group's operations to be made up of
one operating segment and one reportable segment: consultancy
services to the asset/wealth management industry.
The Chief Operating Decision-Maker regularly review consolidated
operating results to make decisions about the financial and
organisational resources of the Group to assess overall
performance.
Notes to the interim condensed consolidated financial statements
(continued)
1. Summary of significant accounting policies (continued)
New standards and interpretations - in issue but not yet
effective
The International Accounting Standards Board (IASB) and IFRS
Interpretations Committee (IFRIC) have issued the following
standards and interpretations which are not yet effective:
-- IFRS 9 - Financial Instruments (effective for periods
commencing on or after 1 January 2018)
-- IFRS 15 - Revenue from contracts with customers (effective
for periods commencing on or after 1 January 2018)
-- IFRS 16 - Leases (effective for periods commencing on or after 1 January 2019)
The directors have not yet reviewed the impact that these new
standards will have on the Group. The Group intends to adopt the
standards in the reporting period when they become effective.
2. Loss per share
Basic loss per share is calculated by dividing the loss for the
financial period by the weighted average number of ordinary shares
in issue during the period. The losses and weighted average number
of shares used in the calculations are set out below:
Unaudited Unaudited
Six months Six months
ended ended
30 Sep 2017 30 Sep 2016
Loss
Loss for the financial period used in calculating
basic and diluted EPS (GBP'000) (1,403) (1,863)
Number of shares
Weighted average number of ordinary shares 92,329 76,979
Basic and diluted EPS (15.20) (24.20)
------------ ------------
There were no potentially dilutive shares, options or warrants
in issue, hence fully diluted earnings per share are identical to
basic earnings per share.
Loss per share is calculated based on the share capital of
Company and the earnings of the Group.
Notes to the interim condensed consolidated financial statements
(continued)
3. Goodwill and Intangible fixed assets
Goodwill
30 Sep 2017 30 Sep 2016
GBP'000 GBP'000
Cost
At the start of the period and at the
end of the period - total 51,529 51,529
============== =============
Goodwill is recognised upon the acquisition of Alpha FMC Group Holdings
Limited on 6 February 2016 and is the difference between the consideration
paid and the fair value of assets acquired and liabilities assumed.
In line with IAS 36, a cash-generating unit to which goodwill has
been allocated shall be tested for impairment at least annually
by comparing the carrying amount of the unit, including the goodwill,
with the recoverable amount of the unit.
In considering this position, the estimated weighted average cost
of capital (WACC) for the Group was determined to be 12.5%. This
discount rate has been applied to the Group's future cash flow forecasts
in order to make this assessment at each balance sheet date.
Revenues and gross margins have continued at the rate projected,
with no customer attrition, no significant change in the competitor
landscape, no negative events impacting on the Group's brand or
reputation and no legal or regulatory changes impacting the Group's
offering. There are no other aspects of the key business objectives
that have not been met.
The Directors do not therefore believe there to be any impairment
indicators.
Intangible fixed assets
As at 30 September 2017
Customer Trade name Intellectual Total
relationships property
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At the start of the period 18,650 5,630 1,421 25,701
Recognised on acquisitions
(see note 5) - - 2,823 2,823
-------------- ---------- ------------ -------
At the end of the period
- total 18,650 5,630 4,244 28,524
-------------- ----------
Amortisation
At the start of the period 1,813 438 237 2,488
Charge for the period 777 188 150 1,115
-------------- ---------- ------------ -------
At the end of the period
- total 2,590 626 387 3,603
-------------- ---------- ------------ -------
Net book value 16,060 5,004 3,857 24,921
-------------- ---------- ------------ -------
As at 30 September 2016
Customer Trade name Intellectual Total
relationships property
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At the start of the period 18,650 5,630 1,421 25,701
Recognised on acquisitions - - - -
-------------- ---------- ------------ -------
At the end of the period
- total 18,650 5,630 1,421 25,701
-------------- ----------
Amortisation
At the start of the period 259 63 34 356
Charge for the period 777 187 102 1,066
-------------- ---------- ------------ -------
At the end of the period
- total 1,036 250 136 1,422
-------------- ---------- ------------ -------
Net book value 17,614 5,380 1,285 24,279
-------------- ---------- ------------ -------
Notes to the interim condensed consolidated financial statements
(continued)
3. Goodwill and Intangible fixed assets (continued)
Intangible fixed assets (continued)
Customer relationships
Customer relationships represent the fair value at the 6 February
2016 acquisition date of the customer relationships which were owned
by, but not previously recognised as assets of, Alpha FMC Group
Holdings Limited. The fair value has been determined by applying
the 'multi-period excess earnings' method to the cash flows expected
to be earned from customer relationships. The key management assumptions
are around forecast revenues, operating margins, discount factors
and contributory asset charges used.
A useful economic life of 12 years has been deemed appropriate based
on the average realisation rate of cumulative cash flows and benchmarked
data and projected cash flows have been discounted over this period.
The amortisation charge is recognised in administrative expenses
within the statement of comprehensive income. There are 10.3 years
remaining to be amortised.
Intellectual property
Opening intellectual property represents the fair value at the 6
February 2016 acquisition date of the intellectual property which
was owned by, but not previously recognised as assets of, Alpha
FMC Group Holdings Limited.
The fair value has been determined by applying the 'relief from
royalty' method to the cash flows earned from the intellectual property.
The key management assumptions are around growth forecasts, discount
factors and royalty percentage utilised. A useful economic life
of 7 years has been deemed appropriate based on previous acquisitions
and benchmarking data and projected cash flows have been discounted
over this period.
The amortisation charge is recognised in administrative expenses
within the statement of comprehensive income. There are 5.3 years
remaining to be amortised.
Additions during the period represent the fair value of the
intellectual property acquired from Track Two GmbH. Refer to note 5
for details.
Trade name
Trade name represents the fair value at the 6 February 2016 acquisition
date of the trade name which was owned by, but not previously recognised
as assets of, Alpha FMC Group Holdings Limited.
The fair value has been determined by applying the 'relief from
royalty' method to the cash flows earned from the trade name. The
key management assumptions are around growth forecasts, discount
factors and royalty percentage utilised. A useful economic life
of 15 years has been deemed appropriate based on benchmarking reviews
and projected cash flows have been discounted over this period.
The amortisation charge is recognised in administrative expenses
within the statement of comprehensive income. There are 13.3 years
remaining to be amortised.
Notes to the interim condensed consolidated financial statements
(continued)
4. Non-current liabilities
Borrowings
30 September 30 September
2017 2016
GBP'000 GBP'000
Dunedin loan notes 46,700 43,248
Bank loans and overdrafts 26,031 26,505
Management loan notes 15,104 14,268
Management preference shares 1,401 1,391
------------ ------------
89,236 85,412
Dunedin loan notes
Dunedin Buyout LLP invested GBP41,137,000 of ordinary 'A' loan
notes in Alpha FMC Midco Limited on 3 February 2016. These have a
nominal value of GBP0.00001 and a premium of GBP0.99999. These
loans notes are listed on the Channel Islands Stock Exchange and
are repayable in full, plus accrued interest on either 3 February
2023 or earlier upon the sale or listing of the Group. The loan
notes accrue interest at 8% per annum and are unsecured. There are
no recognised capitalised arrangement fees in respect of these loan
notes. The amounts shown above represent the total of capital
amounts borrowed and accrued interest as at the balance sheet
date.
Bank loans and overdrafts
As at 30 September 2017, Alpha FMC Bidco Limited had a Mezzanine
Facility of GBP7,853,000 with Beechbrook Capital LLP. The loan is
repayable in full on 3 February 2023 or earlier upon the sale or
listing of the Group. Interest accrues at a rate of either LIBOR
plus 10% per annum if the group chose to pay the interest on the
interest repayment date or at 7.5% per annum plus the PIK rate of
4.5% if they choose to capitalise the PIK element of the rate.
Interest repayment dates are 31 March 2016 and every quarter
thereafter. The varying value of the capitalised loan arrangement
fees held on the balance sheet in respect of this loan as at 30
September 2017 is GBP451,000 and have been offset against the
related liabilities above. Capital repayable after five years
totals GBP6,000,000 gross of capitalised loan arrangement fees held
at amortised cost.
As at 30 September 2017, Alpha FMC Bidco Limited had a loan 'A'
of GBP8,690,000 and a loan 'B' of GBP11,000,000 both with Lloyds
Bank Plc. Loan 'A' is repayable by instalments until a final
payment of GBP1,540,000 is due on 3 February 2021 or earlier upon
the sale or listing of the Group. Loan 'B' is repayable on 3
February 2022 or earlier upon the sale or listing of the Group.
Interest accrues at a rate of 4% and 4.5% plus LIBOR respectively.
Interest repayment dates are 31 March 2016 and every quarter
thereafter. The carrying value of the capitalised loan arrangement
fees held on the balance sheet in respect of these two loans as at
30 September 2017 is GBP1,114,000 and have been offset against the
related liabilities above. Capital repayable after five years
totals GBP11,000,000 gross of capitalised loan arrangement
fees.
Alpha FMC Bidco Limited also have a revolving credit facility of
GBP2,000,000 with Lloyds Bank Plc on which it pays interest of 4%
plus LIBOR for the option to use the facility. This facility has
not been drawn down as at 30 September 2017.
Management loan notes
UK, French and US management invested GBP12,362,087 or ordinary
'B1', 'B2', 'C1', 'C2' and 'D' loan notes in Alpha FMC Topco
Limited on 3 February 2016. These have a nominal value of
GBP0.00001 and a share premium of GBP0.99999. These loan notes are
repayable in full, plus accrued interest on either 3 February 2023
or earlier upon the sale or listing of the Group. The loan notes
accrue interest at 8% per annum and are unsecured. There are no
recognised capitalised arrangement fees in respect of these loan
notes. Management also invested GBP1,315,978 of 'A' ordinary share
in Alpha FMC Midco Limited, to which the same details apply. The
amounts shown above represent the total of capital amounts borrowed
and accrued interest as at the balance sheet date.
Notes to the interim condensed consolidated financial statements
(continued)
4. Non-current liabilities (continued)
Preference shares
On 3 February 2016, management invested GBP1,321,281 of
preference shares in Alpha FMC Topco Limited. These have a nominal
value of GBP0.000005 and a share premium of GBP0.999995. These
preference shares are repayable in full, plus accrued interest on
either 3 February 2023 or earlier upon the sale or listing of the
Group. The preference shares accrue interest at 8% per annum and
are unsecured. The movement since acquisition is the result of
interest accrued for the period of GBP174,428 partially offset by a
GBP95,000 settlement of the preference shares in respect of two
individuals. There are no recognised capitalised arrangement fees
in respect of these preference shares. The amounts shown above
represent the consideration received in respect of preference
shares plus the subsequently accrued interest as at the balance
sheet date.
The preference shares are treated as liabilities as they are
redeemable by the Company for a fixed sum on or before 3 February
2023.
5. Acquisition of TrackTwo
On 18 July 2017, the Group acquired 100% of the share capital
and voting interest of TrackTwo GmbH for an upfront cash
consideration of GBP2,049,000 (EUR 2,331,610), deferred
consideration of GBP 1,025,000 (EUR 1,166,200) payable in January
2019 and consideration shares in the Company with a fair value of
GBP695.
In addition, as part of the purchase negotiations, the Company
has put in place an annual earn-out arrangement and a final
ownership consideration based on the financial performance of the
TrackTwo GmbH over the three year period to July 2020 subject to
continuous employment of Management Seller until July 2020. The
earn-out of GBP23,000 attributable to the half year has been
recognised as an expense in the interim condensed consolidated
financial statements, and presented as an exceptional item.
This acquisition has been accounted for under the acquisition
method of accounting.
The provisional fair value of the identifiable assets and
liabilities of the TrackTwo at the date of acquisition were:
Provisional
fair value recognised
at acquisition
GBP'000
Assets acquired:
Intellectual property 2,823
Property, plant and equipment 9
Trade and other receivables 323
Cash and cash equivalents 108
Trade and other payables (188)
Total investment 3,075
-----------------------
Satisfied by:
Upfront cash consideration 2,049
Deferred consideration 1,025
Shares 1
Total consideration 3,075
-----------------------
Trading assets including property plant and equipment acquired
at net book value are considered to be at their fair value. The
purchase price allocation of the acquisition has yet to be
confirmed and at the time of preparing the interim condensed
consolidated financial statements the Directors have assumed the
total purchase consideration over and above the tangible net assets
acquired relates to intellectual property of TrackTwo GmbH.
Notes to the interim condensed consolidated financial statements
(continued)
6. Related party disclosures
Transactions with directors
Transactions with directors, or entities in which a director is
also a director or partner:
Six months Six months
ended ended
30 Sep 30 Sep
2017 2016
GBP'000 GBP'000
Consultancy services provided by a director
- Mr T Trotter 22 26
---------- ----------
Key management compensation:
The Director's consider that key management personnel are those
persons who are a director of the parent company or any of the
subsidiary companies within the group. These individuals have the
authority and responsibility for planning, directing and
controlling the activities of the Group.
Key management emoluments were as follows:
Six months Six months
ended ended
30 Sep 30 Sep 2016
2017
GBP'000 GBP'000
Salaries (including social security costs) 3,547 3,118
The aggregate of remuneration of the highest paid director of
the parent company for the period ended 30 September 2017 was
GBP230,000 (2016: GBP213,750), and company pension contributions of
GBP2,300 (2016: GBP2,138) were made to a money purchase scheme on
his behalf.
Retirement benefits are accruing to the 4 directors of the
parent company (2016: 3) under money purchase schemes.
Key management hold both loan notes and preference shares in the
Group. At the 30 September 2017, management loan notes totalled
GBP15,104,000 (30 September 2016: GBP14,268,000l) and management
preference shares totalled GBP1,401,000 (30 September 2016:
GBP1,391,000). Further details around the nature of these
arrangements are provided in note 4.
Transactions with shareholders
In the period ended 30 September 2017, the Group paid monitoring
fees of GBP25,000 (30 September 2016: GBP25,000) to Dunedin LLP, a
major shareholder of the Company. At the 30 September 2017, loan
notes due to Dunedin totalled GBP46,700,000 (30 September 2016:
GBP43,248,000). Further details around the nature of these
instruments are provided in note 4.
Notes to the interim condensed consolidated financial statements
(continued)
7. Post balance sheet events
Name change
On 4 October 2017, the Company changed its name to Alpha
Financial Markets Consulting plc and the Company re-registered as a
public limited company.
Initial Public Offering and Listing
The admission document for the Company's IPO and admission to
AIM was published on 6 October 2017. The Company placed 22,017,652
new shares and selling shareholders placed 56,364,512 existing
shares at 160 per share. The Company received net proceeds of
approximately GBP32.8m (After deduction of estimated commissions,
fees and expenses payable by the Company of approximately GBP2.4
million).
The Company ordinary shares are admitted to trading on the AIM
market of the London Stock Exchange on 11 October 2017, under the
ticker "AFM" and the ISIN GBOOBF16C058.
Debt repayment and restructuring
Following the IPO, the Group's bank loans and overdrafts are
repaid in full from the proceeds of the Placing (Loan balance as at
30 September 2017: GBP26,031,000. Refer to Note 4 for details).
Part of the capital restructuring prior to the IPO, Dunedin loan
notes, management loan notes and preference shares together with
accrued interest are converted to equity shares and the resulting
equity shares are sold in the Placing, representing a full exit for
Dunedin Buyout Fund III LP.
Capital restructuring pre IPO
Immediately prior to the IPO, all classes of ordinary equity
share capital in issue (including shares issued on conversion of
loan notes and preference shares, A shares, B1 Shares, B2 Shares,
C1 Shares, C2 Shares, D Shares and F shares) are consolidated and
converted to ordinary shares of 0.0075 each as part of the capital
restructure which took place as a result of the placing. The issued
share capital of the Company after capital restructuring and
immediately prior to the IPO is GBP59,881.45 comprising 79,841,931
ordinary shares of GBP0.00075 each.
Immediately following Admission, the Company's issued share
capital (including the New Shares issued pursuant to the Placing)
is GBP76,394.69, comprising 101,859,583 ordinary shares of
GBP0.00075 each (all of which is fully paid or credited as fully
paid). Refer to paragraph 3.2 of Part V of the IPO Admission
document, for further details. Company accounts with sufficient
distributable reserves to support the proposed dividend have been
filed at Companies House.
Controlling party change
The ultimate controlling party as of 30 September 2017 and 30
September 2016 is a fund advised by Dunedin LLP. Following the IPO
on 11 October 2017, the Group does not have a controlling
party.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FEMFAWFWSEFF
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